-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H0kAlIDIZwJ1MrNvtgnr07hkICp9zE0ocwRLfhzRvDxheP6BOWRD+iOoxPq9MR4/ evZrwWGif7hzXSd2aiaeAg== 0001047469-98-011311.txt : 19980326 0001047469-98-011311.hdr.sgml : 19980326 ACCESSION NUMBER: 0001047469-98-011311 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 19980325 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER PARKS INC CENTRAL INDEX KEY: 0000701374 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 736137714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-45859 FILM NUMBER: 98572422 BUSINESS ADDRESS: STREET 1: 11501 NE EXPWY CITY: OKLAHOMA CITY STATE: OK ZIP: 73131 BUSINESS PHONE: 4054752500 MAIL ADDRESS: STREET 1: 11501 NORTHEAST EXPWY CITY: OKLAHOMA CITY STATE: OK ZIP: 73131 FORMER COMPANY: FORMER CONFORMED NAME: TIERCO GROUP INC/DE/ DATE OF NAME CHANGE: 19920703 S-3/A 1 S-3/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 25, 1998 REGISTRATION NO. 333-45859 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 2 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ PREMIER PARKS INC. (Exact name of Registrant as specified in its charter) ------------------------ DELAWARE 73-6137714 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization)
------------------------ 11501 NORTHEAST EXPRESSWAY KIERAN E. BURKE OKLAHOMA CITY, OKLAHOMA 73131 11501 NORTHEAST EXPRESSWAY TEL: (405) 475-2500 OKLAHOMA CITY, OKLAHOMA 73131 (Address, including zip code, and telephone number, including TEL: (405) 475-2500 area code, of Registrant's principal executive offices) (Name, address, including zip code, and telephone number, including area code, of agent for service)
------------------------ COPIES TO: JAMES M. COUGHLIN, ESQ. THOMAS R. BROME, ESQ. Baer Marks & Upham LLP Cravath, Swaine & Moore 805 Third Avenue Worldwide Plaza New York, New York 10022 825 Eighth Avenue Tel: (212) 702-5819 New York, New York 10019 Tel: (212) 474-1000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------ CALCULATION OF REGISTRATION FEE (SEE FOLLOWING PAGE.) ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED(1)(2)(3) BE REGISTERED PRICE PER SHARE OFFERING PRICE(4) REGISTRATION FEE Common Stock, par value $0.05(5)................. (6) (6) (6) Convertible Preferred Stock...................... (6) (6) (6) EqPINES(sm)(7)(8)................................ (6) (6) (6) Total............................................ -- -- $1,183,781,250 $349,216(9)
(1) This Registration Statement also pertains to certain rights (the "Rights") attached to each share of Common Stock. Each Right entitles its registered holder to purchase one one-thousandth of a share of a junior participating series of Preferred Stock of the Registrant upon the occurrence of certain prescribed events. Until the occurrence of such events, the Rights are not exercisable, will be evidenced by the certificates for the Common Stock and will be transferred along with and only with the Common Stock. (2) Securities registered hereunder may be sold separately, together or as units with other securities, registered hereunder. This Registration Statement also covers such indeterminate amount of securities as may be issued upon conversion of the Convertible Preferred Stock or EqPINES registered hereunder or as dividends on the Convertible Preferred Stock. (3) No separate consideration will be received for any securities registered hereunder that are issued upon conversion of the Convertible Preferred Stock or EqPINES registered hereunder. (4) Estimated in accordance with Rule 457(o) solely for the purposes of computing the registration fee. (5) Includes shares of Common Stock which may be issued upon exercise of the Underwriters' over-allotment options. See "Underwriting." (6) Pursuant to Rule 457(o), the Amount to be Registered, Proposed Maximum Offering Price Per Share and Proposed Maximum Aggregate Offering Price have been omitted for each class of these securities. (7) Such indeterminate number of EqPINES issued pursuant to a Deposit Agreement. (8) Includes shares of EqPINES which may be issued upon exercise of the Underwriters' over-allotment options. See "Underwriting." (9) $319,447 of which has been previously paid. EXPLANATORY NOTE The Prospectus relating to the Common Stock being registered hereby to be used in connection with a United States offering (the "U.S. Prospectus") is set forth following this page. The Prospectus to be used in connection with a concurrent international offering of the Common Stock (the "International Prospectus") will consist of alternate pages set forth following the U.S. Prospectus and the balance of the pages included in the U.S. Prospectus for which no alternate is provided. The Prospectus to be used in connection with a concurrent offering of EqPINES, representing interests in the Company's Mandatorily Convertible Preferred Stock (the "EqPINES Prospectus") will consist of alternate pages set forth following the International Prospectus and the balance of the pages included in the U.S. Prospectus for which no alternate is provided. The U.S. Prospectus and the International Prospectus are identical except that they contain different front and back cover pages and the International Prospectus contains an additional section under the caption "Certain United States Federal Tax Considerations to Non-United States Holders." The U.S. Prospectus and the EqPINES Prospectus are identical except that they contain different front and back cover pages, a different "Legal Matters" section and to the extent, in each case, of references to the different securities or the related offering, different "Prospectus Summary -- The Offering" sections and different "Underwriting" sections. Alternate pages for the International Prospectus and the EqPINES Prospectus are separately designated. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. Subject to Completion, dated March 25, 1998 PROSPECTUS [LOGO] 13,000,000 SHARES PREMIER PARKS INC. COMMON STOCK ------------------ All of the shares of Common Stock offered hereby will be sold by Premier Parks Inc. (collectively with its predecessor, the "Company" or "Premier"). Of the 13,000,000 shares of Common Stock offered, 10,400,000 shares are being offered initially in the United States and Canada in a United States offering (the "U.S. Offering") by the U.S. Underwriters and 2,600,000 shares are being offered outside the United States and Canada in a concurrent offering (the "International Offering") by the International Managers (together with the U.S. Underwriters, the "Underwriters"). These offerings are collectively referred to herein as the "Offering" or the "Common Stock Offering." See "Underwriting." The Offering is being made in connection with the acquisition (the "Six Flags Acquisition") by the Company of all of the capital stock of Six Flags Entertainment Corporation ("SFEC"). The Company is concurrently offering $ million aggregate principal amount at maturity of its senior discount notes due 2008, with estimated gross proceeds of $250.0 million, $280.0 million aggregate principal amount of its senior notes due 2006, and 5,000,000 Premium Income Equity Securities (the "EqPINES(SM)") representing interests in the Company's mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with estimated gross proceeds of $228.2 million (assuming the underwriters' over-allotment option for 750,000 EqPINES is not exercised). SFEC is concurrently offering $170.0 million aggregate principal amount of senior notes due 2006 (collectively the "Concurrent Offerings" and, together with the Offering, the "Offerings"). The Offerings will finance, in whole or in part, the Six Flags Acquisition. The Company may also issue depositary shares (the "Seller Depositary Shares") representing interests in up to $200.0 million of the Company's convertible redeemable preferred stock to the current stockholders of SFEC as part of the consideration for the Six Flags Acquisition. The Company may reduce (but not below $100 million) or may eliminate the Seller Depositary Shares by increasing the cash portion of the consideration for the Six Flags Acquisition and may, if issued, redeem the Seller Depositary Shares for cash within 90 days of the closing at the higher of the issuance price and market value. If the Seller Depositary Shares are not issued, the additional cash portion of the consideration for the Six Flags Acquisition will be funded from the net proceeds of the Common Stock Offering. The closing of the Offering is conditioned upon the closing of the Concurrent Offerings and the Six Flags Acquisition. The Common Stock is listed on the New York Stock Exchange (the "NYSE") under the symbol "PKS." On March 23, 1998, the last sales price of the Common Stock, as reported by the NYSE, was $57 3/16 per share. The Company has applied to list the EqPINES on the NYSE. The Mandatorily Convertible Preferred Stock will not be so listed and the Company does not expect that there will be any trading market for the Mandatorily Convertible Preferred Stock except as represented by the EqPINES. ------------------------ SEE "RISK FACTORS" BEGINNING ON PAGE 19 HEREIN FOR CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS(1) COMPANY(2) Per Share..................................... $ $ $ Total(3)...................................... $ $ $
(1) The Company and its operating subsidiaries have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting expenses payable by the Company estimated at $ . (3) The Company has granted options to the Underwriters to purchase up to 1,950,000 additional shares of Common Stock on the same terms and conditions as set forth herein solely to cover over-allotments, if any. If such options were exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company would be $ , $ and $ , respectively. See "Underwriting." ------------------------ The shares of Common Stock offered by this Prospectus are offered by the U.S. Underwriters subject to prior sale, to withdrawal, cancellation or modification of the offer without notice, to delivery to and acceptance by the U.S. Underwriters and to certain further conditions. It is expected that delivery of the shares of Common Stock will be made at the offices of Lehman Brothers Inc., New York, New York, on or about , 1998. ------------------------ LEHMAN BROTHERS SALOMON SMITH BARNEY FURMAN SELZ NATIONSBANC MONTGOMERY SECURITIES LLC , 1998 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Proxy statements, periodic reports and other information filed by the Company can be inspected and copied at the public reference facilities of the Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and the regional offices of the Commission at Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such material can be obtained from the public reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. In addition, the Commission maintains a Website (http://www.sec.gov) that also contains such reports, proxy statements and other information filed by the Company. The Common Stock of the Company is listed on the NYSE. In addition, application will be made to list the EqPINES and the Common Stock issuable on conversion of the Mandatorily Convertible Preferred Stock on the NYSE. Such reports, proxy statements and other information concerning the Company can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act") with respect to the securities offered hereby. For purposes hereof, the term "Registration Statement" means the original Registration Statement and any and all amendments thereto. In accordance with the rules and regulations of the Commission, this Prospectus does not contain all of the information set forth in the Registration Statement and the schedules and exhibits thereto. Each statement made in this Prospectus concerning a document filed as an exhibit to the Registration Statement is qualified in its entirety by reference to such exhibit for a complete statement of its provisions. For further information pertaining to the Company and the securities offered hereby, reference is made to such Registration Statement, including the exhibits and schedules thereto, which may be inspected or obtained as provided in the foregoing paragraph. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Company with the Commission are incorporated by reference into this Prospectus and made a part hereof as of their respective dates: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1997. 2. The audited financial statements of Kentucky Kingdom Inc. as of November 2, 1997, and for the year then ended included in the Company's Current Report on Form 8-K, dated November 7, 1997, as amended. 3. The Company's Current Report on Form 8-K, dated December 15, 1997, as amended. 4. The Company's Current Report on Form 8-K, dated February 9, 1998. 5. The description of the shares of Common Stock contained in the Company's Registration Statement on Form 8-A dated December 11, 1997 and filed under the Exchange Act, including any amendment or report filed for the purpose of updating such description. 6. The description of the rights relating to the shares of Common Stock contained in the Company's Registration Statement on Form 8-A dated January 12, 1998, as amended, and filed under the Exchange Act, including any amendment or report filed for the purpose of updating such description. 7. The information contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Registration Statement on Form S-3 (File No. 333-46897). All documents filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the Offering shall also be deemed to be incorporated by reference into this Prospectus. 2 Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide, without charge, to each person to whom this Prospectus is delivered, on the written or oral request of any such person, a copy of any or all of the documents incorporated herein by reference (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents). Requests should be directed to: Premier Parks Inc., 11501 Northeast Expressway, Oklahoma City, Oklahoma 73131, Attention: Richard A. Kipf, Corporate Secretary (telephone number: (405) 475-2500, Ext. 219). CERTAIN PERSONS PARTICIPATING IN THESE OFFERINGS MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE EqPINES OR THE COMMON STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF EqPINES OR COMMON STOCK FOLLOWING THE PRICING OF THE OFFERINGS TO COVER A SYNDICATE SHORT POSITION IN THE EqPINES OR COMMON STOCK OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE EqPINES OR THE COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES RELATING TO THE OFFERING, SEE "UNDERWRITING." LOONEY TUNES, BUGS BUNNY, DAFFY DUCK, TWEETY BIRD and YOSEMITE SAM are copyrights and trademarks of Warner Bros., a division of Time Warner Entertainment Company, L.P. ("TWE"). BATMAN, BATMOBILE, GOTHAM CITY AND SUPERMAN are copyrights and trademarks of DC Comics, a partnership between TWE and a subsidiary of Time Warner Inc. SPORTS ILLUSTRATED is a trademark of Time Inc., a subsidiary of Time Warner Inc. HBO is a trademark of TWE. SIX FLAGS GREAT ADVENTURE, SIX FLAGS GREAT AMERICA and SIX FLAGS are federally registered trademarks of Six Flags Theme Parks Inc. FIESTA TEXAS and all related indicia are trademarks of Fiesta Texas Theme Park, Ltd. POPEYE and all related indicia are copyrights and trademarks of King Features Syndicate, Inc., a unit of The Hearst Corporation. This Prospectus includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this Prospectus, including, without limitation, the statements under "Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and located elsewhere herein regarding industry prospects and the Company's financial position are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in this Prospectus, both together with such forward-looking statements and under "Risk Factors." 3 (This page has been left blank intentionally.) 4 PROSPECTUS SUMMARY PRIOR TO THE DATE OF THIS PROSPECTUS, THE EXISTING COMPANY CALLED "PREMIER PARKS INC." WILL BECOME A WHOLLY-OWNED SUBSIDIARY OF THE REGISTRANT AND THE OUTSTANDING SHARES OF CAPITAL STOCK OF THE EXISTING PREMIER PARKS INC. WILL BECOME, ON A SHARE-FOR-SHARE BASIS, SHARES OF CAPITAL STOCK OF THE REGISTRANT WHICH WILL THEN BE RENAMED "PREMIER PARKS INC." (THE "PREMIER MERGER"). AS USED HEREIN, THE TERMS THE "COMPANY" AND "PREMIER" MEAN FOR ANY PERIOD PRIOR TO THE PREMIER MERGER, THE EXISTING PREMIER PARKS INC. AND ITS CONSOLIDATED SUBSIDIARIES AND FOR ANY PERIOD SUBSEQUENT THERETO, THE REGISTRANT AND ITS CONSOLIDATED SUBSIDIARIES. THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY AND SHOULD BE READ IN CONJUNCTION WITH THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED OR THE CONTEXT OTHERWISE REQUIRES, ALL INFORMATION IN THIS PROSPECTUS HAS BEEN ADJUSTED TO GIVE EFFECT TO THE PREMIER MERGER AND THE ACQUISITIONS (AS DEFINED HEREIN) AND ASSUMES THAT THE UNDERWRITERS' OVERALLOTMENT OPTIONS ARE NOT EXERCISED. AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT REQUIRES OTHERWISE, THE TERMS (I) THE "1996 ACQUISITIONS" REFERS TO THE ACQUISITIONS OF ELITCH GARDENS, THE GREAT ESCAPE, WATERWORLD SACRAMENTO AND WATERWORLD CONCORD (TOGETHER, THE "WATERWORLD PARKS") AND RIVERSIDE PARK, (II) THE "1997 ACQUISITIONS" REFERS TO THE ACQUISITION OF KENTUCKY KINGDOM--THE THRILL PARK IN LOUISVILLE, KENTUCKY ("KENTUCKY KINGDOM"), THE PROPOSED ACQUISITION OF ALL OF THE OUTSTANDING CAPITAL STOCK OF WALIBI S.A. ("WALIBI") ASSUMING SUCCESSFUL COMPLETION OF THE WALIBI TENDER OFFER (AS DEFINED HEREIN), AS WELL AS THE COMPANY'S MANAGEMENT CONTRACT, LEASE AND PURCHASE OPTION WITH RESPECT TO MARINE WORLD AFRICA USA IN VALLEJO, CALIFORNIA ("MARINE WORLD"), (III) THE "SIX FLAGS ACQUISITION" REFERS TO THE ACQUISITION, BY MERGER, OF ALL OF THE CAPITAL STOCK OF SIX FLAGS ENTERTAINMENT CORPORATION ("SFEC" AND, TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES, "SIX FLAGS") WHICH WILL OCCUR CONTEMPORANEOUSLY WITH THE CLOSING OF THE OFFERING, (IV) THE "ACQUISITIONS" REFERS TO THE 1996 ACQUISITIONS, THE 1997 ACQUISITIONS AND THE SIX FLAGS ACQUISITION AND (V) THE "SIX FLAGS PARKS" REFERS TO THE PARKS OPERATED BY SIX FLAGS ON THE DATE OF THE SIX FLAGS ACQUISITION, AND THE "PREMIER PARKS" REFERS TO ALL OF THE PARKS OPERATED BY THE COMPANY (INCLUDING PARKS ACQUIRED AND TO BE ACQUIRED IN THE 1997 ACQUISITIONS, BUT EXCLUDING THE SIX FLAGS PARKS). ALL PRO FORMA FINANCIAL INFORMATION PRESENTED HEREIN GIVES PRO FORMA EFFECT TO EACH OF THE ACQUISITIONS (OTHER THAN MARINE WORLD). ALL PARK ATTENDANCE INFORMATION AND RANKINGS BASED ON SUCH DATA INCLUDED IN THIS PROSPECTUS (OTHER THAN ATTENDANCE DATA FOR THE PREMIER PARKS AND THE SIX FLAGS PARKS) ARE BASED ON INFORMATION PUBLISHED BY AMUSEMENT BUSINESS, A RECOGNIZED INDUSTRY PUBLICATION, WHICH, ACCORDING TO SUCH PUBLICATION, INCLUDES ESTIMATES BASED ON SOURCES IT BELIEVES TO BE RELIABLE. RANKINGS OF METROPOLITAN AND DESIGNATED MARKET AREAS ("DMA") ARE BASED ON A COPYRIGHTED 1996-97 SURVEY OF TELEVISION HOUSEHOLDS PUBLISHED BY A.C. NIELSEN MEDIA RESEARCH. ALL INFORMATION IN THIS PROSPECTUS RELATING TO THE ASSUMED PROCEEDS OF THE OFFERINGS AND RELATED SIX FLAGS FINANCINGS, THE AMOUNTS AND NUMBERS OF SECURITIES TO BE SOLD THEREIN AND THE INTEREST AND DIVIDEND RATES ON THOSE SECURITIES IS BASED ON THE ASSUMPTIONS DESCRIBED IN "UNAUDITED PRO FORMA FINANCIAL STATEMENTS" CONTAINED ELSEWHERE HEREIN. THE COMPANY The Company is the largest regional theme park operator, and the second largest theme park company, in the world, based on 1997 attendance of approximately 37 million at its parks. It operates 31 regional parks, including 15 of the 50 largest theme parks in North America based on 1997 attendance. The Company's theme parks serve nine of the ten largest metropolitan areas in the country. The Company estimates that approximately two-thirds of the population of the continental U.S. live within a 150-mile radius of the Company's theme parks. On a pro forma basis, the Company's total revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA") for the year ended December 31, 1997 was approximately $815.3 million and $263.5 million, respectively. See "Unaudited Pro Forma Financial Statements." A substantial portion of the proceeds of the Offerings will be used to fund the Six Flags Acquisition. See "--The Six Flags Transactions." Six Flags operates eight regional theme parks, as well as three 5 separately gated water parks and a wildlife safari park (each of which is located near one of the theme parks). None of the Six Flags Parks is located within the primary market of any of the Premier Parks. During 1997, the Six Flags Parks drew, in the aggregate, approximately 68% of their patrons from within a 100-mile radius. During that year, Six Flags' attendance, revenue and EBITDA totaled approximately 22.2 million, $708.7 million and $164.1 million, respectively. Six Flags has operated regional theme parks under the Six Flags name for over thirty years. As a result, Six Flags has established a nationally-recognized brand name. Premier will obtain worldwide ownership of the Six Flags brand name and expects to use the Six Flags brand name, generally beginning in the 1999 season, at most of the Premier Parks. In addition, as part of the Six Flags Acquisition, the Company will obtain from Warner Bros. and DC Comics the exclusive right for theme-park usage of certain Warner Bros. and DC Comics characters throughout the United States (except the Las Vegas metropolitan area) and Canada. These characters include BUGS BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN, SUPERMAN and others. Since 1991, Six Flags has used these characters to market its parks and to provide an enhanced family entertainment experience. The long-term license will include the right to sell merchandise featuring the characters at the parks and will apply to all of the Company's current theme parks, as well as future parks that meet certain criteria. Premier intends to make extensive use of these characters at the Six Flags Parks and, commencing in 1999, at most of the existing Premier Parks. The Company believes that use of the Warner Bros. and DC Comics characters promotes attendance, supports higher ticket prices, increases lengths-of-stay and enhances in-park spending. See "Business--Licenses." The Premier Parks consist of nine regional theme parks (six of which include a water park component) and four water parks located across the United States, as well as six regional theme parks and two smaller attractions located in Europe and scheduled to be acquired in March 1998 in the acquisition of Walibi. During the 1997 operating season, the 11 parks then owned by Premier drew, on average, approximately 82% of their patrons from within a 100-mile radius, with approximately 35.7% of visitors utilizing group and other pre-sold tickets and approximately 20.6% utilizing season passes. Under current management, since 1989 Premier has assumed control of 30 parks, and has achieved significant internal growth. The 11 parks owned by the Company for the 1997 operating season achieved same park growth during 1997 in attendance, revenue and park-level operating cash flow (representing all park operating revenues and expenses without depreciation and amortization or allocation of corporate overhead or interest expense) of 17.3%, 21.3% and 59.5%, respectively, as compared to 1996. See "--Summary Historical and Pro Forma Data." The Company's parks are individually themed and provide a complete family-oriented entertainment experience. The Company's theme parks generally offer a broad selection of state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and merchandise outlets. In the aggregate, the Company's theme parks offer more than 800 rides, including over 90 roller coasters, making the Company the leading provider of "thrill rides" in the industry. The Company believes that its parks benefit from limited direct competition. The combination of limited supply of real estate appropriate for theme park development, high initial capital investment, long development lead-time and zoning restrictions provides each of the parks with a significant degree of protection from competitive new theme park openings. Based on its knowledge of the development of other theme parks in the United States, the Company's management estimates that it would cost at least $200 million and would take a minimum of two years to construct a new regional theme park comparable to the Company's largest parks. The Company's senior and operating management team has extensive experience in the theme park industry. Premier's six senior executive officers have over 150 years aggregate experience in the industry and its ten general managers (prior to the Six Flags Acquisition) have an aggregate of approximately 210 6 years experience in the industry, including approximately 85 years at the Premier Parks. A number of Premier's executives and operating personnel have experience at Six Flags. According to AMUSEMENT BUSINESS, total North American amusement/theme park attendance in 1997 was approximately 270 million. Total attendance for the 50 largest parks in North America was 167.2 million in 1997, compared to 145.0 million in 1994, representing a compound annual growth rate of 4.9%. The Company believes that this growth reflects two trends: (i) demographic growth in the 5-24 year old age group, which is expected to continue through 2010 and (ii) an increasing emphasis on family-oriented leisure and recreation activities. The Company's strategy for achieving growth includes the following key elements: (i) pursuing growth opportunities at existing parks; (ii) expanding the Company's parks; and (iii) making selective acquisitions. PURSUING GROWTH OPPORTUNITIES AT EXISTING PARKS The Company believes there are substantial opportunities for continued internal growth at its parks. The Company seeks to increase revenue by increasing attendance and per capita spending, while also maintaining strict control of operating expenses. The primary elements used to achieve this objective are: (i) adding rides and attractions and improving overall park quality; (ii) enhancing marketing and sponsorship programs; (iii) increasing group sales, season passes and other pre-sold tickets; (iv) implementing ticket pricing strategies to maximize ticket revenues and park utilization; (v) adding and enhancing restaurants and merchandise and other revenue outlets; and (vi) adding special events. This approach is designed to exploit the operating leverage inherent in the theme park business. Once parks achieve certain critical attendance levels, operating cash flow margins increase because revenue growth through incremental attendance gains and increased in-park spending is not offset by a comparable increase in operating expenses, because a large portion of such expenses is relatively fixed during any given year. THE PREMIER PARKS Management believes it has demonstrated the effectiveness of its strategy at the Premier Parks owned prior to the 1997 Acquisitions. For example, during the year ended December 31, 1997, the three parks acquired in the Company's 1995 acquisition of Funtime Parks, Inc. (the "Funtime Acquisition") achieved compound annual growth in attendance, revenue and park-level operating cash flow of 10.2%, 14.9% and 27.2%, respectively, compared to 1995. Similarly, during the year ended December 31, 1997, the five parks acquired in the 1996 Acquisitions realized growth in attendance, revenue and park-level operating cash flow of 33.8%, 37.9% and 228.9%, respectively, compared to 1996. In particular, two of the parks acquired in the 1996 Acquisitions, Elitch Gardens in Denver and Riverside Park in Springfield, Massachusetts, realized dramatic growth during their first year under the Company's ownership. As a result of capital investment and improved marketing, during the year ended December 31, 1997, attendance and revenue at Elitch Gardens grew 62.1% and 53.3%, respectively, and park-level operating cash flow increased from $(1.8) million to $8.6 million, as compared to 1996. Similarly, during the year ended December 31, 1997, attendance and revenue at Riverside Park increased 57.7% and 56.7%, respectively, and park-level operating cash flow increased from $1.5 million to $8.2 million, as compared to 1996. Management believes that each of the parks acquired by Premier in the 1997 Acquisitions offer similar opportunities to implement the Company's growth strategy. For example, at Marine World, a well-known wildlife park located in the San Francisco market, management is expanding the park's entertainment component with theme park rides and attractions, investing approximately $35-$40 million for the 1998 season to add fourteen new rides in the first phase of this expansion. The Walibi acquisition provides the Company with a significant presence in the expanding theme park industry in Europe and management believes that the Company's strategy of targeted capital investment and sophisticated marketing can improve performance at these parks. The Company has agreed to invest approximately $38 million in the 7 Walibi Parks (as defined herein) over the three years commencing with the 1999 season. See "-- Other Recent Developments" and "Business--Pursuing Growth Opportunities at Existing Parks." The Company believes that, by virtue of the Six Flags Acquisition, a number of the existing Premier Parks have the potential over the next several seasons to accelerate their rate of growth. Recent attendance levels at the Six Flags theme parks (between 1.7 millon and 3.6 million in 1997) have been substantially higher than the annual attendance at the largest Premier Parks (between 1.0 million and 1.5 million during that year). Management believes that a number of the existing Premier Parks, particularly Adventure World, Geauga Lake, Kentucky Kingdom, Marine World and Riverside Park, all of which are located in or near major metropolitan areas, can significantly accelerate their market penetration and the expansion of their geographic market through the use of the Six Flags brand name, aggressive marketing campaigns featuring the animated characters licensed from Warner Bros. and DC Comics, as well as targeted capital investment in new rides and attractions. Management also believes that this expanded penetration, as well as the incorporation of the animated characters in the parks and in merchandise sales, can result in increased per capita spending at the existing Premier Parks. The Company expects to commence general use of the Six Flags brand name and the licensed characters at the Premier Parks for the 1999 season. THE SIX FLAGS PARKS The Six Flags Parks generally enjoy significant market penetration. Thus, although the Company plans to make targeted capital expenditures at these parks to increase attendance and per capita spending levels, it expects to increase significantly the EBITDA of these parks primarily through increased operating efficiencies. First, and most importantly, the Company believes that it can substantially reduce Six Flags' corporate overhead and other corporate-level expenses. Second, the Company expects to achieve significant improvement in park-level operating margins. Third, by virtue of economies of scale, the Company believes that operating efficiencies in areas such as marketing, insurance, promotion, purchasing and other expenses can be realized. Finally, the Company believes that its increased size following the Six Flags Acquisition will enable it to achieve savings in capital expenditures. EXPANDING THE COMPANY'S PARKS The Company is expanding several of the Premier Parks in order to increase attendance and per capita spending. For example, the Company is constructing an economy motel at its Darien Lake park for the 1998 season to supplement the existing campgrounds. In addition, the Company recently purchased campgrounds adjacent to Geauga Lake and expects to add, prior to the 1999 season, a more complete complement of "dry" rides to Wyandot Lake, which is currently primarily a water park. In addition, the Company owns 400 acres adjacent to Adventure World which are zoned for entertainment, recreational and residential uses and are available for complementary uses. Additional acreage owned by the Company and suitable for development exists at several of the other Premier Parks. The Company may expand in the future certain of the Six Flags Parks by adding complementary attractions, such as campgrounds, lodging facilities, new water parks and concert venues. For example, Six Flags owns over 1,500 undeveloped acres adjacent to Six Flags Great Adventure (located between New York City and Philadelphia) suitable for such purposes. Additional acreage suitable for development exists at several other Six Flags Parks. See "Business--Environmental and Other Regulation." MAKING SELECTIVE ACQUISITIONS The U.S. regional theme park industry is highly fragmented with over 150 parks owned by over 100 operators. Management believes that, in addition to the Acquisitions, there are numerous acquisition opportunities, both in the U.S. and abroad, that can expand its business. While the Company will continue to pursue acquisitions of regional parks with attendance between 300,000 and 1.5 million annually, the Company will also consider acquisitions of larger parks or park chains (such as Six Flags). 8 The Company believes it has a number of competitive advantages in acquiring theme parks. Operators of destination or large regional park chains, other than Cedar Fair L.P., have not generally been actively seeking to acquire parks in recent years. Additionally, as a multi-park operator with a track record of successfully acquiring, improving and repositioning parks, the Company has numerous competitive advantages over single-park operators in pursuing acquisitions and improving the operating results at acquired parks. These advantages include the ability to (i) exercise group purchasing power (for both operating and capital assets); (ii) achieve administrative economies of scale; (iii) attract greater sponsorship revenue, support from sponsors with nationally-recognized brands and marketing partners; (iv) use the Six Flags brand name and the characters licensed from Warner Bros. and DC Comics; (v) recruit and retain superior management; (vi) optimize the use of capital assets by rotating rides among its parks to provide fresh attractions; (vii) access capital markets; and (viii) use its NYSE-listed Common Stock as a portion of the acquisition consideration. See "Risk Factors--Uncertainty of Future Acquisitions; Potential Effects of Acquisitions" and "Business--Acquisition Strategy." The Company's principal executive offices are located at 11501 Northeast Expressway, Oklahoma City, Oklahoma 73131, (405) 475-2500 and at 122 East 42nd Street, New York, New York 10168, (212) 599-4690. THE SIX FLAGS TRANSACTIONS The Offering is one of a series of related transactions (the "Six Flags Transactions") which will be consummated immediately prior to or concurrently with the Offering. The elements of the Six Flags Transactions are: THE PREMIER MERGER The company presently named Premier Parks Inc. (together with its consolidated subsidiaries, "Premier Operations") will merge in the Premier Merger with a wholly-owned subsidiary of Premier Parks Holdings Corporation in accordance with Section 251(g) of the Delaware General Corporation Law. As a result of the Premier Merger, holders of shares of Common Stock of Premier Operations will become, on a share-for-share basis, holders of Common Stock of Premier Parks Holdings Corporation, and Premier Operations will become a wholly-owned subsidiary of Premier Parks Holdings Corporation. On the effective date of the Premier Merger, Premier Operations will change its name to Premier Parks Operations Inc., and Premier Parks Holdings Corporation will change its name to Premier Parks Inc. THE SIX FLAGS ACQUISITION Pursuant to an Agreement and Plan of Merger dated as of February 9, 1998 (the "Six Flags Agreement"), Premier will acquire by merger all of the capital stock of SFEC from its current stockholders (the "Sellers") for $965 million (plus an approximate $11 million adjustment based on year-end balance sheet adjustments and option cancellation costs). The purchase price is payable all in cash or, at the Company's option, in cash and Seller Depositary Shares representing interests in up to $200.0 million of the Company's Convertible Redeemable Preferred Stock (the "Seller Preferred Stock"). The Company may reduce (but not below $100.0 million) or eliminate the Seller Depositary Shares by increasing the cash portion of the purchase price. If the Seller Depositary Shares are not issued, the additional cash portion of the purchase price will be funded from the net proceeds of the Common Stock Offering. At the date of acquisition, Six Flags' liabilities will include approximately $192.3 million principal amount at maturity ($161.1 million accreted value at December 28, 1997) of SFEC's Zero Coupon Senior Notes due 1999 (the "SFEC Zero Coupon Senior Notes") and approximately $285.0 million principal amount at maturity ($269.9 million accreted value at December 28, 1997) of 12 1/4% Senior Subordinated Discount Notes due 2005 (the "SFTP Senior Subordinated Notes") of Six Flags Theme Parks Inc. (together with its subsidiaries, "SFTP"), an indirect wholly-owned subsidiary of SFEC. See "Description of Indebtedness." In addition, the Company will refinance all outstanding Six Flags bank indebtedness (approximately $348.5 9 million at December 28, 1997) and certain other indebtedness of SFEC (approximately $30.5 million at December 28, 1997). See "Description of Six Flags Agreement." THE FINANCINGS In the Offerings: 1. The Company will issue (the "Common Stock Offering") 13,000,000 shares of Common Stock with estimated gross proceeds of $593.2 million (based upon the average closing price of the Company's Common Stock for the twenty trading days ended February 27, 1998). 2. The Company will issue (the "EqPINES Offering") 5,000,000 EqPINES representing interests in the Company's % Mandatorily Convertible Preferred Stock (the "Mandatorily Convertible Preferred Stock" and, together with the Seller Preferred Stock, the "Convertible Preferred Stock"), with estimated gross proceeds of $228.2 million (based upon the average closing price of the Company's Common Stock for the twenty trading days ended February 27, 1998). See "Description of EqPINES." 3. The Company will issue (the "Discount Notes Offering") $ million aggregate principal amount at maturity of its % Senior Discount Notes due 2008 (the "Company Senior Discount Notes") with estimated gross proceeds of $250.0 million. See "Description of Indebtedness--Company Senior Discount Notes." 4. The Company will issue (the "Senior Notes Offering") $280.0 million principal amount of its % Senior Notes due 2006 (the "Company Senior Notes" and, together with the Company Senior Discount Notes, the "Company Notes"). See "Description of Indebtedness--Company Senior Notes." 5. SFEC will issue (the "SFEC Notes Offering") $170.0 million principal amount of its % Senior Notes due 2006 (the "New SFEC Notes") guaranteed on a fully subordinated basis by the Company. The proceeds of the New SFEC Notes, together with additional funds, will be deposited in escrow to repay in full at or prior to maturity the SFEC Zero Coupon Senior Notes. See "Description of Indebtedness--New SFEC Notes." In addition, the Company is using approximately $225.0 million of borrowings under the Premier Credit Facility (as defined below) to pay the cash portion of the Walibi purchase price and refinance certain Walibi net indebtedness (which together are estimated to be $122.5 million) and to prefund capital expenditures and provide working capital (which together are estimated to be approximately $102.5 million). The Company will also borrow approximately $420.0 million under a new $472.0 million Six Flags senior secured credit facility (the "Six Flags Credit Facility" and, together with the Premier Credit Facility, the "Credit Facilities") primarily to repay bank indebtedness of SFTP. See "Description of Indebtedness-- Premier Credit Facility" and "--Six Flags Credit Facility." The closing of the Offering is conditioned upon the closing of all other elements of the Six Flags Transactions. Although the size of one or more of the Offerings may be changed, the aggregate gross proceeds of all the Offerings is not expected to change materially. 10 The following table sets forth a summary of the expected sources and uses of funds associated with the Six Flags Transactions:
AMOUNT (IN SOURCES THOUSANDS) ----------- Common Stock Offering(1)(2).................................................... $ 593,190 EqPINES Offering(1)............................................................ 228,150 Issuance of Seller Depositary Shares(2)........................................ 200,000 Company Senior Discount Notes Offering(1)...................................... 250,000 Company Senior Notes Offering(1)............................................... 280,000 SFEC Notes Offering(1)......................................................... 170,000 Borrowings under the Premier Credit Facility(3)................................ 102,500 Borrowings under the Six Flags Credit Facility................................. 420,000 ----------- Total...................................................................... $2,243,840 ----------- ----------- USES Acquisition of SFEC capital stock.............................................. $ 965,000 Adjustment to purchase price of SFEC capital stock............................. 11,000 Deposit for repayment of SFEC Zero Coupon Senior Notes......................... 175,030 Repayment of Six Flags indebtedness............................................ 382,430 Interest escrow for Company Senior Notes(4).................................... 76,260 Restricted Cash Account(5)..................................................... 75,000 Financing of tender offer for partnership interests in Six Flags Over Texas(6)..................................................................... 117,250 Prefunding of capital expenditures and working capital(7)...................... 350,450 Transaction offering fees, expenses, discounts and escrows..................... 91,420 ----------- Total...................................................................... $2,243,840 ----------- -----------
- ------------------------ (1) Reflects assumed gross proceeds. (2) If the Company determines not to issue the Seller Depositary Shares, the additional cash necessary to pay that portion of the purchase price for the Six Flags Acquisition will be funded from net proceeds of the Common Stock Offering. (3) Does not include an estimated $122.5 million (assuming a 100% Walibi Tender Offer (as defined herein)) of borrowings to be used to fund the Walibi acquisition. (4) Represents escrow to prefund the first six semi-annual interest payments thereon. (5) Represents restricted cash to satisfy obligations under the arrangements relating to the Co-Venture Parks (as defined herein) and to fund dividends on the Convertible Preferred Stock, as required under the indentures that will govern the Company Notes. See "Description of Securities--Preferred Stock--Seller Preferred Stock" and "Description of EqPINES--Dividends." (6) Reflects tender of approximately 33% of the units representing limited partnership interests. See "Business--Description of Parks--Six Flags Over Texas and Six Flags Hurricane Harbor." (7) See "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Liquidity, Capital Commitments and Resources." 11 Following the Six Flags Transactions, the Company's structure will be: Chart demonstrating Parent-Subsidiary relationships and the respective debt/credit obligations of each such entity following the Offerings. 12 OTHER RECENT DEVELOPMENTS KENTUCKY KINGDOM. In November 1997, the Company acquired all of the membership interests of the limited liability company that owns substantially all of the assets used in the operation of Kentucky Kingdom, a combination theme and water park located in Louisville, Kentucky, for an aggregate purchase price of $64.0 million, of which approximately $4.8 million was paid by delivery of 121,671 shares of Common Stock, with the balance paid in cash and by the assumption of liabilities. Depending upon the level of revenues at Kentucky Kingdom during each of the 1998-2000 seasons, the Company may be required to issue additional shares of Common Stock to the seller. MARINE WORLD. In April 1997, the Company became manager of Marine World, a marine and exotic wildlife park located in Vallejo, California, pursuant to a contract with an agency of the City of Vallejo under which the Company is entitled to receive an annual base management fee of $250,000 and up to $250,000 annually in additional fees based on park performance. In November 1997, the Company exercised an option to lease approximately 40 acres of land within the site for nominal rent and an initial term of 55 years (plus four ten-year and one four-year renewal options). The Company intends to expand the park's entertainment component by adding theme park rides and attractions on the leased land, which is located within the existing park, in order to create one fully-integrated regional theme park at the site. Premier is entitled to receive, in addition to the management fee, 80% of the cash flow generated by the combined operations at the park, after combined operating expenses and debt service on outstanding debt obligations relating to the park. The Company is currently implementing the first phase of the expansion of the entertainment component at Marine World. The Company also has an option to purchase the entire site commencing in February 2002 at a purchase price equal to the greater of the then principal amount of certain debt obligations of the seller (expected to aggregate $52.0 million at February 2002) or the then fair market value of the seller's interest in the park (based on a formula relating to the seller's 20% share of Marine World's cash flow). The Company currently expects to exercise this purchase option when it becomes exercisable. WALIBI. In December 1997, the Company entered into an agreement (the "Walibi Agreement") with three of the principal stockholders of Walibi, S.A. ("Walibi"), pursuant to which the Company expects to purchase in March 1998 approximately 50% of the outstanding capital stock of Walibi (the "Private Acquisition"). Following the closing of the Private Acquisition, the Company will commence a "public takeover bid," as defined and regulated under Belgian law (the "Walibi Tender Offer"), for the remainder of the outstanding capital stock of Walibi. Walibi is a corporation (SOCIETE ANONYME) organized under the laws of Belgium. Walibi's stock is currently traded on the Official Market of the Brussels Stock Exchange. It owns six theme parks (the "Walibi Parks"), two located in Belgium, one in The Netherlands and three in France, as well as two smaller attractions in Belgium. Walibi's operations had combined 1997 attendance of approximately 3.5 million. The transaction values Walibi at approximately $139.5 million (at the exchange rate of Belgian Francs ("BEF") 37.065 to US$1 on December 31, 1997), based on a multiple of seven times Walibi's 1997 EBITDA. This amount includes the assumption or refinancing of Walibi net indebtedness (total debt less cash and cash equivalents) which aggregated approximately $53.0 million at December 31, 1997. As a result, the aggregate consideration to be paid by the Company for the outstanding stock of Walibi (assuming the Company acquires 100% of the outstanding Walibi capital stock pursuant to the Walibi Tender Offer) will be $86.5 million (based on the year-end exchange rate). The purchase price in the Private Acquisition will be paid 80% in cash in BEF and 20% in Common Stock (approximately 229,000 shares). Shares of Common Stock issued in the Private Acquisition will not be registered under the Securities Act and will be subject to a "lock-up" agreement until the later of June 6, 1998 or 41 days after the consummation of the Private Acquisition. The Company has agreed to grant certain registration rights 13 under the Securities Act to the sellers in the Walibi acquisition with respect to shares issued in the Private Acquisition. The consideration offered in the Walibi Tender Offer will be payable at the election of the holders of Walibi capital stock (i) in cash only or (ii) in cash and shares of Common Stock in the same ratio as the Private Acquisition. The Company will fund the cash portion of the purchase price of the Walibi acquisition (as well as the refinancing of certain indebtedness of Walibi) from borrowings under a $300.0 million senior secured credit facility (the "Premier Credit Facility") entered into by Premier Operations in March 1998. See "Description of Indebtedness--Premier Credit Facility." In addition, the Company will be obligated to issue additional shares of Premier Common Stock in the event certain gross revenue targets are met for the Walibi Parks. Under the terms of the Walibi Agreement, the Company has agreed to invest at least BEF 1.4 billion (approximately $38 million based on the year-end exchange rate) in the Walibi Parks over the three years commencing with the 1999 season. 14 THE OFFERING Common Stock offered(1): U.S. Offering................... 10,400,000 shares International Offering.......... 2,600,000 shares Total......................... 13,000,000 shares Common Stock outstanding: prior to the Offering(2)........ 18,873,111 shares after the Offering(3)........... 32,331,111 shares The Offerings..................... The Company is concurrently offering (i) 13,000,000 shares of Common Stock, (ii) 5,000,000 EqPINES representing interests in Mandatorily Convertible Preferred Stock with estimated gross proceeds of $228.2 million, (iii) $ million aggregate principal amount at maturity of Company Senior Discount Notes, with estimated gross proceeds of $250.0 million, and (iv) $280.0 million principal amount of Company Senior Notes. In addition, SFEC is offering $170.0 million of New SFEC Notes. The Company also may issue Seller Depositary Shares representing interests in up to $200.0 million of Seller Preferred Stock as part of the consideration for the Six Flags Acquisition. See "--The Six Flags Transactions," "Description of Indebtedness--Company Senior Discount Notes," "--Company Senior Notes," "--New SFEC Notes," "Description of Securities--Preferred Stock--Seller Preferred Stock" and "Description of EqPINES." The Offerings are conditioned upon the closing of all other elements of the Six Flags Transactions. Use of Proceeds................... The Company intends to apply the net proceeds from the Offerings to fund the cash portion of the purchase price for the Six Flags Acquisition; to provide for the repayment in full of the SFEC Zero Coupon Senior Notes and for certain interest payments on the the Company Senior Notes; to fund improvements and expansion of the Company's parks, including the parks acquired in the Six Flags Acquisition and the 1997 Acquisitions; to acquire and make improvements at additional theme parks; and for general corporate purposes, including working capital requirements. See "Use of Proceeds." NYSE symbols: Common Stock.................... "PKS" EqPINES......................... "PKSPrA"
- ------------------------ (1) Excludes 1,950,000 shares of Common Stock issuable upon exercise of the Underwriters' over-allotment options. (2) Includes an aggregate of 375,000 unvested restricted shares issued to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, which vest proportionately on January 1 of the five years commencing 1999. Excludes (i) an aggregate of 45,039 shares of Common Stock issuable upon exercise of warrants; (ii) an aggregate of 1,270,000 shares of Common Stock reserved for issuance under the Company's Stock Incentive Plans, of which options for 764,700 shares have been granted and options for 455,800 shares are presently exercisable; and (iii) an aggregate of 450,000 additional restricted shares issuable at the option of the Company to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, under employment agreements with such officers. (3) Assumes the issuance of 229,000 shares in the Private Acquisition and 229,000 shares in the Walibi Tender Offer. Excludes (i) any shares issuable to the sellers in the Kentucky Kingdom and Walibi acquisitions depending upon the future revenues of the acquired parks; (ii) shares issuable upon conversion of the Convertible Preferred Stock or as dividends on the Mandatorily Convertible Preferred Stock; and (iii) 1,950,000 shares of Common Stock issuable upon exercise of the Underwriters' over-allotment options. 15 SUMMARY HISTORICAL AND PRO FORMA DATA The tables below contain certain summary historical and pro forma financial and operating data for the Company and certain summary historical financial and operating data for Six Flags. The historical financial data of the Company for 1996 includes the 1996 Acquisitions (other than Riverside Park) from the dates of the respective acquisitions. The pro forma financial and operating data of the Company for the year ended December 31, 1997 give effect to (i) the acquisitions of Walibi (assuming a 100% Walibi Tender Offer on the basis of 80% payable in cash and 20% payable in shares of Common Stock) and Kentucky Kingdom as if they had occurred on January 1, 1997; and (ii) the acquisition of Six Flags as if it had occurred on December 30, 1996 (the first day of Six Flags' 1997 fiscal year). The following summary historical financial and operating data, except for attendance and revenue per visitor data, for each of the years in the three-year period ended December 31, 1997 (or December 28, 1997 in the case of Six Flags) have been derived from the financial statements of the Company and Six Flags appearing elsewhere in this Prospectus and should be read in conjunction with those financial statements (including the notes thereto), "Unaudited Pro Forma Financial Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Other historical financial and operating data (except attendance and revenue per visitor data) have been derived from audited consolidated financial statements which are not included herein.
YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------ 1993 1994 1995(1) 1996(2) 1997 --------- --------- ----------- ----------- ------------------------ PRO ACTUAL(3) FORMA(4) ----------- ----------- (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE, RATIO AND PER VISITOR AMOUNTS) THE COMPANY STATEMENT OF OPERATIONS DATA: Total revenue.............................. $ 21,860 $ 24,899 $ 41,496 $ 93,447 $ 193,904 $ 815,333 Gross profit(5)............................ 7,787 7,991 13,220 31,388 69,731 263,200 Income from operations(5).................. 3,019 2,543 3,948 14,461 33,184 131,620 Interest expense, net...................... (1,438) (2,299) (5,578) (11,121) (17,775) (180,273) Income (loss) before extraordinary loss.... 1,354 102 (1,045)(6) 1,765 14,099 (41,292) Income (loss) before extraordinary loss per common share--Basic...................... $ .51 $ .04 $ (.40)(6) $ .14 $ .79 $ (2.14) --Diluted.................... $ .51 $ .04 $ (.40)(6) $ .13 $ .76 $ (2.14) OTHER DATA: EBITDA(7).................................. $ 4,562 $ 4,549 $ 7,706 $ 22,994 $ 61,340(8) $ 263,455 Adjusted EBITDA(9)......................... -- -- -- -- -- $ 306,037 Net cash provided by operating activities(10)........................... $ 2,699 $ 1,060 $ 10,646 $ 11,331 $ 47,150 $ 153,027 Depreciation and amortization.............. $ 1,537 $ 1,997 $ 3,866 $ 8,533 $ 19,792 $ 107,138 Capital expenditures....................... $ 7,674 $ 10,108 $ 10,732 $ 39,423 $ 135,852 $ 212,229(11) Total attendance........................... 1,322 1,408 2,302 (12 4,518 (12 8,631 (12 36,530(13) Revenue per visitor(14).................... $ 16.54 $ 17.68 $ 18.03 $ 20.66 $ 22.18 $ 27.37 SELECTED RATIOS: Net debt/EBITDA(15)........................ -- -- -- -- -- 4.8x Total debt/EBITDA(15)...................... -- -- -- -- -- 7.0x EBITDA/cash interest expense(15)........... -- -- -- -- -- 2.2x EBITDA/total interest expense(15).......... -- -- -- -- -- 1.4x Ratio of earnings to fixed charges(16)..... 2.1x 1.1x (16) 1.3 x 2.3 x (16) Ratio of earnings to combined fixed charges and preferred stock dividends(16)........ 2.1x 1.1x (16) 1.2 x 2.3 x (16)
DECEMBER 31, 1997 --------------------------- ACTUAL(17) PRO FORMA(18) ----------- -------------- (UNAUDITED) (IN THOUSANDS) BALANCE SHEET DATA: Cash and cash equivalents............................................................ $ 84,288 $ 479,804(19) Total assets......................................................................... $ 611,321 $3,553,662 Total long-term debt and capitalized lease obligations (excluding current maturities)........................................................................ $ 216,231 $2,032,831 Total debt........................................................................... $ 217,026 $2,035,626 Mandatorily redeemable preferred stock............................................... -- $ 200,000 Stockholders' equity................................................................. $ 323,749 $1,130,180
(SEE FOOTNOTES ON FOLLOWING PAGE) 16 - ------------------------ (1) The historical Statement of Operations Data for 1995 reflect the results of the parks acquired in the Funtime Acquisition from the date of acquisition, August 15, 1995. (2) The historical Statement of Operations Data for 1996 reflect the results of Elitch Gardens from October 31, 1996, the Waterworld Parks from November 19, 1996 and The Great Escape from December 4, 1996 (the dates of their respective acquisitions). (3) The historical Statement of Operations Data for 1997 reflect the results of Riverside Park from February 5, 1997 and Kentucky Kingdom from November 7, 1997 (the dates of their respective acquisitions). (4) The pro forma financial and operating data for the year ended December 31, 1997 give effect to (i) the acquisitions of Walibi (assuming a 100% Walibi Tender Offer on the basis of 80% payable in cash and 20% payable in shares of Common Stock) and Kentucky Kingdom as if they had occurred on January 1, 1997; and (ii) the acquisition of Six Flags as if it had occured on December 30, 1996 (the first day of Six Flags' 1997 fiscal year). The pro forma income per share for 1997 gives effect to the January 1997 public offering, the Common Stock Offering and the EqPINES Offering (assuming no exercise of the Underwriters' over-allotment options) as if they had occurred on January 1, 1997. See "Unaudited Pro Forma Financial Statements-- Unaudited Pro Forma Statement of Operations" generally and with respect to certain assumptions used in respect of the related financings. (5) Gross profit is revenue less operating expenses, costs of products sold and depreciation and amortization. Income from operations is gross profit less selling, general and administrative expenses. (6) During 1995, the Company incurred an extraordinary loss of $140,000, net of income tax benefit, on extinguishment of debt in connection with the Funtime Acquisition. This extraordinary loss is not included in income (loss) before extraordinary loss and income (loss) before extraordinary loss per common share for 1995. (7) EBITDA is defined as earnings before extraordinary loss, interest expense, net, income tax expense (benefit), depreciation and amortization, minority interest and equity in loss of real estate partnership. The Company has included information concerning EBITDA because it is used by certain investors as a measure of the Company's ability to service and/or incur debt. EBITDA is not required by generally accepted accounting principles ("GAAP") and should not be considered in isolation or as an alternative to net income, net cash provided by operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance. This information should be read in conjunction with the Statements of Cash Flows contained in the Company's financial statements included elsewhere herein. Equity in loss of real estate partnership was $142,000, $83,000, $69,000, $78,000 and $59,000 during each of the five years ended December 31, 1997, respectively. Pro Forma EBITDA includes equity in operations of theme parks and the depreciation and amortization ($6,830,000) of the investment in the Co-Venture Parks (as defined herein) included therein. (8) Includes an $8,364,000 termination fee paid to the Company upon termination of its prior agreement to become managing general partner of the Texas Co-Venture Partnership (as defined herein). Such termination fee is not included in the pro forma amounts. (9) Adjusted EBITDA reflects the Company's pro forma EBITDA plus the portion of the pro forma EBITDA of Six Flags Over Georgia and Six Flags Over Texas (the "Co-Venture Parks") ($34,672,000) distributed on a pro forma basis to the other limited partners and therefore not included in the Company's pro forma EBITDA. See Note (1) to the Six Flags Selected Historical Financial and Operating Data. The Co-Venture Partnership (as defined herein) agreements restrict the amount of cash distributable to the Company. See "Business--Description of Parks--Six Flags Parks--Six Flags Over Georgia" and "--Six Flags Over Texas and Six Flags Hurricane Harbor." Adjusted EBITDA also includes $7,910,000 of pro forma EBITDA of Marine World for 1997 which is not already reflected in the Company's pro forma EBITDA. The Company manages the operations of Marine World and has an option to purchase the entire park beginning in February 2002. Adjusted EBITDA is not indicative of the Company's ability to service or incur indebtedness and is not a measure of the Company's profitability or liquidity. Adjusted EBITDA is not meant to be predictive of future operating results. (10) During each of the five years ended December 31, 1997, the Company's net cash used in investing activities was $7,698,000, $10,177,000, $74,139,000, $155,149,000 and $217,070,000, respectively. During those periods, net cash provided by financing activities was $2,106,000, $7,457,000, $90,914,000, $119,074,000 and $250,165,000, respectively. (11) Does not include pro forma amount expended ($93,700,000) by the Company to purchase interests of the limited partners in the Co-Venture Partnerships. (12) Represents in the case of 1995 attendance at the three parks owned by the Company prior to the Funtime Acquisition for the entire 1995 season and attendance at the Funtime parks from and after August 15, 1995. In the case of 1996, historical attendance does not include attendance at any of the parks acquired in the 1996 Acquisitions since those acquisitions were completed following the 1996 season. Historical attendance for the year ended December 31, 1997 does not include attendance at Marine World or attendance at Kentucky Kingdom since that park was acquired following the 1997 season. (13) Pro forma attendance information includes attendance at Marine World for 1997. (14) Pro forma and historical revenue per visitor for all applicable periods does not include revenue of Paradise Island (a fee-per-attraction entertainment center that does not track attendance, acquired in November 1996). Pro forma revenue per visitor also excludes revenue and attendance of Marine World and the Co-Venture Parks. (15) Total debt/EBITDA and Net debt/EBITDA include total outstanding pro forma indebtedness of the Company (excluding the SFEC Zero Coupon Senior Notes) in the accreted principal amount of $1,831,951,000. Net debt deducts from total outstanding pro forma indebtedness $556,064,000 (representing $479,804,000 of pro forma cash and cash equivalents and $76,260,000 of pro forma restricted-use investments placed in escrow to fund the first six semi-annual interest payments on the Company Senior Notes). See "Capitalization." EBITDA/cash interest expense is calculated using pro forma cash interest expense of $119,492,000. EBITDA/total interest expense is calculated using pro forma total interest expense $185,712,000 (excluding interest on the SFEC Zero Coupon Senior Notes). (16) For the purpose of determining the ratio of earnings to fixed charges, and the ratio of earnings to combined fixed charges and preferred stock dividends, earnings consist of income (loss) before extraordinary loss and before income taxes and fixed charges. Fixed charges consist of interest expense net of interest income, amortization of deferred financing costs and discount or premium relating to indebtedness, and the portion (approximately one-third) of rental expense that management believes represents the interest component of rent expense. Preferred stock dividend requirements have been increased to an amount representing the before tax earnings which would have been required to cover such dividend requirements. For the year ended December 31, 1995, the Company's earnings were insufficient to cover fixed charges by $1,738,000, and were insufficient to cover combined fixed charges and preferred stock dividends by $2,620,000. On a pro forma basis, for the year ended December 31, 1997, the Company's earnings were insufficient to cover fixed charges and combined fixed charges and preferred stock dividends by $31,818,000 and $77,720,000, respectively. (FOOTNOTES CONTINUED ON FOLLOWING PAGE) 17 (17) Actual balance sheet data as of December 31, 1997 include the Company's purchase of Kentucky Kingdom and investment in Marine World as of that date. (18) The pro forma balance sheet data give effect to the acquisitions of Walibi (assuming a 100% Walibi Tender Offer on the basis of 80% payable in cash and 20% payable in shares of Common Stock) and Six Flags, the Offerings (assuming no exercise of the underwriters' over-allotment options) and the related financings as if they had occurred on December 31, 1997. Includes SFEC Zero Coupon Senior Notes as well as cash held in escrow to repay the SFEC Zero Coupon Senior Notes. Pro forma total long-term debt and total debt include SFEC Zero Coupon Senior Notes and SFTP Senior Subordinated Notes at fair value rather than accreted amount. See "Capitalization." See also "Unaudited Pro Forma Financial Statements--Unaudited Pro Forma Balance Sheet" generally and with respect to certain assumptions used in respect of the related financings. (19) Excludes $326,300,000 of restricted-use investments. See "Capitalization." ---------------------------------------------------------
YEAR ENDED ----------------------------------------------------------------------- DECEMBER 26, JANUARY 1, DECEMBER 31, DECEMBER 29, DECEMBER 28, 1993 1995 1995 1996 1997 ------------- ----------- ------------- ------------- ------------- (IN THOUSANDS, EXCEPT PER VISITOR AMOUNTS) SIX FLAGS STATEMENT OF OPERATIONS DATA:(1) Total revenue............................... $ 532,455 $ 556,791 $ 629,457 $ 680,876 $ 708,666 Income from operations(2)................... 53,236 54,561 66,738 67,715 79,575 Interest expense, net....................... (54,963) (48,753) (63,282) (76,530) (84,430) Net (loss).................................. (12,944) (695) (3,287) (15,249) (3,708) OTHER DATA: EBITDA(3)................................... 122,371 134,642 150,182 155,132 164,068 Net cash provided by operating activities(4)............................. 111,934 100,895 124,587 128,602 110,303 Depreciation and amortization............... 69,135 80,081 83,444 87,417 84,493 Capital expenditures........................ 34,057 42,039 45,578 75,627 67,675(5) Total attendance............................ 19,144 19,855 21,830 22,796 22,229 Revenue per visitor......................... $ 27.81 $ 28.04 $ 28.83 $ 29.87 $ 31.88
- ------------------------ (1) Prior to the Six Flags Acquisition, Six Flags, through two subsidiaries, was the general partner in theme park limited partnerships (the "Co-Venture Partnerships") related to the Co-Venture Parks. For the fiscal years presented, Six Flags accounted for the parks as co-ventures, i.e., their revenues and expenses (excluding partnership depreciation) were included in the Six Flags consolidated statements of operations and the net amounts distributed to the limited partners were deducted as expenses. Except for the limited partnership units owned in the Georgia park at December 28, 1997, Six Flags had no rights or title to the Co-Venture Parks' assets or to the proceeds from any sale of the Co-Venture Parks' assets or liabilities during the periods presented. The Co-Venture Parks contributed revenues of $160.6 million, $152.0 million and $176.8 million to Six Flags in the fiscal years 1995, 1996 and 1997, respectively. During these three fiscal years, the Co-Venture Parks contributed EBITDA of $36.8 million, $24.3 million and $34.7 million (after payments of $11.6 million, $ 8.1 million and $21.3 million to the limited partners). In 1995, 1996 and 1997, the Co-Venture Parks produced $48.4 million, $32.4 million and $56.0 million of EBITDA, respectively. In connection with the Six Flags Acquisition, Six Flags is transferring its interests in the Co-Venture Parks to Premier. Premier intends to account for its interests in the Co-Venture Parks under the equity method of accounting. (2) Income from operations is revenue less operating, general and administrative expenses, costs of products sold and depreciation and amortization. (3) EBITDA is defined as earnings before interest expense, net, income tax expense (benefit), depreciation and amortization and minority interest. The Company has included information concerning EBITDA because it is used by certain investors as a measure of a company's ability to service and/or incur debt. EBITDA is not required by generally accepted accounting principles ("GAAP") and should not be considered in isolation or as an alternative to net income, net cash provided by operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Six Flags operating performance. This information should be read in conjunction with the Statements of Cash Flows contained in the financial statements of Six Flags included elsewhere herein. (4) During each of the fiscal years ended December 26, 1993, January 1, 1995, December 31, 1995, December 29, 1996 and December 28, 1997, Six Flags' net cash used in investing activities was approximately $41.6 million, $43.8 million, $93.9 million, $81.2 million, and $149.7 million, respectively. During these periods, net cash provided (used) in financing activities was approximately $(73.2) million, $(55.6) million, $10.6 million, $(52.2) million, and $10.6 million, respectively. (5) Does not include amount expended ($62.7 million) by Six Flags to purchase interests of the limited partners in the Co-Venture Partnerships. 18 RISK FACTORS PRIOR TO MAKING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER MATTERS REFERRED TO IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS: RISKS ASSOCIATED WITH SUBSTANTIAL INDEBTEDNESS AND OTHER OBLIGATIONS Following the Six Flags Transactions, the Company will be highly leveraged. On a pro forma basis, as of December 31, 1997, the Company had total outstanding indebtedness (excluding the SFEC Zero Coupon Senior Notes) in the accreted principal amount of approximately $1,832.0 million, including (i) $250.0 million in accreted value at that date of the Company Senior Discount Notes ($ million principal amount at maturity in 2008); (ii) $280.0 million in aggregate principal amount of Company Senior Notes; (iii) $125.0 million in aggregate principal amount of Premier Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"); (iv) $90.0 million in aggregate principal amount of Premier Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes" and, together with the 1997 Premier Notes, the "Premier Notes"); (v) $269.9 million in accreted value at that date of SFTP Senior Subordinated Notes ($285.0 million principal amount at maturity in 2005); (vi) $170.0 million in aggregate principal amount of New SFEC Notes (together with the Company Notes, the Premier Notes and the SFTP Senior Subordinated Notes, the "Senior Notes"); (vii) $225.0 million in outstanding borrowings under the Premier Credit Facility; (viii) $420.0 million in outstanding borrowings under the Six Flags Credit Facility and (ix) $2.0 million of capitalized lease obligations. Pro forma indebtedness at that date also included $161.1 million accreted value of SFEC Zero Coupon Senior Notes, which will be repaid from the proceeds of the New SFEC Notes together with other funds. On a pro forma basis, as of December 31, 1997, the Company would have had stockholders' equity of approximately $1,130.2 million. In addition, the annual dividends (which are payable in cash, in the case of the Seller Preferred Stock, or in cash, or by issuance of shares of Common Stock, at the option of the Company, in the case of the Mandatorily Convertible Preferred Stock) on the Convertible Preferred Stock aggregate $ , and the Company is required to offer to purchase the Seller Preferred Stock in 2010 (if not earlier redeemed or converted). On a pro forma basis, for the year ended December 31, 1997, the Company's earnings would have been insufficient to cover its combined fixed charges and preferred stock dividends by approximately $77.7 million. In addition, the indentures relating to the Senior Notes (the "Indentures") permit the Company to incur additional indebtedness under certain circumstances. See "Capitalization," "Selected Historical and Pro Forma Financial and Operating Data," "Unaudited Pro Forma Financial Statements" and "Description of Indebtedness." By reason of the Six Flags Acquisition, the Company will be required to offer to repurchase the SFTP Senior Subordinated Notes at a price equal to 101% of their accreted amount (approximately $287.9 million at June 15, 1998). On March 23, 1998, the last reported sales price of these notes was substantially in excess of their accreted amount. The Company has not entered into any standby arrangement to finance the purchase of such notes, and there can be no assurance that the Company would be able to obtain such financing in the event that it were to become necessary. In addition to its obligations under its outstanding indebtedness and preferred stock, the Company is required to (i) make minimum annual distributions of approximately $46.2 million (subject to cost of living adjustments) to its partners in two Six Flags Parks, Six Flags Over Georgia and Six Flags Over Texas (the "Co-Venture Parks") and (ii) make minimum capital expenditures at each of the Co-Venture Parks during rolling five-year periods, based generally on 6% of such park's revenues. Cash flow from operations at the Co-Venture Parks will be used to satisfy these requirements first, before any funds are required from the Company. The Company has also agreed to purchase a maximum number of 5% per year (accumulating to the extent not purchased in any given year) of the total limited partnership units outstanding as of the date of the co-venture agreements that govern the partnerships (to the extent tendered by the unit holders). The agreed price for these purchases is based on a valuation for each respective Co-Venture Park equal to the greater of (i) a value derived by multiplying its weighted-average four year EBITDA (as defined therein) by a specified multiple (8.0 in the case of the Georgia park and 8.5 in the case of the Texas park) 19 or (ii) $250.0 million in the case of the Georgia park and $374.8 million in the case of the Texas park. The Company's obligations with respect to Six Flags Over Georgia and Six Flags Over Texas will continue until 2027 and 2028, respectively. In March 1998 Six Flags completed a tender offer pursuant to which it purchased approximately 33% of the outstanding limited partner units in the Texas park for an aggregate purchase price of $117.3 million. Six Flags funded the tender from borrowings which must be refinanced by the Company in connection with the Six Flags Acquisition. The Company has assumed a 25% tender for purposes of preparing the pro forma financial information contained herein. Since a larger number of units were tendered, the Company will be required to refinance the additional indebtedness of Six Flags incurred by virtue thereof and, accordingly, will have less cash to prefund capital expenditures and working capital requirements. As the Company purchases units relating to either Co-Venture Park, it will be entitled to the minimum distribution and other distributions attributable to such units, unless it is then in default under the applicable agreements with its partners at such Co-Venture Park. Time Warner Inc. and certain of its affiliates (collectively, "Time Warner") have guaranteed the obligations of Six Flags under these agreements. Premier will indemnify Time Warner in respect of its guarantee pursuant to a Subordinated Indemnity Agreement (the "Subordinated Indemnity Agreement"). See "Description of Six Flags Agreement." The Company estimates that its maximum unit purchase obligation for 1998, when purchases are required only for the Georgia park, will aggregate approximately $13 million (approximately $31 million for 1999, when purchases for both partnerships are required) and its minimum capital expenditures for 1998 at these parks will total approximately $11 million. See "Business--Description of Parks--Six Flags Parks--Six Flags Over Georgia" and "--Six Flags Over Texas and Six Flags Hurricane Harbor." In addition, the Company has agreed to invest approximately $38 million to expand the six Walibi Parks over three years, commencing 1999. The Company's ability to make scheduled payments on, or to refinance, its indebtedness, to pay dividends on its preferred stock, or to fund planned capital expenditures and its obligations under the arrangements relating to the Co-Venture Parks, will depend on its future performance, which, to a certain extent, is subject to general economic, financial, weather, competitive and other factors that are beyond its control. The Company believes that, based on current and anticipated operating results, cash flow from operations, available cash, available borrowings under the Credit Facilities and the net proceeds of the Offerings (to the extent not used in connection with the Six Flags Acquisition) will be adequate to meet the Company's future liquidity needs, including anticipated requirements for working capital, capital expenditures, scheduled debt and preferred stock dividends and its obligations under arrangements relating to the Co-Venture Parks, for at least the next several years. The Company may, however, need to refinance all or a portion of its existing debt on or prior to maturity or to obtain additional financing. There can be no assurance that the Company's business will generate sufficient cash flow from operations, that currently anticipated cost savings will be realized or that future borrowings will be available under the Credit Facilities in an amount sufficient to enable the Company to service its indebtedness or to fund its other liquidity needs. In addition, there can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity, Capital Commitments and Resources." The degree to which the Company will be leveraged following the Six Flags Transactions could have important consequences to the Company, including, but not limited to: (i) making it more difficult for the Company to satisfy its obligations, (ii) increasing the Company's vulnerability to general adverse economic and industry conditions, (iii) limiting the Company's ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions and other general corporate requirements, (iv) requiring the dedication of a substantial portion of the Company's cash flow from operations to the payment of principal of, and interest on, its indebtedness and dividends on its preferred stock, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions or other general corporate purposes, (v) limiting the Company's flexibility in planning for, or reacting to, changes in its business and the industry, and (vi) placing the Company at a competitive disadvantage vis-a-vis less 20 leveraged competitors. In addition, the Indentures and the Credit Facilities will contain financial and other restrictive covenants that will limit the ability of the Company to, among other things, borrow additional funds. Failure by the Company to comply with such covenants could result in an event of default which, if not cured or waived, would have a material adverse effect on the Company. See "Description of Indebtedness." The Company's inability to service its obligations would have a material adverse effect on the market value and marketability of the Common Stock and the EqPINES. In the event of bankruptcy proceedings involving the Company, the Company's creditors will have a claim upon the Company's assets prior in right to the holders of Common Stock and EqPINES. HOLDING COMPANY STRUCTURE; LIMITATIONS ON ACCESS TO CASH FLOW OF SUBSIDIARIES The Company has no operations of its own and derives all of its revenue from its subsidiaries. Therefore, the Company's ability to pay its obligations (including debt service on the Company Senior Discount Notes, the Company Senior Notes and dividend and redemption obligations on the Convertible Preferred Stock and obligations under the Subordinated Indemnity Agreement with Time Warner) when due is dependent upon the receipt of sufficient funds from its direct and indirect subsidiaries. SFEC is also a holding company and its ability to pay its obligations (including debt service on the New SFEC Notes) when due, as well as to pay any dividends or distributions to the Company, is similarly dependent. Under the terms of the indentures governing the Premier Notes, the SFTP Senior Subordinated Notes and the New SFEC Notes, the Premier Credit Facility and the Six Flags Credit Facility, the payment of dividends by Premier Operations, SFEC and SFTP are subject to restrictive covenants that will significantly restrict or prohibit their ability to pay dividends or make other distributions to the Company. See "Description of Indebtedness" for a summary of the terms of the dividend restrictions. In addition, the terms of the Company Notes and the Mandatorily Convertible Preferred Stock will permit the Company's subsidiaries to incur additional indebtedness, the terms of which could limit or prohibit the payment of dividends or the making of other distributions by such subsidiaries. The Premier Credit Facility will prohibit the payment of dividends by Premier Operations to the Company for any purpose other than a one time distribution, not to exceed $20.0 million, on the date of the Six Flags Acquisition. The Six Flags Credit Facility will prohibit the payment of dividends by SFTP to SFEC or the Company, except a one time distribution, not to exceed $10.0 million, and dividends to provide funds to pay dividends on the Seller Preferred Stock and to pay interest on the New SFEC Notes (but in each case, only if no default has occurred and is continuing under the Six Flags Credit Facility). As a result, there can be no assurance that dividends, distributions or loans to the Company from its subsidiaries will be sufficient to fund its obligations. See "Description of Indebtedness." If any indebtedness of any of the Company's subsidiaries were to be accelerated, there would be no assurance that the assets of any such subsidiary would be sufficient to repay such indebtedness. The Company's rights to participate in the distribution of the assets of its operating subsidiaries upon a liquidation or reorganization of such companies will be subject to the prior claims of their respective creditors. RESTRICTIVE DEBT COVENANTS The Credit Facilities contain a number of significant covenants that, among other things, restrict the ability of the Company's operating subsidiaries to dispose of assets, incur additional indebtedness, pay cash dividends, create liens on assets, make investments or acquisitions, engage in mergers or consolidations, make capital expenditures, engage in certain transactions with affiliates or redeem or repurchase the indebtedness of such subsidiaries. In addition, under the Credit Facilities, Premier Operations and SFTP are each required to comply with specified financial ratios and tests, including interest expense, fixed charges and total debt coverage ratios. The Indentures also contain a series of restrictive covenants. The Company is currently in compliance with the covenants and restrictions contained in the Credit Facilities and the applicable Indentures. However, its ability to continue to comply with financial tests and 21 ratios in the Credit Facilities may be affected by events beyond its control, including prevailing economic, financial, weather and industry conditions. The breach of any such financial covenant could result in the termination of the Credit Facilities (and the acceleration of the maturity of all amounts outstanding thereunder) and, by virtue of cross default provisions, the acceleration of the maturity of other indebtedness of the Company, including the Senior Notes. In addition, under the terms of the Subordinated Indemnity Agreement (which lasts until 2028), without the consent of Time Warner, the Company cannot incur indebtedness (other than the New SFEC Notes) at SFEC or any of its subsidiaries that is secured by any assets of (or guaranteed by) the Company, Premier Operations or any of its subsidiaries, or secure any indebtedness of the Company, Premier Operations or any of its subsidiaries with any of the assets of (or guarantees by) SFEC or any of its subsidiaries. These covenants could inhibit the ability of the Company to borrow in the future. ABILITY TO MANAGE RAPID GROWTH The Six Flags Acquisition is significantly larger than any of Premier's previous acquisitions, and the combination and integration of the respective operations of Six Flags and Premier will be of a substantially greater scale than previously undertaken by Premier and will be ongoing concurrently with the integration of Walibi, its first foreign acquisition. The increased size of Premier's operations and the process of combining and integrating Six Flags with Premier, particularly during the same period as the integration of Walibi, will place substantial additional demands upon existing management resources and require Premier to effectively redeploy such resources, including hiring new personnel. There can be no assurance that Premier's management will be able to successfully integrate the operations of Six Flags or Walibi or that the anticipated benefits of the Six Flags Acquisition or the Walibi acquisition to Premier will be realized or, if realized, as to the timing thereof. The inability to successfully manage the integration of Six Flags or Walibi with Premier would have a material adverse effect on Premier's results of operations and financial condition. UNCERTAINTY OF FUTURE ACQUISITIONS; POTENTIAL EFFECTS OF ACQUISITIONS In addition to the Acquisitions, the Company intends to continue to make selective acquisitions that would expand its business. There can be no assurance that the Company will be able to locate and acquire additional businesses. To the extent any such acquisition would result in the incurrence or assumption of indebtedness by the Company (or its operating subsidiaries), such incurrence or assumption must comply with the limitations on the Company's (or such subsidiary's) ability to incur or assume indebtedness under the Credit Facilities and the Indentures. There can be no assurance that any future acquisition will be permissible under these loan agreements or that waivers of any such covenants could be obtained. See "--Restrictive Debt Covenants." In certain instances, a consummated acquisition may adversely affect the Company's financial condition and reported results, at least in the short-term, depending on many factors, including capital requirements and the accounting treatment of such acquisition. There can be no assurance that the 1997 Acquisitions, the Six Flags Acquisition or any future acquisition will perform as expected, will not result in significant unexpected liabilities or will ever contribute significant revenues or profits to the Company. Shares of Common Stock (or securities convertible into Common Stock) were or will be used as a portion of the aggregate consideration in the acquisitions of The Great Escape, Riverside Park, Kentucky Kingdom, Walibi and may be used in the Six Flags Acquisition. The Company may issue a substantial number of shares of Common Stock (or convertible securities) to fund future acquisitions. By virtue of the foregoing, the Company's acquisitions could have an adverse effect on the market price of the Common Stock and the EqPINES. RISKS OF ACCIDENTS AND DISTURBANCES AT PARKS; EFFECTS OF LOCAL CONDITIONS AND EVENTS Because substantially all of the Company's parks feature "thrill rides," attendance at the parks and, consequently, revenues may be adversely affected by any serious accident or similar occurrence with 22 respect to a ride. In that connection, in June 1997, a slide collapsed at the Company's Waterworld park in Concord, California, resulting in one fatality and the park's closure for twelve days. The collapse had a material adverse effect on that park's 1997 operating performance, as well as a lesser impact on the Company's Sacramento water park (which is also named "Waterworld"), located approximately seventy miles from the Concord park, but did not have a material effect on the balance of the Company's 1997 operations. The Company has recovered all of the Concord park's operating shortfall under its business interruption insurance. Premier Operations' liability insurance policies provide coverage of up to $25.0 million per loss occurrence and require Premier Operations to pay the first $50,000 of loss per occurrence. Six Flags' liability insurance policies provide coverage of up to $175.0 million per loss occurrence and require Six Flags to pay the first $2.0 million per loss occurrence. Other local conditions and events can also adversely affect attendance. For example, in 1994, the Company's Six Flags Magic Mountain park experienced significant attendance declines and interruptions of business as a result of the Los Angeles County earthquake centered in Northridge, California. Six Flags Over Georgia experienced attendance declines in 1996 as a result of the 1996 Summer Olympics. Management believes that the geographic diversity of the Company's theme parks reduces the effects of such occurrences on the Company's consolidated results. In addition, in view of the proximity of certain of the Company's parks to major urban areas and the appeal of the parks to teenagers and young adults, the Company's parks could experience disturbances that could adversely affect the image of and attendance levels at its parks. Working together with local police authorities, the Company has taken certain security-related precautions designed to prevent disturbances in its parks, but there can be no assurance that it will be able to prevent any such disturbances. RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS As a result of the Walibi acquisition, a portion of the Company's operations will be conducted in Europe, and the Company will become subject to risks that are inherent in operating abroad. These risks can include difficulties in staffing and managing foreign operations, longer payment cycles, problems in collecting accounts receivable, political risks, unexpected changes in regulatory requirements, fluctuations in currency exchange rates, import restrictions or prohibitions, delays from customs brokers or government agencies and potentially adverse tax consequences resulting from operating in multiple jurisdictions with different tax laws. There can be no assurance that these and other comparable risks, individually or in the aggregate, will not adversely impact the Company's financial and operating results in Europe. EFFECTS OF INCLEMENT WEATHER; SEASONAL FLUCTUATIONS OF OPERATING RESULTS Because the great majority of theme parks' attractions are outdoor activities, attendance at parks and, accordingly, the Company's revenues are significantly affected by the weather. Additionally, seven of the Company's parks are primarily water parks which, by their nature, are more sensitive to adverse weather than are theme parks. Unfavorable weekend weather and unusual weather of any kind can adversely affect park attendance. The operations of the Company are highly seasonal, with more than 80% of park attendance occurring in the second and third calendar quarters of each year. The great majority of the Company's revenue is collected in those quarters while most expenditures for capital improvements and significant maintenance are incurred when the parks are closed in the first and fourth quarters. Accordingly, the Company believes that quarter-to-quarter comparisons of its results of operations should not be relied upon as an indication of future performance. Nevertheless, the market price of the Common Stock may fluctuate significantly in response to variations in the Company's quarterly and annual results of operations. HIGHLY COMPETITIVE BUSINESS The Company's parks compete directly with other theme, water and amusement parks and indirectly with all other types of recreational facilities and forms of entertainment within their market areas, 23 including movies, sports attractions and vacation travel. Accordingly, the Company's business is and will continue to be subject to factors affecting the recreation and leisure time industries generally, such as general economic conditions and changes in discretionary consumer spending habits. Within each park's regional market area, the principal factors affecting competition include location, price, the uniqueness and perceived quality of the rides and attractions in a particular park, the atmosphere and cleanliness of a park and the quality of its food and entertainment. DEPENDENCE ON KEY PERSONNEL The Company's success depends upon the continued contributions of its executive officers and key operating personnel, particularly Kieran E. Burke, Chairman and Chief Executive Officer, and Gary Story, President and Chief Operating Officer. The loss of services of, or a material reduction in the amount of time devoted to the Company by, either of such individuals or certain other key personnel could adversely affect the business of the Company. Although the Company recently entered into three-year employment agreements with each of Mr. Burke and Mr. Story, there is no assurance that the Company will be able to retain their services during that period. Under certain circumstances, the loss of the services of both Messrs. Burke and Story and the failure to replace them within a specified time period would constitute a default under the Credit Facilities. CERTAIN ANTI-TAKEOVER CONSIDERATIONS; CHANGE OF CONTROL Certain provisions of the Company's Certificate of Incorporation and By-Laws may have the effect of discouraging or delaying attempts to gain control of the Company, including provisions which could result in the Company's stockholders receiving less for their shares of Common Stock than otherwise might be available in the event of a take-over attempt. These provisions include: (i) authorizing the Board of Directors to fix the size of the Board of Directors between three and 15 directors; (ii) authorizing directors to fill vacancies on the Board of Directors that occur between annual meetings; and (iii) restricting the persons who may call a special meeting of stockholders. Additionally, the Company's authorized but unissued preferred stock can be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. In that connection, the Company has a plan that grants to common stockholders rights to purchase shares of preferred stock (with characteristics of Common Stock) upon the occurrence of certain events, including events that could lead to a change in control. The existence of this rights plan could discourage or hinder attempts by third parties to obtain control of the Company. Furthermore, certain provisions of Delaware law may also discourage or hinder attempts by third parties to obtain control of the Company. See "Description of Securities--Rights Plan" and "-- Delaware Law and Certain Charter and By-Law Provisions." In addition, certain events that could lead to a change of control of the Company will constitute a Change of Control under the Indentures relating to the Senior Notes (other than the Indenture relating to the SFTP Senior Subordinated Notes), and require the Company to make an offer to purchase these Senior Notes. A Change of Control is also a default under the Credit Facilities. The Six Flags Transactions do not constitute a Change of Control under the Indentures (other than the Indenture relating to the SFTP Senior Subordinated Notes). By virtue of the Six Flags Transactions, the Company will be required to make an offer to purchase the SFTP Senior Subordinated Notes. See "--Risks Associated with Substantial Indebtedness and Other Obligations." As part of the Six Flags Acquisition, the Company will obtain from Warner Bros. and DC Comics the exclusive right for theme-park usage of certain Warner Bros. and DC Comics characters throughout the United States (except the Las Vegas metropolitan area) and Canada. Warner Bros. can terminate this license under certain circumstances, including if persons engaged in the movie or television industries obtain control of the Company. CASH DIVIDENDS UNLIKELY The Company has not paid dividends on its Common Stock during the three years ended December 31, 1997 and does not anticipate paying any cash dividends thereon in the foreseeable future. The Company's ability to pay cash dividends on the Common Stock will be restricted under the Indentures 24 relating to the Company Notes and will be affected by, among other factors, the Company's substantial indebtedness and holding company structure. See "--Risks Associated with Substantial Indebtedness and Other Obligations" and "--Holding Company Structure; Limitations on Access to Cash Flow of Subsidiaries." SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE Upon consummation of the Offerings, the Company will have 32.3 million shares of Common Stock outstanding and 5.0 million EqPINES (initially convertible into 5.0 million shares of Common Stock) outstanding. Future sales of Common Stock (or Seller Depositary Shares) by existing stockholders pursuant to Rule 144 under the Securities Act, or through the exercise of outstanding registration rights or otherwise, could have an adverse effect on the prevailing market price of the Common Stock and the Company's ability to raise additional capital. Except for the Common Stock to be sold in the Common Stock Offering, the Convertible Preferred Stock and shares of Common Stock issued upon conversion of the Convertible Preferred Stock, the Company has agreed not to offer, sell, contract to sell or otherwise issue any shares of Common Stock (except pursuant to outstanding options and warrants) or other capital stock or securities convertible into or exchangeable for, or any rights to acquire, Common Stock or other capital stock, with certain exceptions (including certain exceptions for Common Stock or other capital stock issued or sold in connection with future acquisitions by the Company, including any Common Stock to be issued in connection with the Walibi acquisition), prior to the expiration of 90 days from the date of this Prospectus without the prior written consent of Lehman Brothers Inc. ("Lehman Brothers"). The Company's officers, directors and principal stockholders, who hold in the aggregate approximately 6.0 million shares of Common Stock (including shares issuable upon exercise of outstanding options and warrants and outstanding shares of restricted stock), have agreed not to sell any such shares for 90 days following the date of this Prospectus without the consent of Lehman Brothers. In addition, the Sellers in the Six Flags Acquisition have agreed not to sell any Seller Preferred Stock during such 90-day period. Thereafter, all such shares held by the Company's officers, directors and principal stockholders will be eligible for sale in the public market (subject, in most cases, to applicable volume limitations and other resale conditions imposed by Rule 144). In addition, subject to the "lock-up" arrangements described above and a minimum 41-day "lock-up" agreed to by the sellers in the Walibi acquisition, holders of approximately 4.9 million shares of Common Stock and the holders of Seller Preferred Stock have the right to require the Company to register such shares (and, in the case of the Seller Preferred Stock, the shares of Common Stock issuable upon conversion thereof) for sale under the Securities Act. Depending upon the level of future revenues at Kentucky Kingdom and Walibi, the Company may also be required in the future to issue additional shares of Common Stock (assuming the maximum number of shares of Common Stock are issued in the Walibi Tender Offer) with an aggregate market value of up to $15.0 million to the sellers thereof. See "Prospectus Summary--Other Recent Developments." The Company may also pay quarterly dividend payments on the EqPINES (which aggregate $ million over three years) by issuing additional shares of Common Stock. The sale, or the availability for sale, of substantial amounts of Common Stock or securities convertible into Common Stock in the public market at any time subsequent to the date of this Prospectus could adversely affect the prevailing market price of the Common Stock and the EqPINES. See "Description of Securities--Registration Rights." LESS EQUITY APPRECIATION FOR EQPINES THAN COMMON STOCK The opportunity for equity appreciation afforded by an investment in the EqPINES is less than the opportunity for equity appreciation afforded by an investment in Common Stock. Holders of EqPINES will realize no equity appreciation if at the Mandatory Conversion Date (as defined herein) the Conversion Price (as defined herein) of the Common Stock is below the Threshold Appreciation Price (as defined herein), and less than all of the equity appreciation if at such time the Conversion Price of the Common Stock is above the Threshold Appreciation Price. Holders of EqPINES will realize the entire decline in equity value if at such time the Conversion Price of the Common Stock is below the Initial Price (as defined herein). See "Description of EqPINES--Mandatory Conversion of EqPINES." 25 DILUTION OF COMMON STOCK The Conversion Rate, the Optional Conversion Rate, the Threshold Appreciation Price and the Initial Price (each as defined herein) on the EqPINES are subject to adjustment for certain events, such as stock splits and combinations, stock dividends, certain other actions by the Company that modify its capital structure and certain other transactions involving the Company. See "Description of EqPINES--Conversion Adjustments" and "--Adjustment for Certain Consolidations or Mergers." Such rates and prices will not be adjusted for other events, such as offerings of Common Stock for cash or in connection with acquisitions that may adversely affect the market price of Common Stock. Due to the relationship of such rates and prices to the market price of Common Stock, such other events may also adversely affect the trading price of the EqPINES. There can be no assurance that the Company will not make such offerings of Common Stock or as to the size of such offerings, if any. LIMITED VOTING RIGHTS FOR EQPINES The Mandatorily Convertible Preferred Stock represented by the EqPINES does not carry any right to vote at the stockholders' meetings of the Company, except with respect to adverse charter and by-law amendments or the authorization or creation of classes of capital stock ranking senior as to payment of dividends or liquidation preference to the Mandatorily Convertible Preferred Stock, as well as in certain circumstances involving protracted dividend arrearages. See "Description of EqPINES--Voting Rights." As a result, unless holders of EqPINES voluntarily convert their EqPINES into Common Stock prior to the Mandatory Conversion Date, such holders will not be entitled to any rights with respect to the Common Stock (including, without limitation, voting rights and the right to receive any dividends or other distributions on the Common Stock) until such time, and will generally have no influence on virtually all matters submitted for general stockholder approval. UNCERTAINTY OF FEDERAL INCOME TAX CONSEQUENCES FOR MANDATORILY CONVERTIBLE PREFERRED STOCK No statutory, judicial or administrative authority directly addresses the characterization of the Mandatorily Convertible Preferred Stock or instruments similar to the Mandatorily Convertible Preferred Stock for U.S. federal income tax purposes. As a result, significant aspects of the U.S. federal income tax consequences of an investment in the Mandatorily Convertible Preferred Stock (including investments in EqPINES representing interests in Mandatorily Convertible Preferred Stock) are not certain. No ruling is being requested from the Internal Revenue Service (the "Service") with respect to the Mandatorily Convertible Preferred Stock or the EqPINES and no assurance can be given that the Service will agree with the conclusions expressed under "Description of EqPINES--Federal Income Tax Consequences." Distributions on the Mandatorily Convertible Preferred Stock (including distributions that are paid in the form of shares of Common Stock and constructive distributions) will be taxable for U.S. federal income tax purposes as ordinary dividend income and, subject to limitations described in "Description of EqPINES--Federal Income Tax Consequences--Dividends," will be eligible for the dividends-received deduction that is available to certain U.S. corporate holders only to the extent paid out of current or accumulated earnings and profits of the Company as determined for U.S. federal income tax purposes. Such distributions otherwise will be treated in the manner described under "Federal Income Tax Consequences--Dividends." It is uncertain whether the Company will have any current or accumulated earnings and profits. To the extent that the Company does not have current or accumulated earnings and profits, or the amount of such distributions exceeds the Company's current or accumulated earnings and profits, distributions on the Mandatorily Convertible Preferred Stock (whether actual or constructive) will constitute tax-free returns of capital to the extent of the holder's tax basis in the Mandatorily Convertible Preferred Stock and thereafter will constitute capital gain, and will not be eligible for the dividends-received deduction. In the case of a distribution on the Mandatorily Convertible Preferred Stock that is paid in the form of shares of Common Stock, the fair market value of such Common Stock on the distribution date will be taxable for U.S. federal income tax purposes in the same manner as a cash distribution would be treated. 26 ABSENCE OF A PREVIOUS MARKET FOR THE EQPINES The EqPINES are a new issue of securities with no established trading market. Application has been made to list the EqPINES on the NYSE, but no assurance can be given as to the development or liquidity of any trading market in the EqPINES. If an active market does not develop, the market price and liquidity of the EqPINES will be adversely affected. IMPACT OF YEAR 2000 ISSUE An issue exists for all companies that rely on computers as the year 2000 approaches. The "Year 2000" problem is the result of the past practice in the computer industry of using two digits rather than four to identify the applicable year. This practice will result in incorrect results when computers perform arithmetic operations, comparisons or data field sorting involving years later than 1999. The Company anticipates that it will be able to test its entire system using its internal programming staff and outside computer consultants and intends to make any necessary modifications to prevent disruption to its operations. Costs in connection with any such modifications are not expected to be material. However, if such modifications are not completed in a timely manner, the Year 2000 problem may have a material adverse impact on the operations of the Company. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Impact of Year 2000 Issue." 27 USE OF PROCEEDS The net proceeds to be received by the Company from the Offerings, after deducting estimated underwriting discounts and commissions and estimated expenses payable by the Company, will be approximately $ million (or approximately $ million if the Underwriters' over-allotment options are exercised in full). The Company intends to use the net proceeds from the Offerings to fund the $765 million cash portion of the purchase price (plus an approximate $11 million adjustment) payable to the Sellers in the Six Flags Acquisition; to provide funds for the repayment in full of the SFEC Zero Coupon Senior Notes and for certain interest payments on the Company Senior Notes; to fund improvements and expansion of the Company's parks, including the Walibi Parks and the Six Flags Parks; to acquire and make improvements at additional theme parks; and for general corporate purposes, including working capital requirements. Although the Company has had discussions with respect to several additional acquisition opportunities, no agreement or understanding with respect to any future acquisition has been reached. There can be no assurance that any such additional acquisitions will be made. See "Prospectus Summary--The Six Flags Transactions--The Financings," "Risk Factors--Uncertainty of Future Acquisitions; Potential Effects of Acquisitions" and "Business--Acquisition Strategy." The Company presently intends to use the net proceeds of any exercise of the Underwriters' over-allotment options to reduce the amount of (or eliminate) the Seller Preferred Stock to be issued in the Six Flags Acquisition (or to redeem the Seller Preferred Stock within 90 days of its issuance). Further, if the Company determines not to issue the Seller Preferred Stock, the additional cash portion of the purchase price for the Six Flags Acquisition will be funded from the net proceeds of the Common Stock Offering. Pending their ultimate use, the portion of net proceeds from the Offerings not used in connection with the Six Flags Acquisition may be invested in short-term, investment grade, interest bearing securities, certificates of deposit or direct or guaranteed obligations of the United States. 28 CAPITALIZATION The following table sets forth as of December 31, 1997, (i) the actual capitalization of the Company; and (ii) the pro forma capitalization of the Company after giving effect to the acquisitions of Walibi (assuming a 100% Walibi Tender Offer with 80% paid in cash and 20% paid in shares of Common Stock) and Six Flags, and after giving effect to the Offerings (assuming that the Underwriters' over-allotment options are not exercised) and other related financings. This table should be read in conjunction with the consolidated financial statements of the Company and Six Flags (including the notes thereto) included elsewhere in this Prospectus, and "Unaudited Pro Forma Financial Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
DECEMBER 31, 1997 ---------------------- ACTUAL PRO FORMA --------- ----------- (UNAUDITED) (IN THOUSANDS) Cash and cash equivalents......................................................................... $ 84,288 $ 479,804(1) --------- ----------- --------- ----------- Restricted-use investments........................................................................ $ -- $ 326,290(2)(3) --------- ----------- --------- ----------- Short-term debt(4)................................................................................ $ 795 $ 2,795 --------- ----------- --------- ----------- Long-term debt (excluding current maturities): Premier Credit Facility....................................................................... $ -- $ 224,000 Six Flags Credit Facility..................................................................... -- 419,000 1995 Premier Notes............................................................................ 90,000 90,000 1997 Premier Notes............................................................................ 125,000 125,000 Company Senior Discount Notes................................................................. -- 250,000 Company Senior Notes.......................................................................... -- 280,000(3) New SFEC Notes................................................................................ -- 170,000 SFEC Zero Coupon Senior Notes................................................................. -- 170,100(2)(5) SFTP Senior Subordinated Notes................................................................ -- 303,500(5) Other......................................................................................... 1,231 1,231 --------- ----------- Total long-term debt...................................................................... 216,231 2,032,831(2) --------- ----------- Mandatorily redeemable preferred stock (none outstanding (actual) and outstanding (with a liquidation value of $200.0 million) (pro forma))............................................... -- 200,000 --------- ----------- Stockholders' equity: Common Stock (90,000,000 authorized; 18,873,111 outstanding (actual)(6) and 32,331,111 outstanding (pro forma)(7)) and Mandatorily Convertible Preferred Stock (none outstanding (actual) and 10,000 outstanding (pro forma)(8))..................................... 323,749 1,130,180 --------- ----------- Total capitalization...................................................................... $ 539,980 $3,363,011 --------- ----------- --------- -----------
- ------------------------------ (1) Cash balances include prefunding of capital expenditures and working capital. (2) The pro forma amount for the SFEC Zero Coupon Senior Notes and total long-term debt do not give effect to the repayment thereof from the net proceeds of the SFEC Notes Offering. Similarly, pro forma restricted-use investments include $175.0 million which will be held in escrow to repay the SFEC Zero Coupon Senior Notes. (3) Restricted use investments include (i) $76.3 million which will be deposited in escrow to fund the first six semi-annual interest payments on the Company Senior Notes, (ii) a $75.0 million restricted cash account to fund certain obligations in respect of the Co-Venture Parks and dividend payments on the Convertible Preferred Stock and (iii) $175.0 million which will be held in escrow to repay the SFEC Zero Coupon Notes. (4) Represents current portion of long-term debt, including $1.0 million in respect of the Premier Credit Facility and $1.0 million in respect of the Six Flags Credit Facility. At December 31, 1997, the Company did not have any amounts outstanding under its then-existing revolving credit facility, which was terminated in February 1998. At March 24, 1998, the Company had borrowed $10.0 million under the revolving credit facility portion of the Premier Credit Facility. (5) Represents fair market value of such indebtedness at December 31, 1997. Actual accreted amounts outstanding at December 31, 1997 were $161.1 million for the SFEC Zero Coupon Senior Notes and $269.9 million for the SFTP Senior Subordinated Notes. (6) Includes an aggregate of 375,000 unvested restricted shares issued to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer which vest proportionately on January 1 of the five years commencing 1999. Excludes (i) an aggregate of 45,039 shares of Common Stock issuable upon exercise of warrants; (ii) an aggregate of 1,270,000 shares of Common Stock reserved for issuance under the Company's Stock Incentive Plans, of which options for 764,700 shares have been granted and options for 455,800 shares are presently exercisable and (iii) an aggregate of 450,000 additional restricted shares issuable at the Company's option to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, under employment agreements with such officers. (7) Assumes the issuance of 229,000 shares in the Private Acquisition and 229,000 shares in the Walibi Tender Offer. Excludes (i) any shares issuable to the sellers in the Kentucky Kingdom and Walibi acquisitions depending upon the future revenues of the acquired parks; (ii) shares issuable upon conversion of the Convertible Preferred Stock or as dividends on the Mandatorily Convertible Preferred Stock; and (iii) 1,950,000 shares of Common Stock issuable upon exercise of the underwriters' over-allotment options. (8) Excludes effect of 750,000 EqPINES issuable upon exercise of the underwriters' over-allotment option. 29 SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA The following selected historical financial and operating data, except for attendance and revenue per visitor data, of (i) the Company as of and for each of the years in the three-year period ended December 31, 1997, and (ii) Six Flags as of December 29, 1996 and December 28, 1997 and for each of the three years in the period ended December 28, 1997, are derived from the audited financial statements of each entity appearing elsewhere in this Prospectus. The selected historical financial data of the Company and Six Flags for fiscal years 1993 and 1994 have been derived from audited financial statements which are not included herein. The historical financial data of the Company for the year ended December 31, 1995 include the results of the Funtime parks from August 15, 1995, the date of the Funtime Acquisition. The historical financial data of the Company for the year ended December 31, 1996 include the operations of Elitch Gardens from October 31, 1996, the Waterworld Parks from November 19, 1996 and The Great Escape from December 4, 1996 (the dates of their respective acquisitions). The historical financial data of the Company for the year ended December 31, 1997 include the operations of Riverside Park from February 5, 1997 and Kentucky Kingdom from November 7, 1997 (the dates of their respective acquisitions). The following selected pro forma financial and operating data of the Company for the year ended December 31, 1997 are derived from the Unaudited Pro Forma Financial Statements appearing elsewhere in this Prospectus. The pro forma financial and operating data of the Company are presented for informational purposes only, have been prepared based on estimates and assumptions deemed by the Company to be appropriate and do not purport to be indicative of the financial position or results of operations which would actually have been attained if the relevant acquisitions had occurred on the assumed dates or which may be achieved in the future. 30 SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
YEAR ENDED DECEMBER 31, ------------------------------------------------------------------ 1993 1994 1995(1) 1996(2) 1997 --------- --------- --------- --------- ---------------------- PRO ACTUAL(3) FORMA(4) --------- ----------- (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE, RATIO AND PER VISITOR AMOUNTS) THE COMPANY Statement of Operations Data: Revenue: Theme park admissions.......... $ 12,874 $ 13,936 $ 21,863 $ 41,162 $ 94,611 $ 424,108 Theme park food, merchandise and other.................... 8,986 10,963 19,633 52,285 99,293 391,225 --------- --------- --------- --------- --------- ----------- Total revenue................ 21,860 24,899 41,496 93,447 193,904 815,333 --------- --------- --------- --------- --------- ----------- Operating costs and expenses: Operating expenses............. 10,401 12,358 19,775 42,425 81,356 335,620 Selling, general and administrative............... 4,768 5,448 9,272 16,927 36,547 131,580 Cost of products sold.......... 2,135 2,553 4,635 11,101 23,025 109,375 Depreciation and amortization................. 1,537 1,997 3,866 8,533 19,792 107,138 --------- --------- --------- --------- --------- ----------- Total operating costs and expenses................... 18,841 22,356 37,548 78,986 160,720 683,713 --------- --------- --------- --------- --------- ----------- Income from operations....... 3,019 2,543 3,948 14,461 33,184 131,620 Other income (expense): Interest expense, net.......... (1,438) (2,299) (5,578) (11,121) (17,775) (180,273) Equity in operations of theme parks........................ -- -- -- -- -- 18,216 Termination fee, net of expenses..................... -- -- -- -- 8,364 -- Minority interest.............. -- -- -- -- -- (516) Other income (expense)......... (136) (74) (177) (78) (59) (408) --------- --------- --------- --------- --------- ----------- Total other income (expense).................. (1,574) (2,373) (5,755) (11,199) (9,470) (162,981) --------- --------- --------- --------- --------- ----------- Income (loss) before income taxes...................... 1,445 170 (1,807) 3,262 23,714 (31,361) Income tax expense (benefit)..... 91 68 (762) 1,497 9,615 9,931 --------- --------- --------- --------- --------- ----------- Income (loss) before extraordinary loss......... $ 1,354 $ 102 $ (1,045 (5) $ 1,765 $ 14,099 $ (41,292) --------- --------- --------- --------- --------- ----------- --------- --------- --------- --------- --------- ----------- Income (loss) before extraordinary loss per common share--basic........ $ .51 $ .04 $ (.40 (5) $ .14 $ .79 $ (2.14) --------- --------- --------- --------- --------- ----------- --------- --------- --------- --------- --------- ----------- Income (loss) before extraordinary loss per common share--diluted...... $ .51 $ .04 $ (.40 (5) $ .13 $ .76 $ (2.14) --------- --------- --------- --------- --------- ----------- --------- --------- --------- --------- --------- ----------- OTHER DATA: EBITDA(6)........................ $ 4,562 $ 4,549 $ 7,706 $ 22,994 $ 61,340(7) $ 263,455 Adjusted EBITDA(8)............... -- -- -- -- -- $ 306,037 Net cash provided by operating activities(9).................. $ 2,699 $ 1,060 $ 10,646 $ 11,331 $ 47,150 $ 153,027 Capital expenditures............. $ 7,674 $ 10,108 $ 10,732 $ 39,423 $ 135,852 $ 212,229(10) Total attendance................. 1,322 1,408 2,302 (11 4,518 (11 8,631 (11 36,530(12) Revenue per visitor(13).......... $ 16.54 $ 17.68 $ 18.03 $ 20.66 $ 22.18 $ 27.37 SELECTED RATIOS: Net debt/EBITDA(14).............. -- -- -- -- -- 4.8x Total debt/EBITDA(14)............ -- -- -- -- -- 7.0x EBITDA/cash interest expense(14).................... -- -- -- -- -- 2.2x EBITDA/total interest expense(14).................... -- -- -- -- -- 1.4x Ratio of earnings to fixed charges(15).................... 2.1x 1.1x (15) 1.3x 2.3x (15) Ratio of earnings to combined fixed charges and preferred stock dividends(15)............ 2.1x 1.1x (15) 1.2x 2.3x (15)
31
AS OF DECEMBER 31, --------------------------------------------------------------------- 1993 1994 1995 1996 1997 --------- --------- --------- --------- ------------------------- PRO ACTUAL(16) FORMA(17) ----------- ------------ (UNAUDITED) (IN THOUSANDS) THE COMPANY Balance Sheet Data: Cash and cash equivalents................. $ 3,026 $ 1,366 $ 28,787 $ 4,043 $ 84,288 $ 479,804(18) Total assets.............................. $ 36,708 $ 45,539 $ 173,318 $ 304,803 $ 611,321 $3,553,662 Total long-term debt and capitalized lease obligations (excluding current maturities)........................... $ 18,649 $ 22,216 $ 93,213 $ 149,342 $ 216,231 $2,032,831 Total debt................................ $ 20,821 $ 24,108 $ 94,278 $ 150,834 $ 217,026 $2,035,626 Mandatorily redeemable preferred stock.... -- -- -- -- -- $ 200,000 Stockholders' equity...................... $ 13,192 $ 18,134 $ 45,911 $ 113,182 $ 323,749 $1,130,180
- ------------------------ (1) The historical Statement of Operations Data for 1995 reflect the results of the parks acquired in the Funtime Acquisition from the date of acquisition, August 15, 1995. (2) The historical Statement of Operations Data for 1996 reflect the results of Elitch Gardens from October 31, 1996, the Waterworld Parks from November 19, 1996 and The Great Escape from December 4, 1996 (the dates of their respective acquisitions). (3) The historical Statement of Operations Data for 1997 reflect the results of Riverside Park from February 5, 1997 and Kentucky Kingdom from November 7, 1997 (the dates of their respective acquisitions). (4) The pro forma financial and operating data for the year ended December 31, 1997 give effect to (i) the acquisitions of Walibi (assuming a 100% Walibi Tender Offer on the basis of 80% payable in cash and 20% payable in shares of Common Stock) and Kentucky Kingdom as if they had occurred on January 1, 1997; and (ii) the acquisition of Six Flags as if it had occurred on December 30, 1996 (the first day of Six Flags' 1997 fiscal year). The pro forma income per share for 1997 gives effect to the January 1997 public offering, the Common Stock Offering and the EqPINES Offering (assuming no exercise of the Underwriters' over-allotment options) as if they had occurred on January 1, 1997. See "Unaudited Pro Forma Financial Statements--Unaudited Pro Forma Statement of Operations" generally and with respect to certain assumptions used in respect of the related financings. (5) During 1995, the Company incurred an extraordinary loss of $140,000, net of income tax benefit, on extinguishment of debt in connection with the Funtime Acquisition. This extraordinary loss is not included in income (loss) before extraordinary loss and income (loss) before extraordinary loss per common share for 1995. (6) EBITDA is defined as earnings before extraordinary loss, interest expense, net, income tax expense (benefit), depreciation and amortization, minority interest and equity in loss of real estate partnership. The Company has included information concerning EBITDA because it is used by certain investors as a measure of the Company's ability to service and/or incur debt. EBITDA is not required by GAAP and should not be considered in isolation or as an alternative to net income, net cash provided by operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance. This information should be read in conjunction with the Statements of Cash Flows contained in the Company's financial statements included elsewhere herein. Equity in loss of real estate partnership was $142,000, $83,000, $69,000, $78,000, and $59,000 during each of the five years ended December 31, 1997, respectively. Pro Forma EBITDA includes equity in operations of theme parks and the depreciation and amortization ($6,830,000) of the investment in the Co-Venture Parks included therein. (7) Includes an $8,364,000 termination fee paid to the Company upon termination of its prior agreement to become managing general partner of the Texas Co-Venture Partnership. Such termination fee is not included in the pro forma amounts. (8) Adjusted EBITDA reflects the Company's pro forma EBITDA plus the portion of the pro forma EBITDA of the Co-Venture Parks ($34,672,000) distributed on a pro forma basis to the other limited partners and therefore not included in the Company's pro forma EBITDA. See Note (1) to the Six Flags Selected Historical (FOOTNOTES CONTINUED ON FOLLOWING PAGE) 32 Financial and Operating Data. The Co-Venture Partnership agreements restrict the amount of cash distributable to the Company. See "Business--Six Flags Parks--Six Flags Over Georgia" and "--Six Flags Over Texas and Six Flags Hurricane Harbor." Adjusted EBITDA also includes $7,910,000 of pro forma EBITDA of Marine World for 1997 which is not already reflected in the Company's pro forma EBITDA. The Company manages the operations of Marine World and has an option to purchase the entire park beginning in February 2002. Adjusted EBITDA is not indicative of the Company's ability to service or incur indebtedness and is not a measure of the Company's profitability or liquidity. Adjusted EBITDA is not meant to be predictive of future operating results. (9) During each of the five years ended December 31, 1997, the Company's net cash used in investing activities was $7,698,000, $10,177,000, $74,139,000, $155,149,000 and $217,070,000, respectively. During those periods, net cash provided by financing activities was $2,106,000, $7,457,000, $90,914,000, $119,074,000 and $250,165,000, respectively. (10) Does not include pro forma amount expended ($93,700,000) by the Company to purchase interests of the limited partners in the Co-Venture Partnerships. (11) Represents in the case of 1995 attendance at the three parks owned by the Company prior to the Funtime Acquisition for the entire 1995 season and attendance at the Funtime parks from and after August 15, 1995. In the case of 1996, historical attendance does not include attendance at any of the parks acquired in the 1996 Acquisitions since those acquisitions were completed following the 1996 season. Historical attendance for the year ended December 31, 1997 does not include attendance at Marine World or attendance at Kentucky Kingdom since that park was acquired following the 1997 season. (12) Pro forma attendance information includes attendance at Marine World for 1997. (13) Pro forma and historical revenue per visitor for all applicable periods do not include revenue of Paradise Island (a fee-per-attraction entertainment center that does not track attendance, acquired in November 1996). Pro forma revenue per visitor also excludes revenue and attendance of Marine World and the Co-Venture Parks. (14) Total debt/EBITDA and Net debt/EBITDA include total outstanding pro forma indebtedness of the Company (excluding the SFEC Zero Coupon Senior Notes) in the accreted principal amount of $1,831,951,000. Net debt deducts from total outstanding pro forma indebtedness $556,064,000 (representing $479,804,000 of pro forma cash and cash equivalents and $76,260,000 of pro forma restricted-use investments placed in escrow to fund the first six semi-annual interest payments on the Company Senior Notes). See "Capitalization." EBITDA/cash interest expense is calculated using pro forma cash interest expense of $119,492,000. EBITDA/total interest expense is calculated using pro forma total interest expense of $185,712,000 (excluding interest on the SFEC Zero Coupon Senior Notes). (15) For the purpose of determining the ratio of earnings to fixed charges, and the ratio of earnings to combined fixed charges and preferred stock dividends, earnings consist of income (loss) before extraordinary loss and before income taxes and fixed charges. Fixed charges consist of interest expense net of interest income, amortization of deferred financing costs and discount or premium relating to indebtedness and the portion (approximately one-third) of rental expense that management believes represents the interest component of rent expense. Preferred stock dividend requirements have been increased to an amount representing the before tax earnings which would have been required to cover such dividend requirements. For the year ended December 31, 1995, the Company's earnings were insufficient to cover fixed charges by $1,738,000 and were insufficient to cover combined fixed charges and preferred stock dividends by $2,620,000. On a pro forma basis, for the year ended December 31, 1997, the Company's earnings were insufficient to cover fixed charges and combined fixed charges and preferred stock dividends by $31,818,000 and $77,720,000, respectively. (16) Actual balance sheet data as of December 31, 1997 include the Company's purchase of Kentucky Kingdom and investment in Marine World as of that date. (17) The pro forma balance sheet data give effect to the acquisitions of Walibi (assuming a 100% Walibi Tender Offer on the basis of 80% payable in cash and 20% payable in Common Stock) and Six Flags, the Offerings (assuming no exercise of the underwriters' over-allotment options) and the related financings as if they had occurred on December 31, 1997. Includes SFEC Zero Coupon Senior Notes as well as cash held in escrow to repay the SFEC Zero Coupon Senior Notes. Pro forma total long-term debt and total debt include SFEC Zero Coupon Senior Notes and SFTP Senior Subordinated Notes at fair value rather than accreted amount. See "Capitalization." See also "Unaudited Pro Forma Financial Statements--Unaudited Pro Forma Balance Sheet" generally and with respect to certain assumptions used in respect of the related financings. (18) Excludes $326,300,000 of restricted-use investments. See "Capitalization." 33
YEAR ENDED ---------------------------------------- DECEMBER 31, DECEMBER 29, DECEMBER 28, 1995 1996 1997 ------------ ------------ ------------ (IN THOUSANDS, EXCEPT PER VISITOR AMOUNTS) SIX FLAGS STATEMENT OF OPERATIONS DATA(1): Revenue: Operating services.................................................. $ 366,665 $ 405,558 $ 427,569 Sales of products and other......................................... 262,792 275,318 281,097 ------------ ------------ ------------ Total revenue(1).................................................. 629,457 680,876 708,666 ------------ ------------ ------------ Costs and expenses: Operating, general and administrative............................... 388,137 419,756 443,359 Cost of products sold............................................... 91,138 105,988 101,239 Depreciation and amortization....................................... 83,444 87,417 84,493 ------------ ------------ ------------ Total costs and expenses.......................................... 562,719 613,161 629,091 ------------ ------------ ------------ Income from operations(2)............................................. 66,738 67,715 79,575 Other income (expense): Interest expense, net............................................... (63,282) (76,530) (84,430) Minority interest................................................... -- (1,297) 1,147 ------------ ------------ ------------ Total other income (expense)...................................... (63,282) (77,827) (83,283) ------------ ------------ ------------ Income (loss) before income taxes................................. 3,456 (10,112) (3,708) Income tax expense.................................................... 6,743 5,137 -- ------------ ------------ ------------ Net (loss)........................................................ $ (3,287) $ (15,249) $ (3,708) ------------ ------------ ------------ ------------ ------------ ------------ OTHER DATA: EBITDA(3)............................................................. $ 150,182 $ 155,132 $ 164,068 Net cash provided by operating activities(4).......................... $ 124,587 $ 128,602 $ 110,303 Capital expenditures.................................................. $ 45,578 $ 75,627 $ 67,675(5) Total attendance...................................................... 21,830 22,796 22,229 Revenue per visitor................................................... $ 28.83 $ 29.87 $ 31.88
- ------------------------ (1) Prior to the Six Flags Acquisition, Six Flags, through two subsidiaries, was the general partner in the Co-Venture Partnerships. For the fiscal years presented, Six Flags accounted for the parks as co-ventures, i.e., their revenues and expenses (excluding partnership depreciation) were included in Six Flags consolidated statements of operations and the net amounts distributed to the limited partners were deducted as expenses. Except for the limited partnership units owned in the Georgia park at December 28, 1997, Six Flags had no rights or title to the Co-Venture Parks' assets or to the proceeds from any sale of the Co-Venture Parks' assets or liabilities during the periods presented. The Co-Venture Parks contributed revenues of $160.6 million, $152.0 million and $176.8 million to Six Flags in the fiscal years 1995, 1996 and 1997, respectively. During these three fiscal years, the Co-Venture Parks contributed EBITDA of $36.8 million, $24.3 million and $34.7 million (after payment of $11.6 million, $8.1 million and $21.3 million to the limited partners). In 1995, 1996 and 1997, the Co-Venture Parks produced $48.4 million, $32.4 million and $56.0 million of EBITDA, respectively. In connection with the Six Flags Transactions, SFEC is transferring its interest in the Co-Venture Parks to Premier. Premier intends to account for its interests in the Co-Venture Parks under the equity method of accounting. (2) Income from operations is revenue less operating, general and administrative expenses, costs of products sold and depreciation and amortization. (3) EBITDA is defined as earnings before interest expense, net, income tax expense (benefit), depreciation and amortization and minority interest. The Company has included information concerning EBITDA because it is used by certain investors as a measure of a company's ability to service and/or incur debt. EBITDA is not required by GAAP and should not be considered in isolation or as an alternative to net income, net cash provided by operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Six Flags operating 34 performance. This information should be read in conjunction with the Statements of Cash Flows contained in the Six Flags financial statements included elsewhere herein. (4) During each of the fiscal years ended December 31, 1995, December 29, 1996 and December 28, 1997, Six Flags' net cash used in investing activities was approximately $93.9 million, $81.2 million and $149.7 million, respectively. During these periods, net cash provided (used) in financing activities was approximately $10.6 million, $(52.2) million and $10.6 million, respectively. (5) Does not include amount expended ($62.7 million) by Six Flags to purchase interests of the limited partners in the Co-Venture Partnerships. 35 UNAUDITED PRO FORMA FINANCIAL STATEMENTS The following unaudited pro forma financial statements (the "Pro Forma Financial Statements") of the Company are based upon and should be read in conjunction with the historical financial statements of Premier, Kentucky Kingdom, Six Flags and Walibi, which are included elsewhere in this Prospectus, except in the case of Kentucky Kingdom and Walibi which are incorporated herein by reference. The unaudited pro forma statement of operations for the year ended December 31, 1997 gives effect to the acquisitions of Kentucky Kingdom, Six Flags, and Walibi, the financings associated with the transactions, and the issuance of Convertible Preferred Stock and Common Stock as if they had occurred on January 1, 1997 (except in the case of Six Flags, which was treated as if it occurred December 30, 1996, the first day of the 1997 fiscal year of Six Flags). The Pro Forma Financial Statements also give pro forma effect to the new arrangements with respect to the Co-Venture Parks entered into by Six Flags in 1997. The unaudited pro forma balance sheet is presented as if the acquisitions of Six Flags and Walibi, the financings associated with the transactions, and the issuance of Convertible Preferred Stock and Common Stock occurred on December 31, 1997 (except in the case of Six Flags, which was treated as if it were acquired December 28, 1997, the last day of the 1997 fiscal year of Six Flags). The acquisitions will be accounted for using the purchase method of accounting. Allocations of the purchase price have been determined based upon estimates of fair value. The final allocation of the purchase price may differ from these preliminary estimates due to the final allocation being based on the completion of valuations of certain acquired assets and assumed liabilities and management's evaluation of such items. The Pro Forma Financial Statements are for informational purposes only, have been prepared based upon estimates and assumptions deemed by the Company to be appropriate and do not purport to be indicative of the financial position or results of operations which would actually have been attained if the acquisitions had occurred as presented in such statements or which could be achieved in the future. 36 PREMIER PARKS INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT FOR RATIO, SHARE AND PER SHARE DATA)
PRO FORMA ADJUSTMENTS HISTORICAL --------------- HISTORICAL KENTUCKY HISTORICAL HISTORICAL COMBINED CO-VENTURE PREMIER KINGDOM (1) SIX FLAGS WALIBI (2) COMPANY ADJUSTMENTS(3) ---------- ------------- ----------- ------------- ----------- --------------- REVENUE: Theme park admissions.................. $ 94,611 $ 11,562 $ 368,139 $ 43,742 $ 518,054 $ (93,946) Theme park food, merchandise, and other................................ 99,293 10,152 340,527 24,101 474,073 (82,848) ---------- ------------- ----------- ------------- ----------- --------------- Total revenue...................... 193,904 21,714 708,666 67,843 992,127 (176,794) ---------- ------------- ----------- ------------- ----------- --------------- OPERATING COSTS AND EXPENSES: Operating expenses..................... 81,356 5,705 330,033 31,629 448,723 (100,445) Selling, general and administrative.... 36,547 5,194 113,326 10,567 165,634 (17,474) Costs of products sold................. 23,025 2,684 101,239 6,097 133,045 (24,137) Depreciation and amortization.......... 19,792 2,344 84,493 13,998 120,627 (12,107) ---------- ------------- ----------- ------------- ----------- --------------- Total operating costs and expenses......................... 160,720 15,927 629,091 62,291 868,029 (154,163) ---------- ------------- ----------- ------------- ----------- --------------- Income (loss) from operations.......... 33,184 5,787 79,575 5,552 124,098 (22,631) OTHER INCOME (EXPENSE): Interest expense, net.................. (17,775) (3,974) (84,430) (3,409) (109,588) -- Equity in operations of theme parks.... -- -- -- -- -- 22,631 Termination fee, net of expenses....... 8,364 -- -- -- 8,364 -- Minority interest...................... -- -- 1,147 -- 1,147 -- Other income (expense)................. (59) 293 -- (289) (55) -- ---------- ------------- ----------- ------------- ----------- --------------- Total other income (expense)....... (9,470) (3,681) (83,283) (3,698) (100,132) 22,631 Income (loss) before income taxes...... 23,714 2,106 (3,708) 1,854 23,966 -- Income tax expense (benefit)........... 9,615 -- -- 2,373 11,988 -- ---------- ------------- ----------- ------------- ----------- --------------- Net income (loss)...................... $ 14,099 $ 2,106 $ (3,708) $ (519) $ 11,978 $ -- ---------- ------------- ----------- ------------- ----------- --------------- ---------- ------------- ----------- ------------- ----------- --------------- Net income (loss) applicable to common stock................................ $ 14,099 $ 2,106 $ (3,708) $ (519) $ 11,978 $ -- ---------- ------------- ----------- ------------- ----------- --------------- ---------- ------------- ----------- ------------- ----------- --------------- Net income (loss) per common share..... $ 0.79 (15) (15) (15) (15) ---------- ---------- Weighted average shares................ 17,938,000 (15) (15) (15) (15) ---------- ---------- EBITDA (16)............................ $ 61,340 $ 8,424 $ 164,068 $ 19,261 $ 253,093 $ -- ---------- ------------- ----------- ------------- ----------- --------------- ---------- ------------- ----------- ------------- ----------- --------------- Net cash provided by operating activities........................... $ 47,150 $ 4,042 $ 110,303 $ 12,206 17) $ 173,701 $ -- ---------- ------------- ----------- ------------- ----------- --------------- ---------- ------------- ----------- ------------- ----------- --------------- Ratio of earnings to fixed charges..... 2.3x Ratio of earnings to combined fixed charges and preferred stock dividends............................ 2.3x PREMIER COMPANY OPERATIONS (4) SIX FLAGS PRO FORMA --------------- ----------- ---------- REVENUE: Theme park admissions.................. $ -- $ -- $ 424,108 Theme park food, merchandise, and other................................ -- -- 391,225 --------------- ----------- ---------- Total revenue...................... -- -- 815,333 --------------- ----------- ---------- OPERATING COSTS AND EXPENSES: Operating expenses..................... (62)(5) (12,596) 335,620 Selling, general and administrative.... (2,903)(6) (13,677) 131,580 Costs of products sold................. (261)(7) 728(7) 109,375 Depreciation and amortization.......... (6,587)(8) 5,205(8) 107,138 --------------- ----------- ---------- Total operating costs and expenses......................... (9,813) (20,340) 683,713 --------------- ----------- ---------- Income (loss) from operations.......... 9,813 20,340 131,620 OTHER INCOME (EXPENSE): Interest expense, net.................. (13,156)(9) (57,529) (180,273) Equity in operations of theme parks.... -- (4,415) 0 ) 18,216 Termination fee, net of expenses....... (8,364)(11) -- -- Minority interest...................... -- (1,663) (516) Other income (expense)................. (353)(13) -- (408) --------------- ----------- ---------- Total other income (expense)....... (21,873) (63,607) (162,981) Income (loss) before income taxes...... (12,060) (43,267) (31,361) Income tax expense (benefit)........... (3,882)(14) 1,825 14 9,931 --------------- ----------- ---------- Net income (loss)...................... $ (8,178) $ (45,092) $ (41,292) --------------- ----------- ---------- --------------- ----------- ---------- Net income (loss) applicable to common stock................................ $ (8,178) $ (73,092) ) $ (69,292) --------------- ----------- ---------- --------------- ----------- ---------- Net income (loss) per common share..... $ (2.14)(15) ---------- ---------- Weighted average shares................ 32,331,000(15) ---------- ---------- EBITDA (16)............................ $ (5,491 ) $ 15,853 $ 263,455 --------------- ----------- ---------- --------------- ----------- ---------- Net cash provided by operating activities........................... $ (17,376 ) $ (3,298 ) $ 153,027 --------------- ----------- ---------- --------------- ----------- ---------- Ratio of earnings to fixed charges..... (18) Ratio of earnings to combined fixed charges and preferred stock dividends............................ (18)
See accompanying notes to unaudited pro forma statement of operations. 37 Premier Parks Inc. Notes to Unaudited Pro Forma Statement of Operation Year Ended December 31, 1997 (All amounts in thousands, except share data) BASIS OF PRESENTATION The accompanying unaudited pro forma statement of operations for the year ended December 31, 1997, has been prepared based upon certain pro forma adjustments to historical financial information of the Company, Kentucky Kingdom, Six Flags and Walibi. The Company's acquisition of the operating assets of Kentucky Kingdom occurred on November 7, 1997. The Company's acquisition of the capital stock of SFEC and Walibi are scheduled to be completed in the second quarter of 1998. The unaudited pro forma statement of operations for the year ended December 31, 1997, has been prepared assuming the acquisitions, the related financings, the issuance of the Convertible Preferred Stock and Common Stock and the new Co-Venture Park arrangements occurred January 1, 1997 (except in the case of Six Flags, which was treated as if it were acquired on December 30, 1996, the first day of the 1997 fiscal year of Six Flags). The unaudited pro forma statement of operations should be read in conjunction with the financial statements of the Company, Kentucky Kingdom, Six Flags and Walibi and notes thereto included elsewhere herein or, in the case of Kentucky Kingdom and Walibi, which are incorporated herein by reference. PRO FORMA ADJUSTMENTS (1) The results of Kentucky Kingdom included herein represent the ten months during 1997 prior to the acquisition of Kentucky Kingdom by the Company. Revenues, operating expenses and other expenses for the first two months (November and December 1996) of Kentucky Kingdom's fiscal year ended November 2, 1997 were $2, $1,199 and $849, respectively, and are not included in the accompanying unaudited pro forma statement of operations. (2) The results of Walibi are converted from Belgian Francs ("BEF") and are accounted for using generally accepted accounting principles of Belgium. The following table reflects the adjustment of the Walibi statement of operations to conform to U.S. generally accepted accounting principles and U.S. dollars (using the December 31, 1997 exchange rate of 37.065 BEF to US$1):
AMOUNT ACCOUNTING ADJUSTED AMOUNT (IN BEF) ADJUSTMENTS AMOUNT (IN U.S.$) ----------- ------------ ---------- ---------- Theme park admissions........................................ 1,621,309 -- 1,621,309 $ 43,742 Theme park food, merchandise, and other...................... 893,291 -- 893,291 24,101 ----------- ------------ ---------- ---------- Total revenue................................................ 2,514,600 -- 2,514,600 67,843 ----------- ------------ ---------- ---------- Operating expenses........................................... 1,175,031 (2,700) 1,172,331 31,629 Selling, general and administrative.......................... 391,677 -- 391,677 10,567 Costs of products sold....................................... 225,974 -- 225,974 6,097 Depreciation and amortization................................ 524,988 (6,144) 518,844 13,998 ----------- ------------ ---------- ---------- Total operating costs and expenses........................... 2,317,670 (8,844) 2,308,826 62,291 ----------- ------------ ---------- ---------- Income (loss) from operations................................ 196,930 8,844 205,774 5,552 Interest expense, net........................................ (126,383) -- (126,383) (3,409) Other income (expense)....................................... (10,700) -- (10,700) (289) ----------- ------------ ---------- ---------- Total other income (expense)................................. (137,083) -- (137,083) (3,698) ----------- ------------ ---------- ---------- Income (loss) before income taxes............................ 59,847 8,844 68,691 1,854 Income tax expense........................................... 59,287 28,656 87,943 2,373 ----------- ------------ ---------- ---------- Net income (loss)............................................ 560 (19,812) (19,252) $ (519) ----------- ------------ ---------- ---------- ----------- ------------ ---------- ----------
38 PREMIER PARKS INC. NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED) YEAR ENDED DECEMBER 31, 1997 (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) The unaudited pro forma statement of operations data assume all Walibi stockholders accept the Walibi Tender Offer. If no such holders tender their shares, the pro forma adjustment for minority interest would have been increased by $1,969. (3) Represents results of the Six Flags Over Texas and Six Flags Over Georgia theme parks. Prior to the Six Flags Acquisition, Six Flags included the results of the Co-Venture Partnerships in Six Flags' consolidated statements of operations and the net amounts paid to the limited partners thereof were reflected as an operating expense. After the date of the Six Flags Acquisition, the Company will account for the results of the Co-Venture Partnerships using the equity method of accounting. Under this method of accounting, the Company's interest in the Co-Venture Partnerships will be reflected in equity in operations of theme parks. (4) Represents adjustments arising from Premier's acquisitions of Kentucky Kingdom and Walibi, including interest expense associated with borrowings under the Premier Credit Facility, and from the elimination of Premier's termination fee referred to in note (11) below. (5) Adjustments reflect reductions in park-level operating expenses of $62 in the case of Kentucky Kingdom and $12,596, in the case of Six Flags. (6) Adjustments reflect reductions in selling, general and administrative expenses of $897 in the case of Kentucky Kingdom (including insurance, franchise tax and other expenses); $2,006 in the case of Walibi (including costs relating to its annual report, other shareholder-related expenses, salaries and other expenses) and $13,677 in the case of Six Flags (including national advertising and promotion expenses, insurance, and other expenses, net of reduction of accrued restructuring costs and other non-recurring items). (7) Adjustments reflect $261 of cost reductions related to termination of concessionaire arrangements at Kentucky Kingdom, and elimination of $728 of non-recurring benefits from reversing previously accrued expenses at Six Flags during 1997. (8) Adjustments in the Premier Operations column reflect the elimination of historical depreciation and amortization of $16,342 for Kentucky Kingdom and Walibi and the inclusion of estimated pro forma depreciation of $7,909 and amortization of $1,846. Adjustments in the Six Flags column reflect the elimination of historical depreciation of $58,902 and the inclusion of estimated pro forma depreciation of $25,937 and the elimination of historical amortization of $13,484 (after reduction of $12,107 of amortization related to the Co-Venture Partnerships) and the inclusion of estimated pro forma amortization of $51,654. Depreciation by the Company is based on useful lives of 20 years and intangible assets are amortized over 25 years. In the case of Walibi, the pro forma value of property and equipment was increased from historical recorded value. In the case of Six Flags, the pro forma value of property and equipment is estimated to be consistent with the historical recorded value. Thus, the net pro forma reduction of Six Flags depreciation is a result of longer average lives used by the Company. The increase in Six Flags net pro forma amortization results from the increase in the pro forma amount of intangible assets and the amortization of such costs over 25 years. The allocation of the Six Flags purchase price to property and equipment, based on book value, and to intangible assets based on the excess of the purchase price over the estimated value of the acquired net assets is subject to adjustment. The final allocation of the purchase price may differ from these preliminary estimates due to the final allocation being based on the completion of valuations of certain acquired assets and assumed liabilities and management's evaluation of such items. (9) Adjustments reflect the interest expense associated with the Company Notes, the New SFEC Notes, the Premier Credit Facility, and the Six Flags Credit Facility net of the elimination of the interest expense associated with the Company and Six Flags credit facilities previously outstanding, the long- term debt of Kentucky Kingdom, the long-term debt of Walibi, and the elimination of the interest 39 PREMIER PARKS INC. NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED) YEAR ENDED DECEMBER 31, 1997 (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) income earned by the Company on the cash used in the purchase of Kentucky Kingdom as if the Company had made the above acquisitions as of January 1, 1997 (except in the case of Six Flags, which was treated as if it occurred on December 30, 1996, the first day of the 1997 fiscal year of Six Flags). Issuance costs associated with the new borrowings are being amortized over the respective terms. The components of the adjustments are as follows: In the case of the Premier Operations adjustments: Interest expense on Premier Credit Facility (assuming a 7 7/8% interest rate)................................................... $ (17,719) Interest expense from amortization of issuance costs............... (600) Interest expense from commitment fees on the Premier Credit Facility......................................................... (375) Elimination of historical interest expense - Premier............... 655 Elimination of historical interest expense - Walibi................ 3,409 Elimination of historical interest expense - Kentucky Kingdom...... 3,974 Elimination of historical interest income on cash used to acquire Kentucky Kingdom................................. (2,500) --------- $ (13,156) --------- --------- In the case of the Six Flags adjustments: Interest expense on Company Senior Notes (assuming a 10% interest rate)............................................................ $ (28,000) Interest expense on Company Senior Discount Notes (assuming an 11% interest rate)................................................... (27,500) Interest expense on New SFEC Notes (assuming a 9 1/2% interest rate)............................................................ (16,150) Interest expense on Six Flags Credit Facility (assuming a 8.198% interest rate)................................................... (34,432) Interest expense from amortization of issuance costs............... (4,614) Interest expense from commitment fee on the Six Flags Credit Facility......................................................... (260) Elimination of historical interest expense - Six Flags............. 53,427 --------- $ (57,529) --------- ---------
A 0.125% change in the interest rates on the Company Notes, New SFEC Notes and Credit Facilities would increase interest expense, net, in the case of Premier Operations, by $281, in the case of Six Flags by $1,400 and, in the case of Company Pro Forma, by $1,681. (10) Adjustment reflects the equity in the operations of the Six Flags Over Texas and Six Flags Over Georgia theme parks, based upon the Company's 25% ownership of the limited partnership that owns the Georgia park and the estimated 25% ownership of the limited partnership that owns the Texas park, as if the Georgia and Texas partnership agreements had been in effect as of January 1, 1997. Adjustments were also made to reflect (i) the elimination of the historical amortization expense related to the investment in the Texas limited partnership of $8,402, (ii) the estimated amortization of $3,125 of the 25% investment in the Texas limited partnership, (iii) recognition of the increased minimum level of required limited partnership distributions of $20,261 as a result of the change in agreement, (iv) receipt of $6,925 of limited partnership distributions associated with the 25% ownership of the limited partnership, and (v) cost savings associated with allocation of national advertising costs and insurance costs of $3,644. The pro forma statement of operations assumes a 25% tender acceptance rate for units in the Texas limited partnership. If 50% of such units are tendered, equity in operations of theme parks would be $17,338 as compared to the $13,538 reflected in the pro forma statement of operations. (11) Adjustment reflects the elimination of $8,364 termination fee paid to the Company in connection with the termination of the Company's prior agreement to become managing general partner of the Texas Co-Venture Partnership. 40 PREMIER PARKS INC. NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED) YEAR ENDED DECEMBER 31, 1997 (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) (12) Adjustment reflects the increase of $1,663 relating to the minority interest owner's share of operations related to net cost reductions at Fiesta Texas reflected above. (13) Adjustment reflects the reduction of $353 of other income (expense) of Kentucky Kingdom related to a lease obligation not assumed by the Company and assets not purchased by the Company. (14) Adjustments reflects the application of income taxes to the pro forma adjustments and to the acquired operations that were not previously directly subject to income taxation, after consideration of permanent differences, at a rate of 39%. (15) Net income (loss) applicable to common stock is adjusted to reflect $28,000 of dividends payable to holders of Seller Preferred Stock and EqPINES at assumed dividend rates of 6 1/2% and 7 1/2%, respectively. Net income (loss) per common share and weighted average share data are not presented for Kentucky Kingdom, Six Flags and Walibi as the information is not meaningful. In the event of an all cash Walibi Tender Offer, net income (loss) per common share would be $(2.16) and pro forma weighted average number of common shares would be 32,092,000. The calculation of pro forma weighted average shares outstanding for the year ended December 31, 1997 is as follows: Pro forma weighted average number of common shares outstanding before the Common Stock Offering and the Walibi acquisition... 18,873,000 Common shares to be issued in the Common Stock Offering, the proceeds of which will be used in part to fund the Six Flags Acquisition, as if issued on January 1, 1997.................. 13,000,000 Common shares to be issued as partial consideration for the Private Acquisition, as if issued on January 1, 1997.......... 229,000 Common shares to be issued as partial consideration for the Walibi Tender Offer, as if issued on January 1, 1997.......... 229,000 --------- Pro forma weighted average number of common shares outstanding................................................... 32,331,000 --------- ---------
(16) EBITDA is defined as earnings before interest expense, net, income tax expense (benefit), depreciation and amortization, minority interest and equity in loss of real estate partnership. The Company has included information concerning EBITDA because it is used by certain investors as a measure of the Company's ability to service and/or incur debt. EBITDA is not required by GAAP and should not be considered in isolation or as an alternative to net income, net cash provided by operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance. This information should be read in conjunction with the Statements of Cash Flows contained in the financial statements included elsewhere herein. Equity in loss of real estate partnership was $59,000 during the year ended December 31, 1997. Pro forma EBITDA includes equity in operations of theme parks and the depreciation and amortization ($6,830,000) of the investment in the Co-Venture Parks included therein. (17) The operating cash flow for Walibi during 1997 was 452,430 BEF. At an exchange rate of 37.065 BEF to US$1, the operating cash flow would have been $12,206. (18) On a pro forma basis, for the year ended December 31, 1997, the Company's earnings were insufficient to cover fixed charges and combined fixed charges and preferred stock dividends by $31,818 and $77,720, respectively. 41 PREMIER PARKS INC. UNAUDITED PRO FORMA BALANCE SHEET DECEMBER 31, 1997 (IN THOUSANDS)
HISTORICAL HISTORICAL HISTORICAL PREMIER SIX FLAGS WALIBI (1) ----------- ----------- ----------- ASSETS: Cash and cash equivalents................................................................ $ 84,288 $ 16,805 $ 16,423 Accounts receivable...................................................................... 6,537 7,258 5,693 Inventories.............................................................................. 5,547 14,338 1,748 Income tax receivable.................................................................... 995 -- -- Prepaid expenses and other current assets................................................ 3,690 11,899 1,595 ----------- ----------- ----------- Total current assets................................................................. 101,057 50,300 25,459 Deferred charges......................................................................... 10,123 20,171 Restricted-use investments............................................................... -- -- -- Deposits and other....................................................................... 3,949 26,784 281 ----------- ----------- ----------- Total other assets................................................................... 14,072 46,955 281 Investment in theme parks, net........................................................... -- 78,370 -- Property and equipment, net.............................................................. 450,256 492,137 91,174 Intangible assets, net................................................................... 45,936 196,928 2,431 ----------- ----------- ----------- Total assets......................................................................... $ 611,321 $ 864,690 $ 119,345 ----------- ----------- ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY: Accounts payable and accrued expenses.................................................... $ 23,199 $ 61,014 $ 11,387 Accrued interest payable................................................................. 9,785 3,431 -- Current maturities of long-term debt and capitalized lease obligations................... 795 56,633 18,843 ----------- ----------- ----------- Total current liabilities............................................................ 33,779 121,078 30,230 Long-term debt and capitalized lease obligations......................................... 216,231 753,369 50,545 Other long-term liabilities.............................................................. 4,025 12,570 1,970 Deferred income taxes.................................................................... 33,537 -- 4,706 Mandatorily redeemable preferred stock................................................... -- -- -- Stockholders' equity..................................................................... 323,749 (22,327) 31,894 ----------- ----------- ----------- Total liabilities and stockholders' equity........................................... $ 611,321 $ 864,690 $ 119,345 ----------- ----------- ----------- ----------- ----------- ----------- COMPANY PROFORMA COMPANY COMBINED ADJUSTMENTS PRO FORMA ----------- ----------- ----------- ASSETS: Cash and cash equivalents................................................................ $ 117,516 $(135,210) 2) $ 479,804 (1,262,134)(3) 1,759,632(4) Accounts receivable...................................................................... 19,488 19,488 Inventories.............................................................................. 21,633 21,633 Income tax receivable.................................................................... 995 995 Prepaid expenses and other current assets................................................ 17,184 17,184 ----------- ----------- ----------- Total current assets................................................................. 176,816 362,288 539,104 Deferred charges......................................................................... 30,294 39,166(4) 49,289 (20,171)(3) Restricted-use investments............................................................... -- 251,290(4) 326,290 75,000(4) Deposits and other....................................................................... 31,014 (10,984)(3) 52,530 25,000(3) 7,500(4) ----------- ----------- ----------- Total other assets................................................................... 61,308 366,801 428,109 Investment in theme parks, net........................................................... 78,370 (18,274)(3) 153,796 93,700(3) Property and equipment, net.............................................................. 1,033,567 17,326(2) 1,050,893 Intangible assets, net................................................................... 245,295 1,094,436(3) 1,381,760 42,029(2) ----------- ----------- ----------- Total assets......................................................................... $1,595,356 $1,958,306 $3,553,662 ----------- ----------- ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY: Accounts payable and accrued expenses.................................................... $ 95,600 $ 95,600 Accrued interest payable................................................................. 13,216 (3,431)(3) 9,785 Current maturities of long-term debt and capitalized lease obligations................... 76,271 (18,843)(2) 2,795 (56,633)(3) 2,000(4) ----------- ----------- ----------- Total current liabilities............................................................ 185,087 (76,907) 108,180 Long-term debt and capitalized lease obligations......................................... 1,020,145 (50,545)(2) 2,032,831 (279,769)(3) 1,343,000(4) Other long-term liabilities.............................................................. 18,565 35,000(3) 53,565 Deferred income taxes.................................................................... 38,243 6,584(2) 28,906 (15,921)(3) Mandatorily redeemable preferred stock................................................... -- 200,000(3) 200,000 Stockholders' equity..................................................................... 333,316 (31,894)(2) 1,130,180 22,327(3) 18,843(2) (1,421)(4) 789,009(4) ----------- ----------- ----------- Total liabilities and stockholders' equity........................................... $1,595,356 $1,958,306 $3,553,662 ----------- ----------- ----------- ----------- ----------- -----------
See accompanying notes to unaudited pro forma balance sheet. 42 PREMIER PARKS INC. NOTES TO UNAUDITED PRO FORMA BALANCE SHEET DECEMBER 31, 1997 (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) BASIS OF PRESENTATION The accompanying unaudited pro forma balance sheet as of December 31, 1997, has been prepared based on certain pro forma adjustments to historical financial information of the Company, Six Flags and Walibi. The Company's acquisition of the capital stock of SFEC and Walibi are scheduled to be completed in the second quarter of 1998. The unaudited pro forma balance sheet as of December 31, 1997, has been prepared assuming the acquisition of Six Flags and Walibi occurred on December 31, 1997. The unaudited pro forma balance sheet should be read in conjunction with the financial statements of the Company, Six Flags and Walibi and notes thereto included elsewhere herein or, in the case of Walibi, incorporated herein by reference. PRO FORMA ADJUSTMENTS (1) The amounts for Walibi are converted from Belgian Francs ("BEF") and are accounted for using generally accepted accounting principles of Belgium. The following table reflects the adjustment of the Walibi balance sheet to conform to U.S. generally accepted accounting principles and the conversion to U.S. dollars (using the December 31, 1997 exchange rate of 37.065 BEF to US$1) :
AMOUNT ACCOUNTING ADJUSTED AMOUNT (IN BEF) ADJUSTMENTS AMOUNT (IN U.S.$) ---------------- ----------- --------- ----------- Cash and cash equivalents.................................. 608,724 -- 608,724 $ 16,423 Accounts receivable........................................ 210,997 -- 210,997 5,693 Inventories................................................ 64,780 -- 64,780 1,748 Prepaid expenses and other current assets.................. 69,909 (10,800) 59,109 1,595 Deposits and other......................................... 10,407 -- 10,407 281 Property and equipment, net................................ 3,393,688 (14,344) 3,379,344 91,174 Intangible assets, net..................................... 45,694 44,429 90,123 2,431 Total assets............................................... 4,404,199 19,285 4,423,484 119,345 Accounts payable and accrued expenses...................... 404,365 17,636 422,001 11,387 Current maturities of long-term debt and capitalized lease 698,411 -- 698,411 18,843 obligations.............................................. Long-term debt and capitalized lease obligations........... 1,873,467 -- 1,873,467 50,545 Other long-term liabilities................................ 58,015 15,000 73,015 1,970 Deferred income taxes...................................... 281,475 (107,029) 174,446 4,706 Stockholders' equity....................................... 1,088,466 93,678 1,182,144 31,894 Total liabilities and stockholders' equity................. 4,404,199 19,285 4,423,484 119,345
43 NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (CONTINUED) DECEMBER 31, 1997 (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) (2) Adjustment reflects the purchase of the outstanding capital stock of Walibi for $64,822 of cash and in Common Stock of the Company valued at $18,843, as well as $1,000 of estimated transaction costs. As of December 31, 1997, Walibi had $69,388 of debt outstanding. As part of the acquisition, the debt will be paid in full. The purchase price, including the debt payment, will be funded from the Premier Credit Facility. The acquisition of Walibi will be accounted for using the purchase price method of accounting. Allocation of the purchase price for purposes of the pro forma balance sheet was based upon estimated fair values of assets and liabilities. Estimated fair value of property and equipment exceeds the historical carrying value by $17,326. Other than intangible assets and deferred tax liabilities, fair value is not anticipated to differ significantly from the current recorded value of other assets and liabilities. Deferred tax liabilities have been increased by $6,584 as a result of the differences between the fair value and tax basis of the assets and liabilities. Purchase price in excess of the estimated fair value of the acquired net assets has been reflected as an increase in intangible assets. The unaudited pro forma balance sheet data assumes a 100% acceptance of the Walibi Tender Offer with 80% of the tender offer consideration payable in cash and 20% in shares of Common Stock. If a 100% acceptance of an all cash Walibi Tender Offer occurs, pro forma cash and cash equivalents and stockholders' equity would decrease by $9,422. If no shares of Walibi capital stock are tendered, the Company Pro Forma amounts would be as follows:
COMPANY PRO FORMA ---------- Cash and cash equivalents................................................................... $ 573,686 Intangible assets, net...................................................................... 1,363,791 Total assets................................................................................ 3,629,575 Current maturities of long-term debt and capitalized lease obligations...................... 21,638 Long-term debt and capitalized lease obligations............................................ 2,083,376 Other long-term liabilities................................................................. 69,512 Stockholders' equity........................................................................ 1,120,758
(3) Adjustment reflects the purchase of the outstanding capital stock of Six Flags for $776,000 of cash and Seller Preferred Stock of $200,000, transaction costs of $10,000 and the purchase of 25% of the outstanding limited partnership units of the Texas Co-Venture Park for $93,700. Six Flags has commenced the tender offer on the terms described under "Business--Description of Parks--Six Flags over Texas and Six Flags Hurricane Harbor". The Company has assumed a 25% tender acceptance rate based on comparable results of the prior tender relating to the Georgia park. A $25,000 indemnity escrow will be established from the purchase price to fund indemnification claims of Premier under the Six Flags Agreement. The indemnity escrow is reflected as a deposit and as an other long-term liability. As of December 31, 1997, Six Flags had $810,002 of debt outstanding. The Company will refinance outstanding indebtedness of $379,003 and $3,431 of accrued interest and assume $430,999 of long-term debt. The purchase price and debt repayment will be funded from proceeds of the Offerings. The acquisition will be accounted for using the purchase method of 44 NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (CONTINUED) DECEMBER 31, 1997 (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) accounting. Allocation of the purchase price for purposes of the pro forma balance sheet was based upon estimated fair values of assets and liabilities. Fair value of assets and liabilities approximate recorded historical amounts, except for the fair value of the assumed debt and certain other assets, investments and deferred charges. The fair value of the assumed debt was $42,601 higher than the recorded value and certain other assets were reduced by $49,429. Additionally, $10,000 of liabilities related to changes in contractual agreements and other obligations are reflected as other long-term liabilities. Purchase price in excess of the estimated fair value of the acquired net assets has been reflected as an increase in intangible assets. The unaudited pro forma combined balance sheet data assumes a 25% tender acceptance rate in the tender offer for units in the Texas Co-Venture Park. In the event of a 50% tender acceptance rate, the applicable Company Pro Forma amounts would be as follows:
COMPANY PRO FORMA ----------- Cash and cash equivalents.............................................................. $ 386,104 Investment in theme parks, net......................................................... $ 247,496
(4) Adjustment reflects the following proceeds and costs:
Equity: Common Stock (assuming 13,000,000 shares issued at $45.63 per share based upon the average closing price of the Company's common stock for the twenty trading days ended February 27, 1998)........................ $ 593,190 EqPINES (assuming 5,000,000 shares issued at $45.63 per share).......... 228,150 Less discounts and costs................................................ (32,331) ----------- $ 789,009 ----------- ----------- Debt: Company Senior Notes.................................................... $ 280,000 Company Senior Discount Notes........................................... 250,000 New SFEC Notes.......................................................... 170,000 Premier Credit Facility ($1,000 principal due within one year).......... 225,000 Six Flags Credit Facility ($1,000 principal due within one year)........ 420,000 ----------- 1,345,000 Less debt issuance costs.................................................... (40,587) ----------- $1,304,413 ----------- -----------
Deferred charges of $1,421 associated with the Company's prior credit facility are reflected as a reduction in stockholders' equity. As part of the Six Flags agreements, the Company will establish a $75,000 restricted-use investment securing the Company's obligations related to the Co-Venture Parks' requirements and certain obligations related to the Convertible Preferred Stock. The Company will also establish a deposit of $7,500 related to securing the Company's obligation with respect to minimum annual distributions and mandatory capital expenditures at the Co-Venture Parks. Additionally, the Company will be establishing restricted-use investments of $175,030 related to the repayment of the SFEC Zero Coupon Senior Notes and of $76,260 for payment of the first six semi-annual interest payments on the Company's Senior Notes. 45 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's revenue is derived from the sale of tickets for entrance to its parks (approximately 52.7%, 44.0% and 48.8% in 1995, 1996 and 1997, respectively) and the sale of food, merchandise, games and attractions inside its parks and other income (approximately 47.3%, 56.0% and 51.2% in 1995, 1996 and 1997, respectively). The Company's principal costs of operations include salaries and wages, employee benefits, advertising, outside services, maintenance, utilities and insurance. The Company's expenses are relatively fixed. Costs for full-time employees, maintenance, utilities, advertising and insurance do not vary significantly with attendance, thereby providing the Company with a significant degree of operating leverage as attendance increases and fixed costs per visitor decrease. The Company acquired three parks in 1995 in the Funtime Acquisition, and acquired four parks during the last quarter of 1996. The Company acquired Riverside Park in February 1997, and Kentucky Kingdom in November 1997. In addition, the Company assumed management of Marine World in April 1997, exercised a lease option with respect to a portion of that park in November 1997, and executed a purchase option for the entire park in September 1997. The following discussion as it relates to 1996 includes two presentations. The first includes the historical results of the Company (including the results of the parks acquired in the 1996 Acquisitions (other than Riverside Park) only from their dates of acquisition forward (October 31, 1996 for Elitch Gardens; November 19, 1996 for the Waterworld parks; and December 4, 1996 for The Great Escape). The second includes both the historical results for the Company and the results of the parks acquired in the 1996 Acquisitions for periods prior to the dates of their respective acquisition. The following discussion as it relates to 1997 includes the results of the parks acquired in the 1996 Acquisitions (other than Riverside Park) for the full year, as well as Kentucky Kingdom and Riverside Park from their dates of acquisition forward, and includes Marine World only to the extent of the management fee received and depreciation expense related to that park. The Company believes that significant opportunities exist to acquire additional theme parks. Although the Company has had discussions with respect to several additional business acquisitions, no agreement or understanding has been reached with respect to any specific future acquisition other than the Six Flags and Walibi acquisitions. In addition, the Company intends to continue its on-going expansion of the rides and attractions and overall improvement of its parks to maintain and enhance their appeal. Management believes this strategy has contributed to increased attendance, lengths of stay and in-park spending and therefore, profitability. A consummated acquisition, including, the Six Flags and Walibi acquisitions, when consummated, may adversely affect the Company's operating results, at least in the short term, depending on many factors including capital requirements and the accounting treatment of any such acquisition. See "Unaudited Pro Forma Financial Statements." 46 RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 AND 1996 The table below sets forth certain financial information with respect to the Company (including the 1996 Acquisitions and Riverside Park) for the year ended December 31, 1996 and with respect to the Company and Kentucky Kingdom and Marine World for the year ended December 31, 1997:
YEAR ENDED DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1997 --------------------------------------------------------- ------------------------------------- HISTORICAL HISTORICAL HISTORICAL 1996 PREMIER NINE MONTHS ACQUISITIONS (EXCLUDING ENDED SEPTEMBER FOR PERIODS MARINE KENTUCKY 30, 1996 FOR SUBSEQUENT TO WORLD AND KINGDOM HISTORICAL 1996 SEPTEMBER 30, HISTORICAL KENTUCKY AND MARINE HISTORICAL PREMIER(1) ACQUISITIONS(2) 1996(3) COMBINED KINGDOM)(4) WORLD(5) PREMIER ----------- --------------- -------------- ----------- ----------- ----------- ----------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (IN THOUSANDS) (IN THOUSANDS) REVENUE: Theme park admissions...... $ 41,162 $ 34,062 $ 724 $ 75,948 $ 94,611 $ -- $ 94,611 Theme park food, merchandise and other.... 52,285 30,453 1,020 83,758 99,103 190 99,293 ----------- ------- -------------- ----------- ----------- ----------- ----------- Total revenue............ 93,447 64,515 1,744 159,706 193,714 190 193,904 ----------- ------- -------------- ----------- ----------- ----------- ----------- OPERATING COSTS AND EXPENSES: Operating expenses......... 42,425 23,204 3,116 68,745 80,307 1,049 81,356 Selling, general and administrative........... 16,927 17,035 2,289 36,251 36,461 86 36,547 Costs of products sold..... 11,101 9,448 347 20,896 23,025 -- 23,025 Depreciation and amortization............. 8,533 13,028 703 22,264 19,159 633 19,792 ----------- ------- -------------- ----------- ----------- ----------- ----------- Total operating costs and expenses............... 78,986 62,715 6,455 148,156 158,952 1,768 160,720 ----------- ------- -------------- ----------- ----------- ----------- ----------- Income (loss) from operations................. 14,461 1,800 (4,711) 11,550 34,762 (1,578) 33,184 OTHER INCOME (EXPENSE): Interest expense, net...... (11,121) (4,624) (517) (16,262) (17,763) (12) (17,775) Termination fee, net of expenses................. -- -- -- -- 8,364 -- 8,364 Other income (expense)..... (78) (284) -- (362) (59) -- (59) ----------- ------- -------------- ----------- ----------- ----------- ----------- Total other income (expense).............. (11,199) (4,908) (517) (16,624) (9,458) (12) (9,470) ----------- ------- -------------- ----------- ----------- ----------- ----------- Income before income taxes.................... 3,262 (3,108) (5,228) (5,074) 25,304 (1,590) 23,714 Income tax expense (benefit)................ 1,497 1,131 -- 2,628 9,615 -- 9,615 ----------- ------- -------------- ----------- ----------- ----------- ----------- Net income (loss).......... $ 1,765 $ (4,239) $ (5,228) $ (7,702) $ 15,689 $ (1,590) $ 14,099 ----------- ------- -------------- ----------- ----------- ----------- ----------- ----------- ------- -------------- ----------- ----------- ----------- -----------
- ------------------------ (1) Includes results of the 1996 Acquisitions from and after the acquisition dates. (2) Includes results of the 1996 Acquisitions for the nine months ended September 30, 1996. (3) Includes results of the 1996 Acquisitions for the respective periods commencing October 1, 1996 and ending on the respective acquisition dates (or in the case of Riverside Park, December 31, 1996). (4) Excludes management fee and depreciation expense relating to Marine World and results of Kentucky Kingdom for the period subsequent to the acquisition date, November 7, 1997. (5) Represents management fee and depreciation expense relating to Marine World and results of Kentucky Kingdom from the acquisition date through December 31, 1997. 47 RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1997 AND 1996 REVENUE. Revenue aggregated $193.9 million in 1997 ($193.7 million at the eleven parks owned during the 1997 season), compared to $93.4 million in 1996, and to combined revenue of $159.7 million in 1996. This 21.3% increase in revenue at the same eleven parks is primarily attributable to increased attendance (17.3%) at these eleven parks, which resulted in part from increased season pass and group sales at several parks. OPERATING EXPENSES. Operating expenses increased during 1997 to $81.4 million ($80.3 million at the eleven parks owned during the 1997 season) from $42.4 million reported in 1996, and from $68.7 million combined operating expenses for 1996. This 16.9% increase in operating expenses at the same eleven parks is mainly due to additional staffing related to the increased attendance levels and increased pay rates. As a percentage of revenue, operating expenses at these parks constituted 41.5% for 1997 and 43.0% on a combined basis for 1996. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expenses at the eleven owned parks were $36.5 million in 1997, compared to $16.9 million reported, and $36.3 million combined, selling, general and administrative expenses for 1996. As a percentage of revenues, these expenses at the same eleven parks constituted 18.8% for 1997 and 22.7% for 1996 combined. This increase over 1996 combined expenses relates primarily to increased advertising and marketing expenses to promote the newly acquired parks and the new rides and attractions at all of the parks, increased sales taxes arising from increased volume generally and increased property taxes and professional services, offset by significant reductions in personnel and insurance expenses. COSTS OF PRODUCTS SOLD. Costs of products sold were $23.0 million at the eleven parks for 1997 compared to $11.1 million reported and $20.9 million combined for 1996. Cost of products sold (as a percentage of in-park revenue) at these parks constituted approximately 23.2% for 1997 and 25.0% for 1996 combined. This $2.1 million or 10.2% increase over combined 1996 results is directly related to the 18.3% increase in food, merchandise and other revenues. DEPRECIATION AND INTEREST EXPENSE. Depreciation expense increased $11.3 million over the reported 1996 results. The increase is a result of the full year's effect of the 1996 Acquisitions (other than Riverside Park), the purchase price paid for the Riverside Park and Kentucky Kingdom acquisitions and the on-going capital program at the Company's parks. Interest expense, net, increased $6.7 million from 1996 as a result of interest on the 1997 Premier Notes. TERMINATION FEE, NET OF EXPENSES. During October 1997, the Company entered into an agreement with the limited partner of the partnership that owns Six Flags Over Texas to become the managing general partner of the partnership, to manage the operations of the park, to receive a portion of the income from such operations, and to purchase limited partnership units over the term of the agreement. The agreement was non-exclusive and contained a termination fee of $10,750,000 payable to the Company in the event the agreement was terminated. Subsequent to the Company's agreement with the limited partnership, the prior operator of the park reached an agreement with the limited partnership, and the Company's agreement was terminated. The Company received the termination fee in December 1997 and included the termination fee, net of $2,386,000 of expenses associated with the transaction, as income in 1997. 48 INCOME TAXES. The Company incurred income tax expense of $9.6 million during 1997, compared to $1.5 million during 1996. The effective tax rate for 1997 was approximately 40.5% as compared to 45.9% in 1996. This decrease is the result of the decline in the size of the non-deductible goodwill from the Funtime Acquisition and the acquisition of Riverside Park relative to the Company's income. At December 31, 1997, the Company estimates that it had approximately $37 million of net operating losses ("NOLs") carryforwards for Federal income tax purposes. The NOLs are subject to review and potential disallowance by the Internal Revenue Service upon audit of the Federal income tax returns of the Company and its subsidiaries. In addition, the use of such NOLs is subject to limitations on the amount of taxable income that can be offset with such NOLs. Some of such NOLs also are subject to a limitation as to which of the subsidiaries' income such NOLs are permitted to offset. Accordingly, no assurance can be given as to the timing or amount of the availability of such NOLs to the Company and its subsidiaries. See Note 7 to Premier's Consolidated Financial Statements. 49 YEARS ENDED DECEMBER 31, 1996 AND 1995 The table below sets forth certain financial information with respect to the Company and the Funtime parks for the year ended December 31, 1995 and with respect to the Company and the 1996 Acquisitions (other than Riverside Park) for the year ended December 31, 1996:
YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1996 ------------------------------------------------------ -------------------------------------------- HISTORICAL FUNTIME(2) ---------------------------- SIX MONTHS HISTORICAL ENDED FORTY-THREE PREMIER HISTORICAL JULY 2, DAYS ENDED HISTORICAL (EXCLUDING 1996 1996 HISTORICAL PREMIER(1) 1995 AUGUST 14, 1995 COMBINED ACQUISITIONS)(3) ACQUISITIONS(4) PREMIER ----------- ----------- --------------- ----------- --------------- -------------- ----------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (IN THOUSANDS) (IN THOUSANDS) Revenue: Theme park admissions......... $ 21,863 $ 6,195 $ 9,680 $ 37,738 $ 41,157 $ 5 $ 41,162 Theme park food, merchandise and other.............. 19,633 8,958 13,450 42,041 52,148 137 52,285 ----------- ----------- ------- ----------- ------- ------- ----------- Total revenue.......... 41,496 15,153 23,130 79,779 93,305 142 93,447 ----------- ----------- ------- ----------- ------- ------- ----------- Expenses: Operating expenses... 19,775 10,537 6,039 36,351 40,568 1,857 42,425 Selling, general and administrative..... 9,272 3,459 2,533 15,264 16,534 393 16,927 Costs of products sold............... 4,635 2,083 2,953 9,671 11,071 30 11,101 Depreciation and amortization....... 3,866 3,316 829 8,011 7,785 748 8,533 ----------- ----------- ------- ----------- ------- ------- ----------- Total costs and expenses............. 37,548 19,395 12,354 69,297 75,958 3,028 78,986 ----------- ----------- ------- ----------- ------- ------- ----------- Income (loss) from operations........... 3,948 (4,242) 10,776 10,482 17,347 (2,886) 14,461 Interest expense, net.................. (5,578) (2,741) (321) (8,640) (11,121) -- (11,121) Other income (expense)............ (177) 4 (4) (177) (78) -- (78) ----------- ----------- ------- ----------- ------- ------- ----------- Total other income (expense)............ (5,755) (2,737) (325) (8,817) (11,199) -- (11,199) ----------- ----------- ------- ----------- ------- ------- ----------- Income before income taxes and extraordinary loss... (1,807) (6,979) 10,451 1,665 6,148 (2,886) 3,262 Income tax expense (benefit)............ (762) (2,722) 4,076 592 2,905 (1,408) 1,497 ----------- ----------- ------- ----------- ------- ------- ----------- Income (loss) before extraordinary loss... $ (1,045) $ (4,257) $ 6,375 $ 1,073 $ 3,243 $ (1,478) $ 1,765 ----------- ----------- ------- ----------- ------- ------- ----------- ----------- ----------- ------- ----------- ------- ------- -----------
- ------------------------ (1) Includes results of the Funtime Acquisition from and after August 15, 1995, the acquisition date. (2) Represents results of the parks acquired in the Funtime Acquisition from January 1, 1995 to August 14, 1995. (3) Excludes operating results of parks acquired in the 1996 Acquisitions, but includes interest expense incurred by virtue of associated financings as of the date incurred. (4) Represents results of the parks acquired in the 1996 Acquisitions (other than Riverside Park which was acquired in February 1997) from their respective acquisition dates through December 31, 1996. 50 REVENUE. Revenue aggregated $93.4 million in 1996 ($93.3 million without the 1996 Acquisitions), compared to $41.5 million actual in 1995, and to combined revenue of $79.8 million in 1995. This 17.0% increase in revenue (excluding the 1996 Acquisitions) over combined 1995 revenue at the same six parks is attributable to increased attendance (10.3%) and per capita revenue (6.3%) at the six parks and increased sponsorship revenue, as well as increased season pass sales at several parks, and increased campground revenue at Darien Lake and income from the new contractual arrangements for 1996 at the Darien Lake Performance Arts Center. OPERATING EXPENSES. Operating expenses increased during 1996 to $42.4 million ($40.6 million excluding the 1996 Acquisitions) from $19.8 million reported in 1995 and from $36.4 million combined operating expenses for 1995. This 11.6% increase in operating expenses (excluding the 1996 Acquisitions) over combined 1995 operating expenses is mainly due to additional staffing related to increased attendance levels and increased pay rates, offset to some extent by a decrease in equipment rental expense in 1996 due to the purchase of equipment that had been leased during 1995. As a percentage of revenue, operating expenses (excluding the 1996 Acquisitions) constituted 43.5% for 1996 and 45.6% on a combined basis for 1995. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expenses were $16.5 million in 1996 (excluding the 1996 Acquisitions), compared to $9.3 million reported, and $15.3 million combined, selling, general and administrative expenses for 1995. As a percentage of revenue, these expenses constituted 17.7% for 1996 and 19.1% for 1995 combined. This increase over 1995 combined expenses relates primarily to increased advertising and marketing expenses to promote the Funtime parks and the new rides and attractions at all of the parks, increased sales taxes arising from increased volume generally and increased property taxes and professional services. COSTS OF PRODUCTS SOLD. Costs of products sold were $11.1 million for 1996 compared to $4.6 million reported and $9.7 million combined for 1995. Cost of products sold (as a percentage of in-park revenue) constituted approximately 21.2% for 1996 and 23.0% for 1995 combined. This $1.4 million or 14.5% increase over combined 1995 results is directly related to the 24.0% increase in 1996 in food, merchandise and other revenue. DEPRECIATION AND INTEREST EXPENSE. Depreciation and amortization expense was $8.5 million for 1996 as compared to $3.9 million in 1995. The increase was a result of the full year's effect of the Funtime Acquisition, the $116.2 million spent during the fourth quarter of 1996 for the 1996 Acquisitions and the on-going capital program at the Company's parks. Interest expense, net, increased $5.5 million in 1996, as compared to 1995, as a result of interest on the 1995 Premier Notes for twelve months in 1996 as compared to four and one-half months in 1995 and the Company's borrowings under its then-existing senior credit facility made in connection with the 1996 Acquisitions. INCOME TAXES. The Company incurred income tax expense of $1.5 million during 1996, compared to a tax benefit of $762,000 during 1995. The effective tax rate for 1996 was approximately 45.9% as compared to 42.2% in 1995. The increase is the result of twelve months of goodwill amortization in 1996 versus four and one-half months in 1995. The goodwill recognized for financial reporting of the Funtime Acquisition and the 1996 Acquisitions is not deductible for Federal income tax purposes. See Note 7 to Notes to Premier's Consolidated Financial Statements. LIQUIDITY, CAPITAL COMMITMENTS AND RESOURCES The operations of the Company are highly seasonal, with the majority of the operating season occurring between Memorial Day and Labor Day. Most of the Company's revenue is collected in the second and third quarters of each year while most expenditures for capital improvements and major maintenance are incurred when the parks are closed. See "Risk Factors -- Effects of Inclement Weather; Seasonal Fluctuations of Operating Results." The Company employs a substantial number of seasonal 51 employees who are compensated on an hourly basis. The Company is not subject to Federal or certain applicable state minimum wage rates in respect of its seasonal employees. However, the 1996 increase of $.90 an hour over two years in the Federal minimum wage rate, and any increase in these state minimum wage rates, may result over time in increased compensation expense for the Company as it relates to these employees as a result of competitive factors. HISTORICAL During 1996, the Company generated net cash of $11.3 million from operating activities. Net cash used in investing activities in 1996 totaled $155.1 million, $116.2 million of which was employed in connection with the 1996 Acquisitions (other than Riverside Park) and $39.4 million represented amounts spent for capital expenditures, offset slightly by proceeds received from equipment sales. Net cash provided by financing activities for 1996 totaled $119.1 million, reflecting the net proceeds from the June 1996 public offering described below and borrowings under the Company's senior credit facility, offset, in part, by scheduled repayments of capitalized lease obligations. During 1997, the Company generated net cash of $47.2 million from operating activities. Net cash used in investing activities in 1997 totaled $217.1 million, $81.4 million of which was employed in connection with the acquisitions of Riverside Park and Kentucky Kingdom and $135.9 million represented amounts spent for capital expenditures at the Company's parks. Net cash provided by financing activities for 1997 totaled $250.2 million, reflecting the net proceeds from the January 1997 offerings of Common Stock and $125.0 million principal amount of 1997 Premier Notes described below, offset in part by repayment of borrowings under the Company's senior credit facility. In June 1996, the Company completed a public offering of approximately 3.9 million shares of Common Stock at a price to the public of $18.00 per share, resulting in aggregate net proceeds to the Company of approximately $65.3 million. In connection with the June 1996 public offering, all of the Company's then outstanding shares of preferred stock, together with all accrued dividends thereon, were converted into approximately 2.6 million shares of Common Stock. In January 1997, the Company completed two concurrent public offerings, issuing an additional 6.9 million shares of Common Stock at a price to the public of $29.00 per share, resulting in aggregate net proceeds to the Company of approximately $189.5 million, and issuing $125 million principal amount of the 1997 Premier Notes, resulting in net proceeds of approximately $120.7 million. On October 31, 1996, the Company acquired substantially all of the assets used in the operation of Elitch Gardens for $62.5 million in cash. On November 19, 1996, the Company acquired substantially all of the assets used in the operation of the Waterworld Parks for an aggregate cash consideration of $17.25 million. On December 4, 1996, the Company acquired substantially all of the assets of The Great Escape for $33.0 million in cash. On February 5, 1997, the Company acquired all of the capital stock of the owner of Riverside Park for approximately $22.2 million, of which $1.0 million was paid in Common Stock with the balance paid in cash. On April 1, 1997, the Company assumed management of Marine World, and subsequently exercised a long-term lease option for a portion of the park and obtained a purchase option with respect to the entire property. In November 1997, the Company purchased substantially all of the assets used in the operation of Kentucky Kingdom for a purchase price of $64.0 million, of which approximately $4.8 million was paid by delivery of 121,671 shares of Common Stock, with the balance paid in cash and by assumption of certain liabilities. Depending on the level of revenues at Kentucky Kingdom during each of the 1998 through 2000 seasons, the Company may be required to issue additional shares of Common Stock to the seller. At December 31, 1997, substantially all of Premier's indebtedness was represented by the Premier Notes in an aggregate principal amount of $215.0 million, which require aggregate annual interest payments of approximately $23.0 million. Except in the event of a change of control of the Company and certain other circumstances, no principal payment on the Premier Notes is due until the maturity dates 52 thereof, August 15, 2003 in the case of the 1995 Premier Notes and January 15, 2007, in the case of the 1997 Premier Notes. In February 1998, Premier terminated its $115.0 million senior secured credit facility and obtained a commitment with respect to the Premier Credit Facility. The Company will expense its remaining deferred charges related to the terminated facility in the first quarter of 1998. The Company expects to enter into the Premier Credit Facility on or about March 6, 1998. PRO FORMA In March 1998, the Company entered into the Premier Credit Facility, pursuant to which it will initially borrow $125.0 million, substantially all of which will be expended in connection with the Walibi acquisition. See "Description of Indebtedness." Upon consummation of the Six Flags Transactions, the Company will issue (i) up to 13,000,000 shares of Common Stock, (ii) up to 5,000,000 EqPINES (depositary shares representing interests in Mandatorily Convertible Preferred Stock), (iii) Seller Depositary Shares representing up to $200.0 million of Seller Preferred Stock, (iv) $ million principal amount at maturity of Company Senior Discount Notes (with estimated gross proceeds of $250.0 million), (v) $280.0 million aggregate principal amount of Company Senior Notes and (vi) $170.0 million aggregate principal amount of New SFEC Notes. The EqPINES will accrue cumulative dividends (payable, at the Company's option, in cash or shares of Common Stock) at % per annum, and will be mandatorily convertible into Common Stock in 2001. The Seller Preferred Stock will accrue cumulative cash dividends at % per annum and the Company is required to offer to purchase the Seller Preferred Stock in 2010. The Company may reduce (but not below $100.0 million) or may eliminate the Seller Depositary Shares by increasing the cash portion of the consideration for the Six Flags Acquisition. If the Company determines not to issue the Seller Depositary Shares, the additional cash portion of the purchase price will be funded from the net proceeds of the Common Stock Offering. The Company Senior Discount Notes will not require any interest payments prior to , 2003, or, except in the event of a change of control of the Company and certain other circumstances, any principal payments prior to their maturity in 2008. The Company Senior Notes will require annual interest payments of $ and, except in the event of a change of control of the Company or certain other circumstances, will not require any principal payments prior to their maturity in 2006. The New SFEC Notes will require annual interest payments of $ and, except in the event of a change of control of the Company or certain other circumstances, will not require any principal payments prior to their maturity in 2006. The net proceeds of the SFEC Notes Offering, together with other funds, will be deposited in escrow to repay in full the SFEC Zero Coupon Senior Notes. In addition, in connection with the Six Flags Transactions, the Company will (i) assume $285.0 million principal amount at maturity of the SFTP Senior Subordinated Notes, which had an accreted value of $269.9 million at December 28, 1997, (ii) refinance all outstanding SFTP bank indebtedness with the proceeds of $420.0 million of borrowings under the Six Flags Credit Facility, and (iii) refinance all outstanding bank debt of SFEC with a portion of the proceeds of the Offerings. The SFTP Senior Subordinated Notes require interest payments of approximately $34.9 million per annum, payable semi-annually commencing December 15, 1998, and, except in certain circumstances, no principal payments are due thereon until their maturity date, June 15, 2005. Term loan borrowings under the Six Flags Credit Facility will mature on November 30, 2004 (with principal payments of $1.0 million in each of 1998 through 2001, $25.0 million in 2002, $40.0 million in 2003 and $303.0 million at maturity). Revolving credit borrowings under this facility ($100.0 million) mature on the fifth anniversary of the Six Flags Credit Facility. Borrowings under the Six Flags Credit Facility will be guaranteed by SFEC and SFTP's subsidiaries and will be secured by substantially all of the assets of SFTP and its subsidiaries and a pledge by SFEC of the stock of SFEC. The Premier Credit Facility includes a five-year $75.0 million revolving credit facility, a five-year $100.0 million term loan facility (with principal payments of $10.0 million, $25.0 million, $30.0 million and $35.0 million in the second, third, fourth and fifth years) and an eight-year $125.0 million term loan facility (with principal payments of $1.0 million in each of the first six years and $25.0 million and $94.0 million in the seventh and eighth years, respectively). Borrowings under the Premier Credit Facility are guaranteed by Premier 53 Operations' domestic subsidiaries and are secured by substantially all of the assets of Premier Operations and such subsidiaries (other than real estate). See "Description of Indebtedness." On a pro forma basis as of December 31, 1997, the Company would have had total outstanding indebtedness in the accreted principal amount of $1,832.0 million (excluding $161.1 million accreted value of the SFEC Zero Coupon Senior Notes which will be repaid from proceeds of the SFEC Notes Offering, together with other funds). Based on actual interest rates for debt outstanding at December 31, 1997 and assumed interest rates for pro forma debt, annual interest payments for 1998 on this indebtedness would have aggregated $136.9 million. In addition, annual dividend payments on the Convertible Preferred Stock at assumed dividend rates would have aggregated $28.0 million. By reason of the Six Flags Acquisition, the Company will be required to offer to purchase the SFTP Senior Subordinated Notes at a price equal to 101% of their accreted amount (approximately $287.9 million at June 15, 1998). On March 23, 1998, the last reported sales price of these notes was substantially in excess of their accreted amount. The Company does not expect to be required to purchase any material amount of these notes by reason of this offer. Although the Company has entered into discussions with lenders to provide a standby arrangement to finance the purchase of such notes, there can be no assurance that such discussions will be successful or that the Company will be able to obtain any other financing in the event that it should become necessary. The Company will be required to (i) make minimum annual distributions of approximately $46.2 million (subject to cost of living adjustments) to its partners in the Co-Venture Parks and (ii) make minimum capital expenditures at each of the Co-Venture Parks during rolling five-year periods, generally based on 6% of such park's revenue. Cash flow from operations at the Co-Venture Parks will be used to satisfy these requirements, before any funds are required from the Company. The Company has also agreed to purchase a maximum number of 5% per year (accumulating to the extent not purchased in any given year) of limited partnership units outstanding as of the date of the co-venture agreements that govern the partnerships (to the extent tendered by the unit holders). The agreed price for these purchases is based on a valuation for each respective Co-Venture Park equal to the greater of (i) a value derived by multiplying its weighted-average four year EBITDA (as defined therein) by a specified multiple (8.0 in the case of the Georgia park and 8.5 in the case of the Texas park) or (ii) $250.0 million in the case of the Georgia park and $374.8 million in the case of the Texas park. The Company's obligations with respect to Six Flags Over Georgia and Six Flags Over Texas will continue until 2026 and 2027, respectively. As the Company purchases units, it will be entitled to the minimum distribution and other distributions attributable to such units unless it is then in default under its obligations to its partners at the Co-Venture Parks. The Company estimates that its maximum unit purchase obligation for 1998, when purchases are required only for the Georgia park, will aggregate approximately $13 million (approximately $31 million for 1999 when purchases for both partnerships are required) and its minimum capital expenditures at these parks for 1998 will total $11 million. In March 1998, Six Flags completed a tender offer pursuant to which it purchased approximately 33% of the outstanding limited partnership units in Six Flags Over Texas, for an aggregate price of $117.3 million, which was financed by borrowings. The Company has assumed a 25% tender for purposes of preparing the pro forma financial information contained herein. Since a larger number of units were tendered, the Company will be required to refinance the additional indebtedness of Six Flags incurred by virtue thereof, and accordingly, will have less cash to prefund capital expenditures and working capital requirements. The degree to which the Company will be leveraged following the Six Flags Transactions could have important consequences to the Company. See "Risk Factors--Risks Associated with Substantial Indebtedness and Other Obligations" and "Description of Indebtedness." The Company's liquidity could be adversely affected by unfavorable weather, accidents or the occurrence of an event or condition, including negative publicity or significant local competitive events (such as the 1996 Summer Olympics in the case of Six Flags Over Georgia) that significantly reduces paid 54 attendance and, therefore, revenue at any of its theme parks. On June 2, 1997, a slide collapsed at the Company's Waterworld park in Concord, California, resulting in one fatality and the park's closure for twelve days. The park re-opened with the approval of the City of Concord on June 14, 1997. Although the collapse and the resulting closure had a material adverse impact on that park's operating performance for 1997, as well as a lesser impact on the Company's Sacramento water park (which is also named "Waterworld"), located approximately seventy miles from the Concord park, the Company's other parks were not adversely affected. The Company has recovered all of the Concord park's operating shortfall under its business interruption insurance. In addition, the Company believes that its liability insurance coverage should be more than adequate to provide for any personal injury liability which may ultimately be found to exist in connection with the collapse. The Company believes that, based on current and anticipated operating results, cash flow from operations, available cash, available borrowings under the Credit Facilities and the net proceeds of the Offerings (to the extent not used in connection with the Six Flags Acquisition) will be adequate to meet the Company's future liquidity needs, including anticipated requirements for working capital, capital expenditures, scheduled debt and preferred stock dividends and its obligations under arrangements relating to the Co-Venture Parks, for at least the next several years. The Company may, however, need to refinance all or a portion of its existing debt on or prior to maturity or to obtain additional financing. See "Risk Factors-- Risks Associated with Substantial Indebtedness and Other Obligations." NEWLY ISSUED ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. SFAS No. 130 establishes standards for reporting and display of "comprehensive income" and its components in a set of financial statements. It requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The Company currently does not have any components of comprehensive income that are not included in net income. After the acquisition of Walibi, the only item not currently included in the Company's consolidated statement of operations would be the currency translation adjustment that will be reported as part of stockholders' equity after the acquisition. The Company will adopt SFAS No. 130 in the year 1998. Also in June 1997, Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," was issued. SFAS No. 131 is effective for periods beginning after December 15, 1997. SFAS No. 131 requires that a public entity report financial and descriptive information about its reportable segments. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company will adopt SFAS No. 131 in 1998. However, such adoption is not expected to impact the Company's financial disclosures because the Company's current operations are limited to one reportable operating segment under SFAS No. 131's definitions. After the acquisition of Walibi, the Company will be required to disclose certain financial information related to its foreign operations. In January 1997, the Commission issued Release No. 33-7386, which requires enhanced descriptions of accounting policies for derivative financial instruments and derivative commodity instruments in the footnotes to financial statements. The release also requires certain quantitative and qualitative disclosure outside financial statements about market risks inherent in market risk sensitive instruments and other financial instruments. The requirements regarding accounting policy descriptions were effective for any fiscal period ending after June 15, 1997. However, because derivative financial and commodity instruments have not materially affected the Company's consolidated financial position, cash flows or results of operations, this part of the release does not affect the Company's 1997 financial statement disclosures. The 55 quantitative and qualitative disclosures required by the release will be initially provided in the Company's annual report on Form 10-K for the year ending December 31, 1998. IMPACT OF YEAR 2000 ISSUE An issue exists for all companies that rely on computers as the year 2000 approaches. The "Year 2000" problem is the result of past practices in the computer industry of using two digits rather than four to identify the applicable year. This practice will result in incorrect results when computers perform arithmetic operations, comparisons or data field sorting involving years later than 1999. The Company anticipates that it will be able to test its entire system using its internal programming staff and outside computer consultants and intends to make any necessary modifications to prevent disruption to its operations. Costs in connection with any such modifications are not expected to be material. See "Risk Factors -- Impact of Year 2000 Issue." 56 BUSINESS GENERAL The Company is the largest regional theme park operator, and the second largest theme park company, in the world, based on 1997 attendance of approximately 37 million. It operates 31 regional parks, including 15 of the 50 largest theme parks in North America, based on 1997 attendance. The Company's theme parks serve 9 of the 10 largest metropolitan areas in the country. The Company estimates that approximately two-thirds of the population of the continental U.S. live within a 150-mile radius of the Company's theme parks. On a pro forma basis, the Company's total revenue and EBITDA for the year ended December 31, 1997 was approximately $815.3 million and $263.5 million, respectively. The following table sets forth certain information for the Company's parks:
NAME TYPE OF PARK PRIMARY MARKET 1997 ATTENDANCE(1) ACRES(2) - ------------------------------- --------------- --------------------------------- --------------------- ------------- (IN THOUSANDS) PREMIER PARKS: Adventure World................ Theme/Water Baltimore/Washington, D.C. 960 115 Bellewaerde.................... Theme Belgium 670 133 Darien Lake.................... Theme/Water Buffalo/Rochester 1,400 142 Elitch Gardens................. Theme/Water Denver 1,450 60 Frontier City.................. Theme Oklahoma City 520 60 Geauga Lake.................... Theme/Water Cleveland 1,250 116 The Great Escape............... Theme/Water Lake George/Albany, New York 680 100 Kentucky Kingdom............... Theme/Water Louisville 1,150 58 Marine World................... Theme/Wildlife San Francisco 1,100 105 Riverside Park................. Theme New England/Boston 1,200 160 Walibi Aquitaine............... Theme France 240 74 Walibi Flevo................... Theme The Netherlands 450 250 Walibi Rhone-Alpes............. Theme/Water France 350 35 Walibi Schtroumpf.............. Theme France 350 375 Walibi Wavre and Aqualibi...... Theme/Water Belgium 960 120 Waterworld USA/Concord......... Water San Francisco 180 24 Waterworld USA/Sacramento...... Water Sacramento 290 20 White Water Bay................ Water Oklahoma City 320 22 Wyandot Lake................... Water Columbus, Ohio 390 18 SIX FLAGS PARKS: Six Flags AstroWorld........... Theme Houston 1,990 90 Six Flags Water World.......... Water Houston 280 14 Six Flags Fiesta Texas......... Theme San Antonio 1,640 200 Six Flags Great Adventure...... Theme New York City/Philadelphia 3,690(3) 576(3) Six Flags Wild Safari Animal Park........................... Wildlife New York City/Philadelphia (3) (3) Six Flags Great America........ Theme Chicago/Milwaukee 3,040 86 Six Flags Magic Mountain....... Theme Los Angeles 3,270 110 Six Flags Hurricane Harbor..... Water Los Angeles 350 11 Six Flags St. Louis............ Theme St. Louis 1,690 499 Six Flags Over Georgia......... Theme Atlanta 2,780 196 Six Flags Over Texas........... Theme Dallas/Fort Worth 2,950 197 Six Flags Hurricane Harbor..... Water Dallas/Fort Worth 560 49
- ------------------------ (1) Excludes approximately 0.4 million in attendance at Walibi's two smaller attractions. (2) Includes acreage currently dedicated to park usage. Additional acreage suitable for development exists at many of the facilities. (3) Attendance and acreage information for Six Flags Great Adventure also includes data for the adjacent Six Flags Wild Safari Animal Park. The Six Flags Parks consist of eight regional theme parks, as well as three separately gated water parks and a wildlife safari park (each of which is located near one of the theme parks). None of the Six Flags Parks are located within the primary market of any of the Premier Parks. During 1997, the Six Flags Parks drew, in the aggregate, approximately 68% of their patrons from within a 100-mile radius. During that year, Six Flags' attendance, revenue and EBITDA totaled approximately 22.2 million, $708.7 million and $164.1 million, respectively. 57 Six Flags has operated regional theme parks under the Six Flags name for over thirty years. As a result, Six Flags has established a nationally-recognized brand name. Premier will obtain worldwide ownership of the Six Flags brand name and expects to use the Six Flags brand name, generally beginning in the 1999 season, at most of the Premier Parks. In addition, as part of the Six Flags Acquisition, the Company will obtain from Warner Bros. and DC Comics the exclusive right for theme-park usage of certain Warner Bros. and DC Comics characters throughout the United States (except the Las Vegas metropolitan area) and Canada. These characters include BUGS BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN, SUPERMAN and others. Since 1991, Six Flags has used these characters to market its parks and to provide an enhanced family entertainment experience. The long-term license will include the right to sell merchandise featuring the characters at the parks and will apply to all of the Company's current theme parks, as well as future parks that meet certain criteria. Premier intends to make extensive use of these characters at the Six Flags Parks and, commencing in 1999, at most of the existing Premier Parks. The Company believes that use of the Warner Bros. and DC Comics characters promotes attendance, supports higher ticket prices, increases lengths-of-stay and enhances in-park spending. See "--Licenses." The Premier Parks consist of nine regional theme parks (six of which include a water park component) and four water parks located across the United States, as well as six regional theme parks and two smaller attractions located in Europe and scheduled to be acquired in March 1998 in the acquisition of Walibi. During the 1997 operating season, the eleven parks then owned by Premier drew, on average, approximately 82% of their patrons from within a 100-mile radius, with approximately 35.7% of visitors utilizing group and other pre-sold tickets and approximately 20.6% utilizing season passes. Under current management, since 1989 Premier has assumed control of 30 parks, and has achieved significant internal growth. The 11 parks owned by the Company for the 1997 operating season achieved same park growth in attendance, revenue and park-level operating cash flow (representing all park operating revenues and expenses without depreciation and amortization or allocation of corporate overhead or interest expense) of 17.3%, 21.3% and 59.5%, respectively, as compared to 1996. The Company's parks are individually themed and provide a complete family-oriented entertainment experience. The Company's theme parks generally offer a broad selection of state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and merchandise outlets. In the aggregate, the Company's theme parks offer more than 800 rides, including over 90 roller coasters, making the Company the leading provider of "thrill rides" in the industry. The Company believes that its parks benefit from limited direct competition. The combination of limited supply of real estate appropriate for theme park development, high initial capital investment, long development lead-time and zoning restrictions provides each of the parks with a significant degree of protection from competitive new theme park openings. Based on its knowledge of the development of other theme parks in the United States, the Company's management estimates that it would cost at least $200 million and would take a minimum of two years to construct a new regional theme park comparable to the Company's largest parks. The Company's senior and operating management team has extensive experience in the theme park industry. Premier's six senior executive officers have over 150 years aggregate experience in the industry and its ten general managers (prior to the Six Flags Acquisition) have an aggregate of approximately 210 years experience in the industry, including approximately 85 years at the Premier Parks. A number of Premier's executives and operating personnel have experience at Six Flags. According to AMUSEMENT BUSINESS, total North American amusement/theme park attendance in 1997 was approximately 270 million. Total attendance for the 50 largest parks in North America was 167.2 million in 1997, compared to 145.0 million in 1994, representing a compound annual growth rate of 4.9%. The Company believes that this growth reflects two trends: (i) demographic growth in the 5-24 year old age 58 group, which is expected to continue through 2010 and (ii) an increasing emphasis on family-oriented leisure and recreation activities. The Company's strategy for achieving growth includes the following key elements: (i) pursuing growth opportunities at existing parks; (ii) expanding the Company's parks; and (iii) making selective acquisitions. PURSUING GROWTH OPPORTUNITIES AT EXISTING PARKS The Company believes there are substantial opportunities for continued internal growth at its parks. The Company's operating strategy is to increase revenue by increasing attendance and per capita spending, while also maintaining strict control of operating expenses. This approach is designed to exploit the operating leverage inherent in the theme park business. Once parks achieve certain critical attendance levels, operating cash flow margins increase because revenue growth through incremental attendance gains and increased in-park spending is not offset by a comparable increase in operating expenses, because a large portion of such expenses is relatively fixed during any given year. The primary elements of this strategy include: --ADDING RIDES AND ATTRACTIONS AND IMPROVING OVERALL PARK QUALITY. The Company regularly makes investments in the development and implementation of new rides and attractions at its parks. The Company believes that the introduction of marketable rides is an important factor in promoting each of the parks in order to increase market penetration and encourage longer visits, which lead to increased attendance and sales of food and merchandise. Once a park reaches an appropriate level of attractions for its market size, the Company will add new marketable attractions at that park only every three to four years. --ENHANCING MARKETING AND SPONSORSHIP PROGRAMS. Premier's parks have benefitted from professional, creative marketing programs which emphasize the marketable rides and attractions, breadth of available entertainment and value provided by each park. Following the Six Flags Acquisition, the Company intends to implement marketing programs that also emphasize the Six Flags brand name, as well as the animated characters licensed from Warner Bros. and DC Comics. The Company has also successfully attracted well known sponsorship and promotional partners, such as Pepsi, McDonald's, Coca-Cola, Taco Bell, Blockbuster, 7-Eleven, Wendy's, First USA Bank, Best Western and various supermarket chains. The Company believes that its increased number of parks and annual attendance has enabled it to expand and enhance its sponsorship and promotional programs. --INCREASING GROUP SALES, SEASON PASSES AND OTHER PRE-SOLD TICKETS. Group sales and pre-sold tickets provide the Company with a consistent and stable base of attendance, representing over 35.7% of aggregate attendance at the 11 parks owned by the Company in the 1997 season, with approximately 20.6% of patrons utilizing season passes. --IMPLEMENTING TICKET PRICING STRATEGIES TO MAXIMIZE TICKET REVENUES AND PARK UTILIZATION. Management regularly reviews its ticket price levels and ticket category mix in order to capitalize on opportunities to implement selective price increases, both through main gate price increases and the reduction in the number and types of discounts. Management believes that opportunities exist to implement marginal ticket price increases without significant reductions in attendance levels. Such increases have successfully been implemented on a park-by-park basis in connection with the introduction of major new attractions or rides. In addition, the Company offers discounts on season, multi-visit and group tickets and also offers discounts on tickets for specific periods, in order to increase attendance at less popular times such as weekdays and evenings. --INCREASING AND ENHANCING RESTAURANTS AND MERCHANDISE AND OTHER REVENUE OUTLETS TO INCREASE LENGTH-OF-STAY AND IN-PARK SPENDING. The Company also seeks to increase in-park spending by adding well-themed restaurants, remodeling and updating existing restaurants and adding new merchandise outlets. The Company has successfully increased spending on food and beverages by introducing well- 59 recognized local and national brands, such as Domino's, Friendly's, KFC and TCBY. Typically, the Company operates these revenue outlets and often is the franchisee. Finally, the Company has taken steps to decrease the waiting time for its most popular restaurants and merchandise outlets. --ADDING SPECIAL EVENTS. The Company has also developed a variety of off-season special events designed to increase attendance and revenue prior to Memorial Day and after Labor Day. Examples include Hallowscream and Fright Fest-Registered Trademark-, Halloween events in which parks are transformed with supernatural theming, scary rides and haunting shows, Oktoberfest, in which traditional German food, theming, music and entertainment are presented at the parks and Holiday in the Park-Registered Trademark-, a winter holiday event, in which several parks are transformed with winter and holiday theming. THE PREMIER PARKS Management believes it has demonstrated the effectiveness of its strategy at the Premier Parks owned prior to the 1997 Acquisitions. The Company first implemented its strategy at the parks it owned prior to the Funtime Acquisition. FRONTIER CITY--In 1990 and 1991, an aggregate of approximately $7.0 million was invested in Frontier City to add several major rides, expand and improve the children's area, significantly increase the size of and theme the group picnic facilities and construct a 12,000 square foot air-conditioned mall and main events center. These additions, combined with an aggressive marketing strategy, resulted in Frontier City's attendance and revenue increasing approximately 54% and 83%, respectively, from 1989 to 1991. ADVENTURE WORLD--Since acquiring Adventure World in January 1992, the Company has invested approximately $42 million in the park to add numerous rides and attractions and to improve theming. As a result of these improvements, as well as aggressive and creative marketing and sales strategies, Adventure World's attendance increased during the five seasons ended 1997 at a compound annual rate of 21.5%. Additionally, revenue and park-level operating cash flow at Adventure World increased from $6.1 million and $0.1 million, respectively, for 1992 to $20.2 million and $4.9 million, respectively, for 1997. The Company is continuing to apply its growth strategy to the three Funtime parks, acquired in August 1995. Since that time, the Company has invested approximately $43 million at these parks to add marketable rides and attractions and make other improvements and implemented creative marketing and sales programs. As a result of this strategy, during 1997, the Funtime parks achieved compound annual growth in attendance, revenue and park-level operating cash flow of 10.2%, 14.9% and 27.2%, respectively, as compared to 1995. DARIEN LAKE--For the 1996 and 1997 seasons, Premier invested approximately $21 million, adding numerous rides and attractions and 50 recreational vehicles. Further, the Company entered into a long-term contract with a national concert promoter under which the promoter invested $2.5 million to make improvements at Darien Lake's 20,000 seat amphitheater and agreed to book at least twenty nationally-recognized performers per season. As a result of these investments and creative marketing and sales initiatives, during 1997 , Darien Lake achieved compound annual growth of 15.2% in attendance, 20.5% in revenue and 45.2% in park-level operating cash flow over the results for 1995. During the 1997 season, the Company began to apply its operating strategy to the five parks acquired in the 1996 Acquisitions. The Company invested approximately $65 million in the parks for that season to add marketable rides and attractions and make other improvements and implemented creative marketing and sales programs. As a result of this strategy, during 1997, these five parks achieved growth in attendance, revenue and park-level operating cash flow of 33.8%, 37.9% and 228.9%, respectively, as compared to 1996. ELITCH GARDENS--Subsequent to its October 1996 acquisition of Elitch Gardens, the Company invested approximately $30 million at that park for the 1997 season, adding three major marketable rides including a "state-of-the-art" steel suspended looping roller coaster, an entire water park, a new main entrance and 60 main street (including a theatre) and numerous revenue outlets, as well as substantial theming and landscaping. As a result, during 1997, attendance and revenue at Elitch Gardens grew 62.1% and 53.3%, respectively, and park-level operating cash flow increased from ($1.8) million to $8.6 million, as compared to 1996. RIVERSIDE PARK--The Company invested approximately $25 million for the 1997 season at Riverside Park, which it acquired in February 1997, to add three major marketable rides, including a "state-of-the-art" steel suspended looping roller coaster, a group picnic area, a new main entrance and improved theming and landscaping. As a result, during 1997, attendance and revenue at Riverside Park increased 57.7% and 56.7%, respectively, and park-level operating cash flow increased from $1.5 million to $8.2 million, as compared to 1996. Management believes that each of the parks acquired by Premier in the 1997 Acquisitions offer similar opportunities to implement the Company's growth strategy. Specifically, the Company believes it can increase attendance and per capita revenue at Kentucky Kingdom. The Company intends to invest approximately $10 million at Kentucky Kingdom for the 1998 season to add dueling wooden roller coasters, a five-story interactive family water attraction and restaurants and other revenue outlets. Marine World represents an opportunity to operate and eventually own an established, well-known wildlife park in the San Francisco market, with excellent access to major area highways. Premier has exercised its option to lease approximately 40 acres at Marine World for a term of up to 99 years at a nominal rent. Upon exercise of the lease option, Premier became entitled to receive, in addition to its management fee, 80% of the cash flow generated by the park after operating expenses and debt service. Management intends to expand the park's entertainment component with theme park rides and attractions. The Company is currently implementing the first phase of this expansion of Marine World by investing approximately $35-$40 million for the 1998 season to add fourteen new rides, including a boomerang steel roller coaster, a river rapids ride and a shoot-the-chute giant splash ride. In September 1997, the Company was granted an option to purchase the entire site commencing in February 2002, which it currently expects to exercise at that time. The Walibi acquisition provides the Company with a significant presence in the expanding theme park industry in Europe and management believes that the Company's strategy of targeted capital investment and sophisticated marketing can improve performance at these parks. The Company has agreed to invest approximately $38 million in the Walibi Parks over the three years commencing with the 1999 season. The Company believes that the Walibi Parks have suffered from limited available funds for investment and a lack of creative marketing. Additionally, the Company believes that the presence of Disney Land Paris outside of Paris has resulted in greater awareness of local parks in Europe. For example, in 1997, European park attendance grew 6%, as compared to 4% in North America. Further, the Company believes that, by virtue of the Six Flags Acquisition, a number of the existing Premier Parks have the potential over the next several seasons to accelerate their rate of growth. Recent attendance levels at the Six Flags theme parks (between 1.7 million and 3.6 million in 1997) have been substantially higher than the annual attendance at the largest Premier Parks (between 1.0 million and 1.5 million during that year). Management believes that a number of existing Premier Parks, particularly Adventure World, Geauga Lake, Kentucky Kingdom, Marine World and Riverside Park, all of which are located in or near major metropolitan areas, can significantly accelerate their market penetration and the expansion of their geographic market. Management believes this can be achieved through the use of the Six Flags brand name, aggressive marketing campaigns featuring the animated characters licensed from Warner Bros. and DC Comics, as well as targeted capital investment in new rides and attractions. Management also believes that this expanded penetration, as well as the incorporation of the animated characters in the parks and in merchandise sales can result in increased per capita spending at the existing Premier Parks. The Company expects to commence general use of the Six Flags brand name and the licensed characters at the Premier Parks for the 1999 season. 61 THE SIX FLAGS PARKS The Six Flags Parks generally enjoy significant market penetration. Thus, although the Company plans to make targeted capital expenditures at these parks to increase their attendance and per capita spending levels, it expects to increase significantly the EBITDA of these parks primarily through increases in operating efficiencies. First and most importantly, the Company believes that it can substantially reduce Six Flags' corporate overhead and other corporate-level expenses. Second, the Company expects to achieve significant improvement in park-level operating margins. Third, by virtue of economies of scale, the Company believes that operating efficiencies in areas such as marketing, insurance, promotion, purchasing and other expenses can be realized. Finally, the Company believes that its increased size following the Six Flags Acquisition will enable it to achieve savings in capital expenditures, including by the Company's ability to rotate rides among its parks. EXPANDING THE COMPANY'S PARKS The Company is expanding several of the Premier Parks in order to increase attendance and per capita spending. For example, the Company is constructing an economy motel at Darien Lake for the 1998 season to supplement the campgrounds. In addition, the Company recently purchased campgrounds adjacent to Geauga Lake, and expects to add, prior to the 1999 season, a more complete complement of "dry" rides to Wyandot Lake, which is currently primarily a water park. In addition, the Company owns 400 acres adjacent to Adventure World which are zoned for entertainment, recreational and residential uses and are available for complementary uses. Additional acreage owned by the Company and suitable for development exists at several of the Company's other parks. The Company may use a portion of the proceeds of the Offering and the Concurrent Offerings to fund expansions at its parks. See "Use of Proceeds." The Company may expand in the future certain of the Six Flags Parks by adding complementary attractions, such as campgrounds, lodging facilities, new water parks and concert venues. For example, Six Flags owns over 1,500 undeveloped acres adjacent to Six Flags Great Adventure (located between New York City and Philadelphia) suitable for such purposes. Additional acreage suitable for development exists at several other Six Flags Parks. See "--Environmental and Other Regulation." ACQUISITION STRATEGY The Company expects to achieve further growth beyond that generated from internal growth at its existing parks through continued selective acquisitions of additional regional theme parks. Given its decentralized management approach, the Company has experience in managing assets in diverse locations, and therefore does not seek acquisitions with any specific geographic focus. In that connection, in the first quarter of 1998 the Company expects to acquire a controlling interest in Walibi (and expects to acquire the remaining interest in the second quarter of 1998), which owns six theme parks and two smaller attractions in Europe, and may continue to pursue acquisitions of parks located outside of the United States. The U.S. regional theme park industry is highly fragmented with over 150 parks owned by over 100 operators. Management believes that, in addition to the Acquisitions, there are numerous acquisition opportunities, both in the U.S. and abroad, that can expand its business while the Company will continue to pursue acquisitions of regional parks with attendance between 300,000 and 1.5 million annually, the Company will consider acquisitions of larger parks or chains (such as Six Flags). The Company believes it has a number of competitive advantages in acquiring theme parks. Operators of destination or large regional park chains, other than Cedar Fair L.P., have not generally been actively seeking to acquire parks in recent years. Additionally, as a multi-park operator with a track record of successfully acquiring, improving and repositioning parks, the Company has numerous competitive advantages over single-park operators in pursuing acquisitions and improving the operating results at acquired parks. These advantages include the ability to (i) exercise group purchasing power (for both operating and 62 capital assets); (ii) achieve administrative economies of scale; (iii) attract greater sponsorship revenue, support from sponsors with nationally-recognized brands and marketing partners; (iv) use the Six Flags brand name and the characters licensed from Warner Bros. and DC Comics; (v) recruit and retain superior management; (vi) optimize the use of capital assets by rotating rides among its parks to provide fresh attractions; and (vii) access capital markets. See "Risk Factors--Uncertainty of Future Acquisitions; Potential Effects of Acquisitions." Furthermore, the Company is able to make acquisitions where its capital stock forms all or part of the purchase price. This is particularly important where the seller has a low tax basis in its assets, which the Company believes is often the case with its acquisition targets. While the Company expects that many acquisitions will be made for cash, its ability to use Common Stock for all or part of the purchase price will provide it with an additional advantage over single-park operators in making such acquisitions. For example, shares of Common Stock (or securities convertible into Common Stock) were or will be used as a portion of the aggregate consideration in the acquisitions of Kentucky Kingdom and Walibi and may be used in the Six Flags Acquisition. In most cases, the Company will seek to acquire outright ownership of parks, as it did with the 1996 Acquisitions. However, transactions may be undertaken in other forms, including acquisition of less than full ownership, such as participation in park management, leases or joint venture arrangements. For example, the Company manages Marine World and leases a portion of that facility, with an option to acquire the entire park, commencing in 2002. The Company expects to continue to acquire parks which have been undermanaged and have not benefitted from sustained capital expenditures, and to reposition such parks through the implementation of its operating strategies. The Company may also acquire better performing parks which require less additional investment but where cash flow can be improved through economies of scale in operating and capital expenditures and other enhancements. The Company intends to locate acquisition targets primarily through its own direct efforts. Management has extensive contacts throughout the industry and is an active participant in industry associations. Particular attention is given to cultivating relationships over time with park owners who appear likely to be or become potential sellers due to factors such as age or family or economic circumstances. In addition, the Company has developed a reputation as an active acquiror of regional parks. Through this reputation and general industry contacts, the Company believes that it becomes aware of most acquisition opportunities that develop in its area of focus. THE THEME PARK INDUSTRY HISTORY Although there is a long history of traditional amusement parks, primarily family-owned and consisting of thrill rides and midways, the opening of Disneyland in 1955 introduced the first modern theme park. Several features of modern theme parks distinguish them from the traditional amusement park whose carnival atmosphere and thrill rides offer less to families and adults. Theme parks are designed around one central or several different themes which are consistently applied to all areas, including the rides, attractions, entertainment, food, restaurants and landscape. Modern parks also typically present a variety of free entertainment not found at old-style amusement parks. Theme parks also offer the visitor numerous and diverse dining establishments in order to expand length of stay and position the parks as an all-day entertainment center. Generally, theme parks also plan nighttime entertainment (such as fireworks) and special events, and keep certain rides open into the night to further extend the hours of operation. As a result of these differences, theme parks draw attendance from a wider geographic area and attract a larger number of people from within a given market. Theme parks also attract more families and group outings, and the average length of stay and per capita outlay is greater. 63 The following table identifies the nine largest operators of theme park chains worldwide ranked by total attendance, showing the number and type of such parks operated by each and the aggregate attendance in 1997.
TYPE NUMBER 1997 NAME OF OPERATOR OF PARK OF PARKS ATTENDANCE - --------------------------------------------------------------- ----------------------- ------------- ------------- (IN THOUSANDS) Disney......................................................... Destination 8 86,000 PREMIER PARKS(1)............................................... REGIONAL 31 36,500 Anheuser-Busch................................................. Regional/Destination 9 20,700 Universal Studios.............................................. Destination 2 14,300 Cedar Fair..................................................... Regional 7 13,400 Paramount Parks................................................ Regional 6 12,800 Blackpool Pleasure Beach Co.(2)................................ Destination 3 8,800 The Tussauds Group(2).......................................... Regional 3 7,400 Silver Dollar City............................................. Regional/Destination 5 4,900
- ------------------------ (1) Figures for Premier Parks reflect the 1997 Acquisitions and the Six Flags Acquisition as if such acquisitions had all occurred at the commencement of the 1997 season. (2) Does not operate parks in North America. DESTINATION PARKS VERSUS REGIONAL PARKS Destination parks are those designed primarily to attract visitors willing generally to travel long distances and incur significant expense to visit the parks' attractions as part of an extended stay. To accommodate vacationers, many destination parks also include on-site lodging. Walt Disney World and Universal Studios are well-known examples of this type of park. Management believes that destination parks are typically more affected by the national economy than are regional parks. With the exception of Six Flags Magic Mountain, located in the same market as Disneyland and Universal Studios Hollywood, the Company does not believe that its parks compete directly with destination parks. Regional theme parks, such as those historically operated by the Company, are designed to attract visitors for a full day or a significant number of hours. Management views regional theme parks as those that draw the majority of their patrons from within a 50-mile radius of the park and the great majority of their visitors from within a 100-mile radius of the park. Visiting a regional theme park may be significantly less expensive than visiting a destination park because of lower transportation expenses, lower ticket prices and the lack of extended lodging expenses. The U.S. regional theme park industry is highly fragmented with over 150 parks owned by over 100 operators. ATTRACTIONS Regional theme parks attract patrons of all ages. Families and young people are attracted by the variety of major rides and attractions, children's rides and various entertainment areas including thematic shows and concerts. Most park admission policies are "pay-one-price," which entitles a guest to virtually unlimited free access to all rides, shows and attractions. Depending on the size of the property, regional theme parks typically have between 30 and 40 attractions. These rides include roller coasters and water rides, as well as other attractions such as bumper cars, aerial rides and children's rides. A park may also have distinct entertainment and show areas with specific themes such as a wild west or pirate stunt show. Games, food and merchandise stands often reflect the theme of the particular area in which they are located. This enhances the promotional effect of the 64 thematic area. By offering a variety of rides and themed areas, a park is able to target a wider age spectrum from the surrounding population. In addition to thrill rides, many parks offer indoor attractions and outdoor concerts, ranging from musical skits and bands to full-scale evening concerts by prominent entertainers. Selected concerts may require an add-on to the admissions price, but often are part of the regular ticket price, providing added value to visitors. Food service offered ranges from full-service restaurants to fast food. Young people may only be interested in a quick meal between rides while the family may choose to relax for a picnic. Refreshment stands serve snack foods, such as hot dogs, cotton candy and soda. In addition, game booths and merchandise souvenir stands are dispersed throughout a park. HISTORY The Company was incorporated in 1981 as The Tierco Group, Inc., and through 1989 was primarily engaged in the ownership and management of real estate and mortgage loans. In October 1989, the Company's current senior management assumed control, and during 1989, management determined to focus Premier's business on its theme park operations, which at that point consisted of a 50% interest in Frontier City. In 1991, the Company acquired White Water Bay and increased its ownership in Frontier City to in excess of 50%. In 1992, the Company acquired Adventure World and the remaining minority interest in Frontier City and disposed of substantially all of its non-theme park operations. In 1994, the Company changed its name to Premier Parks Inc. On August 15, 1995, the Company completed the Funtime Acquisition. On June 4, 1996, the Company completed a public offering of approximately 3.9 million shares of Common Stock, at a price to the public of $18.00 per share, which raised $65.3 million of net proceeds. In the fourth quarter of 1996, the Company acquired Elitch Gardens, the Waterworld Parks and The Great Escape, and, in February 1997, acquired Riverside Park. In January 1997, the Company completed the issuance, through a public offering, of an additional 6.9 million shares of its Common Stock at a price to the public of $29.00 per share, which raised approximately $189.5 million of aggregate net proceeds. In the fourth quarter of 1997, the Company acquired Kentucky Kingdom and its leasehold interest at Marine World. In the first quarter of 1998, the Company expects to acquire an approximate 50% interest in Walibi, and expects to acquire the remaining interest in the second quarter of 1998. On February 9, 1998, the Company entered into an agreement to acquire all of the outstanding capital stock of SFEC. DESCRIPTION OF PARKS PREMIER PARKS ADVENTURE WORLD Adventure World is a combination theme and water park located in Largo, Maryland, approximately 15 miles east of Washington, D.C. and 30 miles southwest of Baltimore, Maryland. The park's primary market includes Maryland, northern Virginia, Washington, D.C. and parts of Pennsylvania and Delaware. This market provides the park with a permanent resident population base of approximately 6.6 million people within 50 miles and 10.9 million people within 100 miles. The Washington, D.C. and Baltimore markets are the number 7 and number 23 DMAs in the United States, respectively. Based upon in-park surveys, approximately 87% of the visitors to Adventure World in 1997 resided within a 50-mile radius of the park, and 92% resided within a 100-mile radius. The Company owns a site of 515 acres, with 115 acres currently used for park operations. The remaining 400 acres, which are fully zoned for entertainment and recreational uses, provide the Company with ample expansion opportunity, as well as the potential to develop complementary operations, such as an amphitheater. 65 Adventure World's principal competitors are King's Dominion Park, located in Doswell, Virginia (near Richmond); Hershey Park, located in Hershey, Pennsylvania; and Busch Gardens, located in Williamsburg, Virginia. These parks are located approximately 120, 125 and 175 miles, respectively, from Adventure World. DARIEN LAKE & CAMPING RESORT Darien Lake, a combination theme and water park, is the largest theme park in the State of New York and the 38th largest theme park in the United States based on 1997 attendance of 1.4 million. Darien Lake is located off Interstate 90 in Darien Center, New York, approximately 30, 40 and 120 miles from Buffalo, Rochester and Syracuse, New York, respectively. The park's primary market includes upstate New York, western and northern Pennsylvania and southern Ontario, Canada. This market provides the park with a permanent resident population base of approximately 2.1 million people within 50 miles of the park and 3.1 million with 100 miles. The Buffalo, Rochester and Syracuse markets are the number 40, number 75 and number 72 DMAs in the United States, respectively. Based upon in-park surveys, approximately 62% of the visitors to Darien Lake in 1997 resided within a 50-mile radius of the park, and 79% resided within a 100-mile radius. The Darien Lake property consists of approximately 1,000 acres, including 144 acres for the theme park, 242 acres of campgrounds and 593 acres of agricultural, undeveloped and water areas. Darien Lake also has a 20,000 seat amphitheater. Following the 1995 season, the Company entered into a long-term arrangement with a national concert promoter to realize the cash flow potential of the amphitheater. As a result, since it acquired the park, the Company has realized substantial increases in revenues earned from concerts held at the facility. Adjacent to the Darien Lake theme park is a camping resort owned and operated by the Company with 1,180 developed campsites, including 330 recreational vehicles (RV's) available for daily and weekly rental. In addition, there are 500 other campsites available for tenting. Darien Lake is one of the few theme parks in the United States which offers a first class campground adjacent to the park. The campground is the fifth largest in the United States. In 1997, approximately 310,000 people used the Darien Lake campgrounds. The Company believes that substantially all of the camping visitors use the theme park. The Company is constructing an economy motel at the site for the 1998 season to supplement the campgrounds. Darien Lake's principal competitor is Wonderland Park located in Toronto, Canada, approximately 125 miles from Darien Lake. In addition, Darien Lake competes to a lesser degree with three smaller amusement parks located within 50 miles of the park. Darien Lake is significantly larger with a more diverse complement of entertainment than any of these three smaller facilities. ELITCH GARDENS Elitch Gardens is a combination theme and water park located on approximately 60 acres in the downtown area of Denver, Colorado, next to Mile High Stadium and McNichols Arena, and close to Coors Field. Based on 1997 attendance of 1.5 million, Elitch Gardens is the 37th largest theme park in the United States. The park's primary market includes the greater Denver area, as well as most of central Colorado. This market provides the park with a permanent resident population base of approximately 2.4 million people within 50 miles of the park and approximately 3.3 million people within 100 miles. The Denver area is the number 18 DMA in the United States. Based upon in-park surveys, approximately 54% of the visitors to Elitch Gardens in 1997 resided within a 50-mile radius of the park, and 78% resided within a 100-mile radius. A park in Denver under the name of "Elitch Gardens" has been in continuous operation for over 100 years. During 1994 and 1995, the park was relocated from its smaller location on the north side of Denver to its current location in downtown Denver. The park was constructed at a cost of $100.0 million (including land and equipment, as well as extensive infrastructure). The park was reopened in 1995. Management 66 believes that the park, as constructed, did not have sufficient marketable rides and attractions to achieve its attendance potential. In addition, prior to its acquisition in 1996, the park lacked theming and landscaping, as well as creative marketing. Elitch Gardens has no significant direct competitors. FRONTIER CITY Frontier City is a western theme park located along Interstate 35 in northeast Oklahoma City, Oklahoma, approximately 100 miles from Tulsa. The park's market includes nearly all of Oklahoma and certain parts of Texas and Kansas, with its primary market in Oklahoma City and Tulsa. This market provides the park with a permanent resident population base of approximately 1.2 million people within 50 miles of the park and 2.1 million people within 100 miles. The Oklahoma City and Tulsa markets are the number 43 and number 58 DMAs in the United States, respectively. Based upon in-park surveys, approximately 63% of the visitors to Frontier City in 1997 resided within a 50-mile radius of the park, and 69% resided within a 100-mile radius. The Company owns a site of approximately 90 acres, with 60 acres currently used for park operations. The remaining 30 acres provide the Company with the potential to develop complementary operations, such as campgrounds or an amphitheater. Frontier City's only significant competitor is Six Flags Over Texas, the Company's park located in Arlington, Texas, approximately 225 miles from Frontier City. GEAUGA LAKE Geauga Lake is a combination theme and water park, and is the 40th largest theme park in the United States based on 1997 attendance of 1.3 million. Geauga Lake is located in Aurora, Ohio, 20 miles southeast of Cleveland and approximately 30, 60 and 120 miles, respectively, from Akron and Youngstown, Ohio and Pittsburgh, Pennsylvania. This market provides the park with a permanent resident population base of approximately 4.0 million people within 50 miles of the park and 7.4 million within 100 miles. The Cleveland/Akron, Youngstown and Pittsburgh markets are the number 13, number 97 and number 19 DMAs in the United States, respectively. Based upon in-park surveys, approximately 44% of the visitors to Geauga Lake in 1997 resided within a 50-mile radius of the park, and 76% resided within a 100-mile radius. The 257-acre property on which Geauga Lake is situated includes a 55-acre spring-fed lake. The theme park itself presently occupies approximately 116 acres. There are approximately 87 acres of undeveloped land (of which approximately 30 acres have the potential for further development). Geauga Lake's principal competitors are Cedar Point in Sandusky, Ohio and Kennywood in Pittsburgh, Pennsylvania. These parks are located approximately 90 miles and 120 miles, respectively, from Geauga Lake. There are also three small water parks within a 50-mile radius of Geauga Lake, and Sea World, a marine park, is located on the other side of Geauga Lake. While Sea World does, to some extent, compete with Geauga Lake, it is a complementary attraction, and many patrons visit both facilities. In that regard, the Company and Sea World conduct joint marketing programs in outer market areas, involving joint television advertising of combination passes. In addition, combination tickets are sold at each park. THE GREAT ESCAPE The Great Escape, which opened in 1954, is a combination theme and water park located off Interstate 87 in the Lake George resort area, 180 miles north of New York City and 40 miles north of Albany. The park's primary market includes the Lake George tourist population and the upstate New York and western New England resident population. Official statistics indicate that the area had a visitor population of over 7.5 million people in 1995, of which over 3.5 million were overnight visitors, with an average length of stay of 4.3 days. This market provides the park with a permanent resident population base of approximately 800,000 people within 50 miles of the park and 3.3 million people within 100 miles. 67 The Albany market is the number 52 DMA in the United States. Based upon in-park surveys, approximately 41% of the visitors to The Great Escape in 1997 resided within a 50-mile radius of the park, and 69% resided within a 100-mile radius. The Great Escape is located on a site of approximately 335 acres, with 100 acres currently used for park operations. Approximately 30 of the undeveloped acres are suitable for park expansion. The Great Escape's only significant direct competitor is Riverside Park, the Company's park located in Springfield, Massachusetts, approximately 150 miles from The Great Escape. In addition, there is a smaller water park located in Lake George. KENTUCKY KINGDOM Kentucky Kingdom is a combination theme and water park, located on approximately 58 acres on and adjacent to the grounds of the Kentucky State Fair in Louisville, Kentucky, of which approximately 38 acres are leased under ground leases with terms (including renewal options) expiring in 2049, with the balance owned by the Company. Based on 1997 attendance of 1.1 million, Kentucky Kingdom was the 47th largest theme park in the United States. The park's primary market includes Louisville and Lexington, Kentucky, Evansville and Indianapolis, Indiana and Nashville, Tennessee. This market provides the park with a permanent resident population of approximately 1.4 million people within 50 miles and 4.6 million people within 100 miles. The Louisville and Lexington markets are the number 50 and number 67 DMAs in the United States. The Company believes that, although Kentucky Kingdom is outfitted with a large number of rides and has a solid attendance base, the park has suffered from limited available funds for investment and a lack of revenue outlets. Premier intends to spend approximately $10 million prior to the 1998 season to add two major new attractions and to upgrade the quality and quantity of the merchandise outlets and restaurants. The Company also intends to implement more professional and creative marketing, sales and promotional programs. Kentucky Kingdom's only significant direct competitor is Paramount's Kings Island and The Beach, located in Cincinnati, Ohio, approximately 100 miles from the park. MARINE WORLD Marine World, a theme park which has historically featured primarily marine mammals and exotic land animals, is the 47th largest theme park in the United States, based on 1997 attendance of 1.1 million. Marine World is located in Vallejo, California, approximately 32 miles from San Francisco, 22 miles from Oakland and 57 miles from Sacramento. This market provides the park with a permanent resident population base of approximately 5.4 million people within 50 miles and 10.0 million people within 100 miles. The San Francisco/Oakland and Sacramento areas are the number 5 and number 20 DMAs in the United States, respectively. Based upon in-park surveys, approximately 50% of the visitors to Marine World in 1997 resided within a 50-mile radius of the park, and 78% resided within a 100-mile radius. The Company manages the operations of Marine World pursuant to a management agreement entered into in February 1997, pursuant to which the Company is entitled to receive an annual base management fee of $250,000 and up to $250,000 annually in additional fees based on park performance. In addition, in November 1997 the Company exercised at no additional cost an option to lease approximately 40 acres of land at the site on a long-term basis and at nominal rent, entitling the Company to receive, in addition to the management fee, 80% of the cash flow generated by the park after operating expenses and debt service. Finally, the Company has the option to purchase the entire park beginning in February 2002, which it currently expects to exercise at that time. Marine World currently consists of 105 acres comprised of various presentation stadiums, animal habitats, visitor walkways, parking, concession and picnic areas, bordering a 55-acre man-made lake. The park provides for the shelter and care of over 50 marine mammals, 600 land animals, over 70 sharks and rays, birds and reptiles, over 2,600 tropical and cold water fish and marine invertebrates, and 500 butterflies, all featured in a variety of exhibits and participatory attractions. 68 Marine World's principal competitors are Underwater World at Pier 39 in San Francisco, Great America in Santa Clara and Outer Bay at Monterey Bay Aquarium. These parks are located approximately, 30, 60 and 130 miles from Marine World, respectively. In addition, plans for Hecker Pass, a new theme park in Gilroy, California (approximately 100 miles from Marine World) are under development. If developed, the Company believes that the park would not be operational for at least two years. Since taking over the management of Marine World in April 1997, the Company has stabilized the park's performance by reducing operating expenses, shortening the operating season, and beginning to expand the park's entertainment component by adding a themed children's area with children's rides called "Popeye's Seaport" and the DinoSphere TurboRide, a ride simulation theatre. The Company expects to invest between $35-$40 million at Marine World for the 1998 season to add fourteen new rides, including a boomerang steel roller coaster, a river rapids ride and a shoot-the-chute giant splash ride. RIVERSIDE PARK Riverside Park is a combination theme park and motor speedway, located off Interstate 91 near Springfield, Massachusetts, approximately 95 miles west of Boston. Riverside Park's primary market includes Springfield and western Massachusetts, and Hartford and western Connecticut, as well as portions of eastern Massachusetts (including Boston) and eastern New York. Based on 1997 attendance of over 1.2 million, Riverside Park is the 43rd largest theme park in the United States. This market provides the park with a permanent resident population base of approximately 3.1 million people within 50 miles and 14.7 million people within 100 miles. Based upon in-park surveys, approximately 63% of the visitors to Riverside Park in 1997 resided within a 50-mile radius of the park, and 95% resided within a 100-mile radius. Springfield, Hartford/New Haven and Boston are the number 103, number 27 and number 6 DMAs in the United States. Riverside Park is comprised of approximately 160 acres, with 118 acres currently used for park operations, 12 acres for a picnic grove and approximately 30 undeveloped acres. Riverside Park's Speedway is a multi-use stadium which includes a one-quarter mile NASCAR-sanctioned short track for automobile racing which can seat 6,200 for speedway events and 15,000 festival style for concerts. Riverside Park's most significant competitor is Lake Compounce located in Bristol, Connecticut, approximately 50 miles from Riverside Park. Lake Compounce had not been in regular full-service operation for several years. However, the prior owner of the park entered into a joint venture relationship in 1996 with an established park operator, and the park has received a substantial investment of private and public funds and did operate in the 1997 season. To a lesser extent, Riverside Park competes with The Great Escape, the Company's park located in Lake George, New York, approximately 150 miles from Riverside Park. WATERWORLD PARKS The Waterworld Parks consist of two water parks (Waterworld USA/Concord and Waterworld USA/ Sacramento) and one family entertainment center (Paradise Island). Waterworld USA/Concord is located in Concord, California, in the East Bay area of San Francisco. The park's primary market includes nearly all of the San Francisco Bay area. This market provides the park with a permanent resident population base of approximately 6.8 million people within 50 miles of the park and 10.0 million people within 100 miles. The San Francisco Bay market is the number 5 DMA in the United States. Based upon in-park surveys, approximately 94% of the visitors in 1997 resided within a 50-mile radius of the park, and 97% resided within a 100-mile radius. Waterworld USA/Sacramento is located on the grounds of the California State Fair in Sacramento, California. Also located on the fair grounds is Paradise Island, the Company's family entertainment center. The facilities' primary market includes Sacramento and the immediate surrounding area. This market provides the park with a permanent resident population base of approximately 2.7 million people within 50 69 miles of the park and 9.7 million people within 100 miles. The Sacramento market is the number 20 DMA in the United States. Based upon in-park surveys, approximately 80% of the visitors in 1997 resided within a 50-mile radius of the park, and 96% resided within a 100-mile radius. Both facilities are leased under long-term ground leases. The Concord site includes approximately 29 acres, with 24 acres currently used for park operations. The Sacramento facility is located on approximately 20 acres, all of which is used for the park and the family entertainment center. Concord's only significant direct competitor is Raging Waters located in San Jose, approximately 100 miles from that facility. Sacramento's only significant competitor is Sunsplash located in northeast Sacramento, approximately 40 miles from that facility. WHITE WATER BAY White Water Bay is a tropical themed water park situated on 22 acres located along Interstate 40 in southwest Oklahoma City, Oklahoma. The park is the 15th largest water park in the United States based on 1997 attendance of approximately 316,000. The park's primary market includes the greater Oklahoma City metropolitan area. Oklahoma City is the number 43 DMA in the United States. This market provides the park with a permanent resident population base of approximately 1.2 million people within 50 miles of the park and 2.1 million people within 100 miles. Based upon in-park surveys, approximately 80% of the visitors to White Water Bay in 1997 resided within a 50-mile radius of the park, and 87% resided within a 100-mile radius. White Water Bay has no direct competitors. WYANDOT LAKE Wyandot Lake, a water park that also offers "dry" rides, is located just outside of Columbus, Ohio, adjacent to the Columbus Zoo on property sub-leased from the Columbus Zoo. The park's primary market includes the Columbus metropolitan area and other central Ohio towns. This market provides the park with a permanent resident population base of approximately 2.0 million people within 50 miles of the park and approximately 6.4 million people within 100 miles. The Columbus market is the number 34 DMA in the United States. Based on in-park surveys, approximately 85% of the visitors to Wyandot Lake in 1997 resided within a 50-mile radius of the park, and 93% resided within a 100-mile radius. The Company leases from the Columbus Zoo the land, the buildings and several rides which existed on the property at the time the lease was entered into in 1983. The current lease expires in 1998, but the Company expects to exercise the first of its two five-year renewal options. The land leased by Wyandot Lake consists of approximately 18 acres. The park shares parking facilities with the Columbus Zoo. Wyandot Lake's direct competitors are Paramount's Kings Island and The Beach, each located in Cincinnati, Ohio, and Cedar Point, located in Sandusky, Ohio. Each of these parks is located approximately 100 miles from Wyandot Lake. Although the Columbus Zoo is located adjacent to the park, it is a complementary attraction, with many patrons visiting both facilities. WALIBI PARKS In March 1998, Premier is scheduled to acquire approximately 50% of the shares of capital stock of Walibi (on a fully diluted basis) in the Private Acquisition. Thereafter, the Company will commence the Walibi Tender Offer for the balance of the Walibi shares, pursuant to which the Company expects to acquire all or substantially all of such shares. Walibi, a Belgian corporation whose capital stock is traded on the Official Market of the Brussels Stock Exchange, owns six theme parks, two located in Belgium, one in The Netherlands and three in France, as well as two smaller attractions in Brussels. Walibi's operations had combined 1997 attendance of approximately 3.5 million. The Walibi Parks consist of six theme parks and two small attractions throughout Europe, including: Bellewaerde, Mini-Europe and Oceade, Walibi Aquitaine, Walibi Flevo, Walibi Rhone-Alpes, Walibi Schtroumpf and Walibi Wavre and Aqualibi. The Walibi Parks' primary markets include Belgium, The 70 Netherlands, southwestern France, eastern France and northern France. These markets provide the Walibi Parks with a permanent resident population of 23.0 million people within 50 miles and 54.5 million people within 100 miles. The Walibi Parks' most significant competitors are Disneyland Paris, located in France, Meli Park and Bobbeejaanland, each located in Belgium, de Efteling, located in The Netherlands, and Parc Asterix, located in France. SIX FLAGS PARKS In February 1998, Premier entered into the Six Flags Agreement to acquire all of the capital stock of SFEC from the Sellers. See "Description of Six Flags Agreement." Six Flags operates 12 "Six Flags" branded theme parks in eight locations in the United States, consisting of eight major regional theme parks, as well as three separately gated water parks and one wildlife safari park (each located near one of the theme parks). The closing of the Six Flags Acquisition will occur concurrently with the closing of the Offering. SIX FLAGS ASTROWORLD AND SIX FLAGS WATERWORLD Six Flags AstroWorld, the 28th largest theme park in the United States with 1997 attendance of 2.0 million, and the separately gated adjacent Six Flags WaterWorld, with 1997 attendance of 283,000, are located in Houston, Texas on the grounds of an entertainment and sports complex that includes the Houston Astrodome. The Houston, Texas market provides the parks with a permanent resident population of 4.3 million people within 50 miles and 5.2 million people within 100 miles. The Houston market is the number 11 DMA in the United States. Based upon in-park surveys, approximately 68% of the visitors to the parks in 1997 resided within a 50-mile radius of the park, and 73% resided within a 100-mile radius. The Company owns a site of approximately 90 acres used for the theme park, and approximately 14 acres used for the water park. Six Flags AstroWorld indirectly competes with Sea World of Texas and the Company's Six Flags Fiesta Texas, both located in San Antonio, Texas, approximately 200 miles from the park. Six Flags WaterWorld competes with Splashtown and Water Works, two nearby water parks. SIX FLAGS FIESTA TEXAS Six Flags Fiesta Texas (the "Fiesta Park"), the 33rd largest theme park in the United States with 1997 attendance of 1.6 million, is located on approximately 206 acres of land in San Antonio, Texas. The San Antonio, Texas market provides the park with a permanent resident population of 1.7 million people within 50 miles and 3.0 million people within 100 miles. The San Antonio market is the number 38 DMA in the United States. Based upon in-park surveys, approximately 43% of the visitors to the parks in 1997 resided within a 50-mile radius of the park, and 55% resided within a 100-mile radius. Six Flags Fiesta Texas' principal competitor is Sea World of Texas located in San Antonio. In addition, the park competes to a lesser degree with Six Flags Astro-World, the Company's park located in Houston, Texas, approximately 200 miles from the park. PARTNERSHIP STRUCTURE. Six Flags took over management of the park in 1996. The park is operated by San Antonio Theme Park, L.P., a limited partnership (the "Fiesta Partnership"). Partners in the Fiesta Partnership include (i) Six Flags San Antonio, L.P. (a limited partnership between two wholly-owned subsidiaries of SFTP) as a 59% general partner (the "Six Flags GP"), (ii) San Antonio Park GP, LLC (a Delaware limited liability company managed and partially owned by the Sellers in which SFTP holds a 99% equity interest) as a 1% general partner (the "Sellers GP") and (iii) Fiesta Texas Theme Park, Ltd (a Texas limited partnership indirectly wholly-owned by La Cantera Development Company) as a 40% limited partner (the "La Cantera LP"). Pursuant to the Six Flags Acquisition the Sellers will transfer to the Company their 1% interest in the Sellers GP. 71 The land and most of the assets of the Fiesta Park are owned by the La Cantera LP. The La Cantera LP leases the park to the Fiesta Partnership (the "Fiesta Lease"). In exchange, the Fiesta Partnership pays the La Cantera LP a nominal annual rent and is required to make certain capital improvements to and cover all operating expenses of the park. The Fiesta Lease has an initial term which extends through the end of fiscal year 2005, but under certain circumstances may be extended until the end of fiscal year 2015. If extended, the Fiesta Lease can be terminated at the end of fiscal year 2010 at the option of either the Fiesta Partnership or the lessor. The Fiesta Partnership has the right to terminate the Fiesta Lease effective at the end of fiscal year 2001 if it has incurred in excess of a specified cumulative operating loss during the 1998 to 2001 fiscal years. As long as the Fiesta Lease continues in effect, the Fiesta Partnership has the option to purchase the tangible and intangible assets of Fiesta Park and to buy-out the La Cantera LP's interest in the Fiesta Partnership during the initial term of the Fiesta Lease, at the end of fiscal year 2010 should the lessor terminate the Fiesta Lease and at the end of fiscal year 2015. In connection with Six Flags' management of Fiesta Park, the Six Flags GP entered into a management agreement with the Fiesta Partnership (the "Fiesta Agreement") under which it will manage and operate Fiesta Park on the Fiesta Partnership's behalf. Under the terms of the Fiesta Agreement, the Fiesta Partnership will pay the Six Flags GP an annual management fee and intellectual property fee. For the 1996 and 1997 fiscal years, the annual management fee payable to the Six Flags GP was 4% of the Fiesta Partnership's Gross Revenues (as defined in the Fiesta Agreement) for such year. Commencing with the 1998 fiscal year, the management fee is 25% of EBITDA (as defined in the Fiesta Agreement). The intellectual property fee payable to the Six Flags GP throughout the term of the Fiesta Agreement will be based on the Fiesta Partnership's Gross Revenues. SIX FLAGS GREAT ADVENTURE AND SIX FLAGS WILD SAFARI ANIMAL PARK Six Flags Great Adventure, the 10th largest theme park in the United States, and the separately gated adjacent Six Flags Wild Safari Animal Park, the 23rd largest theme park in the United States with 1997 combined attendance of 3.7 million, are located in Jackson, New Jersey, approximately 70 miles south of New York City and 50 miles east of Philadelphia. The New York and Philadelphia markets provide the parks with a permanent resident population of 11.5 million people within 50 miles and 25.9 million people within 100 miles. The New York and Philadelphia markets are the number 1 and number 4 DMAs in the United States, respectively. Based upon in-park surveys, approximately 50% of the visitors to the parks in 1997 resided within a 50-mile radius of the park, and 80% resided within a 100-mile radius. The Company owns a site of approximately 1,862 acres, of which approximately 221 acres are currently used for the thrill-ride based theme park operations, and 1,641 acres remain undeveloped. Additionally, the Company owns approximately 355 adjacent acres that are used for the wildlife safari park, home to 55 species of 1,200 exotic animals which can be seen over a four and a half mile drive. Six Flags Great Adventure's principal competitors are Hershey Park, located in Hershey, Pennsylvania, approximately 150 miles from the park; and Dorney Park, located in Allentown, Pennsylvania, approximately 75 miles from the park. SIX FLAGS GREAT AMERICA Six Flags Great America, the 16th largest theme park in the United States with 1997 attendance of 3.0 million, is located in Gurnee, Illinois, between Chicago, Illinois and Milwaukee, Wisconsin. The Chicago and Milwaukee markets provide the park with a permanent resident population of 7.6 million people within 50 miles and 12.5 million people within 100 miles. The Chicago and Milwaukee markets are the number 3 and number 31 DMAs in the United States, respectively. Based upon in-park surveys, approximately 64% of the visitors to the park in 1997 resided within a 50-mile radius of the park, and 80% resided within a 100-mile radius. 72 The Company owns a site of approximately 86 acres used for the theme park operations. Six Flags Great America currently has no direct theme park competitors in the region, but does compete with Paramount's Kings Island, located near Cincinnati, Ohio, approximately 350 miles from the park; Cedar Point, located in Sandusky, Ohio, approximately 340 miles from the park; and Six Flags St. Louis, the Company's park located near St. Louis, Missouri, approximately 320 miles from the park. SIX FLAGS MAGIC MOUNTAIN AND SIX FLAGS HURRICANE HARBOR Six Flags Magic Mountain, the 12th largest theme park in the United States with 1997 attendance of 3.3 million, and the separately gated adjacent Six Flags Hurricane Harbor, the 11th largest water park in the United States with 1997 attendance of 351,000, are located in Valencia, California, in the northwest section of Los Angeles County. The Los Angeles, California market provides the parks with a permanent resident population of 9.4 million people within 50 miles and 15.8 million people within 100 miles. The Los Angeles market is the number 2 DMA in the United States. Based upon in-park surveys, approximately 45% of the visitors to the parks in 1997 resided within a 50-mile radius of the parks, and 64% resided within a 100-mile radius. The Company owns a site of approximately 110 acres used for the theme park, and approximately 11 acres used for the pirate-themed water park. Six Flags Magic Mountain's principal competitors include Disneyland in Anaheim, California, located approximately 60 miles from the park, Universal Studios Hollywood in Universal City, California, located approximately 20 miles from the park, Knott's Berry Farm in Buena Park, California, located approximately 50 miles from the park, and Sea World of California in San Diego, California, located approximately 150 miles from the park. Six Flags Hurricane Harbor has no direct competitors in the area. SIX FLAGS OVER GEORGIA Six Flags Over Georgia, the 20th largest theme park in the United States with 1997 attendance of 2.8 million, is located in Mableton, Georgia, approximately 10 miles outside of Atlanta, Georgia. The Atlanta, Georgia market provides the park with a permanent resident population of 3.8 million people within 50 miles and 6.3 million people within 100 miles. The Atlanta market is the number 10 DMA in the United States. Based upon in-park surveys, approximately 42% of the visitors to the park in 1997 resided within a 50-mile radius of the park, and 58% resided within a 100-mile radius. Six Flags Over Georgia's primary competitors include Paramount's Carowinds in Charlotte, North Carolina, located approximately 250 miles from the park, and Dollywood in Pigeon Forge, Tennessee, located approximately 200 miles from the park. The Georgia Limited Partner (as defined below) owns the site of approximately 283 acres, including approximately 87 acres of undeveloped land, all of which is leased to Six Flags Over Georgia II, L.P. (the "Georgia Co-Venture Partnership"). PARTNERSHIP STRUCTURE. On March 18, 1997, Six Flags completed arrangements pursuant to which Six Flags will manage the Georgia park through 2026. Under the agreements governing these arrangements (the "Georgia Agreements"), the Georgia park is owned (excluding real property) by the Georgia Co-Venture Partnership of which a Six Flags subsidiary is the managing general partner. In the second quarter of 1997, two subsidiaries of Six Flags made a tender offer for partnership interests ("LP Units") in the 99% limited partner of the Georgia Co-Venture Partnership (the "Georgia Limited Partner"), that valued the Georgia park at the greater of $250 million or eight times 1997 EBITDA of the Georgia park (the "Georgia Tender Offer Price"). Six Flags purchased approximately 25% of the LP Units in the 1997 tender offer at an aggregate price of $62.7 million. The key elements of these arrangements are as follows: (i) the Georgia Limited Partner (which is not affiliated with Six Flags) received minimum annual distributions of $18.5 million in 1997, which will increase each year thereafter in proportion to increases in the cost of living; (ii) thereafter, Six Flags will be 73 entitled to receive from available cash (after provision for reasonable reserves and after capital expenditures per annum of approximately 6% of prior year's revenues) a management fee equal to 3% of the prior year's gross revenues, and, thereafter, any additional available cash will be distributed 95% to Six Flags and 5% to the Georgia Limited Partner; (iii) commencing in 1998, and on an annual basis thereafter, Six Flags will offer to purchase additional LP Units at a price based on a valuation for the park equal to the greater of $250.0 million or a value derived by multiplying the weighted average four year EBITDA (as defined therein) of the park by 8.0; (iv) in 2027, Six Flags will have the option to acquire all remaining interests in the Georgia park at a price based on the Georgia Tender Offer Price, increased in proportion to the increase in the cost of living between December 1996 and December 2026, and (v) the Company is required to make minimum capital expenditures at the Georgia park during rolling five-year periods, based generally on 6% of the park's revenues. Cash flow from operations at the Georgia park will be used to satisfy these requirements first, before any funds are required from the Company. In connection with the Subordinated Indemnity Agreement, the Company is transferring to Time Warner (who has guaranteed the Six Flags obligations under these arrangements) record title to the corporations which own certain entities that have purchased and will purchase LP Units, and the Company will receive an assignment from Time Warner of all cash flow received on such LP Units and will otherwise control such entities, except in the event of a default by the Company of its obligations under these arrangements. After all such obligations have been satisfied, Time Warner is required to retransfer to the Company such record title for a nominal consideration. In addition, the Company will issue preferred stock of the managing partner of the Georgia Limited Partner to Time Warner which, in the event of such a default, would permit Time Warner to obtain control of such entity. See "Description of Six Flags Agreement." Six Flags has accounted for the Georgia park as a co-venture and included the revenues and expenses of the Georgia Co-Venture Partnership (excluding partnership depreciation and interest expense associated with limited partnership debt) in Six Flags' consolidated financial statements and deducted as expenses the net amounts distributed to the limited partners. The Company intends to account for its interest in the Georgia park under the equity method of accounting. SIX FLAGS OVER TEXAS AND SIX FLAGS HURRICANE HARBOR Six Flags Over Texas, the 16th largest theme park in the United States with 1997 attendance of 2.9 million, and the separately gated Six Flags Hurricane Harbor, the 7th largest water park in the United States with 1997 attendance of 558,000, are located across Interstate 30 from each other in Arlington, Texas, between Dallas and Fort Worth, Texas. The Dallas/Fort Worth market provides the parks with a permanent resident population of 4.5 million people within 50 miles and 5.6 million people within 100 miles. The Dallas/Fort Worth market is the number 8 DMA in the United States. Based upon in-park surveys, approximately 60% of the visitors to the parks in 1997 resided within a 50-mile radius of the park, and 68% resided within a 100-mile radius. The Texas Limited Partner (as defined below) owns the site of approximately 197 acres used for the theme park, and the Company owns approximately an additional 49 acres, of which approximately 18 acres are currently used for Hurricane Harbor and 22 acres remain undeveloped. Six Flags Over Texas' principal competitors include Sea World of Texas and the Company's Six Flags Fiesta Texas, both located in San Antonio, Texas, approximately 285 miles from the park. Six Flags Hurricane Harbor has no direct competitors in the area. PARTNERSHIP STRUCTURE. Six Flags Over Texas is owned (excluding real property) by Texas Flags, Ltd. (the "Texas Co-Venture Partnership"), a Texas limited partnership of which the 1% general partner is a wholly-owned subsidiary of Six Flags, and the 99% limited partner is Six Flags Fund II, Ltd., a Texas limited partnership (the "Texas Limited Partner") which is unaffiliated with Six Flags. 74 In December 1997, Six Flags completed arrangements pursuant to which it will manage Six Flags Over Texas through 2027. The key elements of the new arrangements are as follows: (i) the Texas Limited Partner will receive minimum annual distributions of $27.7 million in 1998, increasing each year thereafter in proportion to increases in the cost of living; (ii) thereafter, Six Flags will be entitled to receive from available cash (after provision for reasonable reserves and after capital expenditures per annum of approximately 6.0% of prior year's revenues) a management fee equal to 3% of the prior year's gross revenues, and, thereafter, any additional available cash will be distributed 92.5% to Six Flags and 7.5% to the Texas Limited Partner; (iii) in the first quarter of 1998, Six Flags made a tender offer for partnership units ("LP Units") in the Texas Limited Partner that valued the park at the greater of approximately $374.8 million or 8.5 times 1997 EBITDA (as defined herein) of the park (the "Texas Tender Offer Price"); (iv) commencing in 1999, and on an annual basis thereafter, Six Flags will offer to purchase LP Units at a price based on a valuation for the park equal to the greater of $374.8 million or a value derived by multiplying the weighted-average four year EBITDA of the park by 8.5; (v) in 2028 Six Flags and its affiliates will have the option to acquire all remaining interests in the park at a price based on the Texas Tender Offer Price, increased in proportion to the increase in the cost of living between December 1997 and December 2027; and (vi) the Company is required to make minimum capital expenditures at the Texas park during rolling five-year periods, based generally on 6% of such park's revenues. Cash flow from operations at the Texas park will be used to satisfy these requirements first, before any funds are required from the Company. In March 1998, Six Flags completed a tender offer pursuant to which Six Flags purchased approximately 33% of the outstanding LP Units for an aggregate purchase price of $117.3 million. In connection with the Subordinated Indemnity Agreement, the Company is transferring to Time Warner (who has guaranteed the Six Flags obligations under these arrangements) record title to the corporations which own certain entities that have purchased and will purchase LP Units and the Company will receive an assignment from Time Warner of all cash flow received on such LP Units and will otherwise control such entities, except in the event of a default by the Company of its obligations under these arrangements. After all such obligations have been satisfied, Time Warner is required to retransfer to the Company such record title for a nominal consideration. In addition, the Company will issue preferred stock of the managing partner of the Texas Co-Venture Partnership to Time Warner which, in the event of such a default, would permit Time Warner to obtain control of such entity. See "Description of Six Flags Agreement." Six Flags has accounted for the park as a co-venture and included the revenues and expenses of the Texas Co-Venture Partnership (excluding partnership depreciation and interest expense associated with limited partnership debt) in its consolidated financial statements and deducted as expenses the net amounts distributed to the Texas Limited Partner. The Company intends to account for its interest in the Texas park under the equity method of accounting. SIX FLAGS ST. LOUIS Six Flags St. Louis, the 33rd largest theme park in the United States with 1997 attendance of 1.7 million, is located in Eureka, Missouri, about 35 miles west of St. Louis, Missouri. The St. Louis market provides the park with a permanent resident population of 2.6 million people within 50 miles and 3.7 million people within 100 miles. The St. Louis market is the number 21 DMA in the United States. Based upon in-park surveys, approximately 55% of the visitors to the park in 1997 resided within a 50-mile radius of the park, and 65% resided within a 100-mile radius. The Company owns a site of approximately 499 acres used for the theme park operations. Six Flags St. Louis competes with Paramount's Kings Island, located near Cincinnati, Ohio, approximately 350 miles from the park; Cedar Point, located in Sandusky, Ohio, approximately 515 miles from the park; Silver Dollar City, located in Branson, Missouri, approximately 250 miles from the park; and Six Flags Great America, the Company's park located near Chicago, Illinois, approximately 320 miles from the park. 75 MARKETING AND PROMOTION The Company attracts visitors through national and local multi-media marketing and promotional programs for each of its parks. The national programs are designed to market and enhance the Six Flags brand name. Local programs are tailored to address the different characteristics of their respective markets and to maximize the impact of specific park attractions and product introductions. All marketing and promotional programs are updated or completely revamped each year to address new developments. Marketing programs are supervised by the Company's Vice President for Marketing, with the assistance of the Company's senior management and its national advertising agency. The Company also develops partnership relationships with well-known national and regional consumer goods companies and retailers to supplement its advertising efforts and to provide attendance incentives in the form of discounts and/or premiums. The Company has also arranged for popular local radio and television programs to be filmed or broadcast live from its parks. Group sales and pre-sold tickets provide the Company with a consistent and stable base of attendance, representing approximately 35.7% of aggregate attendance in 1997 at the eleven parks owned by Premier during that season. Each park has a group sales and pre-sold ticket manager and a well-trained sales staff dedicated to selling multiple group sales and pre-sold ticket programs through a variety of methods, including direct mail, telemarketing and personal sales calls. Historically, Premier has been successful in increasing group sales and pre-sold tickets at its existing and acquired parks. The Company has also developed effective programs for marketing season pass tickets. Season pass sales establish a solid attendance base in advance of the season, thus reducing exposure to inclement weather. Additionally, season pass holders often bring paying guests and generate "word-of-mouth" advertising for the parks. The increased in-park spending which results from season passes is not offset by incremental operating expenses, since such expenses are relatively fixed during the operating season. During 1997, 20.6% of visitors to the eleven parks then owned by the Company utilized season passes. A significant portion of the Company's attendance is attributable to the sale of discount admission tickets. The Company offers discounts on season and multi-visit tickets, tickets for specific dates and tickets to affiliated groups such as businesses, schools and religious, fraternal and similar organizations. The increased in-park spending which results from such attendance is not offset by incremental operating expenses, because such expenses are relatively fixed during the operating season. In 1997, approximately 72% of patrons at the 11 parks then owned by the Company were admitted at a discount rate and, for the year ended December 31, 1997, approximately 44.7% of the Company's revenue was attributable to in-park spending. The Company also implements promotional programs as a means of targeting specific market segments and geographic locations not reached through its group or retail sales efforts. The promotional programs utilize coupons, sweepstakes, reward incentives and rebates to attract additional visitors. These programs are implemented through direct mail, telemarketing, direct response media, sponsorship marketing and targeted multi-media programs. The special promotional offers are usually for a limited time and offer a reduced admission price or provide some additional incentive to purchase a ticket, such as combination tickets with a complementary location. LICENSES Pursuant to the License Agreement among Warner Bros., DC Comics, the Company and SFTP, the Company has the exclusive right for a term through 2053 to use Warner Bros. and DC Comics characters in theme parks throughout the United States and Canada (other than the Las Vegas metropolitan area). In particular, the License Agreement entitles the Company to use, subject to customary approval rights of Warner Bros., and in limited circumstances, approval rights of certain third parties, all animated cartoon and comic book characters that Warner Bros. and DC Comics have the right to license, including as of the 76 date hereof, BATMAN, SUPERMAN, BUGS BUNNY, DAFFY DUCK, TWEETY BIRD and YOSEMITE SAM, and will include the right to sell merchandise using the characters. The license fee is fixed until 2005, and thereafter, the license fee will be subject to periodic scheduled increases and will be payable on a per-theme park basis. In addition, the Company will be required to pay a royalty fee on merchandise sold that uses the licensed characters. Six Flags is also a party to certain additional license agreements with Warner Bros. and Time Warner concerning, among others, HBO BACKLOT COMMISSARY and SPORTS ILLUSTRATED FESTIVAL. Warner Bros. has the right to terminate the License Agreement under certain circumstances, including if any persons involved in the movie or television industries obtain control of the Company and upon a default under the Subordinated Indemnity Agreement. Premier also licenses on a non-exclusive basis certain other characters, including POPEYE, for use at certain Premier Parks. PARK OPERATIONS The Company currently operates in geographically diverse markets in the United States and Europe. Each of the Company's parks is operated to the extent practicable as a separate operating division of the Company in order to maximize local marketing opportunities and to provide flexibility in meeting local needs. Each park is managed by a general manager who reports to one of the Company's regional executives (each of whom report to its Chief Operating Officer) and is responsible for all operations and management of the individual park. Local advertising, ticket sales, community relations and hiring and training of personnel are the responsibility of individual park management in coordination with corporate support teams. Each of the Company's parks is managed by a full-time, on-site management team under the direction of the general manager. Each such management team includes senior personnel responsible for operations and maintenance, marketing and promotion, human resources and merchandising. Park management compensation structures are designed to provide incentives (including stock options and cash bonuses) for individual park managers to execute the Company's strategy and to maximize revenues and operating cash flow at each park. The Company's ten general managers (before the Six Flags Acquisition) have an aggregate of approximately 210 years experience in the industry, including approximately 85 years at parks owned or operated by Premier. The Company's parks are generally open daily from Memorial Day through Labor Day. In addition, most of the Company's parks are open during weekends prior to and following their daily seasons, primarily as a site for theme events (such as Hallowscream, Fright Fest-Registered Trademark-, Oktoberfest and Holiday in the Park-Registered Trademark-). Due to their location, certain Six Flags Parks have longer operation seasons. Typically, the parks charge a basic daily admission price, which allows unlimited use of all rides and attractions, although in certain cases special rides and attractions require the payment of an additional fee. The Company's family entertainment centers are open year-round and do not charge an admission price. CAPITAL IMPROVEMENTS The Company regularly makes capital investments in the development and implementation of new rides and attractions at its parks. The Company purchases both new and used rides. In addition, the Company rotates rides among its parks to provide fresh attractions. The Company believes that the introduction of new rides is an important factor in promoting each of the parks in order to achieve market penetration and encourage longer visits, which lead to increased attendance and in-park spending. In addition, the Company generally adds theming to acquired parks and enhances the theming and landscaping of its existing parks in order to provide a complete family oriented entertainment experience. Capital expenditures are planned on a seasonal basis with most expenditures made during the off-season. Expenditures for materials and services associated with maintaining assets, such as painting and inspecting rides are expensed as incurred and therefore are not included in capital expenditures. 77 The Company's level of capital expenditures are directly related to the optimum mix of rides and attractions given park attendance and market penetration. These targeted expenditures are intended to drive significant attendance growth at the parks and to provide an appropriate complement of entertainment value, depending on the size of a particular market. As an individual park begins to reach an appropriate attendance penetration for its market, management generally plans a new ride or attraction every three to four years in order to enhance the park's entertainment product. MAINTENANCE AND INSPECTION The Company's rides are inspected daily by maintenance personnel during the operating season. These inspections include safety checks, as well as regular maintenance and are made through both visual inspection of the ride and test operation. Senior management of the Company and the individual parks evaluate the risk aspects of each park's operation. Potential risks to employees and staff as well as to the public are evaluated. Contingency plans for potential emergency situations have been developed for each facility. During the off-season, maintenance personnel examine the rides and repair, refurbish and rebuild them where necessary. This process includes x-raying and magnafluxing (a further examination for minute cracks and defects) steel portions of certain rides at high-stress points. The Company has approximately 900 full-time employees who devote substantially all of their time to maintaining the parks and their rides and attractions. In addition to the Company's maintenance and inspection procedures, the Company's liability insurance carrier performs an annual inspection of each park and all attractions and related maintenance procedures. The result of insurance inspections are written evaluation and inspection reports, as well as written suggestions on various aspects of park operations. State inspectors also conduct annual ride inspections before the beginning of each season. Other portions of each park are also subject to inspections by local fire marshals and health and building department officials. Furthermore, the Company uses Ellis & Associates as water safety consultants at its parks in order to train life guards and audit safety procedures. EMPLOYEES The Company employs approximately 2,800 full-time employees and approximately 35,000 seasonal employees during the operating season. In this regard, the Company competes with other local employers for qualified student and other candidates on a season-by-season basis. As part of the seasonal employment program, the Company employs a significant number of teenagers, which subjects the Company to child labor laws. The Company is not subject to federal or certain applicable state minimum wage rates in respect of its seasonal employees. However, the recent increase in the federal or any applicable state minimum wage rate could result over time in increased compensation expense for the Company as it relates to these employees as a result of competitive factors. Approximately 14.8% of the Company's full-time and approximately 15.3% of its seasonal employees are subject to labor agreements with local chapters of national unions. These labor agreements expire in January 2000 (Six Flags Over Texas), December 2000 (Six Flags Over Georgia), December 1999 (Six Flags Great Adventure), January 2000 (Six Flags St. Louis) and January 2000 (Marine World). The Company has never experienced any work stoppages, and believes that it has a strong relationship with its employees and unions. INSURANCE The Company maintains insurance of the type and in amounts that it believes are commercially reasonable and that are available to businesses in its industry. Premier Operations maintains multi-layered general liability policies that provide for excess liability coverage of up to $25.0 million per occurrence. By virtue of self-insured retention limits, Premier Operations is required to pay the first $50,000 of loss per 78 occurrence. Six Flags maintains multi-layered general liability policies that provide for excess liability coverage of up to $175.0 million per occurrence. By virtue of self-insured retention limits ($500,000 per occurrence) and first dollar coverage by a captive insurance company, Six Flags or its wholly-owned insurance company subsidiary is required to pay the first $2 million of loss per occurrence. Premier may alter the insurance coverage of Six Flags following the Six Flags Acquisition. Premier's combined cost for liability insurance and for self-insured claims for 1997 was $0.9 million compared to $0.8 million in 1996 and $0.6 million in 1995. For the same three years Six Flags liability costs and claims were $13.8 million, $15.9 million and $15.8 million, respectively. The Company also maintains fire and extended coverage, workers' compensation, business interruption and other forms of insurance typical to businesses in its industry. The fire and extended coverage policies insure the Company's real and personal properties (other than land) against physical damage resulting from a variety of hazards. ENVIRONMENTAL AND OTHER REGULATION The Company's operations are subject to increasingly stringent federal, state and local environmental laws and regulations including laws and regulations governing water discharges, air emissions, soil and groundwater contamination, the maintenance of underground and above-ground storage tanks and the disposal of waste and hazardous materials. In addition, its operations are subject to other local, state and federal governmental regulations including, without limitation, labor, health, safety, zoning and land use and minimum wage regulations applicable to theme park operations, and local and state regulations applicable to restaurant operations at the park. The Company believes that it is in substantial compliance with applicable environmental and other laws and regulations and, although no assurance can be given, it does not foresee the need for any significant expenditures in this area in the near future. Remediation of certain hazardous substances or petroleum products are underway at the Company's Six Flags Great Adventure Park. The Company does not anticipate that any environmental remediation matters, either individually or in the aggregate, will have a material adverse effect on its financial condition or results of operation. In addition, portions of the undeveloped areas at its parks may be classified as wetlands. Accordingly, the Company may need to obtain governmental permits and other approvals prior to conducting development activities that affect these areas, and future development may be prohibited in some or all of these areas. LEGAL PROCEEDINGS The nature of the industry in which the Company operates tends to expose it to claims by visitors for injuries. Historically, the great majority of these claims have been minor. While the Company believes that it is adequately insured against the claims currently pending against it and any potential liability, if the number of such events resulting in liability significantly increased, or if the Company becomes subject to damages that cannot by law be insured against, such as punitive damages, there may be a material adverse effect on its operations. On March 19, 1997, SFTP, and its wholly-owned subsidiary Six Flags Over Georgia, Inc. (collectively, the "Six Flags Parties") commenced a declaratory judgment action in the Superior Court of Gwinnett County, Georgia, entitled SIX FLAGS OVER GEORGIA, INC. AND SIX FLAGS THEME PARKS, INC. V. SIX FLAGS FUND, LTD. AND AVRAM SALKIN, AS TRUSTEE OF THE CLAIMS TRUST (the "Georgia Litigation"). The Six Flags Parties sought, among other things, a declaration and determination of the rights and obligations of the partners of Six Flags Over Georgia, L.P., with respect to certain disputed partnership affairs and an accounting of all partnership affairs. On April 21, 1997, defendants Six Flags Fund, Ltd. and its affiliates (collectively, the "SFOG Fund Parties") filed a motion to dismiss the declaratory judgment action as well as an answer and counterclaim naming SFEC and Time Warner Entertainment Company, L.P. as additional counterclaim- defendants. The counterclaim seeks imposition of a constructive trust and an accounting, compensatory 79 damages of in excess of $250 million and unspecified punitive damages for alleged breaches of fiduciary duty, conversion, fraud and conspiracy allegedly committed by the counterclaim-defendants in connection with the management of Six Flags Over Georgia. On June 9, 1997, the parties entered into a consent order in which they agreed, among other things, to realign the parties. An amended complaint was then filed by the SFOG Fund Parties as the newly-aligned plaintiffs against the Six Flags Parties in which the same substantive claims were asserted. The Six Flags Parties filed their answer denying liability and asserting several affirmative defenses on July 24, 1997. The Six Flags Parties intend to vigorously contest the allegations of the complaint. The Sellers have agreed to indemnify the Company from any and all liabilities arising out of the Georgia Litigation. See "Description of Six Flags Agreement--Indemnification." 80 MANAGEMENT DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES The following table sets forth certain information with respect to the directors, executive officers and key employees of the Company or its subsidiaries.
NAME AGE POSITION WITH COMPANY - --------------------------------- --------- ------------------------------------------------------------------------ Kieran E. Burke.................. 40 Chairman and Chief Executive Officer; Director Gary Story....................... 42 President and Chief Operating Officer; Director James F. Dannhauser.............. 45 Chief Financial Officer; Director Hue W. Eichelberger.............. 39 Executive Vice President Dan Aylward...................... 45 Vice President, General Manager, Marine World Jack D. Bateman.................. 40 Vice President, General Manager, Kentucky Kingdom Timothy D. Black................. 32 Vice President, General Manager, Wyandot Lake James C. Bouy.................... 56 Vice President, General Manager, Elitch Gardens John S. Collins.................. 38 Vice President, General Manager, The Great Escape Jeffrey A. Lococo................ 42 Vice President, General Manager, Geauga Lake Richard A. McCurley.............. 38 Vice President, General Manager, Waterworld Bill Muirhead.................... 42 Vice President, General Manager, Riverside Park Bradley Y. Paul.................. 50 Vice President, General Manager, Darien Lake Manuel Gonzalez-Perez............ 36 Vice President, General Manager, Frontier City Traci E. Blanks.................. 37 Vice President of Marketing David Thomas..................... 40 Vice President of Entertainment Richard A. Kipf.................. 63 Vice President of Administration, Corporate Secretary John Gannon...................... 40 Vice President of Finance Russell Kuteman.................. 45 Vice President of Finance Paul A. Biddelman................ 52 Director Michael E. Gellert............... 66 Director Jack Tyrrell..................... 51 Director Sandy Gurtler.................... 48 Director Charles R. Wood.................. 83 Director
KIERAN E. BURKE has served as Chief Executive Officer and a Director of the Company since October 1989 and Chairman of the Board since June 1994. From 1989 through June 1994, he was President of Premier. Mr. Burke also serves as a director of Blue Ridge Real Estate Company and Big Boulder Corporation. Mr. Burke was an investment banker prior to becoming President of Premier. Mr. Burke is a member of the board of directors of the International Association of Amusement Parks & Attractions ("IAAPA"). GARY STORY has served as President and a Director of the Company since June 1994 and as Chief Operating Officer since January 1992. From January 1992 through June 1994, he also served as Premier's Executive Vice President. Prior to that time, he had been General Manager of Frontier City for more than five years. From 1983 through 1984, Mr. Story served as General Manager of Luna Park, an amusement park in Sydney, Australia, during its redevelopment as a theme park and from 1981 through 1983 he served as General Manager of Diversiones del Reino, an amusement park in Mexico City. From 1972 through 1981, Mr. Story served in various capacities with Six Flags. Mr. Story is a former member of the board of directors of IAAPA. JAMES F. DANNHAUSER became Chief Financial Officer of the Company in October 1995 and has served as a Director of Premier since December 1992. From 1990 through June 1996, Mr. Dannhauser was a managing director of Lepercq, de Neuflize & Co. Incorporated, an investment banking firm ("Lepercq"). Mr. Dannhauser is a member of the board of directors of Lepercq. 81 HUE W. EICHELBERGER has served as Executive Vice President since 1996; prior thereto he served as Vice President and General Manager of Adventure World since 1992. From 1991 through 1992, he served as Park Manager of White Water Bay. From 1988 through 1991, he was Associate Director of Corporate Development at Silver Dollar City, Inc. Prior thereto, Mr. Eichelberger served as General Manager of White Water (a water park in Grand Prairie, Texas) and FantaSea (a water park in Wichita, Kansas). DAN AYLWARD has served as Vice President and General Manager of Marine World since February 1997. From January 1995 to February 1997, Mr. Aylward was President and General Manager of Silverwood Theme Park, a small theme park operation in Idaho. From June 1989 to January 1995 he served as General Manager of Old Tucson Studios in Tucson, Arizona. Prior thereto, Mr. Aylward was employed at Kings Island. JACK D. BATEMAN has served as Vice President and General Manager of Kentucky Kingdom since its acquisition by the Company in November 1997. Prior to that time, he served as Director of Marketing at Elitch Gardens since 1996. Prior to joining Premier, Mr. Bateman worked in various capacities at Six Flags for over fifteen years, most recently as Director of Destination Marketing at Six Flags Over Texas. TIMOTHY D. BLACK has served as Vice President and General Manager of Wyandot Lake since 1997. From 1995 through 1997, he was Manager of Park Operations at Six Flags Fiesta Texas. From 1992 to 1995, he was Director of Operations and Maintenance at Frontier City. JAMES C. BOUY served as Vice President and General Manager of Geauga Lake since 1994 and became General Manager of Elitch Gardens following its acquisition by the Company. Prior thereto, from 1992 through 1994, he served as Vice President and General Manager of Kennywood Park in Pittsburgh, Pennsylvania. From 1985 through 1991, Mr. Bouy was employed by Funtime as Vice President and General Manager of Darien Lake. Prior thereto, from 1975 through 1981, he was employed by the Marriott Corporation, where his responsibilities included serving as Chief Operating Officer for The Great American Theme Park in Gurnee, Illinois and The Great American Theme Park in Santa Clara, California. JOHN S. COLLINS has served as a Vice President since 1998 and as General Manager of The Great Escape since November 1996. Prior to that time, he served in various capacities at Geauga Lake for over ten years, most recently as Director of Marketing. JEFFREY A. LOCOCO has served as Vice President and General Manager of Wyandot Lake since 1989 and became the General Manager of Geauga Lake following its acquisition by the Company. From 1982 through 1989, he served as Director of Marketing and Sales of Geauga Lake. From 1980 through 1982, Mr. Lococo served as Regional Sales Manager with Marriott's Great America Theme Park. RICHARD A. MCCURLEY has served as Vice President and General Manager of Frontier City and White Water Bay since 1994 and became General Manager of Waterworld following its acquisition by the Company. He joined Premier in 1992 as Director of Revenue for Frontier City and White Water Bay and, during that year, transferred to become Director of Revenue for Adventure World. From 1985 through 1992, Mr. McCurley was Food Service Manager and later Food Service Director at Knotts Berry Farms. Prior to that period, he spent six years with Worlds of Fun, a major theme park in Kansas City, Missouri, ultimately serving as Director of Food Services. BILL MUIRHEAD has served as Vice President and General Manager of Riverside Park since January 1997. Prior to that, beginning in 1992, he served as Vice President and General Manager of Expo/Tiered Retail Services Inc., a company headquartered in Hong Kong and specialized in developing themed retail and gaming operations in the South Pacific rim. Prior thereto, Mr. Muirhead was employed at Dorney Park and Six Flags Great Adventure. 82 BRADLEY Y. PAUL has served as Vice President and General Manager of Darien Lake since 1991. From 1984 through 1991 he served as Marketing Director of Darien Lake. MANUEL GONZALEZ-PEREZ has served as Vice President and General Manager of Frontier City since 1996. From 1995 to 1996 he served as Director of Park Revenue and Operation at Frontier City. From 1991 to 1995, Mr. Gonzalez-Perez was President and CEO for Park Street (Family Entertainment Center) in Mexico and from 1991 to 1994 he served as Revenue Director for Reine Arthon in Mexico City. TRACI E. BLANKS has served as Vice President of Marketing since 1995. From 1992 through 1994, she served as Vice President Marketing for Frontier City and White Water Bay. From 1986 through 1992, she served as Director of Marketing for Frontier City, and as such was responsible for all marketing and group sales programs. From 1986 through 1987, she also served as Manager of Advertising and Promotions for Frontier City. DAVID THOMAS has served as Vice President of Entertainment since 1993. From 1987 through 1993, he was responsible for the Company's show productions (including booking national touring acts to appear at the parks) as well as the staging of numerous festivals including Oktoberfest and Hallowscream. Prior to 1987, he served as President of Silvertree Productions, producing over forty stage shows, musicals, stunt spectaculars and magic illusion presentations. RICHARD A. KIPF has served as Corporate Secretary of the Company (or its predecessors) since 1975 and has served as Vice President of Administration since 1994. JOHN P. GANNON has served as Vice President of Finance for the Company since August of 1995 when Premier purchased Funtime Parks, Inc. Mr. Gannon had previously served as Vice President and Treasurer for Funtime Parks, Inc. from 1990 to 1995. From 1987 to 1990, he served as a controller for Geauga Lake Park in Aurora, Ohio. Prior thereto, Mr. Gannon, a certified public accountant, was employed with Ernst & Young, beginning in 1979, and was assigned to the Funtime audit. Mr. Gannon is a past president of the Akron Chapter of the Institute of Management Accounts. RUSSELL W. KUTEMAN has served as Vice President of Finance of the Company since 1996. From 1986 through 1996, Mr. Kuteman served as the Vice President of Finance for Wet 'n Wild and later Six Flags. Prior to 1986, Mr. Kuteman served as Vice President of Finance for several independent petroleum companies. Mr. Kuteman is a CPA, and began his professional career with Peat, Marwick, Mitchell & Co. in 1976. PAUL A. BIDDELMAN has served as a Director of the Company since December 1992. Since December 1997, Mr. Biddelman has been president of Hanseatic Corporation ("Hanseatic"), a private investment company. Prior to that date, he was treasurer of Hanseatic for more than five years. Mr. Biddelman also serves as a director of Electronic Retailing Systems International, Inc., Insituform Technologies, Inc., Celadon Group, Inc., Petroleum Heat and Power Co., Inc. and Star Gas Corporation (general partner of Star Gas Partners, L.P.). MICHAEL E. GELLERT has served as a Director of the Company since March 1989. He previously served as a Director of Premier and as a Trustee of Tierco from 1979 until 1986. From June 1989 through June 1994, he also served as the Chairman of the Board of Premier. Mr. Gellert is a general partner of Windcrest Partners ("Windcrest"), a New York limited partnership. Windcrest, the principal business of which is private investing, is an affiliate of Premier. Mr. Gellert also serves as a director of Devon Energy Corp., Humana Inc., Seacor Holdings, Inc., Regal Cinemas, Inc. and The Putnam Trust Company of Greenwich Advisory Board of The Bank of New York. JACK TYRRELL has served as a Director of Premier since December 1992. For more than five years, Mr. Tyrrell has been a general partner of Lawrence Venture Partners, a general partnership, the principal business of which is that of acting as general partner of Lawrence, Tyrrell, Ortale & Smith ("LTOS"), a 83 private investment limited partnership. Mr. Tyrrell is also a general partner of LTOS II Partners, a general partnership, the principal business of which is that of acting as general partner of Lawrence, Tyrrell, Ortale & Smith II, L.P. ("LTOS II"), a private investment limited partnership. Mr. Tyrrell is also a general partner of Richland Partners, L.P., a limited partnership, the principal business of which is that of acting as general partner of Richland Ventures, L.P. ("Richland"), a private investment limited partnership. In addition, Mr. Tyrrell is a general partner of Richland Partners II, L.P., a limited partnership, the principal business of which is that of acting as general partner of Richland Ventures II, L.P. ("Richland II"), a private investment limited partnership. Mr. Tyrrell also serves as a director of National Health Investors, Inc. and Regal Cinemas, Inc. SANDY GURTLER has served as a Director of the Company since 1997. Mr. Gurtler is the chief executive officer, a director and a shareholder of Chilcott Entertainment Corp., which was the general partner of the owner of Elitch Gardens prior to the acquisition of the park by the Company in October 1996. Mr. Gurtler also serves as a consultant to the Company. CHARLES R. WOOD has served as a Director of the Company since 1997. Mr. Wood is the President and sole shareholder of Storytown USA, Inc. and Fantasy Rides Corporation, which collectively owned The Great Escape prior to the acquisition of the park by the Company in December 1996. Mr. Wood also serves as a consultant to the Company and owns, directly or through wholly-owned corporations, a variety of businesses in the Lake George area, including real estate, motels, restaurants and an action park. 84 PRINCIPAL STOCKHOLDERS The following table sets forth certain information as of January 1, 1998 (except as noted below) as to Common Stock owned by (a) each of the Company's current directors and senior executive officers; (b) all current directors and officers of the Company as a group; and (c) each person who, to the best of the Company's knowledge, beneficially owned on that date more than 5% of the outstanding Common Stock.
PERCENTAGE OF CLASS NUMBER OF SHARES ------------------------ BENEFICIALLY PRIOR TO AFTER NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OFFERING OFFERING - -------------------------------------------------------------------------- ----------------- ----------- ----------- Kieran E. Burke(1)........................................................ 314,877 1.6 * Paul A. Biddelman(2)...................................................... 2,657,071 14.1 8.2 James F. Dannhauser(3).................................................... 76,665 * * Michael E. Gellert(4)..................................................... 1,368,961 7.3 4.2 Gary Story(5)............................................................. 143,000 * * Jack Tyrrell(6)........................................................... 695,253 3.7 2.2 Sandy Gurtler............................................................. -- -- -- Charles R. Wood........................................................... 9,091(7) * * Robert J. Gellert(8)...................................................... 1,254,553 6.6 3.9 122 East 42nd Street New York, New York 10168 Windcrest Partners(9)..................................................... 1,136,025 6.0 3.5 122 East 42nd Street New York, New York 10168 Hanseatic Corporation(10)................................................. 2,657,071 14.1 8.2 Wolfgang Traber 450 Park Avenue New York, New York 10152 FMR Corp.(11)............................................................. 1,296,500 6.9 4.0 82 Devonshire Street Boston, Massachusetts 02109 Baron Capital Group(12)................................................... 1,184,700 6.3 3.7 767 Fifth Avenue New York, NY 10153 Warburg Pincus Asset Management(13)....................................... 968,145 5.1 3.0 466 Lexington Avenue New York, NY 10017 All directors and officers as a group(14) (14 persons).................... 5,306,419 27.5 16.2
- ------------------------ * Less than one percent. (1) Includes 75,637 shares of Common Stock and warrants and options to purchase 239,238 shares of Common Stock for his own account as to which Mr. Burke has sole voting and investment power. Does not include 258,675 shares under the unvested portion of options and restricted shares granted. (2) Represents shares of Common Stock beneficially owned by Hanseatic Corporation ("Hanseatic"), of which Mr. Biddelman is President. See footnote (10) below. (3) Includes 32,665 shares of Common Stock and options to purchase 44,000 shares of Common Stock. Does not include 154,325 shares under the unvested portion of options and restricted shares granted. (4) Includes 232,936 shares of Common Stock, as to which Mr. Gellert has sole voting and investment power. Also includes 1,136,025 shares of Common Stock beneficially owned by Windcrest Partners 85 ("Windcrest") which shares voting and investment power with its general partners, Michael E. Gellert and Robert J. Gellert. (5) Includes 25,000 shares of common stock and options to purchase 118,000 shares of Common Stock. Does not include 197,000 shares under the unvested portion of options and restricted shares granted. (6) Includes 9,794 shares of Common Stock for his own account; 4,396 shares of Common Stock held in a trust for the benefit of his son; 311,940 shares of Common Stock beneficially owned by Lawrence, Tyrrell, Ortale & Smith II, L.P. ("LTOS II"); and an aggregate of 369,123 shares of Common Stock beneficially owned by Richland Ventures, L.P. ("Richland") and Richland Ventures II, L.P. ("Richland II"). Mr. Tyrrell, who is a general partner of the respective general partners of LTOS II, Richland and Richland II, disclaims beneficial ownership of all shares held by such entities. (7) Represents shares held by Double "H" Hole in the Woods Ranch, Inc., a charitable organization of which Mr. Wood is Chairman of the Board. (8) Includes 2,514 shares of Common Stock for his own account, as to which he has sole voting and investment power; 40,351 shares of Common Stock as agent for 26 other persons and entities with whom he shares voting and investment power; 2,168 shares of Common Stock as trustee for Michael E. Gellert's sister with respect to which he shares voting and investment power with Peter J. Gellert (who holds these shares as agent); 5,558 shares of Common Stock as trustee of irrevocable trusts for the benefit of Michael E. Gellert's children as to which he has sole voting and investment power; 1,083 shares of Common Stock as trustee of an irrevocable trust for the benefit of his brother as to which he has sole voting and investment power; 1,854 shares of Common Stock as trustee of a trust for the benefit of a second cousin as to which he has sole voting and investment power; 1,136,025 shares of Common Stock owned by Windcrest, which shares voting and investment power with its general partners, Michael E. Gellert and Robert J. Gellert; and 65,000 shares of Common Stock beneficially owned by Lexfor Corporation of which he is President and a director, as to which he shares voting and investment power with the other officers and directors. Michael E. Gellert disclaims beneficial ownership of the shares of Common Stock owned by the trusts for the benefit of his children. (9) Windcrest shares voting and investment power with its general partners, Michael E. Gellert and Robert J. Gellert. (10) Represents shares of Common Stock beneficially owned by Hanseatic. Mr. Traber holds a majority of the shares of capital stock of Hanseatic and thus may be deemed to beneficially own such Common Stock. Of such shares, 2,588,695 shares of Common Stock are held by Hanseatic Americas LDC, a Bahamian limited duration company in which the sole managing member is Hansabel Partners LLC, a Delaware limited liability company in which the sole managing member is Hanseatic. The remaining shares of Common Stock are held by Hanseatic for discretionary customer accounts. Information has been derived from Amendment No. 7 to Schedule 13D, dated December 5, 1997. (11) Includes 1,213,200 shares of Common Stock beneficially owned by Fidelity Management & Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp. and a registered investment adviser (including 3,400 shares of Common Stock owned by Fidelity American Special Situations Trust ("FASST"), an English unit trust as to which Fidelity acts as a sub-adviser); 81,400 shares of Common Stock beneficially owned by Fidelity Management Trust Company ("FMT"), a wholly-owned subsidiary of FMR Corp. and a bank; and 5,300 shares beneficially owned by Fidelity International Limited ("FIL"), a Bermudan investment adviser and former majority-owned subsidiary of Fidelity (including 3,400 shares of Common Stock owned by FASST, as to which a subsidiary of FIL acts as an investment adviser). Edward C. Johnson 3d, Chairman of FMR Corp. and FIL, Abigail P. Johnson, a director of FMR Corp., and members of the Johnson family may be deemed to form a controlling group with respect to FMR Corp. Information has been derived from Schedule 13G, dated December 30, 1997. 86 (12) Includes 1,136,700 shares of Common Stock beneficially owned by BAMCO, Inc., a registered investment adviser as to which Baron Capital Group ("BCG") and Ronald Baron ("Baron"), President of BCG, may be deemed parent holding companies; and 48,000 shares of Common Stock beneficially owned by Baron Capital Management, Inc., a registered investment adviser as to which BCG and Baron may be deemed parent holding companies. Information has been derived from Schedule 13G, dated February 17, 1998. (13) Represents shares beneficially owned by Warburg Pincus Asset Management, Inc., a registered investment adviser. Information has been derived from Amendment No. 1 to Schedule 13G, dated January 12, 1998. (14) The share amounts listed include shares of Common Stock that the following persons have the right to acquire within 60 days from December 1, 1997 (Kieran E. Burke, 239,238 shares (see footnote (1)); James F. Dannhauser, 44,000 shares (see footnote (3)); Gary Story, 118,000 shares (see footnote (5)); and all directors and officers as a group, 442,839 shares. 87 DESCRIPTION OF SIX FLAGS AGREEMENT GENERAL On February 9, 1998, the company presently named Premier Parks Inc., certain wholly-owned subsidiaries of Premier, SFEC and each of the Sellers entered into the Six Flags Agreement. The Six Flags Agreement provides for the Six Flags Acquisition, pursuant to which Premier will acquire, by merger, all of the capital stock of SFEC from the Sellers for $965 million (the "Capital Stock Consideration") (plus an approximate $11 million adjustment based on year-end balance sheet adjustments and option cancellation costs). The Capital Stock Consideration will be payable all in cash or, at the Company's option, in cash and Seller Depositary Shares representing interests in up to $200 million of the Seller Preferred Stock. The Company may reduce (but not below $100.0 million) or may eliminate the Seller Depositary Shares by increasing the cash portion of the purchase price. The net proceeds of the Offerings will be used, in whole or in part, to fund the cash portion of the Capital Stock Consideration. If the Company determines not to issue the Seller Depositary Shares, the additional cash portion of the Capital Stock Consideration will be funded from the net proceeds of the Common Stock Offering. Consummation of the Six Flags Acquisition is a condition to the Offerings. THE MERGERS Prior to the Six Flags Acquisition, and pursuant to the Premier Merger, the company presently named Premier Parks Inc. will merge with a wholly-owned subsidiary of Premier Parks Holdings Corporation in accordance with Section 251(g) of the Delaware General Corporation Law. As a result of the Premier Merger, holders of shares of Common Stock of Premier will become, on a share-for-share basis, holders of Common Stock of Premier Parks Holdings Corporation, and Premier will become a wholly-owned subsidiary of Premier Parks Holdings Corporation. On the effective date of the Premier Merger, Premier will change its name to Premier Parks Operations Inc., and Premier Parks Holdings Corporation will change its name to Premier Parks Inc. In addition to the share-for-share exchange, each option or similar right exercisable for capital stock of Premier outstanding immediately prior to the Premier Merger automatically will be converted into an option or similar right exercisable for a number of shares of the Common Stock equal to the number of shares of capital stock of Premier for which such option or similar right was exercisable immediately prior to the Premier Merger. Immediately following the closing of the Offerings, SFEC and a wholly-owned subsidiary of the Company will be merged pursuant to the Six Flags Acquisition, with SFEC continuing as the surviving corporation and as a wholly-owned subsidiary of the Company. Pursuant to the Six Flags Acquisition, (i) each share of capital stock of SFEC outstanding immediately prior to the Six Flags Acquisition, all of which are held by the Sellers, automatically will be converted into the right to receive a pro rata share of the Capital Stock Consideration based on the aggregate number of such shares (together with a cash payment in lieu of any fractional shares of Seller Preferred Stock to which the Sellers would have otherwise been entitled as part of the Capital Stock Consideration) and (ii) each option or similar right exercisable for capital stock of SFEC outstanding immediately prior to the Six Flags Acquisition automatically will be cancelled in exchange for a cash payment by SFEC (all such cash payments together, the "SFEC Option Consideration") of all amounts necessary to fund such payments being loaned or contributed by the Company. CONDITIONS The Six Flags Agreement contains customary closing conditions of the parties. In addition, the Company's obligation to consummate the Six Flags Acquisition is subject to the condition that the 88 Company raise equity capital in an amount at least equal to the difference between $900.0 million and the value of the Seller Preferred Stock issued to the Sellers pursuant to the Six Flags Acquisition. INDEMNIFICATION The Six Flags Agreement contains customary representations, warranties, covenants and other agreements of the parties. Each Seller has agreed to indemnify and hold harmless the Company against certain damages, claims and liabilities (and the cost and expenses related thereto) suffered by the Company in respect of (i) any breach of or inaccuracy in any representation or warranty contained in the Six Flags Agreement made by such Seller individually, or by the Sellers collectively, and (ii) any breach or violation of any covenant or agreement made by any Seller for itself or on behalf of SFEC or its subsidiaries contained in the Six Flags Agreement or any documents delivered at the closing thereunder. The Company has agreed to indemnify and hold harmless the Sellers against certain damages, claims and liabilities (and the cost and expenses related thereto) suffered by the Sellers in respect to (i) any breach of or inaccuracy in any representation or warranty made by or on behalf of the Company, and (ii) any breach or violation of any covenant made by or on behalf of the Company in the Six Flags Agreement or any documents delivered at the closing thereunder. Generally, no party may make a claim for indemnification for breaches of representations and warranties and of covenants and other agreements as described in the immediately preceding paragraph after the date (the "Claims Termination Date") which is the earlier of (i) the 45th day following the date on which audited annual financial statements of the Company and its consolidated subsidiaries for the 1998 fiscal year are first made available to the Company and (ii) April 30, 1999. The Company may not make any claims for indemnification for breaches of any of the Sellers' representations and warranties until the aggregate amount of the damages suffered exceeds $5 million (the "Basket Amount"), whereupon the Sellers are obligated to pay in full all such amounts for indemnification, including the Basket Amount. The total maximum amount that the Sellers are required to pay for indemnification for breaches of the Sellers' representations and warranties under the Six Flags Agreement is $25 million. The Sellers' ability to make indemnification claims for breaches of any of the Company's representations and warranties is subject to a corresponding Basket Amount and $25 million maximum amount. Upon consummation of the Six Flags Acquisition, the Company will deposit $25 million in cash into an escrow fund under a General Indemnity Escrow Agreement to be entered into by the Company with the Sellers and certain holders of options exercisable for capital stock of SFEC. A portion of such deposit will come from the Capital Stock Consideration payable to the Sellers, with the balance to come from the SFEC Option Consideration payable to the optionholders who are party to the General Indemnity Escrow Agreement. The escrow fund will be the sole source of payment for the Sellers' indemnification obligations to the Company for breaches of or inaccuracies in the Sellers' representations and warranties. Any payment as a result of breaches of or inaccuracies in an individual Seller's representations and warranties may be limited to such individual Seller's contribution to the escrow fund. In addition, the Sellers have agreed to indemnify the Company from any and all liabilities arising out of the Georgia Litigation. See "Business--Legal Proceedings." AGREEMENTS RELATED TO THE SIX FLAGS AGREEMENT Certain ancillary agreements will be entered into pursuant to the Six Flags Agreement in connection with the Six Flags Acquisition. See "Business--Licenses" and "Description of Securities--Registration Rights." In addition to the ancillary agreements to be entered into in connection with the Six Flags Acquisition that are described elsewhere herein, at the closing of the Six Flags Transactions, the Company will enter 89 into the Subordinated Indemnity Agreement with Time Warner, pursuant to which the Company will indemnify Time Warner in respect of its effective guarantee of the SFEC Zero Coupon Senior Notes, and the Company and Six Flags will indemnify Time Warner in respect of its guarantee of the obligations of Six Flags under the agreements relating to the Co-Venture Parks. Pursuant to the Subordinated Indemnity Agreement, the Company will transfer to Time Warner record title to the corporations which own certain entities that have purchased and will purchase units of the limited partners of such partnerships, and the Company will receive an assignment from Time Warner of all cash flow received on such units and will otherwise control such entities, except in the event of a default by the Company of its obligations under the Subordinated Indemnity Agreement. After all such obligations have been satisfied, Time Warner is required to retransfer to the Company such record title for a nominal consideration. In the event of a default, the Subordinated Indemnity Agreement allows Time Warner to acquire the stock of the entities that purchase units of the limited partners of the Co-Venture Parks and the assets of the Company subsidiary which holds the general partner interest in the Co-Venture Parks. In addition, the Company will issue preferred stock of the managing partners of the Co-Venture Parks to Time Warner which, in the event of such a default, would permit Time Warner to obtain control of such entities. The Subordinated Indemnity Agreement also limits the Company's ability to sell the Six Flags Parks. Except in the case of the New SFEC Notes, under the terms of the Subordinated Indemnity Agreement, without the consent of Time Warner, the Company cannot incur indebtedness at SFEC or any of its subsidiaries that is secured by any assets of (or guaranteed by) the Company, Premier Operations or any of its subsidiaries, or secure any indebtedness of the Company, Premier Operations or any of its subsidiaries with any of the assets of (or guarantees by) SFEC or any of its subsidiaries. In connection with the Premier Merger, Premier, SFEC and Premier Operations will enter into a Shared Services Agreement pursuant to which Premier will provide certain corporate, administrative and other general services to SFEC and Premier Operations for their operations and the operations of their subsidiaries. Generally, Premier will provide legal, financial, accounting, human resources, information systems, payroll, marketing and promotion, and other services to its subsidiaries. In addition, the purchasing, design and implementation of capital improvements, the production of live entertainment at the parks, as well as the purchasing of operating supplies, will generally be done by Premier on behalf of its subsidiaries. With respect to such services provided generally to the parks, the costs thereof, including third party costs and appropriate corporate overhead, will generally be allocated based on each park's percentage of Premier's revenues. Costs of services provided to particular parks, such as costs relating to capital improvements, will be allocated to such park and will normally include, in addition to direct costs, an allocation of time spent and expenses incurred by corporate personnel in providing such services. SFEC and Premier Operations will be obligated to purchase such services only so long as they may deem such services to be necessary or desirable for their operations and the operations of their subsidiaries. A tax sharing agreement will be entered into between Premier and SFEC for the purpose of allocating to SFEC its share of any actual federal income tax liability of Premier's consolidated federal income tax group that will include SFEC and its eligible subsidiaries. Under the tax sharing agreement, SFEC will be required to make payments to Premier shortly before Premier is required to make tax payments, including estimated tax payments, to the Internal Revenue Service on behalf of the consolidated group. Premier will act as agent for SFEC and its subsidiaries with respect to federal income tax matters and will pay to the Internal Revenue Service the federal income tax liability of the consolidated group. Under the tax sharing agreement, the amount that SFEC and its subsidiaries will owe to Premier may not exceed the tax liability that they would have owed if they were not members of Premier's consolidated group and instead were a separate consolidated group, but without taking into account any of their tax attribute carrybacks or carryforwards. The tax sharing agreement will provide for the application of similar principles to any unitary, consolidated or combined state or local income tax filing group that includes SFEC or any of its subsidiaries in the same group with Premier or any of its subsidiaries other than SFEC and its subsidiaries. 90 DESCRIPTION OF INDEBTEDNESS PREMIER CREDIT FACILITY Borrowings under the Premier Credit Facility, which was entered into in March 1998, are secured by substantially all of the assets of Premier Operations and its domestic subsidiaries (other than real estate), and guaranteed by such subsidiaries. The Premier Credit Facility has an aggregate availability of $300.0 million consisting of (i) a five-year $75.0 million revolving credit facility for working capital and general corporate purposes (the "Revolving Credit Facility"); (ii) a five-year $100.0 million term loan facility ("Facility B"); and (iii) an eight-year $125.0 million term loan facility ("Facility C" and, together with Facility B, the "Term Loan Facilities"), in each case, to fund acquisitions and make capital improvements. The Company expects to borrow $125.0 million in March 1998, in part, to fund the cash portion of the purchase price for the Walibi acquisition. Interest rates per annum under the Premier Credit Facility are equal to either (a) a base rate equal to the higher of the Federal Funds Rate plus 1/2% or the prime rate of Citibank, N.A., in each case, plus the Applicable Margin (as defined therein) or (b) the London Interbank Offered Rate plus the Applicable Margin. The Revolving Credit Facility will terminate on March 31, 2003. Borrowings under Facility B will mature on March 31, 2003 and borrowings under Facility C will mature on March 31, 2006; however, aggregate principal payments and reductions of $10.0 million, $25.0 million, $30.0 million and $35.0 million will be required during the second, third, fourth and fifth years of Facility B and aggregate principal payments of $1.0 million each are required in each of the first six years of Facility C in addition to a $25.0 million payment in year seven and a $94.0 million payment in year eight. The Premier Credit Facility contains restrictive covenants that, among other things, limit the ability of Premier Operations and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; repurchase stock; make investments; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates. In addition, the Premier Credit Facility requires that Premier Operations comply with certain specified financial ratios and tests, including ratios of total debt to EBITDA, interest expense to EBITDA and fixed charges to EBITDA. Defaults under the Premier Credit Facility include (i) failure to repay principal when due; (ii) failure to pay interest within three days after due; (iii) default in the performance of certain obligations of Premier Operations' principal subsidiaries under the Security Agreement (as defined thereunder); (iv) failure to comply with certain covenants, conditions or agreements under the credit agreement which, in certain cases, continues for 30 days; (v) default by Premier Operations or any of its principal subsidiaries in respect of any indebtedness above specified levels; (vi) certain events of bankruptcy; (vii) certain judgments against Premier Operations or any of its principal subsidiaries; (viii) the occurrence of a Change in Control (as defined thereunder); (ix) the assertion of certain Environmental Claims (as defined thereunder); and (x) under certain circumstances, the failure by Messrs. Burke and Story to serve Premier Operations in their present positions and the failure to replace them within a specified time period. SIX FLAGS CREDIT FACILITY Borrowings under the Six Flags Credit Facility, which will be entered into on or prior to the closing of the Six Flags Acquisition, will be secured by substantially all of the assets of SFTP and its subsidiaries and a pledge by SFEC of the stock of SFEC, and will be guaranteed by such subsidiaries and SFEC. The Six Flags Credit Facility will have an aggregate availability of $472 million consisting of (i) up to $100.0 million under a Revolving Credit Facility to be used to refinance existing outstanding Six Flags bank indebtedness and for working capital and other general corporate purposes; and (ii) up to $372.0 million under Facility B to be used to refinance existing outstanding Six Flags bank indebtedness and fund acquisitions and make capital improvements. The Company anticipates that Facility B will be fully funded in connection with the Six Flags Acquisition. Interest rates per annum under the Six Flags Credit Facility are equal to either (a) a base rate equal to the higher of the Federal Funds Rate plus 1/2% or the prime rate of Citibank, N.A., in each case, plus the Applicable Margin (as defined therein) or (b) the London Interbank Offered Rate plus the Applicable Margin. The Revolving Credit Facility will terminate five years from the closing of the Six Flags Acquisition. Borrowings under Facility B will mature on November 30, 2004. However, for Facility B, 91 aggregate principal payments and reductions of $1.0 million will be required during each of the first, second, third and fourth years and aggregate principal payments of $25.0 million and $40.0 million are required in years five and six, and $303.0 million at maturity. The Six Flags Credit Facility will contain restrictive covenants that, among other things, limit the ability of SFTP and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; repurchase stock; make investments; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates. In addition, the Six Flags Credit Facility will require SFTP to comply with certain specified financial ratios and tests, including ratios of total debt to EBITDA, interest expense to EBITDA, and fixed charges to EBITDA. Defaults under the Six Flags Credit Facility will include (i) failure to repay principal when due; (ii) failure to pay interest within three days after due; (iii) default in the performance of certain obligations of SFTP's principal subsidiaries under the Security Agreement (as defined thereunder); (iv) failure to comply with certain covenants, conditions or agreements under the credit agreement which, in certain cases, continues for 30 days; (v) default by SFTP or any of its principal subsidiaries in respect of any indebtedness above specified levels; (vi) certain events of bankruptcy; (vii) certain judgments against SFTP or any of its principal subsidiaries; (viii) the occurrence of a Change in Control (as defined thereunder); (ix) the assertion of certain Environmental Claims (as defined thereunder); and (x) under certain circumstances, the failure by Messrs. Burke and Story to serve as Chief Executive Officer and Chief Operating Officer of SFTP and the failure to replace them within a specified time period. COMPANY SENIOR DISCOUNT NOTES The Company Senior Discount Notes are senior obligations of the Company, in an aggregate principal amount at maturity sufficient to generate gross proceeds of $250.0 million. The Company Senior Discount Notes will mature on , 2008. The Company Senior Discount Notes accrete in value until , 2003 at which time the accreted value will equal 100% of their principal amount. The Company Senior Discount Notes bear cash interest at the rate of % per annum, commencing , 2003, and are not guaranteed by the Company's subsidiaries. Approximately $75.0 million of net proceeds from the sale of the Senior Discount Notes will be deposited with the trustee to provide a fund until , 2003 (the "Restricted Cash Account") to satisfy obligations under the Co-Venture Parks agreements and to pay dividends on the Convertible Preferred Stock. The Company's obligations will be secured pending disbursement by a pledge of the Restricted Cash Account. The Company Senior Discount Notes are redeemable, at the Company's option, in whole or in part, at any time on or after , 2003, at specified redemption prices, together with accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a Change of Control (as defined in the applicable Indenture), the Company will be required to make an offer to repurchase the Company Senior Discount Notes at a price equal to 101% of the accreted value thereof, prior to , 2003 or 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, on or after , 2003. Neither the Premier Merger nor the Six Flags Acquisition constitutes a Change of Control under the Indenture relating to the Company Senior Discount Notes. The Indenture relating to the Company Senior Discount Notes contains restrictive covenants that, among other things, limit the ability of the Company to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates. Defaults under the applicable Indenture include (i) failure to pay interest on the Company Senior Discount Notes within 30 days after such payments are due; (ii) failure to pay principal or premium, if any, on the Company Senior Discount Notes; (iii) failure to comply for 30 days after notice with the Company's repurchase obligations upon the occurrence of a Change of Control or an Asset Sale (as defined in the applicable Indenture) or with certain covenants or provisions governing the Restricted 92 Cash Account and failure to comply for 60 days after notice with the other agreements contained in the applicable Indenture, the Company Senior Discount Notes or the Restricted Cash Account; (iv) the default by the Company or any of its Restricted Subsidiaries (as defined in the applicable Indenture) in respect of any indebtedness above specified levels; (v) certain events of bankruptcy or insolvency; (vi) a material breach or default of, or repudiation by the Company of its obligations under the escrow agreement governing the Restricted Cash Account or the unenforceability of the escrow agreement governing the Restricted Cash Account against the Company; and (vii) certain judgements against the Company or any of its Restricted Subsidiaries above specified levels. COMPANY SENIOR NOTES The Company Senior Notes are senior obligations of the Company, in the aggregate principal amount of $280.0 million of which up to $76.3 million will be used to capitalize a three-year overfund account (the "Interest Escrow Account") with respect to the Company Senior Notes. The Company Senior Notes will mature on , 2006. The Company Senior Notes bear interest at the rate of % per annum and are not guaranteed by the Company's subsidiaries. The Company Senior Notes are redeemable, at the Company's option, in whole or in part, at any time on or after , 2002, at specified redemption prices, together with accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a Change of Control (as defined in the applicable Indenture) the Company will be required to make an offer to repurchase the Company Senior Notes at a price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of repurchase. Neither the Premier Merger nor the Six Flags Acquisition constitutes a Change of Control under the Indenture relating to the Company Senior Notes. The Indenture relating to the Company Senior Notes contains restrictive covenants that, among other things, limit the ability of the Company to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates. Defaults under the applicable Indenture include (i) failure to pay interest on the Company Senior Notes within 30 days (two days in the case of interest payments due on or prior to , 2001) after such payments are due; (ii) failure to pay principal or premium, if any on the Company Senior Notes; (iii) failure to comply for 30 days after notice with the Company's repurchase obligations upon the occurrence of a Change of Control or an Asset Sale (as defined in the applicable Indenture) or with certain covenants or the provisions governing the Interest Escrow Account and failure to comply for 60 days after notice with the other agreements contained in the applicable Indenture, the Company Senior Notes or the Interest Escrow Account; (iv) the default by the Company or any of its Restricted Subsidiaries (as defined in the applicable Indenture) in respect of any indebtedness above specified levels; (v) certain events of bankruptcy or insolvency; (vi) a material breach or default of, or repudiation by the Company of its obligations under, the escrow agreement governing the Interest Escrow Account or the unenforceability of the escrow agreement governing the Interest Escrow Account against the Company; and (vii) certain judgments against the Company or any of its Restricted Subsidiaries above specified levels. PREMIER NOTES The Premier Notes are senior, unsecured obligations of Premier Operations, in the aggregate principal amount of $215.0 million, of which $90.0 million will mature on August 15, 2003 (the 1995 Premier Notes) and $125.0 million will mature on January 15, 2007 (the 1997 Premier Notes). The 1995 Premier Notes bear interest at the rate of 12% per annum and the 1997 Premier Notes bear interest at the rate of 9 3/4% per annum. The Premier Notes are guaranteed on a senior, unsecured basis by the principal operating subsidiaries of Premier Operations. The 1995 Premier Notes are redeemable, at Premier Operations' option, in whole or in part, at any time on or after August 15, 1999, at specified redemption prices, together with accrued and unpaid 93 interest, if any, to the date of redemption. The 1997 Premier Notes are redeemable, at Premier Operations' option, in whole or in part, at any time on or after January 15, 2002, at specified redemption prices, together with accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a Change of Control (as defined in the relevant Indenture), Premier Operations will be required to make an offer to repurchase the Premier Notes at a price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of repurchase. Neither the Premier Merger nor the Six Flags Acquisition constitutes a Change of Control under the Indentures relating to the Premier Notes. The Indentures relating to the Premier Notes contain restrictive covenants that, among other things, limit the ability of Premier Operations to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates. Defaults under these Indentures include (i) failure to pay interest on the applicable Premier Notes within 30 days after such payments are due; (ii) failure to repay principal when due at its maturity date, upon optional redemption, upon required repurchase, upon acceleration or otherwise; (iii) failure to comply for 30 days after notice with Premier Operations' repurchase obligations upon the occurrence of a Change of Control and failure to comply for 60 days after notice with the other covenants contained in the applicable Indenture; (iv) the default by Premier Operations or any of its principal subsidiaries in respect of any indebtedness above specified levels; (v) certain events of bankruptcy; (vi) certain judgments against Premier Operations or any principal subsidiaries; (vii) any principal subsidiaries (as defined in the indentures) ceasing to be in full force and effect (except as contemplated by the terms thereof); and (viii) the denial or disaffirmation by any principal subsidiary of its obligations under the applicable Indentures, which continues for 10 days. SFTP SENIOR SUBORDINATED NOTES The SFTP Senior Subordinated Notes are unsecured senior subordinated obligations of SFTP, in an aggregate principal amount of $285.0 million and will mature on June 15, 2005. The SFTP Senior Subordinated Notes accrete in value until June 15, 1998, at which time the accreted value will equal 100% of their principal amount. The SFTP Senior Subordinated Notes bear interest at the rate of 12 1/4% per annum, payable semiannually on June 15 and December 15 of each year, commencing December 15, 1998. The SFTP Senior Subordinated Notes are guaranteed on a senior, unsecured basis by the principal operating subsidiaries of SFTP. The SFTP Senior Subordinated Notes are redeemable, at SFTP's option, in whole or in part, at any time on or after June 15, 2000 at specified redemption prices, together with accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a Change of Control (as defined in the applicable Indenture), SFTP is required to make an offer to repurchase the SFTP Senior Subordinated Notes at a price equal to 101% of the accreted value thereof to the date of repurchase. The Six Flags Transactions constitute a Change of Control under the Indenture relating to the SFTP Senior Subordinated Notes, and the Company will be required to make an offer to purchase the SFTP Senior Subordinated Notes within 30 days of the closing of the Six Flags Transactions. The Company does not expect that it will be required to purchase any material amount of such Notes pursuant to such offer. See "Risk Factors--Risks Associated with Substantial Indebtedness." The Indenture pursuant to which the SFTP Senior Subordinated Notes were issued contains restrictive covenants that, among other things, limit the ability of SFTP and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates. Defaults under this Indenture include (i) failure to pay interest on the SFTP Senior Subordinated Notes within 30 days after such payments are due; (ii) failure to repay principal when due at its maturity date, upon optional redemption, upon required repurchase, upon acceleration or otherwise; (iii) failure to comply for 30 days after notice with SFTP's repurchase obligations upon the occurrence of a Change of Control and failure to comply for 60 days after notice with the other covenants contained in the Indenture; 94 (iv) the default by SFTP or any Significant Subsidiary (as defined in the applicable indenture) in respect of any indebtedness above specified levels; (v) certain events of bankruptcy; (vi) certain judgments against SFTP or any Significant Subsidiary; (vii) any note guarantee (as defined in the applicable Indenture) ceasing to be in full force and effect (except as contemplated by the terms thereof); and (viii) the denial or disaffirmation by any note guarantor (as defined in the applicable indenture) of its obligations under the applicable Indenture or any note guarantee, which continues for 10 days. SFEC ZERO COUPON SENIOR NOTES The SFEC Zero Coupon Senior Notes are senior unsecured obligations of SFEC, in an aggregate principal amount of $192.25 million and will mature on December 15, 1999. The SFEC Zero Coupon Senior Notes accrete in value until December 15, 1999, at which time the accreted value will equal 100% of their principal amount. There are no periodic payments on the SFEC Zero Coupon Senior Notes. One of the Sellers, Time Warner, has effectively guaranteed the SFEC Zero Coupon Senior Notes, and the Company has indemnified Time Warner in respect of its guarantee. The Company will use the proceeds of the SFEC Notes Offering, together with other funds, to repay SFEC Zero Coupon Senior Notes. Until so used, such proceeds and other funds (or U.S. government obligations purchased therefrom) will be deposited in escrow. The SFEC Zero Coupon Senior Notes may not be redeemed prior to maturity. Defaults under the indenture relating to the SFEC Zero Coupon Senior Notes include (i) the failure by SFEC or Time Warner to comply for 30 days after written notice with any covenant in the applicable indenture; (ii) failure to pay, when due, upon final maturity or upon acceleration, the principal amount of any indebtedness of SFEC or any of its subsidiaries in excess of $5.0 million, or any indebtedness of Time Warner or any of its Material Subsidiaries (as defined in the applicable indenture) in excess of $50 million, if such indebtedness is not discharged within 60 days after written notice; (iii) certain events of bankruptcy of SFEC or Seller; and (iv) failure to pay the principal amount of any SFEC Zero Coupon Senior Note at its maturity date. Accordingly, after the Six Flags Acquisition, such a default by Time Warner could result in the acceleration of the maturity of the SFEC Zero Coupon Senior Notes. NEW SFEC NOTES The New SFEC Notes will be senior, unsecured obligations of SFEC, in the aggregate principal amount of $170.0 million. The New SFEC Notes will mature on , 2006. The New SFEC Notes will bear interest at the rate of % per annum and will be guaranteed by the Company on a fully subordinated basis (the "Guarantee") but will not be guaranteed by SFEC's subsidiaries. All of the net proceeds from the sale of the New SFEC Notes will be placed in escrow (the "SFEC Escrow Account") for repayment of the SFEC Zero Coupon Senior Notes. The indenture relating to the New SFEC Notes will provide that SFEC will defease the SFEC Zero Coupon Senior Notes no later than 360 days from the date of the Offerings. The New SFEC Notes will be redeemable, at SFEC's option, in whole or in part, at any time on or after , 2002 at specified redemption prices, together with accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a Change of Control (as defined in the applicable Indenture), SFEC will be required to make an offer to repurchase the New SFEC Notes at a price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of repurchase. Neither the Premier Merger nor the Six Flags Acquisition constitutes a Change of Control under the Indenture relating to the New SFEC Notes. The Indenture relating to the New SFEC Notes contains restrictive covenants that, among other things, limit the ability of SFEC to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates. Defaults under the applicable Indenture include (i) failure to pay interest on the New SFEC Notes within 30 days after such payments are due; (ii) failure to pay principal or premium, if any on the New SFEC 95 Notes; (iii) failure to comply for 30 days after notice with SFEC's repurchase obligations upon the occurrence of a Change of Control or an Asset Sale (as defined in the applicable Indenture) or with certain covenants or the provisions governing the SFEC Escrow Account and failure by either the Company or SFEC to comply for 60 days after notice with the other agreements contained in the applicable Indenture, the Guarantee, the SFEC Escrow Account or the New SFEC Notes; (iv) the default by SFEC or any of its Restricted Subsidiaries (as defined in the applicable Indenture), in respect of any indebtedness above specified levels; (v) certain events of bankruptcy or insolvency; (vi) if the Guarantee shall be held invalid, unenforceable or shall cease for any reason to be in full force and effect or any person acting on behalf of the Company shall deny or disaffirm the Company's obligations under the Guarantee; (vii) a material breach or default of, or repudiation by the Company of its obligations under the escrow agreement governing the SFEC Escrow Account or the unenforceability of the escrow agreement governing the SFEC Escrow Account against the Company; and (viii) certain judgements against SFEC or any of its Restricted Subsidiaries above specified levels. 96 DESCRIPTION OF SECURITIES COMMON STOCK The Company's authorized capital stock includes 90,000,000 shares of Common Stock, par value $0.05 per share. Each share of Common Stock entitles the holder thereof to one vote. Holders of the Common Stock have equal ratable rights to dividends from funds legally available therefor, when, as and if declared by the Board of Directors and are entitled to share ratably, as a single class, in all of the assets of the Company available for distribution to holders of Common Stock upon the liquidation, dissolution or winding up of the affairs of the Company. Holders of Common Stock do not have preemptive, subscription or conversion rights. However, each outstanding share of Common Stock currently has attached to it one right (a "Right") issued pursuant to an Amended and Restated Rights Agreement (the "Rights Agreement"). Each Right entitles its registered holder to purchase one one-thousandth of a share of a junior participating series of Preferred Stock designated to have economic and voting terms similar to those of one share of Common Stock, as described under "--Rights Plan" below. After the Offerings, 32,331,111 shares of Common Stock will be outstanding and shares will be reserved for future issuance (1,315,038 for options and warrants and upon conversion of the Convertible Preferred Stock). Bank One Trust Company, N.A., Oklahoma City, Oklahoma, is the transfer agent and registrar for the Common Stock. PREFERRED STOCK The Company's authorized capital stock includes 500,000 shares of Preferred Stock, par value $1.00 per share. The Preferred Stock may be issued in series, and shares of each series will have such rights and preferences as are fixed by the Board of Directors in resolutions authorizing the issuance of that particular series. In designating any series of Preferred Stock, the Board of Directors may, without further action by the holders of the Common Stock, fix the number of shares constituting that series and fix the dividend rights, dividend rate, conversion rights, voting rights (which may be greater or lesser than the voting rights of the Common Stock), rights and terms of redemption (including any sinking fund provisions), and the liquidation preferences of such series of Preferred Stock. Holders of any series of Preferred Stock, when and if issued, may have priority claims to dividends and to any distributions upon liquidation of the Company, and other preferences over the holders of the Common Stock. After giving effect to the Six Flags Transactions, shares of Preferred Stock will be outstanding. In addition, approximately 20,600 shares of Preferred Stock have been reserved for issuance under the Rights Plan. MANDATORILY CONVERTIBLE PREFERRED STOCK Pursuant to the EqPINES Offering, the Company will issue EqPINES in respect of its Mandatorily Convertible Preferred Stock. The terms of the EqPINES and the Manditorily Convertible Preferred Stock are described under "Description of EqPINES." SELLER PREFERRED STOCK In connection with the Six Flags Acquisition, the Company may issue to the Sellers Seller Depositary Shares for up to $200.0 million of Seller Preferred Stock. The Company may reduce (but not below $100.0 million) or may eliminate the Seller Depositary Shares by increasing the cash portion of the consideration for the Six Flags Acquisition. The following is a summary of the terms of the Seller Preferred Stock. DIVIDENDS. Subject to the terms of the Company Notes, holders of shares of the Seller Preferred Stock will be entitled to receive annually cash dividends out of funds of the Company legally available for payment, at an annual rate of % of the $ liquidation value (the "Liquidation Value") per share. Dividends will be cumulative from the date of original issuance of the Seller Preferred Stock. The Seller Preferred Stock will rank PARI PASSU as to dividends with the Mandatorily Convertible Preferred Stock and have priority as to dividends over the Common Stock and any other series or class of the Company's stock hereafter issued. 97 LIQUIDATION RIGHTS. In case of the voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of shares of Seller Preferred Stock are entitled to receive the amount equal to the Liquidation Value thereof, plus an amount equal to any accrued and unpaid dividends to the payment date, before any payment or distribution is made to the holders of Common Stock or any other series or class of the Company's stock hereafter issued which ranks junior as to liquidations rights to the Seller Preferred Stock. The Seller Preferred Stock will rank PARI PASSU as to liquidation with the Mandatorily Convertible Preferred Stock. VOTING RIGHTS. The holders of each share of the Seller Preferred Stock will not be entitled to any voting rights, except as required by Delaware law and except in certain circumstances involving a default by the Company in the payment of dividends, the authorization of capital stock having a preference as to dividends or upon liquidation over the Seller Preferred Stock, charter amendments materially affecting the rights of the holders or mergers or consolidations of the Company. CONVERSION RIGHTS. The holders of Seller Preferred Stock will be entitled at any time after the 90th day following the date of issuance to convert their shares of Seller Preferred Stock into Common Stock at an initial conversion price equal to % of the weighted average of the trading prices for all of the sales of the Common Stock on the NYSE for the 20 consecutive trading days ending on the third trading day prior to the issuance of the Seller Preferred Stock, subject to adjustment in certain circumstances, including the payment of a stock dividend on shares of the Common Stock, combinations and subdivisions of the Common Stock, certain reclassifications of the Common Stock, the issuance to the Company's stockholders of rights or warrants to subscribe for or purchase shares of Common Stock at a price per share less than the then-current market price (determined as provided in the Certificate of Designation of the Seller Preferred Stock) of the Common Stock and certain cash dividends and distributions of evidences of indebtedness or assets to holders of certain of the Company's capital stock. The Seller Depositary Shares may be voluntarily converted by the holders thereof upon the same terms and conditions as the Seller Preferred Stock represented by such Seller Depositary Shares, adjusted to reflect the fact that Seller Depositary Shares represent a one-five hundredth interest of a share of Seller Preferred Stock. OPTIONAL REDEMPTION BY COMPANY. The Company may redeem all (but not less than all) of the Seller Preferred Stock at any time during the 90 days following the date of issuance at a redemption price equal to the greater of Liquidation Value or the fair market value of the Seller Preferred Stock, in each case plus accrued and unpaid dividends. Except as provided in the preceding sentence, shares of Seller Preferred Stock will not be redeemable prior to , 2001. On or after such date, the shares of Seller Preferred Stock will be redeemable at the option of the Company, in whole or in part, at any time or from time to time on not less than 30 nor more than 60 days notice by mail, at the redemption prices equal to the Liquidation Value plus a premium based on 70% of the dividend rate (declining ratably on an annual basis until 2010) plus, in each case, accrued and unpaid dividends to the redemption date. MANDATORY REDEMPTION BY COMPANY. On the twelfth anniversary of the date of issuance of the Seller Preferred Stock, the Company must offer to purchase all outstanding shares at the Liquidation Value, plus accrued and unpaid dividends thereon to the date of purchase. REGISTRATION RIGHTS Holders of approximately 4.9 million shares of Common Stock have rights to require the Company to register such shares for sale under the Securities Act. In addition, such holders have the right to have such shares included in a future registration statement relating to Common Stock and, in certain cases, other equity securities, subject to customary provisions relating to the right of the underwriters of any such offering to exclude such shares if their inclusion would impair the success of such offering. In the event such holders exercise their registration rights, the Company will be required to bear all registration expenses other than underwriting discounts or other selling expenses and fees and expenses of counsel to such holders. 98 Upon consummation of the Six Flags Acquisition, Sellers will have the right to require the Company to file a shelf registration statement within 90 days of the closing with respect to the Seller Depositary Shares, as well as the shares of Common Stock issuable upon conversion of the underlying Seller Preferred Stock (the "Conversion Shares") received by them. In addition, Sellers will have the right to require the Company on no more than four occasions to register such shares of Seller Depositary Shares and Conversion Shares for sale under the Securities Act. Sellers may not demand the registration of any of such shares during such time as the shelf registration statement is effective or within six months after the effective date of a registration statement filed in response to a previous demand. Further, Sellers will have the right to have such Seller Depositary Shares included in a future registration statement relating to the Seller Depositary Shares or Common Stock, as the case may be, subject to customary provisions relating to the right of the underwriters of any such offering to exclude such shares if their inclusion would impair the success of such offering. If Sellers exercise their registration rights, the Company will be required to bear all registration expenses other than underwriting discounts and commissions. SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE Upon consummation of the Offerings, the Company will have 32.3 million shares of Common Stock outstanding and 5.0 million EqPINES (initially convertible into 5.0 million shares of Common Stock) outstanding. Future sales of Common Stock (or Seller Depositary Shares) by existing stockholders pursuant to Rule 144 under the Securities Act, or through the exercise of outstanding registration rights or otherwise, could have an adverse effect on the prevailing market price of the Common Stock and the Company's ability to raise additional capital. Except for the Common Stock to be sold in the Common Stock Offering, the Convertible Preferred Stock and shares of Common Stock issued upon conversion of the Convertible Preferred Stock, the Company has agreed not to offer, sell, contract to sell or otherwise issue any shares of Common Stock (except pursuant to outstanding options and warrants) or other capital stock or securities convertible into or exchangeable for, or any rights to acquire, Common Stock or other capital stock, with certain exceptions (including certain exceptions for Common Stock or other capital stock issued or sold in connection with future acquisitions by the Company, including any Common Stock to be issued in connection with the Walibi acquisition), prior to the expiration of 90 days from the date of this Prospectus without the prior written consent of Lehman Brothers. The Company's officers, directors and principal stockholders, who hold in the aggregate approximately 6.0 million shares of Common Stock (including shares issuable upon exercise of outstanding options and warrants and outstanding shares of restricted stock), have agreed not to sell any such shares for 90 days following the date of this Prospectus without the consent of Lehman Brothers. In addition, the Sellers in the Six Flags Acquisition have agreed not to sell any Seller Preferred Stock during such 90-day period. Thereafter, all such shares held by the Company's officers, directors and principal stockholders will be eligible for sale in the public market (subject, in most cases, to applicable volume limitations and other resale conditions imposed by Rule 144). In addition, subject to the "lock-up" arrangements described above and a minimum 41-day "lock-up" agreed to by the sellers in the Walibi acquisition, holders of approximately 4.9 million shares of Common Stock and the holders of Seller Preferred Stock have the right to require the Company to register such shares (and, in the case of the Seller Preferred Stock, the shares of Common Stock issuable upon conversion thereof) for sale under the Securities Act. Depending upon the level of future revenues at Kentucky Kingdom and Walibi, the Company may also be required in the future to issue additional shares of Common Stock (assuming the maximum number of shares of Common Stock are issued in the Walibi Tender Offer) with an aggregate market value of up to $15.0 million to the sellers thereof. See "Prospectus Summary--Other Recent Developments." The Company may also pay quarterly dividend payments on the EqPINES (which aggregate $ million over three years) by issuing additional shares of Common Stock. The sale, or the availability for sale, of substantial amounts of Common Stock or securities convertible into Common Stock in the public market at any time subsequent to the date of this Prospectus could adversely affect the prevailing market price of the Common Stock and the EqPINES. See "-- Registration Rights." 99 RIGHTS PLAN Each outstanding share of Common Stock currently has attached to it one Right issued pursuant to the Rights Agreement. Each Right entitles its registered holder to purchase one one-thousandth of a share of a junior participating series of Preferred Stock designated to have economic and voting terms similar to those of one share of Common Stock, for $250.00, subject to adjustment (the "Rights Exercise Price"), but only after the earlier to occur of (i) the tenth day following a public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 15% or more of the outstanding voting stock of the Company (an "Acquiring Person") or (ii) the tenth business day (or such later date as may be determined by the Board of Directors prior to such time as any person becomes an Acquiring Person) after the date (the "Flip-in Date") of the commencement or announcement of a person's or group's intention to commence a tender or exchange offer whose consummation will result in the ownership of 15% or more of the Company's outstanding voting stock (even if no shares are actually purchased pursuant to such offer) (in either case, the "Separation Time"). The Rights will not trade separately from the shares of Common Stock unless and until the Separation Time occurs. The Rights Agreement provides that an Acquiring Person does not include (A) the Company, (B) any subsidiary of the Company, (C) any employee benefit plan or employee stock plan of the Company, or any trust or other entity organized, appointed, established or holding Common Stock for or pursuant to the terms of any such plan or (D) any person whose ownership of 15% or more of the shares of voting stock of the Company then outstanding results solely from (i) any action or transaction approved by the Board of Directors before such person acquires such 15% beneficial ownership or (ii) a reduction in the number of issued and outstanding shares of voting stock of the Company pursuant to a transaction or transactions approved by the Board of Directors (provided that any person that does not become an Acquiring Person by reason of clause (i) or (ii) above shall become an Acquiring Person upon his acquisition of any additional 1% of the Company's voting stock unless such acquisition of additional voting stock will not result in such person becoming an Acquiring Person by reason of such clause (i) or (ii)). The Rights will not be exercisable until the business day following the Separation Time. The Rights will expire on the earlier of (i) the close of business on December 10, 2007 and (ii) the date on which the Rights are redeemed or terminated as described below. The Rights Exercise Price and the number of Rights outstanding, or in certain circumstances the securities purchasable upon exercise of the Rights, are subject to adjustment upon the occurrence of certain events. Once any person becomes an Acquiring Person, unless the Rights are earlier redeemed or exchanged as described below, if (i) the Company were to be merged into or consolidated with another entity (whether or not related to a 15% stockholder), (ii) the Company were to merge with another entity (whether or not related to a 15% stockholder) and be the surviving corporation, but any shares of the Company's Common Stock were changed into or exchanged for other securities or assets, or (iii) more than 50% of the Company's assets or earning power were to be sold in one or a series of related transactions, each Right then outstanding would "flip-over" and would require that its holder be entitled to buy, at the exercise price, that number of shares of common stock of the acquiring company which at the time of the merger or sale would have a market value of two times the exercise price of the Right (i.e., a discount of 50%). Any business combination not providing for the issuance of common stock of the acquiring company in compliance with such provisions would be prohibited. Unless the Rights are earlier redeemed or exchanged as described below, if a person or group becomes the beneficial owner of 15% or more of the Company's voting stock, each Right not owned by such stockholder would become exercisable, at the Rights Exercise Price, for that number of shares of Preferred Stock which at the time of such transaction would have a market value of two times the Rights Exercise Price. 100 At any time after the acquisition by a person or group of affiliated or associated persons of beneficial ownership of 15% or more of the outstanding voting stock of the Company and before the acquisition by a person or group of 50% or more of the outstanding voting stock of the Company, the Board of Directors may elect to cause the Company to exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of the Company's Common Stock per Right, subject to adjustment. The Rights are redeemable by the Company by a vote of a majority of the Board of Directors at a price of $.01 per Right at any time prior to the close of business on the Flip-in Date (or at such later date as may be authorized by the Board of Directors and a majority of the Continuing Directors (as defined in the Rights Agreement)). The Rights may be redeemed after the time that any person has become an Acquiring Person only if approved by a majority of the Continuing Directors. The Rights have no voting rights, and they are not entitled to dividends. The Rights will not prevent a takeover of the Company. The Rights, however, may cause substantial dilution to a person or group that acquires 15 percent or more of the Common Stock unless the Rights are first redeemed or terminated by the Board of Directors of the Company. Nevertheless, the Rights should not interfere with a transaction that, in the judgment of the Board of Directors, is in the best interests of the Company and its stockholders because the Rights can be redeemed, as hereinabove described, before the consummation of such transaction. The complete terms of the Rights are set forth in the Rights Agreement. The Rights Agreement is incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part, and the foregoing description is qualified in its entirety by reference thereto. A copy of the Rights Agreement can be obtained upon written request to the Rights Agent. DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS Certain provisions of the Delaware General Corporation Law may also be considered to have an anti-takeover effect. Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the time of the transaction in which the person became an interested stockholder unless (i) prior to the time the person became an interested stockholder, either the business combination or the transaction which resulted in the person becoming an interested stockholder is approved by the board of directors of the corporation, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the outstanding voting stock, or (iii) on or after such time the business combination is approved by the board of directors and by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. A "business combination" includes mergers, asset sales and other transactions resulting in a financial benefit to the stockholder. An "interested stockholder" is a person who owns 15% or more of the corporation's outstanding voting stock or who is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder, as well as the affiliates and associates of such person. The restrictions of Section 203 do not apply if, among other things, a corporation, by action of its stockholders, adopts an amendment to its certificate of incorporation or by-laws expressly electing not to be governed by Section 203, PROVIDED THAT, in addition to any other vote required by law, such amendment to the certificate of incorporation or by-laws must be approved by the affirmative vote of a majority of the shares entitled to vote. Moreover, an amendment so adopted is not effective until twelve months after its adoption and does not apply to any business combination between the corporation and any person who became an interested stockholder of such corporation on or prior to such adoption. The Company's Restated Certificate of Incorporation and By-Laws do not currently contain any provisions electing not to be governed by Section 203 of the Delaware General Corporation Law. 101 In addition, the Restated Certificate of Incorporation and By-Laws of the Company contain a number of provisions which may be deemed to have the effect of discouraging or delaying attempts to gain control of the Company, including (i) authorizing the Board of Directors to fix the size of the Board of Directors between three and 15 directors; (ii) authorizing directors to fill vacancies on the Board of Directors that occur between annual meetings; (iii) restricting the persons who may call a special meeting of stockholders; and (iv) authorizing the issuance of Preferred Stock. Further, the applicable Indentures and the Credit Facilities require the Company to make an offer to purchase the Company Senior Discount Notes and the Company Senior Notes and repay all indebtedness under the Credit Facilities upon a Change of Control (as defined therein) of the Company. The existence of the foregoing provisions could result in (i) the Company being less attractive to a potential acquiror and (ii) the Company's stockholders receiving less for their shares of Common Stock than otherwise might be available in the event of a take-over attempt. 102 DESCRIPTION OF EQPINES EACH OF THE EQPINES REPRESENTS BENEFICIAL OWNERSHIP OF ONE-FIVE HUNDREDTH OF A SHARE OF MANDATORILY CONVERTIBLE PREFERRED STOCK AND ENTITLES THE HOLDER (AS EVIDENCED BY ITS RECORD HOLDING OF THE DEPOSITARY RECEIPT (COLLECTIVELY, THE "DEPOSITARY RECEIPTS") EVIDENCING THE EQPINES) TO THAT PROPORTION OF ALL THE RIGHTS, PREFERENCES AND PRIVILEGES OF THE PROPORTIONATE SHARE OF MANDATORILY CONVERTIBLE PREFERRED STOCK REPRESENTED THEREBY. SEE "DESCRIPTION OF DEPOSITARY ARRANGEMENTS". THE SUMMARY OF THOSE RIGHTS, PREFERENCES AND PRIVILEGES AND OTHERWISE OF THE TERMS OF THE EQPINES CONTAINED HEREIN DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ALL OF THE PROVISIONS OF THE FORM OF CERTIFICATE OF DESIGNATION RELATING TO THE SHARES OF MANDATORILY CONVERTIBLE PREFERRED STOCK (THE "CERTIFICATE OF DESIGNATION"), A COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART. DIVIDENDS Holders of the EqPINES will be entitled to receive, through the Depositary, when, as and if declared on the Mandatorily Convertible Preferred Stock represented thereby by the Board of Directors, dividends from the date of initial issuance of the EqPINES (which issuance will be evidenced by the initial issuance of the Depositary Receipts) (the "Issue Date") at the rate of $ per annum or $ per quarter payable quarterly in arrears on January 1, April 1, July 1 and October 1 or, if any such date is not a Business Day (as defined herein), on the next succeeding Business Day (each such date, a "Regular Dividend Payment Date"). The first dividend will be for the period from the Issue Date to, but excluding, July 1, 1998, and will be payable on such date. Dividends will be payable on the Mandatorily Convertible Preferred Stock to holders of record of shares of Mandatorily Convertible Preferred Stock as they appear on the stock register of the Company on record dates not less than 15 nor more than 60 days preceding the payment date thereof, as will be fixed by the Board of Directors. The Depositary will be the holder of record of shares of Mandatorily Convertible Preferred Stock represented by the EqPINES, and dividends paid by the Company in respect of such shares of Mandatorily Convertible Preferred Stock will, accordingly, be paid to the Depositary. The Depositary will distribute dividends on the Mandatorily Convertible Preferred Stock paid to it by the Company to holders of the EqPINES in accordance with the procedures described in "Description of Depositary Arrangements--Dividends and Other Distributions." Dividends will cease to become payable by the Company to the Depositary for distribution to the holders of the EqPINES when dividends cease to accrue on the Mandatorily Convertible Preferred Stock represented thereby on the Mandatory Conversion Date or on the date of the earlier conversion of the EqPINES at the option of the holder. Dividends distributed through the Depositary to the holders of the EqPINES for any period less than a full quarterly dividend period will be paid by the Company to the Depositary on the Mandatorily Convertible Preferred Stock represented thereby on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in any period less than one month. Dividends on the Mandatorily Convertible Preferred Stock will accrue whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accrued but unpaid dividends on the Mandatorily Convertible Preferred Stock will cumulate as of the dividend payment date on which they first become payable, but no interest will accrue on any accumulated but unpaid dividends. Dividends may be paid, at the election of the Company, (i) out of funds legally available therefor, (ii) through the delivery of shares of Common Stock or (iii) through any combination of the foregoing, provided that a dividend may be paid in whole or in part by delivery of shares of Common Stock only if paid on the Regular Dividend Payment Date for such dividend. If the Company elects to pay any dividend, in whole or in part, by delivery of shares of Common Stock, the amount of such dividend payment to be distributed per EqPINES in shares of Common Stock (the "Stock Dividend Amount") will be distributed by the Depositary to the holders of EqPINES which are holders on the record date for such dividend payment. The Depositary will deliver to each such holder of EqPINES, for each EqPINES held, a number of shares of Common Stock determined by dividing the dollar amount of the Stock Dividend Amount by 103 an amount (the "Cash Equivalent Amount") equal to 95% of the average Closing Price (as defined herein) per share of Common Stock on the ten Trading Days (as defined herein) ending on the third Trading Day preceding the related record date (the "Dividend Stock Price") (appropriately adjusted in such manner as the Board of Directors in good faith deems appropriate to take into account any stock dividend on the Common Stock, or any subdivision, split, combination or reclassification of the Common Stock that occurs, or the ex-dividend date for which occurs, during the period following the first Trading Day in such ten- Trading Day Period and ending on the last full Trading Day immediately preceding the payment of the dividend). The Dividend Stock Price for any dividend which will be paid, in whole or in part, through the delivery of shares of Common Stock will be determined on the related record date for such dividend payment. The Depositary will deliver a cash adjustment as described under "--Fractional Shares" in lieu of delivering a fractional share in distributing a dividend payable in Common Stock to a holder of EqPINES if delivering shares of Common Stock on the basis of that holder's aggregate holdings of EqPINES on the related record date would otherwise result in delivery of a fractional share. Any portion of a dividend on the Mandatorily Convertible Preferred Stock that is declared and not paid by the Company through delivery of shares of Common Stock on the related Regular Dividend Payment Date will be paid in cash. The market price of the Common Stock may vary from the Dividend Stock Price between the date of determination of such Dividend Stock Price and the subsequent delivery of shares of Common Stock, in payment of a dividend, by the Depositary to the holders of EqPINES entitled thereto. If the market value on the related dividend payment date of the shares of Common Stock delivered in payment of a dividend is more than 5% lower than the Dividend Stock Price as of the related record date and the holder of the EqPINES who receives the dividend sells such shares of Common Stock at such lower price, the holder's actual dividend yield for the dividend period in respect of which such dividend was paid would be lower than the stated dividend yield on the EqPINES. In addition, in connection with any such sale the holder is likely to incur commissions and transaction costs. If the Company elects to make a dividend payment, in whole or in part, through the delivery of shares of Common Stock, it will give notice of such determination by publication, on the related record date for such dividend payment, in a daily newspaper of national circulation. The EqPINES, as representative of beneficial ownership interests in the Mandatorily Convertible Preferred Stock, will rank on a parity, both as to payment of dividends and distribution of assets upon liquidation, with the Seller Preferred Stock and any other preferred stock issued in the future by the Company that by its terms ranks PARI PASSU with the Mandatorily Convertible Preferred Stock. Whether or not the Mandatory Conversion Date has occurred, (A) no dividends (other than dividends payable in shares of, or warrants, rights or options exercisable for or convertible into shares of, any capital stock, including without limitation, the Common Stock, of the Company ranking junior to the Mandatorily Convertible Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation (collectively "Junior Stock") and cash in lieu of fractional shares in connection with any such dividend) may be paid or declared in cash or otherwise, nor may any other distribution be made (other than a distribution payable in Junior Stock and cash in lieu of fractional shares in connection with any such distribution), on any Junior Stock; (B) no shares of any Junior Stock may be purchased, redeemed or otherwise acquired by the Company or any of its subsidiaries (except in connection with a reclassification or exchange of any Junior Stock through the issuance of other Junior Stock (and cash in lieu of fractional shares in connection therewith) or the purchase, redemption or other acquisition of any Junior Stock (i) with any Junior Stock (and cash in lieu of fractional shares in connection therewith) or (ii) in connection with purchases in an aggregate amount up to $5.0 million from employees of the Company on termination of their employment for whatever reason) nor may any funds be set 104 aside or made available for any sinking funds for the purchase, redemption or acquisition of any Junior Stock; and (C) no dividends or other distributions may be declared or paid on any Preferred Stock (including the Mandatorily Convertible Preferred Stock) that does not constitute Junior Stock ("Parity Preferred Stock") (other than dividends or other distributions payable in Junior Stock and cash in lieu of fractional shares in connection therewith), and the Company may not purchase, redeem or otherwise acquire any Parity Preferred Stock (except with any Junior Stock and cash in lieu of fractional shares in connection therewith and except with the right, subject to the requirement set out following clause (iv) of this paragraph and any similar requirement of any other Preferred Stock, to receive accrued and unpaid dividends) unless, in the case of either (A) or (B) or (C): (i) full dividends on Parity Preferred Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such dividend, distribution, purchase, redemption, acquisition, setting aside or making available, as applicable, to the extent such dividends are cumulative, (ii) dividends in full for the current quarterly dividend period have been paid, or declared and set aside for payment, on all Parity Preferred Stock to the extent such dividends are cumulative, (iii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement, and sinking funds, if any, for any Parity Preferred Stock, and (iv) the Company is not in default on any of its obligations to redeem any Parity Preferred Stock, or, in the case of (C) only, with respect to the declaration and payment of dividends on Parity Preferred Stock, any such dividends are declared and paid pro rata so that the amounts of any dividends declared and paid per share of Mandatorily Convertible Preferred Stock and each other share of Parity Preferred Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends (including any accumulation with respect to unpaid dividends for prior dividend periods, if such dividends are cumulative) per share of Mandatorily Convertible Preferred Stock and such other share of Parity Preferred Stock bear to each other. MANDATORY CONVERSION OF EQPINES Unless voluntarily converted into Common Stock prior thereto, on , 2001 (the "Mandatory Conversion Date"), each EqPINES will automatically convert into a number of shares of Common Stock at the Conversion Rate (as defined below) and the holder thereof will have the right to receive cash in an amount equal to the accrued and unpaid dividends on the Mandatorily Convertible Preferred Stock represented by such EqPINES to the Mandatory Conversion Date (other than previously declared dividends deliverable to a holder of record of the Depositary Receipt evidencing such EqPINES as of a prior date), whether or not declared (the "Accrued Amount"), out of funds legally available for the payment of dividends, subject to the requirement set forth following clause (iv) of the immediately preceding paragraph and any other similar requirement of any other Preferred Stock. The "Conversion Rate" is equal to (a) if the Conversion Price (as defined below) is greater than or equal to $ (the "Threshold Appreciation Price"), shares of Common Stock per EqPINES, (b) if the Conversion Price is less than the Threshold Appreciation Price but is greater than $ (the "Initial Price"), a fraction, equal to the Initial Price divided by the Conversion Price, of one share of Common Stock per EqPINES and (c) if the Conversion Price is less than or equal to the Initial Price, one share of Common Stock per EqPINES. Each of the Conversion Rate, the Threshold Appreciation Price and the Initial Price are subject to adjustment as provided in "--Conversion Adjustments." THE VALUE 105 OF THE COMMON STOCK TO BE RECEIVED BY HOLDERS OF THE EqPINES UPON MANDATORY CONVERSION WILL NOT NECESSARILY EQUAL THE LIQUIDATION VALUE OF THE EqPINES. Any shares of Common Stock received by holders of EqPINES that are not affiliated with the Company will be free of any transfer restrictions and the holders of the EqPINES will be responsible for the payment of any and all brokerage costs upon the subsequent sale of such shares. No fractional shares of Common Stock will be delivered by the Depositary to the holders of EqPINES upon mandatory conversion on the Mandatory Conversion Date (see "--Fractional Shares" below). Notwithstanding the foregoing, (i) in the case of certain dilution events, the Conversion Rate, the Threshold Appreciation Price and the Initial Price will be subject to adjustment and (ii) in the case of certain adjustment events, the consideration received by holders of the EqPINES upon mandatory conversion at the Mandatory Conversion Date will be shares of Common Stock, other securities and/or cash. See "--Conversion Adjustments" and "--Adjustment for Certain Consolidations or Mergers" below. The "Conversion Price" is the average Closing Price per share of Common Stock for the 20 Trading Days immediately prior to (but not including) the Mandatory Conversion Date; provided, however, that, if there are not 20 Trading Days for the Common Stock occurring later than the 60th calendar day immediately prior to, but not including, the Mandatory Conversion Date, the "Conversion Price" will be the market value per share of Common Stock as of the Mandatory Conversion Date as determined by a nationally recognized investment banking firm retained for such purpose by the Company. The "Closing Price" of any security on any date of determination means (i) the closing sale price (or, if no closing sale price is reported, the last reported sale price) of such security (regular way) on the NYSE on such date, (ii) if such security is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which such security is so listed, (iii) if such security is not so listed on a United States national or regional securities exchange, as reported by the NASDAQ Stock Market, (iv) if such security is not so reported, the last quoted bid price for such security in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or (v) if such security is not so quoted, the average of the mid-point of the last bid and ask prices for such security from each of at least three nationally recognized investment banking firms selected by the Company for such purpose. A "Trading Day" is defined as a Business Day on which the security, the Closing Price of which is being determined, (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of such security. "Business Day" means any day that is not a Saturday, a Sunday or a day on which the NYSE, banking institutions or trust companies in The City of New York are authorized or obligated by law or executive order to close. For illustrative purposes only, the following chart shows the number of shares of Common Stock that a holder of EqPINES would receive for each EqPINES at various Conversion Prices. The table assumes that there will be no adjustments to the Conversion Rate described under "--Conversion Adjustments" and "--Adjustment for Certain Consolidations or Mergers" below. There can be no assurance that the Conversion Price will be within the range set forth below. Given the Initial Price of $ per EqPINES and the Threshold Appreciation Price of $ per EqPINES, a holder of EqPINES 106 would receive, through the Depositary, upon mandatory conversion at the Mandatory Conversion Date the following number of shares of Common Stock:
CONVERSION PRICE NUMBER OF SHARES OF COMMON STOCK OF COMMON STOCK (1) - --------------------------- --------------------------------- $
- ------------------------ (1) In lieu of any fractional share otherwise deliverable in respect of the aggregate number of EqPINES of any holder that are converted upon mandatory conversion, such holder will be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock as of the fifth Trading Day immediately preceding the Mandatory Conversion Date. As the foregoing chart illustrates, if upon mandatory conversion at the Mandatory Conversion Date the Conversion Price is greater than or equal to $ , the Company will be obligated to deliver, through the Depositary, shares of Common Stock per EqPINES, resulting in the holders of the EqPINES receiving only % of the appreciation in market value of the Common Stock above $ . If upon mandatory conversion at the Mandatory Conversion Date, the Conversion Price is greater than $ and less than $ , the Company will be obligated to deliver, through the Depositary, only a fraction of a share of Common Stock having a market value equal to $ per EqPINES, resulting in the holders of the EqPINES receiving none of the appreciation in the market value of the Common Stock from $ to $ . If upon mandatory conversion at the Mandatory Conversion Date, the Conversion Price is less than or equal to $ , the Company will be obligated to deliver, through the Depositary, one share of Common Stock per EqPINES, regardless of the market price of such shares, resulting in the holders of the EqPINES realizing the entire loss on the decline in market value of the Common Stock. CONVERSION AT THE OPTION OF THE HOLDER The EqPINES are convertible, in whole but not in part, at the option of the holders thereof, at any time prior to the Mandatory Conversion Date, into shares of Common Stock at a rate of shares of Common Stock for each EqPINES (the "Optional Conversion Rate"), equivalent, for each EqPINES, to a conversion price of $ per share of Common Stock (the "Optional Conversion Price"), subject to adjustment as described under "--Conversion Adjustments" and "--Adjustment for Certain Consolidations or Mergers" below. No fractional shares of Common Stock will be delivered by the Depositary to the holders of EqPINES upon their optional conversion (see "--Fractional Shares" below). Conversions of EqPINES at the option of the holders may be effected in accordance with the procedures described in "Description of Depositary Arrangements--Conversion Provisions--Conversion at the Option of the Holder." Holders of EqPINES at the close of business on a record date for any payment of declared dividends on the Mandatorily Convertible Preferred Stock will be entitled to receive the dividends so declared on the corresponding dividend payment date notwithstanding the optional conversion of the EqPINES following such record date and prior to such dividend payment date. However, EqPINES (as evidenced by Depositary Receipts) surrendered for optional conversion after the close of business on a record date for any payment of declared dividends and before the opening of business on the next succeeding dividend payment date must be accompanied by payment in cash of an amount equal to the dividend payable on such date. Except as provided above, upon any optional conversion of EqPINES, the Company will make no payment of or allowance for unpaid dividends, whether or not in arrears, through the Depositary on such EqPINES or previously declared dividends or distributions on the shares of Common Stock issued upon such conversion. 107 CONVERSION ADJUSTMENTS The Conversion Rate and the Optional Conversion Rate are each subject to adjustment as appropriate in certain circumstances, including if the Company shall (a) pay a stock dividend or make a distribution with respect to its Common Stock in shares of Common Stock, (b) subdivide or split its outstanding Common Stock, (c) combine its outstanding Common Stock into a smaller number of shares, (d) issue by reclassification of its shares of Common Stock any shares of Common Stock, (e) issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price (as defined below) of the Common Stock on the record date for the determination of stockholders entitled to receive such rights or warrants, or (f) pay a dividend or distribute to all holders of its Common Stock evidences of its indebtedness, cash or other assets (including capital stock of the Company but excluding any cash dividends or distributions, other than Extraordinary Cash Distributions (as defined below), and dividends referred to in clause (a) above) or issue rights or warrants (other than those referred to in clause (e) above) to all holders of its Common Stock entitling them to subscribe for or purchase any of its securities. If an adjustment is made to the Conversion Rate pursuant to any of clauses (a) through (f) above, an adjustment will also be made to the Threshold Appreciation Price and Initial Price as such terms are used to determine which of clauses (a), (b) or (c) of the definition will apply at the Mandatory Conversion Date and for purposes of calculating the fraction in clause (b) of such definition. The required adjustments to the Threshold Appreciation Price and the Initial Price will be made at the Mandatory Conversion Date by multiplying each by the inverse of the fractional adjustment made to the Conversion Rate in such circumstances pursuant to the Certificate of Designation. In addition, the Company will be entitled (but will not be required) to make upward adjustments in the Conversion Rate and the Optional Conversion Rate as the Company, in its sole discretion, shall determine to be advisable, in order that any stock dividend, subdivision or split of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock (or any transaction which could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended (the "Code")) hereafter made by the Company to its stockholders will not be taxable in whole or in part. "Current Market Price" means, as of any date of determination, the average Closing Price per share of Common Stock for the 20 Trading Days immediately prior to the date of determination; provided, however, that if there are not 20 Trading Days for the Common Stock occurring later than the 60th calendar day immediately prior to, but not including, such date, the Current Market Price will be determined as the market value per share of Common Stock as of such date as determined by a nationally recognized investment banking firm retained for such purpose by the Company. "Extraordinary Cash Distributions" means, with respect to any cash dividend or distribution paid on any date, the amount, if any, by which all cash dividends and cash distributions on the Common Stock paid during the consecutive 12-month period ending on and including such date (other than cash dividends and cash distributions for which an adjustment to the Conversion Rate or the Optional Conversion Rate was previously made) exceeds, on a per share of Common Stock basis, 10% of the average of the daily Closing Price of the Common Stock over such consecutive 12-month period. All adjustments to the Conversion Rate and the Optional Conversion Rate will be calculated to the nearest 1/100th of a share of Common Stock. No adjustment in the Conversion Rate or the Optional Conversion Rate will be required unless such adjustment would require an increase or decrease of at least 1% therein; PROVIDED, HOWEVER, that any adjustments which, by reason of the foregoing, are not required to be made will be carried forward and taken into account in any subsequent adjustment. All adjustments will be made successively. Whenever the Conversion Rate, the Threshold Appreciation Price, the Initial Price and the Optional Conversion Rate are adjusted as provided in the preceding paragraph, the Company will file with the Depositary and the transfer agent for the shares of Mandatorily Convertible Preferred Stock a certificate with respect to such adjustment, make a prompt public announcement thereof and mail a notice to holders of the EqPINES. 108 No adjustment will be made to the Conversion Rate, the Threshold Appreciation Price, the Initial Price or the Optional Conversion Rate in the event that the Company issues Common Stock for cash, including at prices below its then-existing market price, the Conversion Price or the Optional Conversion Price. The Conversion Rate, the Threshold Appreciation Price, the Initial Price and the Optional Conversion Rate will also not be adjusted for other events, such as issuances of Common Stock in connection with acquisitions, that may adversely affect the market price of the Common Stock. See "Risk Factors--Dilution of Common Stock." ADJUSTMENT FOR CERTAIN CONSOLIDATIONS OR MERGERS In case of any consolidation or merger to which the Company is a party (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which each share of Common Stock outstanding immediately prior to the merger or consolidation remains unchanged in all material respects), or in case of any sale or transfer to another corporation of the property of the Company as an entirety or substantially as an entirety, or in case of any statutory exchange of securities with another corporation (other than in connection with a merger or acquisition), each EqPINES will, after consummation of such transaction, be subject to (i) conversion at the option of the holder into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock (including fractional shares for this purpose) into which such EqPINES might have been converted immediately prior to consummation of such transaction and (ii) conversion on the Mandatory Conversion Date into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock (including fractional shares for this purpose) into which such EqPINES would have been converted if the conversion on the Mandatory Conversion Date had occurred immediately prior to the date of consummation of such transaction, plus the right, subject to the rights of other Preferred Stock, to receive, through the Depositary, cash in an amount equal to all accrued and unpaid dividends on the Mandatorily Convertible Preferred Stock represented by such EqPINES (other than previously declared dividends deliverable to a holder of record of the Depositary Receipt evidencing such EqPINES as of a prior record date); and assuming in each case that such holder of shares of Common Stock failed to exercise rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon consummation of such transaction (provided that, if the kind or amount of securities, cash or other property receivable upon consummation of such transaction is not the same for each non-electing share, then the kind and amount of securities, cash or other property receivable upon consummation of such transaction for each non-electing share will be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The kind and amount of securities into or for which the EqPINES will be convertible after consummation of such transaction will be subject to adjustment as described above under the caption "--Conversion Adjustments" following the date of consummation of such transaction. The Company may not become a party to any such transaction unless the terms thereof are consistent with the foregoing. FRACTIONAL SHARES No fractional shares of Common Stock will be delivered by the Depositary upon conversion of the EqPINES. In lieu of any fractional share otherwise deliverable in respect of the aggregate number of EqPINES of any holder that are converted upon mandatory conversion or any voluntary conversion, such holder will be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock (A) as of the fifth Trading Day immediately preceding the Mandatory Conversion Date, in the case of mandatory conversion, or (B) as of the second Trading Day immediately preceding the effective date of conversion, in the case of an optional conversion by a holder. If more than one EqPINES is surrendered for conversion at one time by or for the same holder, the number of shares of Common Stock issuable upon conversion thereof will be computed on the basis of the aggregate number of EqPINES so converted. 109 In addition, no fractional shares of Common Stock will be delivered by the Depositary to holders of the EqPINES in connection with the Depositary's distribution of dividends on the Mandatorily Convertible Preferred Stock paid by the Company to it in shares of Common Stock. In lieu of any fractional share otherwise so deliverable, such holders will be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock determined as of the fifth Trading Day immediately preceding the dividend payment date. On the Mandatory Conversion Date, the fractional share of Common Stock that any holder of EqPINES would otherwise be entitled to receive shall be determined by adding all the fractional shares such holder would otherwise be entitled to receive on the mandatory conversion of all EqPINES held by such holder and on the payment of the regular quarterly dividend on all EqPINES held by such holder. On that date, the Company may, at its option, deliver any resulting whole number of shares in shares of Common Stock and the resulting fraction in cash. In the event that (i) mandatory conversion of the EqPINES, (ii) voluntary conversions of EqPINES, (iii) the Depositary's delivery of shares of Common Stock as dividends to the holders of EqPINES, (iv) the combination of (i) and (iii) pursuant to the preceding sentence or (v) any combination of the foregoing result in more than one holder of EqPINES being entitled to cash in lieu of a fractional share on the related date of conversion or dividend payment, as applicable, the Company will deliver to the Depositary for distribution to the holders of the EqPINES cash in an amount equal to the total amount of cash to which all holders of EqPINES are entitled in lieu of fractional shares on such date. If payment in cash in lieu of fractional shares of Common Stock in accordance with the preceding three paragraphs would result in the Company's failure to be in compliance with any debt instrument to which it is a party, the Company will be entitled to deliver a whole share of Common Stock in lieu of cash to holders of EqPINES entitled to fractional shares of Common Stock (beginning with the holders entitled to the largest fractional shares) until delivery of cash in lieu of fractional shares of Common Stock to the remaining holders of EqPINES would no longer result in the Company's failure to be in compliance with such debt instrument. LIQUIDATION RIGHTS In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, and subject to the rights of holders of any other series of Preferred Stock, the holders of EqPINES will be entitled to receive an amount equal to the per share price to public of the EqPINES shown on the cover page of this Prospectus plus accrued and unpaid dividends on the Mandatorily Convertible Preferred Stock represented thereby, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Junior Stock upon liquidation, dissolution or winding up. If, upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the assets of the Company are insufficient to permit the payment of the full preferential amounts payable with respect to shares of Mandatorily Convertible Preferred Stock and all other series of Parity Preferred Stock, the holders of shares of Mandatorily Convertible Preferred Stock and of all other series of Parity Preferred Stock will share ratably in any distribution of assets of the Company in proportion to the full respective preferential amounts to which they are entitled. After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Mandatorily Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Company. A consolidation or merger of the Company with one or more corporations or a sale or transfer of substantially all of the assets of the Company shall not be deemed to be a liquidation, dissolution or winding up of the Company. 110 VOTING RIGHTS The holders of shares of Mandatorily Convertible Preferred Stock (including shares of Mandatorily Convertible Preferred Stock represented by EqPINES) will not be entitled to any voting rights, except as required by applicable state law and as described below. In the event that dividends on the Mandatorily Convertible Preferred Stock (including shares of Mandatorily Convertible Preferred Stock represented by EqPINES) or any other series of Preferred Stock are in arrears and unpaid for six quarterly dividend periods, or if any other series of Preferred Stock shall be entitled for any other reason to exercise voting rights, separate from the Common Stock, to elect any Directors of the Company ("Preferred Stock Directors"), the holders of the shares of Mandatorily Convertible Preferred Stock (voting separately as a class with holders of all other series of Preferred Stock which does not have a separate class vote and upon which like voting rights have been conferred and are exercisable), with each share of Mandatorily Convertible Preferred Stock entitled to 500 votes (equivalent to one vote for each EqPINES) on this and other matters in which Preferred Stock votes as a group, will be entitled to vote for the election of two Preferred Stock Directors, such Directors to be in addition to the number of Directors constituting the Board of Directors immediately prior to the accrual of such right. Such right, when vested, will continue until all dividends in arrears on the Mandatorily Convertible Preferred Stock and such series of Preferred Stock will have been paid in full and the right of any other series of Preferred Stock to exercise voting rights, separate from the Common Stock, to elect any Preferred Stock Directors will terminate or have terminated, and, when so paid and such termination occurs or has occurred, such voting right will cease. Upon any termination of the aforesaid voting right, subject to the requirements of the Delaware corporation law and the Restated Certificate of Incorporation of the Company, such Preferred Stock Directors will cease to be Directors of the Company and will resign. The Company will not, without the approval of the holders of at least 66 2/3 percent of all the shares of Mandatorily Convertible Preferred Stock then outstanding: (i) amend, alter or repeal any of the provisions of the Restated Certificate of Incorporation or the By-laws of the Company so as to affect adversely the powers, preferences or rights of the holders of the shares of Mandatorily Convertible Preferred Stock then outstanding or reduce the minimum time required for any notice to which only the holders of the shares of Mandatorily Convertible Preferred Stock then outstanding may be entitled (an amendment of the Restated Certificate of Incorporation to authorize or create, or increase the authorized amount of or to issue, Junior Stock, preferred stock ranking on parity with the shares of Mandatorily Convertible Preferred Stock or any stock of any class ranking on parity with the shares of Mandatorily Convertible Preferred Stock will be deemed not to affect adversely the powers, preferences or rights of the holders of the shares of Mandatorily Convertible Preferred Stock); (ii) create any series of preferred stock ranking prior to the shares of Mandatorily Convertible Preferred Stock as to payment of dividends or the distribution of assets upon liquidation; or (iii) authorize or create, or increase the authorized amount of, any capital stock, or any security convertible into capital stock, of any class ranking prior to the shares of Mandatorily Convertible Preferred Stock as to payment of dividends or the distribution of assets upon liquidation. TRANSFER AGENT AND REGISTRAR The Bank of New York will act as transfer agent and registrar for, and paying agent for the payment of dividends on, the EqPINES and shares of Mandatorily Convertible Preferred Stock. LISTING Application will be made to list the EqPINES and the Common Stock issuable on conversion of the Mandatorily Convertible Preferred Stock on the NYSE. The Mandatorily Convertible Preferred Stock will not be so listed and the Company does not expect that there will be any trading market for the Mandatorily Convertible Preferred Stock except as represented by the EqPINES. 111 FEDERAL INCOME TAX CONSEQUENCES The following is a general discussion regarding the material United States Federal income tax consequences expected to apply to a holder with respect to the purchase, ownership and disposition of the shares of EqPINES representing interests in Mandatorily Convertible Preferred Stock. This discussion is based on the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations promulgated thereunder and the administrative and judicial interpretations thereof, all as in effect on the date of this Prospectus. This discussion is intended for informational purposes only, and does not address aspects of taxation, other than Federal income taxation, or all tax consequences that may be relevant in the particular circumstances of each holder (some of which, such as dealers in securities, banks, insurance companies, tax-exempt organizations and foreign persons, may be subject to special rules). There can be no assurance that future changes in applicable law or administrative and judicial interpretations thereof, any of which could have a retroactive effect, will not adversely affect the tax consequences discussed herein or that there will not be differences of opinion as to the interpretation of applicable law. Stock having terms closely resembling those of the shares of Mandatorily Convertible Preferred Stock has not been the subject of any regulation, ruling or judicial decision currently in effect, and there can be no assurance that the Service will take the positions set forth below. The Company has not and will not seek a ruling from the Service as to any tax matters relating to the shares of Mandatorily Convertible Preferred Stock. PERSONS CONSIDERING THE PURCHASE OF SHARES OF MANDATORILY CONVERTIBLE PREFERRED STOCK SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION. THE FOLLOWING DISCUSSION RELATES ONLY TO SHARES OF MANDATORILY CONVERTIBLE PREFERRED STOCK OR SHARES OF COMMON STOCK RECEIVED UPON CONVERSION THEREOF OR IN EXCHANGE THEREFOR THAT ARE HELD AS CAPITAL ASSETS WITHIN THE MEANING OF SECTION 1221 OF THE CODE. THIS SUMMARY PERTAINS ONLY TO A HOLDER THAT IS (I) A CITIZEN OR RESIDENT OF THE U.S. FOR U.S. FEDERAL INCOME TAX PURPOSES, (II) AN ESTATE SUBJECT TO U.S. FEDERAL INCOME TAXATION WITHOUT REGARD TO THE SOURCE OF ITS INCOME, (III) A CORPORATION CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE U.S. OR ANY POLITICAL SUBDIVISION THEREOF OR (IV) A TRUST WHICH IS SUBJECT TO THE SUPERVISION OF A COURT WITHIN THE U.S. AND THE CONTROL OF A U.S. FIDUCIARY. EQPINES Holders of the EqPINES will be treated for United States federal income tax purposes as owners of the shares of Mandatorily Convertible Preferred Stock represented by the EqPINES. Accordingly, the tax treatment of the owners of the EqPINES will be the same as the tax treatment of the owners of the Mandatorily Convertible Preferred Stock as described below. Thus, upon the withdrawal of shares of Mandatorily Convertible Preferred Stock in exchange for Depositary Receipts evidencing the ownership of EqPINES as provided in the Depositary Agreement, (i) no gain or loss will be recognized by an exchanging holder, (ii) the tax basis of each share of Mandatorily Convertible Preferred Stock to an exchanging holder will be the same as the aggregate tax basis of the EqPINES exchanged therefor, and (iii) the holding period for shares of Mandatorily Convertible Preferred Stock in the hands of an exchanging holder will include the period during which such holder held the EqPINES exchanged therefor. References in this section "Federal Income Tax Consequences," to holders of the Mandatorily Convertible Preferred Stock will mean both holders of shares of Mandatorily Convertible Preferred Stock and holders of EqPINES representing shares of Mandatorily Convertible Preferred Stock. References to shares of Mandatorily Convertible Preferred Stock will mean both shares of Mandatorily Convertible Preferred Stock and EqPINES. DIVIDENDS. Dividends paid on the shares of Mandatorily Convertible Preferred Stock out of the Company's current or accumulated earnings and profits will be taxable as ordinary income and will generally will qualify for the 70 percent intercorporate dividends-received deduction provided that the 112 minimum holding period (generally at least 46 days) and that other applicable requirements are satisfied, and subject further to the discussion of Code Section 1059(f), below. Under certain circumstances, a corporate holder may be subject to the alternative minimum tax with respect to a portion of the amount of its dividends-received deduction. To the extent the Company does not have sufficient current or accumulated earnings and profits in the years that the Mandatorily Convertible Preferred Stock is outstanding, distributions made with respect to the Mandatorily Convertible Preferred Stock for any such year will be treated as a return of capital rather than a taxable dividend. Such distributions will reduce the holder's tax basis in its Mandatorily Convertible Preferred Stock and, to the extent distributions exceed such tax basis they will be treated as capital gain. Such distributions will not be eligible for the dividends-received deduction. It is uncertain whether the Company currently has, and whether it will have prior to the Mandatory Conversion Date, any current or accumulated earnings and profits. Under certain circumstances, a corporation that receives an "extraordinary dividend," as defined in Section 1059(c) of the Code, is required to reduce its stock basis by the non-taxed portion of such dividend. Generally, quarterly dividends that are not in arrears and that are paid to an original holder of the shares of Mandatorily Convertible Preferred Stock will not constitute extraordinary dividends under Section 1059(c). However, under Section 1059(f), any dividend with respect to "disqualified preferred stock" is treated as an "extraordinary dividend." For this purpose, "disqualified preferred stock" includes stock which is preferred as to dividends if the issue price of such stock exceeds its liquidation rights or redemption price. However, although the issue is not free from doubt, it is believed that the Mandatorily Convertible Preferred Stock is not "disqualified preferred stock." DISTRIBUTION OF COMMON STOCK IN LIEU OF CASH DIVIDEND. If the Company pays a distribution on the Mandatorily Convertible Preferred Stock in the form of Common Stock, such distribution will be taxable in the same manner as distributions described above under "Dividends." The amount of such distribution will equal the fair market value on the distribution date of the Common Stock distributed to a holder on that date. A holder's tax basis in Common Stock so received will equal the fair market value of such Common Stock on the distribution date, and such holder's holding period for such Common Stock will commence on the day following the distribution date. REDEMPTION PREMIUM. Under certain circumstances, Section 305(c) of the Code requires that any excess of the redemption price of redeemable preferred stock over its issue price be includable in income, prior to receipt, as a constructive dividend. However, although the issue is not free from doubt it is believed that Section 305(c) does not apply to stock with terms such as those of the shares of Mandatorily Convertible Preferred Stock. MANDATORY OR OPTIONAL CONVERSION INTO COMMON STOCK. Gain or loss generally will not be recognized by a holder upon the conversion of shares of Mandatorily Convertible Preferred Stock into shares of Common Stock if no cash is received. Income may be recognized, however, to the extent Common Stock or cash is received in payment of accrued and unpaid dividends upon a conversion. Such income would probably be characterized as dividend income although some uncertainty exists as to the appropriate characterization of payments in satisfaction of undeclared accrued and unpaid dividends. In addition, a holder who receives cash in lieu of a fractional share will be treated as having received the fractional share and exchanged it for cash in a transaction subject to Section 302 of the Code and related provisions. This exchange generally should result in capital gain or loss measured by the difference between the cash received for the fractional share interest and the holder's basis in the fractional share. Generally, a holder's tax basis in the Common Stock received upon the conversion of the shares of Mandatorily Convertible Preferred Stock, other than shares of Common Stock taxed upon receipt, will equal the adjusted tax basis of the converted shares of Mandatorily Convertible Preferred Stock (exclusive of any basis allocable to a fractional share interest) and the holding period of such Common Stock will include the holding period of the converted shares of Mandatorily Convertible Preferred Stock. 113 ADJUSTMENT OF CONVERSION RATE. Certain adjustments (or failure to make adjustments) to the Conversion Rate and the Optional Conversion Rate to reflect the Company's issuance of certain rights, warrants, evidences of indebtedness, securities or other assets to holders of Common Stock may result in constructive distributions taxable as dividends to the holders of the shares of Mandatorily Convertible Preferred Stock which may constitute (and cause other dividends to constitute) "extraordinary dividends" to corporate holders as described above. CONVERSION OF MANDATORILY CONVERTIBLE PREFERRED STOCK AFTER DIVIDEND RECORD DATE. If a holder of shares of Mandatorily Convertible Preferred Stock exercises the holder's right to convert the shares of Mandatorily Convertible Preferred Stock into shares of Common Stock after a dividend record date but before payment of the dividend, then, upon conversion the holder generally will be required to pay the Company an amount equal to the portion of such dividend attributable to the current quarterly dividend period, which amount would increase the tax basis of the Common Stock received. The holder would recognize the dividend payment as income in accordance with the rules described under "Dividends" above. DISPOSITION OF MANDATORY CONVERTIBLE PREFERRED STOCK AND COMMON STOCK. A holder that disposes of or is deemed to dispose of Mandatory Convertible Preferred Stock or Common Stock that was received either upon the conversion of such preferred stock or as the dividend distribution generally will realize gain (or loss) to the extent that the proceeds of such disposition (not including any proceeds attributable to any declared accrued but unpaid dividends which will be taxable as such to holders of record who have not previously included such dividends in income), net of any reasonable costs of disposition, exceed (or are exceeded by) the adjusted tax basis of the Mandatory Convertible Preferred Stock or Common Stock that is disposed of by such holder. Such gain or loss will be capital gain or loss, and, for individual holders that held the Mandatory Convertible Preferred Stock and Common Stock for more than 18 months, may be subject to a preferential tax rate of 20%. BACKUP WITHHOLDING. Certain non-corporate holders may be subject to backup withholding at a current rate of 31 percent on dividends. Generally, backup withholding applies only if a taxpayer fails to furnish or certify a proper taxpayer identification number or if the taxpayer is notified by the Service that the taxpayer has failed to report payments of interest and dividends properly. Holders should consult their tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining any applicable exemption. MISCELLANEOUS Upon issuance, the shares of Mandatorily Convertible Preferred Stock will be fully paid and nonassessable. Holders of EqPINES and Mandatorily Convertible Preferred Stock will have no preemptive rights. The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of Mandatorily Convertible Preferred Stock, such number of shares of Common Stock as will from time to time be issuable upon the conversion of all the shares of Mandatorily Convertible Preferred Stock then outstanding. Shares of Mandatorily Convertible Preferred Stock converted into Common Stock of the Company or otherwise acquired by the Company will resume the status of authorized and unissued shares of preferred stock, undesignated as to series, and will be available for subsequent issuance. 114 DESCRIPTION OF DEPOSITARY ARRANGEMENTS THE FOLLOWING SUMMARY OF THE TERMS AND PROVISIONS OF THE DEPOSITARY ARRANGEMENTS FOR THE EQPINES DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY, THE DEPOSIT AGREEMENT, AS DEFINED BELOW (WHICH CONTAINS THE FORM OF THE DEPOSITARY RECEIPT, AS DEFINED BELOW). Each EqPINES represents one-five hundredth of a share of Mandatorily Convertible Preferred Stock deposited under a Deposit Agreement dated as of April 1, 1998 (the "Deposit Agreement"), among the Company, The Bank of New York, as depositary (the "Depositary"), and the holders from time to time of depositary receipts executed and delivered thereunder (the "Depositary Receipts"). Subject to the terms of the Deposit Agreement, each owner of a EqPINES is entitled, proportionately, to all the rights, preferences and privileges of the shares of Mandatorily Convertible Preferred Stock represented thereby (including dividend, conversion, voting and liquidation rights), and, subject to all of the limitations of the shares of Mandatorily Convertible Preferred Stock represented thereby, contained in the Certificate of Designation and summarized under "Description of EqPINES." The corporate trust office of The Bank of New York is located at 101 Barclay Street, New York, NY 10286. The EqPINES are evidenced by Depositary Receipts. Copies of the Deposit Agreement, the form of which has been filed with the Registration Statement of which this Prospectus is a part, are available for inspection at the office of the Depositary listed above. EXECUTION AND DELIVERY OF DEPOSITARY RECEIPTS The Company will deposit the shares of Mandatorily Convertible Preferred Stock represented by the EqPINES being offered hereby with the Depositary, in exchange for Depositary Receipts, which the Company will deliver to the Underwriters (as defined herein) upon consummation of the EqPINES Offering. The Deposit Agreement does not provide for the deposit of shares of Mandatorily Convertible Preferred Stock and the withdrawal of Depositary Receipts by any party other than the Company. WITHDRAWAL OF MANDATORILY CONVERTIBLE PREFERRED STOCK Upon surrender of Depositary Receipts at the corporate trust office of the Depositary, the owner of the EqPINES evidenced thereby is entitled to delivery at such office of certificates evidencing the number of shares of Mandatorily Convertible Preferred Stock (but only in whole shares of Mandatorily Convertible Preferred Stock) represented by such EqPINES. If the Depositary Receipts delivered by the holder evidence a number of EqPINES in excess of the number of EqPINES representing the number of shares of Mandatorily Convertible Preferred Stock to be withdrawn, the Depositary will at the same time deliver to such holder a new Depositary Receipt or Receipts evidencing such excess number of EqPINES. The Company does not expect that there will be any public trading market for the shares of Mandatorily Convertible Preferred Stock except as represented by the EqPINES. See "Risk Factors--Absence of a Previous Market for the EqPINES." CONVERSION PROVISIONS MANDATORY CONVERSION. As described under "Description of EqPINES--Mandatory Conversion of EqPINES," the EqPINES are subject to mandatory conversion into shares of Common Stock on the Mandatory Conversion Date. CONVERSION AT THE OPTION OF THE HOLDER. As described under "Description of EqPINES-- Conversion at the Option of the Holder," the EqPINES may be converted, in whole but not in part, into shares of Common Stock at the option of the holder at any time prior to the Mandatory Conversion Date. To effect such an optional conversion, a holder of EqPINES must deliver Depositary Receipts evidencing the EqPINES to be converted, together with a written notice of conversion and a proper assignment of the Depositary Receipts to the Company or in blank (and, if such conversion is to occur after the close of 115 business on a record date for any payment of declared dividends and before the opening of business on the next succeeding dividend payment date, payment in cash of an amount equal to the dividend payable on such date), to the Depositary or its agent. A holder who delivers Depositary Receipts evidencing the EqPINES to the Depositary on a record date for any payment of declared dividends for conversion on the succeding dividend payment date will not be required to include payment of the dividend payable on such date upon deliver of such Depositary Receipts. Each optional conversion of EqPINES shall be deemed to have been effected immediately prior to the close of business on the date on which the foregoing requirements shall have been satisfied. The conversion shall be at the Optional Conversion Rate in effect at such time and on such date. If only a portion of the EqPINES evidenced by a Depositary Receipt is to be converted, a new Depositary Receipt or Receipts will be issued for any EqPINES not converted. No fractional shares of Common Stock will be issued to any holder upon mandatory or optional conversion of its EqPINES. See "--Dividends and Other Distributions" below. After the date fixed for conversion, the EqPINES so converted will no longer be deemed to be outstanding and all rights of the holders of such EqPINES will cease, except the right to receive the Common Stock and amounts payable on such conversion and any money or other property to which the holders of such EqPINES are entitled upon such conversion, upon surrender to the Depositary of the Depositary Receipt or Receipts evidencing such EqPINES. DIVIDENDS AND OTHER DISTRIBUTIONS The Depositary will distribute all cash dividends or other cash distributions (other than cash dividends or cash distributions paid by the Company to the Depositary in lieu of fractional shares) and all dividends or other distributions paid by the Company in shares of Common Stock (other than payments of whole shares of Common Stock in lieu of fractional shares pursuant to the final paragraph under "Description of EqPINES--Fractional Shares") in respect of the Mandatorily Convertible Preferred Stock to the record holders of Depositary Receipts in proportion, insofar as practicable, to the number of EqPINES owned by such holders. The Depositary will distribute whole shares of Common Stock paid by the Company to it on the Mandatory Conversion Date in lieu of cash payments for fractional shares otherwise payable by the Company on the Mandatorily Convertible Preferred Stock to holders of EqPINES entitled to such fractional shares, beginning with the holders entitled to the largest fractional shares. The Depositary will distribute cash dividends or other cash distributions received by it from the Company in lieu of fractional shares to a record holder of Depositary Receipts on the basis of such holder's aggregate record holdings of Depositary Receipts (i) on the related record date for a dividend payment or (ii) which are to be converted into Common Stock on a conversion date, as applicable, if delivering shares of Common Stock on that basis in payment of the dividend or upon conversion would otherwise result in delivery of a fractional share. The Depositary will, in any such event, deliver an amount in cash to such record holder as set forth in "Description of EqPINES--Fractional Shares." On the Mandatory Conversion Date, the fractional share of Common Stock that any holder of EqPINES would otherwise be entitled to receive shall be determined by adding all the fractional shares such holder would otherwise be entitled to receive on the mandatory conversion of all EqPINES held by such holder and on the payment of the regular quarterly dividend on all EqPINES held by such holder. If the Company elects to deliver resulting whole number of shares in shares of Common Stock and the resulting fraction in cash, the Depositary will distribute shares and cash received by it to the applicable holders of EqPINES. In the event that (i) mandatory conversion of the EqPINES, (ii) voluntary conversions of EqPINES, (iii) the Depositary's delivery of shares of Common Stock as dividends to the holders of EqPINES, (iv) the combination of (i) and (iii) pursuant to the preceding sentence or (v) any combination of the foregoing result in any holder of EqPINES being entitled to cash in lieu of a fractional share on the related date of conversion or dividend payment, as applicable, the Company will deliver to the Depositary for distribution 116 to such holders cash in an amount equal to the total amount of cash to which all such holders are entitled in lieu of fractional shares on such date. In the event of a distribution other than cash or Common Stock in respect of the shares of Mandatorily Convertible Preferred Stock, the Depositary will distribute property received by it to the record holders of Depositary Receipts in proportion, insofar as practicable, to the number of EqPINES owned by such holders, unless the Depositary determines that it is not feasible to make such distribution, in which case the Depositary may, with the approval of the Company, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including sale (at public or private sale) of such property and distribution of the net proceeds from such sale to such holders. The amount distributed in any of the foregoing cases will be reduced by any amount required to be withheld by the Company or the Depositary on account of taxes. RECORD DATE Whenever (i) any cash dividend or other cash distribution or any dividend to be paid by the Company in shares of Common Stock shall become payable, any distribution other than cash shall be made, or any rights, preferences or privileges shall be offered with respect to the shares of Mandatorily Convertible Preferred Stock, or (ii) the Depositary shall receive notice of any meeting at which holders of shares of Mandatorily Convertible Preferred Stock are entitled to vote or of which holders of shares of Mandatorily Convertible Preferred Stock are entitled to notice, the Depositary shall in each such instance fix a record date (which shall be the same date as the record date for the shares of Mandatorily Convertible Preferred Stock) for the determination of the holders of Depositary Receipts (x) who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof or (y) who shall be entitled to give instructions for the exercise of voting rights at any such meeting or to receive notice of such meeting. VOTING OF MANDATORILY CONVERTIBLE PREFERRED STOCK Upon receipt of notice of any meeting at which holders of shares of Mandatorily Convertible Preferred Stock are entitled to vote, the Depositary will mail the information contained in such notice of meeting to the record holders of Depositary Receipts. Each record holder of Depositary Receipts on the record date (which will be the same date as the record date for the shares of Mandatorily Convertible Preferred Stock) will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the number of shares of Mandatorily Convertible Preferred Stock represented by such holder's EqPINES. The Depositary will endeavor, insofar as practicable, to vote the number of shares of Mandatorily Convertible Preferred Stock represented by such EqPINES in accordance with such instructions, and the Company has agreed to take all reasonable action which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will abstain from voting shares of Mandatorily Convertible Preferred Stock to the extent it does not receive specific written voting instructions from the holders of Depositary Receipts. AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT The form of Depositary Receipts and any provision of the Deposit Agreement may at any time be amended by agreement between the Company and the Depositary. However, any amendment that imposes any fees, taxes or other charges payable by holders of Depositary Receipts (other than taxes and other governmental charges, fees and other expenses payable by such holders as stated under "Charges of Depositary"), or that otherwise prejudices any substantial existing right of holders of Depositary Receipts, will not take effect as to outstanding Depositary Receipts until the expiration of 90 days after notice of such amendment has been mailed to the record holders of outstanding Depositary Receipts. Every holder of Depositary Receipts at the time any such amendment becomes effective shall be deemed to consent and 117 agree to such amendment and to be bound by the Deposit Agreement, as so amended. In no event may any amendment impair the right of any owner of EqPINES, subject to the conditions specified in the Deposit Agreement, upon surrender of the Depositary Receipts evidencing such EqPINES to receive shares of Mandatorily Convertible Preferred Stock or, upon conversion of the shares of Mandatorily Convertible Preferred Stock represented by EqPINES, to receive shares of Common Stock, and in each case any money or other property represented thereby, except in order to comply with mandatory provisions of applicable law. The Depositary may resign or be removed by the Company. Such resignation or removal will only become effective upon the appointment of a qualified successor depositary which expressly assumes the obligations of the Depositary under the Deposit Agreement. CHARGES OF DEPOSITARY The Company will pay all charges of the Depositary including charges in connection with the initial deposit of the shares of Mandatorily Convertible Preferred Stock, the initial execution and delivery of the Depositary Receipts, the distribution of information to the holders of Depositary Receipts with respect to matters on which shares of Mandatorily Convertible Preferred Stock are entitled to vote, withdrawals of the shares of Mandatorily Convertible Preferred Stock by the holders of Depositary Receipts or conversion of the shares of Mandatorily Convertible Preferred Stock, except for taxes (including transfer taxes, if any) and other governmental charges and such other charges as are provided in the Deposit Agreement to be at the expense of holders of Depositary Receipts or persons depositing shares of Mandatorily Convertible Preferred Stock. GENERAL The Depositary will make available for inspection by holders of Depositary Receipts at its corporate office all reports and communications from the Company that are delivered to the Depositary and made generally available to the holders of the shares of Mandatorily Convertible Preferred Stock. Neither the Depositary nor the Company will be liable if it is prevented or delayed by law or any circumstance beyond its control from or in performing its obligations under the Deposit Agreement. 118 UNDERWRITING Under the terms of and subject to the conditions contained in an underwriting agreement (the "U.S. Underwriting Agreement"), among the Company and each of the underwriters named below (the "U.S. Underwriters"), for whom Lehman Brothers Inc., Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC are acting as representatives (the "Representatives"), each of the several U.S. Underwriters has agreed to purchase from the Company, and the Company has agreed to sell to each U.S. Underwriter, the aggregate number of shares of Common Stock set forth opposite the name of such U.S. Underwriter below:
NUMBER OF U.S. UNDERWRITERS COMMON SHARES - ------------------------------------------------------------------------------------------------- --------------- Lehman Brothers Inc.............................................................................. Smith Barney Inc................................................................................. Furman Selz LLC.................................................................................. NationsBanc Montgomery Securities LLC............................................................ --------------- Total........................................................................................ 10,400,000 --------------- ---------------
Under the terms of and subject to the conditions contained in an underwriting agreement (the "International Underwriting Agreement"), among the Company and each of the international managers named below (the "International Managers"), for whom Lehman Brothers International (Europe), Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC are acting as Lead Managers (the "Lead Managers"), each of the several International Managers has agreed to purchase from the Company, and the Company has agreed to sell to each International Manager, the aggregate number of shares of Common Stock set forth opposite the name of such International Manager below:
NUMBER OF INTERNATIONAL MANAGERS COMMON SHARES - ------------------------------------------------------------------------------------------------- --------------- Lehman Brothers International (Europe)........................................................... Smith Barney Inc................................................................................. Furman Selz LLC.................................................................................. NationsBanc Montgomery Securities LLC............................................................ --------------- Total........................................................................................ 2,600,000 --------------- ---------------
The U.S. Underwriting Agreement and the International Underwriting Agreement (collectively, the "Underwriting Agreements") provide that the obligations of the U.S. Underwriters and the International Managers, respectively, to purchase shares of Common Stock, are subject to the approval of certain legal matters by counsel and to certain other conditions and that if any of the shares of Common Stock are purchased by the U.S. Underwriters pursuant to the U.S. Underwriting Agreement or by the International Managers pursuant to the International Underwriting Agreement, all the shares of Common Stock agreed to be purchased by either the U.S. Underwriters or the International Managers, as the case may be, pursuant to their respective Underwriting Agreements, must be so purchased. The offering price and underwriting discounts and commissions for the U.S. Offering and the International Offering are identical. The closing of each of the U.S. Offering, the International Offering and the Concurrent Offerings is conditioned upon the closing of the other and of the other Six Flags Transactions. The Company has been advised by the Representatives and the Lead Managers that the U.S. Underwriters and the International Managers propose to offer shares of Common Stock directly to the public initially at the public offering price set forth on the cover page of this Prospectus and to certain selected dealers (who may include the U.S. Underwriters and International Managers) at such public offering price less a selling concession not to exceed $ per share. The selected dealers may reallow a concession not to exceed $ per share. After the initial offering of the Common Stock, 119 the offering price, the concession to selected dealers and the reallowance to other dealers may be changed by the U.S. Underwriters and the International Managers. The U.S. Underwriters and the International Managers have entered into an Agreement Among U.S. Underwriters and International Managers (the "Agreement Among") pursuant to which each U.S. Underwriter has agreed that, as part of the distribution of the shares of Common Stock offered in the U.S. Offering, (a) it is not purchasing any of such shares for the account of anyone other than a U.S. or Canadian Person (as defined below) and (b) it has not offered or sold, and will not offer, sell, resell or deliver, directly or indirectly, any of such shares or distribute any prospectus relating to the U.S. Offering outside the United States or Canada or to anyone other than a U.S. or Canadian Person. In addition, pursuant to the Agreement Among, each International Manager has agreed that, as part of the distribution of the shares of Common Stock offered in the International Offering, (a) it is not purchasing any of such shares for the account of any U.S. or Canadian Person and (b) it has not offered or sold, and will not offer, sell, resell or deliver, directly or indirectly, any of such shares or distribute any prospectus relating to the International Offering within the United States or Canada or to any U.S. or Canadian Person. The foregoing limitations do not apply to stabilization transactions or to certain other transactions specified in the Underwriting Agreements and the Agreement Among, including: (i) certain purchases and sales between the U.S. Underwriters and the International Managers; (ii) certain offers, sales, resales, deliveries or distributions to or through investment advisors or other persons exercising investment discretion; (iii) purchases, offers or sales by a U.S. Underwriter that is also acting as an International Manager or by an International Manager that is also acting as a U.S. Underwriter; and (iv) other transactions specifically approved by the U.S. Underwriters and International Managers. As used herein, "U.S. or Canadian Person" means any resident or citizen of the United States or Canada, any corporation, pension, profit sharing or other trust or other entity organized under or governed by the laws of the United States or Canada or any political subdivision thereof (other than the foreign branch of any United States or Canadian Person), any estate or trust the income of which is subject to United States or Canadian federal income taxation regardless of the source of its income, and any United States or Canadian branch of a person other than a United States or Canadian Person. The term "United States" means the United States of America (including, the states thereof and the District of Columbia) and its territories, its possessions and other areas subject to its jurisdiction. The term "Canada" means the provinces of Canada, its territories, its possessions and other areas subject to its jurisdiction. Pursuant to the Agreement Among, sales may be made among the U.S. Underwriters and the International Managers of such number of shares of Common Stock as may be mutually agreed. The price of any shares so sold shall be the public offering price as then in effect for Common Stock being sold by the U.S. Underwriters and the International Managers, less an amount not greater than the selling concession unless otherwise determined by mutual agreement. To the extent that there are sales pursuant to the Agreement Among, the number of shares initially available for sale by the U.S. Underwriters and the International Managers may be more or less than the amount specified on the cover page of this Prospectus. Each International Manager has represented and agreed that: (i) it is not carrying on investment business in the United Kingdom in contravention of Section 3 of the Financial Services Act 1986; (ii) it has not offered or sold and, prior to the date six months after the latest closing date for the issue of the shares of Common Stock, will not offer or sell any shares of Common Stock to persons in the United Kingdom by means of any document except to persons whose ordinary business is to buy or sell securities or debentures, whether as principal or agent, or otherwise in circumstances that do not constitute an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulation 1995; (iii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the shares of Common Stock in, from or otherwise involving the United Kingdom; and (iv) it has only issued or passed on, and will only issue or pass on, to any person in the United Kingdom, any document received by it in connection with the issue of the Common Stock if 120 that person is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the document may otherwise lawfully be issued or passed on and that it will procure that any purchaser from it of shares of Common Stock undertakes to comply with the provisions of this paragraph. Purchasers of the shares of Common Stock offered pursuant to the Common Stock Offering may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the offering price set forth on the cover page hereof. Except for the Common Stock to be sold in the Common Stock Offering and the Convertible Preferred Stock or shares of Common Stock to be issued upon conversion of the Convertible Preferred Stock, the Company has agreed not to offer, sell, contract to sell or otherwise issue any shares of Common Stock or other capital stock or securities convertible into or exchangeable for, or any rights to acquire, Common Stock or other capital stock, with certain exceptions (including certain exceptions for Common Stock or other capital stock issued or sold in connection with future acquisitions by the Company, including its proposed acquisition of Walibi), prior to the expiration of 90 days from the date of this Prospectus without the prior written consent of Lehman Brothers on behalf of the Representatives and the Lead Managers. The Company's officers, directors and principal stockholders, who hold in the aggregate approximately 6.0 million shares of Common Stock (including shares issuable upon exercise of outstanding options, warrants and restricted stock), have agreed not to, directly or indirectly, offer, sell or otherwise dispose of shares of Common Stock of the Company or any securities convertible into or exchangeable for or any rights to acquire, Common Stock or other capital stock of the Company for 90 days following the date of this Prospectus without the prior written consent of Lehman Brothers. In addition, the Sellers in the Six Flags Acquisition have agreed not to sell any Seller Preferred Stock (or shares of Common Stock issuable upon conversion thereof) acquired by them in the Six Flags Acquisition during such 90-day period. The Company has granted to the U.S. Underwriters and the International Managers options to purchase up to an additional 1,560,000 and 390,000 shares of Common Stock, respectively, at the initial public offering price to the public, less the underwriting discounts and commissions shown on the cover page of this Prospectus, solely to cover over-allotments, if any. The options may be exercised at any time up to 30 days after the date of this Prospectus. To the extent that the U.S. Underwriters and the International Managers exercise such options, each of the U.S. Underwriters and the International Managers, as the case may be, will be committed (subject to certain conditions) to purchase a number of additional shares proportionate to such U.S. Underwriter's or International Manager's initial commitment as indicated in the preceding tables. The Company and its operating subsidiaries (including Six Flags) have agreed to indemnify the U.S. Underwriters and the International Managers against certain liabilities, including liabilities under the Securities Act, and to contribute to payments which the U.S. Underwriters and the International Managers may be required to make in respect thereof. Until the distribution of the shares of Common Stock offered hereby is completed, rules of the Commission may limit the ability of the Underwriters and certain selling group members to bid for and purchase the Common Stock. As an exception to these rules, the Representatives and the Lead Managers are permitted to engage in certain transactions that stabilize the price of the Common Stock. Such transactions may consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the Common Stock. If the Underwriters create a short position in the Common Stock in connection with the Common Stock Offering (I.E., if they sell more shares of Common Stock than are set forth on the cover page of this Prospectus), the Representatives and the Lead Managers may reduce that short position by purchasing the Common Stock in the open market after the distribution has been completed. The Representatives and the Lead Managers may also elect to reduce any short position by exercising all or part of the over-allotment options described herein. 121 The Representatives and the Lead Managers also may impose a penalty bid on certain Underwriters and selling group members. This means that if the Representatives or the Lead Managers purchase Common Stock in the open market to reduce the Underwriters' short position or to stabilize the price of the Common Stock, they may reclaim the amount of the selling concession from the Underwriters and selling group members who sold those shares of Common Stock as part of the Offering. In general, purchases of a security for the purposes of stabilization or to reduce a syndicate short position could cause the price of the security to be higher than it might otherwise be in the absence of such purchases. The imposition of a penalty bid might have an effect on the price of a security to the extent that it were to discourage resales of the security by purchasers in the applicable offering. Neither the Company nor any of the Underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Common Stock. In addition, neither the Company nor any of the Underwriters makes any representation that the Representatives or the Lead Managers will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice. An application will be made to list the EqPINES and the Common Stock into which shares of Mandatorily Convertible Preferred Stock are convertible on the NYSE. The Mandatorily Convertible Preferred Stock will not be so listed and the Company does not expect that there will be any trading market for the Mandatorily Convertible Preferred Stock except as represented by the EqPINES. Each of Lehman Brothers, Smith Barney Inc. and Furman Selz LLC has from time to time provided certain investment banking services to the Company and its affiliates for which they have received customary fees. LBI Group Inc., an affiliate of Lehman Brothers is party to financing commitments provided to the Company in connection with the Six Flags Transactions and has received customary fees in connection therewith. In addition, Lehman Brothers, Smith Barney Inc. and Furman Selz LLC acted as underwriters of the Company's 1996 and 1997 public offerings and are acting (along with NationsBanc Montgomery Securities LLC) as underwriters in connection with the Concurrent Offerings and will receive customary fees in connection therewith. An affiliate of Lehman Brothers is a lender under each of the Credit Facilities. LEGAL MATTERS The validity of the Common Stock offered hereby and certain legal matters in connection with the Offering will be passed upon for the Company by Baer Marks & Upham LLP, New York, New York. The Underwriters are being represented by Cravath, Swaine & Moore, New York, New York. 122 EXPERTS The consolidated financial statements of the Company as of December 31, 1996 and 1997, and for each of the years in the three-year period ended December 31, 1997, have been included herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The financial statements of Six Flags Entertainment Corporation as of December 28, 1997 and December 29, 1996 and for the three years ended December 28, 1997, December 29, 1996 and December 31, 1995 appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report appearing elsewhere herein and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The audited financial statements of Kentucky Kingdom, Inc. as of November 2, 1997 and for the year then ended incorporated in this Prospectus by reference from the Company's amended report on Form 8-K/A have been audited by Carpenter, Mountjoy & Bressler, PSC, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statements of Walibi, S.A. at December 31, 1997 and for the year then ended, appearing in the Company's Form 8-K/A dated December 15, 1997, which is incorporated herein by reference are incorporated herein in reliance upon the report of Coopers & Lybrand LLP, independent auditors included in the Form 8-K/A and upon the authority of such firm as experts in accounting and auditing. 123 INDEX TO FINANCIAL STATEMENTS
PAGE --------- CONSOLIDATED FINANCIAL STATEMENTS OF PREMIER PARKS INC.: Independent Auditors' Report............................................................................. F-2 Consolidated Balance Sheets.............................................................................. F-3 Consolidated Statements of Operations.................................................................... F-4 Consolidated Statements of Stockholders' Equity.......................................................... F-5 Consolidated Statements of Cash Flows.................................................................... F-6 Notes to Consolidated Financial Statements............................................................... F-8 CONSOLIDATED FINANCIAL STATEMENTS OF SIX FLAGS ENTERTAINMENT CORPORATION: Report of Independent Auditors........................................................................... F-26 Consolidated Statements of Operations.................................................................... F-27 Consolidated Balance Sheets.............................................................................. F-28 Consolidated Statements of Stockholders' Equity (Deficit)................................................ F-29 Consolidated Statements of Cash Flows.................................................................... F-30 Notes to Consolidated Financial Statements............................................................... F-31
F-1 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders Premier Parks Inc.: We have audited the accompanying consolidated balance sheets of Premier Parks Inc. and subsidiaries as of December 31, 1996 and 1997, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1997. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Premier Parks Inc. and subsidiaries as of December 31, 1996 and 1997, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Oklahoma City, Oklahoma February 23, 1998 F-2 PREMIER PARKS INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND 1997
ASSETS 1996 1997 - -------------------------------------------------------------------------------------- ----------- ----------- Current assets: Cash and cash equivalents........................................................... $ 4,043,000 $84,288,000 Accounts receivable................................................................. 1,180,000 6,537,000 Inventories......................................................................... 4,200,000 5,547,000 Income tax receivable............................................................... -- 995,000 Prepaid expenses and other current assets........................................... 3,416,000 3,690,000 ----------- ----------- Total current assets............................................................ 12,839,000 101,057,000 ----------- ----------- Other assets: Deferred charges.................................................................... 6,752,000 10,123,000 Deposits and other.................................................................. 9,087,000 3,949,000 ----------- ----------- Total other assets.............................................................. 15,839,000 14,072,000 ----------- ----------- Property and equipment, at cost....................................................... 263,175,000 485,866,000 Less accumulated depreciation....................................................... 17,845,000 35,610,000 ----------- ----------- 245,330,000 450,256,000 Intangible assets..................................................................... 31,669,000 48,876,000 Less accumulated amortization....................................................... 874,000 2,940,000 ----------- ----------- 30,795,000 45,936,000 ----------- ----------- Total assets.................................................................... $304,803,000 $611,321,000 ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------------- Current liabilities Accounts payable and accrued expenses............................................... $11,059,000 $23,199,000 Accrued interest payable............................................................ 4,304,000 9,785,000 Current portion of capitalized lease obligations.................................... 1,492,000 795,000 ----------- ----------- Total current liabilities....................................................... 16,855,000 33,779,000 ----------- ----------- Long-term debt and capitalized lease obligations: Long-term debt: Senior notes...................................................................... 90,000,000 215,000,000 Credit facility................................................................... 57,574,000 -- Capitalized lease obligations....................................................... 1,768,000 1,231,000 ----------- ----------- Total long-term debt and capitalized lease obligations.......................... 149,342,000 216,231,000 Other long-term liabilities........................................................... 4,846,000 4,025,000 Deferred income taxes................................................................. 20,578,000 33,537,000 ----------- ----------- Total liabilities............................................................... 191,621,000 287,572,000 ----------- ----------- Stockholders' equity: Preferred stock, 500,000 shares authorized at December 31, 1996 and 1997; no shares issued and outstanding at December 31, 1996 and 1997.............................. -- -- Common stock, $.05 par value, 30,000,000 and 90,000,000 shares authorized at December 31, 1996 and 1997, respectively; 11,392,669 and 18,899,457 shares issued and 11,366,323 and 18,873,111 shares outstanding at December 31, 1996 and 1997, respectively...................................................................... 569,000 944,000 Capital in excess of par value...................................................... 144,642,000 354,235,000 Accumulated deficit................................................................. (31,340,000) (17,241,000) Deferred compensation............................................................... -- (13,500,000) ----------- ----------- 113,871,000 324,438,000 Less 26,346 common shares of treasury stock, at cost................................ (689,000) (689,000) ----------- ----------- Total stockholders' equity...................................................... 113,182,000 323,749,000 ----------- ----------- Total liabilities and stockholders' equity...................................... $304,803,000 $611,321,000 ----------- ----------- ----------- -----------
See accompanying notes to consolidated financial statements. F-3 PREMIER PARKS INC. CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
1995 1996 1997 -------------- -------------- -------------- Revenue: Theme park admissions.......................................... $ 21,863,000 $ 41,162,000 $ 94,611,000 Theme park food, merchandise, and other........................ 19,633,000 52,285,000 99,293,000 -------------- -------------- -------------- Total revenue.............................................. 41,496,000 93,447,000 193,904,000 -------------- -------------- -------------- Operating costs and expenses: Operating expenses............................................. 19,775,000 42,425,000 81,356,000 Selling, general and administrative............................ 9,272,000 16,927,000 36,547,000 Costs of products sold......................................... 4,635,000 11,101,000 23,025,000 Depreciation and amortization.................................. 3,866,000 8,533,000 19,792,000 -------------- -------------- -------------- Total operating costs and expenses......................... 37,548,000 78,986,000 160,720,000 -------------- -------------- -------------- Income from operations..................................... 3,948,000 14,461,000 33,184,000 Other income (expense): Interest expense, net.......................................... (5,578,000) (11,121,000) (17,775,000) Termination fee, net of expenses............................... -- -- 8,364,000 Other income (expense)......................................... (177,000) (78,000) (59,000) -------------- -------------- -------------- Total other income (expense)............................... (5,755,000) (11,199,000) (9,470,000) -------------- -------------- -------------- Income (loss) before income taxes.......................... (1,807,000) 3,262,000 23,714,000 Income tax expense (benefit)..................................... (762,000) 1,497,000 9,615,000 -------------- -------------- -------------- Income (loss) before extraordinary loss.................... (1,045,000) 1,765,000 14,099,000 Extraordinary loss on extinguishment of debt, net of income tax benefit of $90,000 in 1995..................................... (140,000) -- -- -------------- -------------- -------------- Net income (loss).......................................... $ (1,185,000) $ 1,765,000 $ 14,099,000 -------------- -------------- -------------- -------------- -------------- -------------- Net income (loss) applicable to common stock............... $ (1,714,000) $ 1,162,000 $ 14,099,000 -------------- -------------- -------------- -------------- -------------- -------------- Weighted average number of common shares outstanding--basic...... 3,938,000 8,603,000 17,938,000 -------------- -------------- -------------- -------------- -------------- -------------- Income (loss) per average common share outstanding-- basic:...... Income (loss) before extraordinary loss.................... $ (.40) $ .14 $ .79 Extraordinary loss......................................... (.04) -- -- -------------- -------------- -------------- Net income (loss).......................................... $ (.44) $ .14 $ .79 -------------- -------------- -------------- -------------- -------------- -------------- Weighted average number of common shares outstanding--diluted.... 3,938,000 8,972,000 18,438,000 -------------- -------------- -------------- -------------- -------------- -------------- Income (loss) per average common share outstanding-- diluted: Income (loss) before extraordinary loss.................... $ (.40) $ .13 $ .76 Extraordinary loss......................................... (.04) -- -- -------------- -------------- -------------- Net income (loss).......................................... $ (.44) $ .13 $ .76 -------------- -------------- -------------- -------------- -------------- --------------
See accompanying notes to consolidated financial statements. F-4 PREMIER PARKS INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
SERIES A, 7% CUMULATIVE CONVERTIBLE PREFERRED STOCK COMMON STOCK -------------------- -------------------- CAPITAL IN SHARES SHARES EXCESS OF ACCUMULATED DEFERRED TREASURY ISSUED AMOUNT ISSUED AMOUNT PAR VALUE DEFICIT COMPENSATION STOCK TOTAL --------- --------- --------- --------- ---------- ------------ ------------- ----------- ---------- Balances at December 31, 1994............ -- $ -- 3,398,467 $ 170,000 50,573,000 (31,920,000) -- (689,000) 18,134,000 Issuance of preferred stock........... 200,000 200,000 -- -- 19,800,000 -- -- -- 20,000,000 Conversion of debt to common stock........... -- -- 1,485,433 74,000 8,888,000 -- -- -- 8,962,000 Net loss.......... -- -- -- -- -- (1,185,000) -- -- (1,185,000) --------- --------- --------- --------- ---------- ------------ ------------- ----------- ---------- Balances at December 31, 1995............ 200,000 200,000 4,883,900 244,000 79,261,000 (33,105,000) -- (689,000) 45,911,000 Conversion of preferred stock to common stock........... (200,000) (200,000) 2,560,928 128,000 72,000 -- -- -- -- Issuance of common stock........... -- -- 3,947,841 197,000 65,309,000 -- -- -- 65,506,000 Net income........ -- -- -- -- -- 1,765,000 -- -- 1,765,000 --------- --------- --------- --------- ---------- ------------ ------------- ----------- ---------- Balances at December 31, 1996............ -- -- 11,392,669 569,000 144,642,000 (31,340,000) -- (689,000) 113,182,000 Issuance of common stock........... -- -- 7,506,788 375,000 209,593,000 -- (14,625,000) -- 195,343,000 Amortization of deferred compensation.... -- -- -- -- -- -- 1,125,000 -- 1,125,000 Net income........ -- -- -- -- -- 14,099,000 -- -- 14,099,000 --------- --------- --------- --------- ---------- ------------ ------------- ----------- ---------- Balances at December 31, 1997............ -- $ -- 18,899,457 $ 944,000 354,235,000 (17,241,000) (13,500,000) (689,000) 323,749,000 --------- --------- --------- --------- ---------- ------------ ------------- ----------- ---------- --------- --------- --------- --------- ---------- ------------ ------------- ----------- ----------
See accompanying notes to consolidated financial statements. F-5 PREMIER PARKS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
1995 1996 1997 --------------- --------------- --------------- Cash flows from operating activities: Net income (loss).......................................... $ (1,185,000) $ 1,765,000 $ 14,099,000 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization.......................... 3,866,000 8,533,000 19,792,000 Deferred compensation.................................. -- -- 1,125,000 Extraordinary loss on early extinguishment of debt..... 230,000 -- -- Amortization of debt issuance costs.................... 317,000 811,000 1,918,000 Gain on sale of assets................................. -- (51,000) (46,000) (Increase) decrease in accounts receivable............. 5,794,000 (215,000) (5,272,000) Deferred income taxes (benefit)........................ (808,000) 1,433,000 6,737,000 Increase in income tax receivable...................... -- -- (995,000) Increase in inventories and prepaid expenses and other current assets....................................... (455,000) (2,360,000) (1,150,000) (Increase) decrease in deposits and other assets....... 1,197,000 (3,947,000) 6,237,000 Increase (decrease) in accounts payable and accrued expenses............................................. (2,366,000) 5,216,000 (776,000) Increase in accrued interest payable................... 4,056,000 146,000 5,481,000 --------------- --------------- --------------- Total adjustments...................................... 11,831,000 9,566,000 33,051,000 --------------- --------------- --------------- Net cash provided by operating activities.................... 10,646,000 11,331,000 47,150,000 --------------- --------------- --------------- Cash flows from investing activities: Proceeds from the sale of equipment........................ -- 476,000 246,000 Other investments.......................................... (63,000) (48,000) (38,000) Additions to property and equipment........................ (10,732,000) (39,423,000) (135,852,000) Acquisition of theme park assets........................... -- (116,154,000) (60,050,000) Acquisition of Funtime Parks, Inc. in 1995 and Stuart Amusement Company in 1997, net of cash acquired.......... (63,344,000) -- (21,376,000) --------------- --------------- --------------- Net cash used in investing activities........................ (74,139,000) (155,149,000) (217,070,000) --------------- --------------- --------------- Cash flows from financing activities: Repayment of debt.......................................... (17,487,000) (1,082,000) (66,576,000) Proceeds from borrowings................................... 93,500,000 57,574,000 132,500,000 Net cash proceeds from issuance of preferred stock......... 20,000,000 -- -- Net cash proceeds from issuance of common stock............ -- 65,306,000 189,530,000 Payment of debt issuance costs............................. (5,099,000) (2,724,000) (5,289,000) --------------- --------------- --------------- Net cash provided by financing activities.................... 90,914,000 119,074,000 250,165,000 --------------- --------------- --------------- Increase (decrease) in cash and cash equivalents............. 27,421,000 (24,744,000) 80,245,000 Cash and cash equivalents at beginning of year............... 1,366,000 28,787,000 4,043,000 --------------- --------------- --------------- Cash and cash equivalents at end of year..................... $ 28,787,000 $ 4,043,000 $ 84,288,000 --------------- --------------- --------------- --------------- --------------- ---------------
F-6 PREMIER PARKS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
1995 1996 1997 ------------ ------------- ------------- Supplementary cash flow information: Cash paid for interest............................................. $ 1,701,000 $ 11,640,000 $ 18,315,000 ------------ ------------- ------------- ------------ ------------- ------------- Cash paid (received) for income taxes (refund)..................... $ (22,000) $ 64,000 $ 3,697,000 ------------ ------------- ------------- ------------ ------------- -------------
Supplemental disclosure of noncash investing and financing activities: 1995 - Common stock (1,485,433 shares) was exchanged for $9,095,000 of debt, net of $133,000 of costs. - The Company acquired certain rides and attractions through capital leases with obligations totaling $3,259,000. 1996 - Preferred stock (200,000 shares) was converted into common stock (2,560,928 shares). - The Company issued $200,000 of common stock (9,091 shares) as a component of a theme park acquisition. - The Company acquired certain equipment through a capital lease with an obligation of $64,000. 1997 - The Company issued $5,813,000 of common stock (153,800 shares) as components of theme park acquisitions. - The Company issued restricted common stock (450,000 shares) to certain employees valued at $14,625,000. - The Company assumed $268,000 of capital lease obligations as a component of a theme park acquisition. See accompanying notes to consolidated financial statements. F-7 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995, 1996 AND 1997 (1) SUMMARY OF SIGNIFICANT POLICIES DESCRIPTION OF BUSINESS Premier Parks Inc. (the "Company") owns and operates regional theme amusement and water parks. As of December 31, 1997, the Company and its subsidiaries own and operate twelve parks: Adventure World, a combination theme and water park located in Largo, Maryland; Darien Lake & Camping Resort, a combination theme and water park with an adjacent camping resort and performing arts center, located between Buffalo and Rochester, New York; Elitch Gardens, a theme park located in Denver, Colorado; Frontier City, a western theme park located in Oklahoma City, Oklahoma; Geauga Lake, a combination theme and water park located near Cleveland, Ohio; The Great Escape and Splash Water Kingdom, a combination theme and water park located in Lake George, New York; Kentucky Kingdom--The Thrill Park, located in Louisville, Kentucky; Riverside Park, a theme park located near Springfield, Massachusetts; two water parks operated under the name Waterworld/USA, located in Northern California; White Water Bay, a tropical water park located in Oklahoma City, Oklahoma; and Wyandot Lake, a water park which also includes "dry rides" located in Columbus, Ohio. The Company also manages Marine World Africa USA in Vallejo, California. BASIS OF PRESENTATION The Company's accounting policies reflect industry practices and conform to generally accepted accounting principles. The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and limited partnerships and limited liability companies in which the Company beneficially owns 100% of the interests. Intercompany transactions and balances have been eliminated in consolidation. The Company's investment in a partnership in which it does not own a controlling interest is accounted for using the equity method and included in other assets. CASH EQUIVALENTS Cash equivalents of $2,753,000 and $73,694,000 at December 31, 1996 and 1997, respectively, consist of short-term highly liquid investments with a remaining maturity as of purchase date of three months or less, which are readily convertible into cash. For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. INVENTORIES Inventories are stated at the lower of cost (first in, first out) or market and primarily consist of products for resale including merchandise and food and miscellaneous supplies including repair parts for rides and attractions. F-8 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (1) SUMMARY OF SIGNIFICANT POLICIES (CONTINUED) ADVERTISING COSTS Production costs of commercials and programming are charged to operations in the year first aired. The costs of other advertising, promotion, and marketing programs are charged to operations in the year incurred. The amounts capitalized at year-end are included in prepaid expenses. Advertising and promotions expense incurred was $5,700,000, $9,100,000, and $21,600,000 during 1995, 1996, and 1997, respectively. DEFERRED CHARGES The Company capitalizes all costs related to the issuance of debt with such costs included in deferred charges in the consolidated balance sheets. The amortization of such costs is recognized as interest expense under a method approximating the interest method over the life of the respective debt issue. As of December 31, 1996, approximately $626,000 of costs associated with the Company's January 1997 debt and equity offerings (notes 5 and 8) were also included in deferred charges. DEPRECIATION AND AMORTIZATION Buildings and improvements are depreciated over their estimated useful lives of approximately 30 years by use of the straight-line method. Furniture and equipment are depreciated using the straight-line method over 5-10 years. Rides and attractions are depreciated using the straight-line method over 5-25 years. Amortization of property associated with capitalized lease obligations is included in depreciation expense in the consolidated financial statements. Maintenance and repairs are charged directly to expense as incurred, while betterments and renewals are generally capitalized in the property accounts. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized. INTANGIBLE ASSETS Goodwill, which represents the excess of purchase price over fair value of net assets acquired, is amortized on a straight-line basis over the expected period to be benefited, generally 25 years. Impairment of goodwill is assessed whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. LONG-LIVED ASSETS The Company adopted the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," on January 1, 1996. SFAS No. 121 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The adoption of SFAS No. 121 did not have an impact on the Company's consolidated financial position or results of operations in 1996. F-9 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (1) SUMMARY OF SIGNIFICANT POLICIES (CONTINUED) INTEREST EXPENSE RECOGNITION Interest on notes payable is generally recognized as expense on the basis of stated interest rates. Capitalized lease obligations that do not have a stated interest rate or that have interest rates considered to be lower than prevailing market rates (when the obligations were incurred) are carried at amounts discounted to impute a market rate of interest cost. Total interest expense incurred was $6,074,000, $12,597,000, and $25,714,000 in 1995, 1996 and 1997, respectively. Interest expense in the accompanying consolidated statements of operations is shown net of interest income. INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. INCOME (LOSS) PER COMMON SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share." SFAS No. 128 revised the previous calculation methods and presentations of earnings per share. The statement requires that all prior-period earnings per share data be restated. The Company adopted SFAS No. 128 in the fourth quarter of 1997 as required by the statement. The effect of applying SFAS No. 128 was not material to the Company's prior period's earnings per share data. The previously reported amounts for earnings per share were replaced by basic earnings per share and diluted earnings per share. Basic earnings per share for the second quarter of 1997 and for the year 1996 are $.01 per share higher than the previously reported primary earnings per share amounts. The Company issued convertible preferred stock in 1995. Preferred stock dividends of $529,000 and $603,000, which were paid through additional issuances of common stock, were considered in determining net income (loss) applicable to common stock in 1995 and 1996, respectively. Under the provisions of SFAS No. 128, basic earnings per share is computed by dividing net income (loss) applicable to common stock by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if the Company's outstanding stock options were exercised (calculated using the treasury stock method). The following table reconciles the weighted average number of common shares outstanding used in the calculations of basic and diluted income per average common share outstanding for the years 1996 and 1997. The Company incurred a loss in 1995 and the effect on diluted loss per average common share F-10 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (1) SUMMARY OF SIGNIFICANT POLICIES (CONTINUED) outstanding of all contingently issuable common shares was antidilutive. Therefore, there is no difference in the number of shares used in the basic and diluted calculations for the year 1995.
YEAR ENDED DECEMBER 31, ------------------------ 1996 1997 ---------- ------------ Weighted average number of common shares outstanding-- basic....... 8,603,000 17,938,000 Dilutive effect of potential common shares issuable upon the exercise of employee stock options............................... 369,000 500,000 ---------- ------------ Weighted average number of common shares outstanding-- diluted..... 8,972,000 18,438,000 ---------- ------------ ---------- ------------
STOCK OPTIONS On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation," which permits entities to recognize over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB No. 25, "Accounting for Stock Issued to Employees," whereby compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. Companies which continue to apply the provisions of APB No. 25 are required by SFAS No. 123 to disclose pro forma net earnings and net earnings per share for employee stock option grants made in 1995, 1996 and future years as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to continue to apply the provisions of APB No. 25, and has provided the pro forma disclosures required by SFAS No. 123 in note 8. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECLASSIFICATIONS Reclassifications have been made to certain amounts reported in 1995 and 1996 to conform with the 1997 presentation. (2) FAIR VALUE OF FINANCIAL INSTRUMENTS The recorded amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and accrued interest payable approximate fair value because of the short maturity of these financial instruments. The fair value estimates, methods, and assumptions relating to the Company's other financial instruments are discussed in note 5. F-11 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (3) ACQUISITION OF THEME PARKS PRIOR TO JANUARY 1998 Pursuant to a merger agreement, on August 15, 1995, the Company acquired Funtime Parks, Inc. ("Funtime"), a company owning three regional theme parks, for an initial purchase price of approximately $60,000,000 in cash, with an additional amount of approximately $5,400,000 paid to the former shareholders as a postclosing adjustment related to the operating cash flows of the former Funtime parks after the acquisition date. The acquisition was accounted for as a purchase. As of the acquisition date and after giving effect to the purchase, $18,030,000 of deferred tax liabilities were recognized for the tax consequences attributable to the differences between the financial statement carrying amounts and the tax basis of Funtime's assets and liabilities. Approximately $13,500,000 of cost in excess of the fair value of the net assets acquired was recorded as goodwill. The accompanying 1995, 1996 and 1997 consolidated statements of operations reflect the results of Funtime from the date of acquisition (August 15, 1995). On October 31, 1996, the Company acquired all of the interests of a partnership which owned substantially all of the assets used in the operation of Elitch Gardens for $62,500,000 in cash. Thereupon, the partnership dissolved by operation of law. As a result, the assets were then directly owned by the Company. The transaction was accounted for as a purchase. In addition, the Company entered into a five-year non-competition agreement with the president of Elitch Gardens Company's general partner. Based upon the purchase method of accounting, the purchase price was primarily allocated to property and equipment with $4,506,000 of costs recorded as intangible assets, primarily goodwill. The general partner and a principal limited partner of Elitch Gardens Company have agreed severally to indemnify the Company for claims in excess of $100,000 in an amount up to $1,000,000 per partner. On November 19, 1996, the Company acquired all of the interests of two partnerships which owned substantially all of the assets used in the operation of the two Waterworld/USA water parks and a related family entertainment center for an aggregate cash purchase price of approximately $17,250,000, of which $862,500 was placed in escrow to fund potential indemnification claims by the Company. Thereupon, the partnerships dissolved by operation of law. As a result, the assets were then directly owned by the Company. The transaction was accounted for as a purchase. Based upon the purchase method of accounting, the purchase price was primarily allocated to property and equipment with $5,110,000 of costs recorded as intangible assets, primarily goodwill. On December 4, 1996, the Company acquired all of the interests in a limited liability company which owned substantially all of the assets used in the operation of The Great Escape and Splash Water Kingdom for a cash purchase price of $33,000,000. The transaction was accounted for as a purchase. In connection with the acquisition, the Company entered into a non-competition agreement and a related agreement with the former owner, providing for an aggregate consideration of $1,250,000. In addition, as a component of the transaction, the Company issued 9,091 shares of its common stock ($200,000) to an affiliate of the former owner. Based upon the purchase method of accounting, the purchase price was primarily allocated to property and equipment with $9,221,000 of costs recorded as intangible assets, primarily goodwill. The accompanying 1996 and 1997 consolidated statement of operations reflects the results of the Elitch Gardens, Waterworld/USA, and The Great Escape and Splash Water Kingdom acquisitions from their respective acquisition dates. F-12 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (3) ACQUISITION OF THEME PARKS PRIOR TO JANUARY 1998 (CONTINUED) On February 5, 1997, the Company acquired all of the outstanding common stock of Stuart Amusement Company ("Stuart"), the owner of Riverside Park and an adjacent multi-use stadium, for a purchase price of $22,200,000 ($1,000,000 of which was paid through issuance of 32,129 of the Company's common shares). The transaction was accounted for as a purchase. As of the acquisition date and after giving effect to the purchase, $6,623,000 of deferred tax liabilities were recognized for the tax consequences attributable to the differences between the financial statement carrying amounts and the tax basis of Stuart's assets and liabilities. Approximately $10,484,000 of cost in excess of the fair value of the net assets acquired was recorded as intangible assets, primarily goodwill. On November 7, 1997, the Company acquired all of the interests of a limited liability company which owned substantially all of the theme park assets of Kentucky Kingdom--The Thrill Park ("Kentucky Kingdom"), located in Louisville, Kentucky, for a purchase price of $64,000,000 of which $4,831,000 was paid through the issuance of 121,671 shares of the Company's common stock. The Company may be required to issue additional shares of common stock based upon the level of revenues at Kentucky Kingdom during 1998, 1999, and 2000. The acquisition was accounted for as a purchase. The purchase price was primarily allocated to property and equipment with $4,592,000 of costs recorded as intangible assets, primarily goodwill. The value of the additional shares, if any, will be recognized as additional goodwill. The accompanying 1997 consolidated statement of operations reflects the results of Stuart and Kentucky Kingdom from their respective acquisition dates. The following summarized pro forma results of operations assumes that for the year ended December 31, 1997, the Stuart and Kentucky Kingdom acquisitions and related transactions occurred as of the beginning of 1997 and for the year ended December 31, 1996, assumes that these acquisitions, the Elitch Gardens, The Great Escape and Splash Water Kingdom and Waterworld/USA acquisitions, and the related transactions occurred as of the beginning of 1996.
1996 1997 ---------- ---------- (UNAUDITED) (IN THOUSANDS) Total revenues........................................................ $ 175,224 $ 215,620 Net income............................................................ 12,436 15,210 Income per weighted average common share outstanding-- basic.......... .66 .81
F-13 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (4) PROPERTY AND EQUIPMENT Property and equipment, at cost, are classified as follows:
1996 1997 -------------- -------------- Land......................................................... $ 27,760,000 $ 40,099,000 Buildings and improvements................................... 106,302,000 159,661,000 Rides and attractions........................................ 112,379,000 254,969,000 Equipment.................................................... 16,734,000 31,137,000 -------------- -------------- Total...................................................... 263,175,000 485,866,000 Less accumulated depreciation................................ (17,845,000) (35,610,000) -------------- -------------- $ 245,330,000 $ 450,256,000 -------------- -------------- -------------- --------------
Included in property and equipment are costs and accumulated depreciation associated with capitalized leases as follows:
1996 1997 ------------ ------------ Cost.............................................................. $ 6,069,000 $ 6,386,000 Accumulated depreciation.......................................... (577,000) (826,000) ------------ ------------ $ 5,492,000 $ 5,560,000 ------------ ------------ ------------ ------------
(5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS At December 31, 1996 and 1997, long-term debt and capitalized lease obligations consist of:
1996 1997 -------------- -------------- Long term debt: Senior notes due 2003 (a).................................. $ 90,000,000 $ 90,000,000 Senior notes due 2007 (b).................................. -- 125,000,000 Credit facility (c)........................................ 57,574,000 -- -------------- -------------- Total long-term debt......................................... 147,574,000 215,000,000 Capitalized lease obligations: Capitalized lease obligations maturing 1998 through 2000, requiring aggregate annual lease payments ranging from approximately $20,000 to $548,000 including implicit interest at rates ranging from 9.875% to 14% and secured by equipment with a net book value of approximately $5,560,000 as of December 31, 1997....................... 3,260,000 2,026,000 -------------- -------------- Total.................................................... $ 150,834,000 $ 217,026,000 -------------- -------------- -------------- --------------
F-14 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS (CONTINUED) (a) The notes are senior unsecured obligations of the Company, with a $90,000,000 aggregate principal amount, and mature on August 15, 2003. The notes bear interest at 12% per annum payable semiannually on August 15 and February 15 of each year, commencing February 15, 1996. The notes are redeemable, at the Company's option, in whole or part, at any time on or after August 15, 1999, at varying redemption prices. Additionally, at any time prior to August 15, 1998, the Company may redeem in the aggregate up to 33 1/3% of the original aggregate principal amount of notes with the proceeds of one or more public equity offerings at a redemption price of 110% of the principal amount. These notes are guaranteed on a senior, unsecured, joint and several basis by all of the Company's principal operating subsidiaries. The proceeds of the notes were used in the Funtime acquisition and in the refinancing of previously existing indebtedness. The Company recognized a $230,000 loss on early extinguishment of debt during 1995. The loss was recorded, net of tax effect, as an extraordinary item. The indenture under which the notes were issued was amended January 21, 1997, in contemplation of the Company's January 1997 senior debt and equity offerings. The indenture places limitations on operations and sales of assets by the Company or its subsidiaries, permits incurrence of additional debt only in compliance with certain financial ratios, and limits the Company's ability to pay cash dividends or make other distributions to the holders of its capital stock or to redeem such stock. The indenture, as amended, permits the Company, subject to certain limitations, to incur additional indebtedness, including the $125,000,000 of indebtedness issued January 31, 1997 described below and secured senior revolving credit facility indebtedness of up to $75,000,000. All of the Company's subsidiaries, except for one indirect wholly owned subsidiary, Funtime-Famous Recipe, Inc., are full, unconditional, and joint and several guarantors of the notes. The assets and operations of Funtime-Famous Recipe, Inc. are inconsequential to the Company and its consolidated financial position and results of operations. Condensed financial statement information for the guarantors is not included herein, as the Company does not believe such information would be material to the understanding of the Company and its direct and indirect subsidiaries. (b) On January 31, 1997, the Company issued $125,000,000 of 9 3/4% senior notes due January 2007. The notes are senior unsecured obligations of the Company and equal to the Company's 2003 notes in priority upon liquidation. Interest is payable on January 15 and July 15 of each year, commencing July 15, 1997. The notes are redeemable, at the Company's option, in whole or in part, at any time on or after January 15, 2002, at varying redemption prices. Additionally, at any time prior to January 15, 2000, the Company may redeem in the aggregate up to 33 1/3% of the original aggregate principal amount of notes with the proceeds of one or more public equity offerings at a redemption price of 110% of the principal amount. The notes are guaranteed on a senior, unsecured, joint and several basis by all of the Company's principal operating subsidiaries. The indenture under which the notes were issued places limitations substantially similar to those of the Company's senior notes due in 2003. A portion of the proceeds were used to fully pay amounts outstanding under the Company's Credit Facility. (c) In connection with the 1996 acquisitions described in note 3, in October 1996 the Company entered into a senior secured credit facility (the "Credit Facility") with a syndicate of banks. The Credit F-15 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS (CONTINUED) Facility had an aggregate availability of $115,000,000 of which (i) up to $30,000,000 under the revolving credit facility (the "Revolving Credit Facility") was for working capital and general corporate purposes; (ii) up to $25,000,000 ("Facility A") was to finance capital expenditures prior to April 30, 1998; and (iii) up to $60,000,000 ("Facility B") was to finance certain acquisitions by the Company (including the acquisitions described in note 3), provided that at least 50% of the consideration for any such acquisition or improvements under Facility A or Facility B (collectively, the "Term Loan Facility") was required to have been funded by the Company. Interest rates per annum under the Credit Facility were equal to a base rate equal to the higher of the Federal Funds Rate plus 1/2% or the prime rate of Citibank N.A., in each case plus the Applicable Margin (as defined thereunder) or the London Interbank Offered Rate plus the Applicable Margin. Commitment fees approximated $53,000 and $620,000 in 1996 and 1997, respectively. The Revolving Credit Facility was to terminate October 31, 2002 (reducing to $15,000,000 on October 31, 2001) and borrowings under the Term Loan Facility were to mature October 31, 2001; however, aggregate principal payments of $7,500,000, $20,000,000 and $25,000,000 were to be required under the Term Loan Facility during 1998, 1999 and 2000, respectively. Borrowings under the Revolving Credit Facility were required to be fully paid for at least 30 days each year and were secured by substantially all of the Company's assets (other than real estate) and guarantees of the Company's principal subsidiaries. Borrowings under the Term Loan Facility were secured by the assets acquired with the proceeds thereof, and limited guarantees of the Company's principal subsidiaries. The Credit Facility contained restrictive covenants that, among other things, limited the ability of the Company and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; repurchase stock; make investments; engage in mergers or consolidations and engage in certain transactions with subsidiaries and affiliates. In addition, the Credit Facility required that the Company comply with certain specified financial ratios and tests, including ratios of total debt to earnings before interest, taxes and depreciation and amortization (EBITDA), interest expense to EBITDA, and fixed charges to EBITDA. On January 31, 1997, the Company and the syndicate of banks agreed to amend the Credit Facility. The $30,000,000 Revolving Credit Facility has a maturity date of December 31, 2001 (without reduction prior to that date). Additionally, following repayment of amounts that were then outstanding under the Term Loan Facility through the use of proceeds from the Company's January 1997 debt and equity offerings, the Term Loan Facility was converted into an $85,000,000 reducing revolving credit facility. The Term Loan Facility, as amended, will be available to fund acquisitions and make capital improvements. The amount available under the Term Loan Facility reduces to $75,000,000 on December 31, 1999, to $45,000,000 on December 31, 2000, and matures on December 31, 2001. Borrowings under the amended Credit Facility are secured by substantially all the assets of the Company and its subsidiaries (other than real estate) and are guaranteed by the Company's operating subsidiaries. The restrictive covenants are essentially the same as those of the original October 1996 credit facility. On February 9, 1998, the Company terminated the Credit Facility. No amounts were outstanding as of December 31, 1997 or as of the termination date. F-16 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS (CONTINUED) Annual maturities of long-term debt and capitalized lease obligations, adjusted to reflect the payment of the amounts outstanding under the Credit Facility through use of proceeds of the January 1997 note issuance, during the five years subsequent to December 31, 1997, are as follows:
1998.......................................................................... $ 795,000 1999.......................................................................... 412,000 2000.......................................................................... 723,000 2001.......................................................................... 67,000 2002 and thereafter........................................................... 215,029,000 -------------- $ 217,026,000 -------------- --------------
The fair value of the Company's long-term debt is estimated by using quoted prices or discounted cash flow analyses based on current borrowing rates for debt with similar maturities. Under the above assumptions the estimated fair value of long-term debt and capitalized lease obligations at December 31, 1996 and 1997, is approximately $160,000,000 and $236,000,000, respectively. (6) TERMINATION FEE During October 1997, the Company entered into an agreement with the limited partner of the partnership that owns the Six Flags Over Texas theme park. The general terms of the agreement were for the Company to become the managing general partner of the partnership, to manage the operations of the park, to receive a portion of the income from such operations, and to purchase limited partnership units over the term of the agreement. The provisions of the agreement also granted the Company an option to purchase all of the partnership interests in the partnership at the end of the agreement. The agreement was non-exclusive and contained a termination fee of $10,750,000 payable to the Company in the event the agreement was terminated. Subsequent to the Company's agreement with the limited partnership, the prior operator of the theme park also reached an agreement with the limited partnership. The Company received the termination fee in December 1997 and has included the termination fee, net of $2,386,000 of expenses associated with the transaction, as a component of other income (expense) in the accompanying 1997 consolidated statement of operations. F-17 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (7) INCOME TAXES Income tax expense (benefit) allocated to operations for 1995, 1996 and 1997 consists of the following:
CURRENT DEFERRED TOTAL ------------ ------------ ------------ 1995: U.S. Federal...................................... $ (44,000) $ (508,000) $ (552,000) State and local................................... -- (210,000) (210,000) ------------ ------------ ------------ $ (44,000) $ (718,000) $ (762,000) ------------ ------------ ------------ ------------ ------------ ------------ 1996: U.S. Federal...................................... $ -- $ 1,335,000 $ 1,335,000 State and local................................... 64,000 98,000 162,000 ------------ ------------ ------------ $ 64,000 $ 1,433,000 $ 1,497,000 ------------ ------------ ------------ ------------ ------------ ------------ 1997: U.S. Federal...................................... $ 2,505,000 $ 6,060,000 $ 8,565,000 State and local................................... 373,000 677,000 1,050,000 ------------ ------------ ------------ $ 2,878,000 $ 6,737,000 $ 9,615,000 ------------ ------------ ------------ ------------ ------------ ------------
Recorded income tax expense (benefit) allocated to operations differed from amounts computed by applying the U.S. federal income tax rate of 34% in 1995 and 1996 and 35% in 1997 to pretax income (loss) approximately as follows:
1995 1996 1997 ------------ ------------ ------------ Computed "expected" federal income tax expense (benefit)......................................... $ (614,000) $ 1,109,000 $ 8,300,000 Amortization of goodwill............................ 78,000 180,000 327,000 Other, net.......................................... (68,000) 87,000 200,000 Effect of state and local income taxes, net of federal tax benefit............................... (158,000) 121,000 788,000 ------------ ------------ ------------ $ (762,000) $ 1,497,000 $ 9,615,000 ------------ ------------ ------------ ------------ ------------ ------------
Substantially all of the Company's future taxable temporary differences (deferred tax liabilities) relate to the different financial accounting and tax depreciation methods and periods for property and equipment. The Company's net operating loss carryforwards, alternative minimum tax carryforwards, and deferred compensation amounts represent future income tax deductions (deferred tax assets). The tax effects of these temporary differences as of December 31, 1996 and 1997, are presented below:
1996 1997 ------------- ------------- Deferred tax assets before valuation allowance................. $ 11,496,000 $ 21,891,000 Less valuation allowance....................................... 1,196,000 1,196,000 ------------- ------------- Net deferred tax assets........................................ 10,300,000 20,695,000 Deferred tax liabilities....................................... 30,878,000 54,232,000 ------------- ------------- Net deferred tax liability..................................... $ 20,578,000 $ 33,537,000 ------------- ------------- ------------- -------------
The Company's deferred tax liability results from the financial carrying value for property and equipment being substantially in excess of the Company's tax basis in the corresponding assets. The F-18 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (7) INCOME TAXES (CONTINUED) Company's property and equipment are being depreciated primarily over a 7-year period for tax reporting purposes and a longer 20- to 25-year period for financial purposes. The faster tax depreciation has resulted in tax losses which can be carried forward to future years to offset future taxable income. Because most of the Company's depreciable assets' financial carrying value and tax basis difference will reverse before the expiration of the Company's net operating loss carryforwards and taking into account the Company's projections of future taxable income over the same period, management believes that it will more likely than not realize the benefits of these net future deductions. The Company has experienced ownership changes within the meaning of the Internal Revenue Code Section 382 and the regulations thereunder. As a result of the ownership changes, net operating loss carryforwards generated before the ownership changes can be deducted in subsequent periods only in certain limited situations. Accordingly, it is probable that the Company will not be able to use most of the net operating loss carryforwards generated prior to October 30, 1992. A valuation allowance for the pre-October 1992 net operating loss carryforwards has been established. The Company experienced an additional ownership change on June 4, 1996 as a result of the issuance of shares of common stock and the conversion of preferred stock into additional shares of common stock. This ownership change may limit the use of the Company's November 1992 through June 1996 net operating loss carryforwards in a given year; however, it is more likely than not that the post-October 1992 carryforwards will be fully utilized by the Company before their expiration. As of December 31, 1997, the Company has approximately $36,709,000 of net operating loss carryforwards available for federal income tax purposes which expire through 2012. Included in that total are pre-October 30, 1992, net operating loss carryforwards of which $3,400,000 are not expected to be utilized. Additionally, the Company has approximately $4,370,000 of alternative minimum tax credits which have no expiration date. (8) STOCKHOLDERS' EQUITY PREFERRED STOCK The Company has authorized 500,000 shares of preferred stock, $1 par value. During 1995, the Company issued 200,000 shares of Series A, 7% cumulative convertible preferred stock at $100 per share. During June 1996, the shares, including all dividends thereon, were converted into 2,560,928 common shares. The Company has agreed to provide the former preferred stockholders certain registration rights relative to the common stock issued upon conversion of the preferred stock. Holders of Series A preferred stock were entitled to receive cumulative dividends at an annual rate of $7 per share. At the Company's election, dividends were payable in cash and/or in additional Series A preferred stock. The terms of the Company's senior notes and credit facility limit the Company's ability to pay cash dividends. All dividends paid to the preferred stockholders were made by additional issuances of common stock at the time of the conversion into shares of common stock as described above. All shares of preferred stock rank senior and prior in right to all of the Company's now or hereafter issued common stock with respect to dividend payments and distribution of assets upon liquidation or dissolution of the Company. F-19 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (8) STOCKHOLDERS' EQUITY (CONTINUED) COMMON STOCK In August 1995, the Company issued 1,175,063 common shares in full exchange for the Company's $7,000,000 senior subordinated convertible notes and 310,370 common shares in full exchange for the Company's $2,095,000 junior subordinated term loan. The Company has agreed to provide the stockholders certain registration rights in the future. On April 4, 1996, a majority of the Company's common and preferred shareholders and the Company's board of directors approved a one-for-five reverse stock split effective May 6, 1996. The par value of common stock was increased to $.05 per share from $.01 per share. Additionally, the authorized common shares of the Company were changed to 30,000,000. The accompanying consolidated financial statements and notes to the consolidated financial statements reflect the reverse stock split as if it had occurred as of the earliest date presented. On June 4, 1996, and June 6, 1996, the Company issued 3,425,000 and 513,750, respectively, of its common shares resulting in net proceeds to the Company of $65,306,000. Additionally, on June 4, 1996, the Company exchanged 2,560,928 of its common shares for all 200,000 shares of its previously outstanding preferred stock. On January 31, 1997, the Company issued 6,900,000 of its common shares resulting in net proceeds to the Company of approximately $189,530,000. STOCK OPTIONS AND WARRANTS In 1993, 1994, 1995, and 1996, certain members of the Company's management were issued seven-year options to purchase 145,200, 36,000, 248,000, and 337,500, of its common shares, at an exercise price of $5.00, $7.50, $8.25, and $22.00 per share, respectively, under the Company's 1993, 1995 and 1996 Stock Option and Incentive Plans (the Plans). No stock options were issued during 1997. Stock options are granted with an exercise price equal to the stock's fair market value at the date of grant. These options may be exercised on a cumulative basis with 20% of the total exercisable on date of issuance and with an additional 20% being available for exercise on each of the succeeding anniversary dates. Any unexercised portion of the options will automatically and without notice terminate upon the seventh anniversary of the issuance date or upon termination of employment. At December 31, 1997, there were 503,300 additional shares available for grant under the Plans. The per share weighted-average fair value of stock options granted during 1995 and 1996 was $5.56 and $14.97 on the date of grant using the Black--Scholes option-pricing model with the following weighted-average assumptions: 1995--expected dividend yield 0%, risk-free interest rate of 5.5%, and an expected life of 5 years; 1996--expected dividend yield 0%, risk-free interest rate of 6.25%, and an expected life of 5 years. The Company applies APB Opinion No. 25 in accounting for its stock options and, accordingly, no compensation cost has been recognized for its stock options in the consolidated financial statements. Had the Company determined compensation cost based on the fair value at the grant date for its stock options F-20 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (8) STOCKHOLDERS' EQUITY (CONTINUED) under SFAS No. 123, the Company's net income (loss) would have been changed to the pro forma amounts indicated below:
1995 1996 1997 ------------- ------------ ------------- Net income (loss) applicable to common stock: As reported $ (1,714,000) $ 1,162,000 $ 14,099,000 Pro forma (1,880,000) 390,000 13,325,000 Income (loss) per average common share outstanding--basic: As reported $ (.44) $ .14 $ .79 Pro forma (.48) .05 .74
Pro forma net income (loss) applicable to common stock reflects only options granted in 1995 and 1996. Therefore, the full impact of calculating compensation cost for stock options under SFAS No. 123 is not reflected in the pro forma net income (loss) amounts presented above because compensation cost is reflected over the options' vesting period of 4 years and compensation cost for options granted prior to January 1, 1995 is not considered. Stock option activity during the periods indicated is as follows:
NUMBER OF WEIGHTED-AVERAGE SHARES EXERCISE PRICE ----------- ----------------- Balance at December 31, 1994.................................... 181,200 $ 5.50 Granted....................................................... 248,000 8.25 Exercised..................................................... -- -- Forfeited..................................................... -- -- Expired....................................................... -- -- ----------- ------ Balance at December 31, 1995.................................... 429,200 7.09 Granted....................................................... 337,500 22.00 Exercised..................................................... -- -- Forfeited..................................................... -- -- Expired....................................................... -- -- ----------- ------ Balance at December 31, 1996.................................... 766,700 13.65 Granted....................................................... -- -- Exercised..................................................... -- -- Forfeited..................................................... (2,000) 5.00 Expired....................................................... -- -- ----------- ------ Balance at December 31, 1997.................................... 764,700 $ 13.67 ----------- ------ ----------- ------
F-21 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (8) STOCKHOLDERS' EQUITY (CONTINUED) At December 31, 1997, the range of exercise prices and weighted-average remaining contractual life of outstanding options was $5.00 to $22.00 and 5.01 years, respectively. At December 31, 1995, 1996, and 1997, the number of options exercisable was 151,120, 304,460 and 455,800, respectively, and weighted-average exercise price of those options was $6.30, $10.01 and $11.25, respectively. In 1989, the Company's current chairman was issued a ten-year warrant to purchase 26,346 common shares (currently being held as treasury stock) at an exercise price of $1.00 per share and a ten-year warrant to purchase 18,693 common shares at an exercise price of $1.00 per share. SHARE RIGHTS PLAN On December 10, 1997, the Company's board of directors authorized a share rights plan. Under the plan, stockholders have one right for each share of common stock held. The rights become exercisable ten business days after (a) an announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 15% or more of the voting shares outstanding, or (b) the commencement or announcement of a person's or group's intention to commence a tender or exchange offer that could result in a person or group owning 15% or more of the voting shares outstanding. Each right entitles its holder (except a holder who is the acquiring person) to purchase 1/100 of a share of a junior participating series of preferred stock designated to have economic and voting terms similar to those of one share of common stock for $250.00, subject to adjustment. In the event of certain merger or asset sale transactions with another party or transactions which would increase the equity ownership of a shareholder who then owned 15% or more of the Company, each right will entitle its holder to purchase securities of the merging or acquiring party with a value equal to twice the exercise price of the right. The rights, which have no voting power, expire in 2008. The rights may be redeemed by the Company for $.01 per right until the right becomes exercisable. RESTRICTED STOCK GRANT The Company has issued 450,000 restricted common shares to members of the Company's senior management. The restrictions on the stock lapse ratably over a six-year term commencing January 1, 1998, generally based upon the continued employment of the members of management. The restrictions also lapse if any or all members are terminated without cause or if a change in control of the Company occurs. The fair value of the restricted shares, as determined at the date of grant, approximated $14,625,000 and will be recognized as an expense over the vesting term. (9) 401(K) PLAN The Company has a qualified, contributory 401(k) plan (the Plan). All regular employees are eligible to participate in the Plan if they have completed one full year of service and are at least 21 years old. The Company matches 100% of the first 2% and 25% of the next 6% of salary contributions made by employees. The accounts of all participating employees are fully vested. The Company recognized F-22 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (9) 401(K) PLAN (CONTINUED) approximately $32,000, $150,000 and $377,000 of expense in the years ended December 31, 1995, 1996 and 1997, respectively. (10) MARINE WORLD In April 1997, the Company became manager of Marine World, a marine and exotic wildlife park located in Vallejo, California, pursuant to a contract with an agency of the City of Vallejo under which the Company is entitled to receive an annual base management fee of $250,000 and up to $250,000 annually in additional fees based on park performance. In November 1997, the Company exercised its option to lease approximately 40 acres of land within the site for nominal rent and an initial term of 55 years (plus four ten-year and one four-year renewal options). At December 31, 1997, the Company is in the process of adding theme park rides and attractions on the leased land, which is located within the existing park, in order to create one fully-integrated regional theme park at the site. The Company is entitled to receive, in addition to the management fee, 80% of the cash flow generated by the combined operations at the park, after combined operating expenses and debt service on outstanding debt obligations relating to the park. The Company also has an option to purchase the entire site commencing in February 2002 at a purchase price equal to the greater of the then principal amount of certain debt obligations of the seller (expected to aggregate $52.0 million at February 2002) or the then fair market value of the seller's interest in the park (based on a formula relating to the seller's 20% share of Marine World's cash flow). The Company currently expects to exercise this purchase option when it becomes exercisable. (11) COMMITMENTS AND CONTINGENCIES The Company leases office space under a lease agreement which expires April 30, 2001. The lease requires minimum monthly payments over its term and also escalation charges for proportionate share of expenses as defined in the lease. An affiliate of the Company shares office space with the Company and has agreed to pay 50% of the rental payments. Rent expense recognized by the Company (after deduction of amounts paid by the affiliate) for the years ended December 1995, 1996 and 1997, aggregated $68,000, $64,000, and $64,000, respectively. The Company leases the sites of Wyandot Lake and each of the two Waterworld/USA locations with rent based upon percentages of revenues earned by each park. During 1995, 1996, and 1997, the Company recognized approximately $100,000, $385,000 and $1,110,000, respectively, of rental expense under these rent agreements. Total rental expense, including office space and park sites, was approximately $550,000, $1,227,000, and $2,229,000 for the years ended December 31, 1995, 1996, and 1997, respectively. On June 2, 1997, a water slide collapsed at the Company's Waterworld/USA park in Concord, California, resulting in one fatality and the park's closure for twelve days. Although the collapse and the resulting closure had a material adverse impact on that park's operating performance for 1997, as well as a lesser impact on the Company's Sacramento water park (which is also named "Waterworld/USA"), located approximately seventy miles from the Concord park, the Company's other parks were not adversely affected. The Company has recovered all of the Concord park's operating shortfall under its business interruption insurance. In addition, the Company believes that its liability insurance coverage should be F-23 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (11) COMMITMENTS AND CONTINGENCIES (CONTINUED) adequate to provide for any personal injury liability which may ultimately be found to exist in connection with the collapse. The Company is party to various legal actions arising in the normal course of business. Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, the Company's estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve amounts that would be material to consolidated financial condition, operations, or liquidity after consideration of recorded accruals. (12) CERTAIN TRANSACTIONS During 1995, in connection with the acquisition of Funtime and the issuance of the $90,000,000 senior notes, the Company paid investment banking and financial advisory fees in the amount of $800,000 and $475,000 to Lepercq, de Neuflize & Co. Incorporated (Lepercq) and Hanseatic Corporation (Hanseatic), respectively. Two directors of the Company are director and treasurer, respectively, of Lepercq and Hanseatic. (13) PROPOSED ACQUISITIONS OF ADDITIONAL THEME PARKS On December 15, 1997, the Company entered into an agreement with the majority shareholders of Walibi, S.A. ("Walibi"), to purchase the outstanding stock of Walibi held by the majority shareholders. The purchase agreement commits the Company to tender for the remaining stock. The estimated aggregate purchase price of the Walibi common stock plus the debt of Walibi to be assumed by the Company will approximate $140,000,000. The acquisition will be accounted for using the purchase method of accounting and is expected to be completed in March 1998. On February 9, 1998, the Company agreed to purchase 100% of the capital stock of Six Flags Entertainment Corporation for $965,000,000 (subject to adjustment) and the assumption of approximately $770,000,000 of indebtedness. The purchase price is payable in cash or, at the Company's option, cash and up to $200,000,000 of preferred stock. The Company has filed registration statements to offer equity and debt securities to fund the cash portion of the purchase price. The acquisition will be accounted for using the purchase method of accounting and is expected to be completed in April 1998. If the agreement to purchase Six Flags is terminated, except as a result of legal or governmental restrictions or by mutual consent, the Company may be required to pay a termination fee of $25,000,000. F-24 PREMIER PARKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995, 1996 AND 1997 (14) QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Following is a summary of the unaudited interim results of operations for the years ended December 31, 1996 and 1997:
1996 ------------------------------------------------------------------------ FIRST SECOND THIRD FOURTH FULL QUARTER QUARTER QUARTER QUARTER YEAR ------------ ------------- ------------- ------------- ------------- Revenue................................ $ 2,430,000 $ 26,953,000 $ 60,409,000 $ 3,655,000 $ 93,447,000 Net income (loss) applicable to common stock................................ (5,584,000) (744,000) 16,238,000 (8,748,000) 1,162,000 Net income (loss) applicable to common stock per share: Basic.............................. $ (1.15) $ (.11) $ 1.43 $ (.77) $ .14 Diluted............................ $ (1.15) $ (.11) $ 1.39 $ (.77) $ .13
1997 -------------------------------------------------------------------------- FIRST SECOND THIRD FOURTH FULL QUARTER QUARTER QUARTER QUARTER YEAR ------------ ------------- -------------- ------------- -------------- Revenue............................. $ 4,264,000 $ 62,468,000 $ 120,014,000 $ 7,158,000 $ 193,904,000 Net income (loss) applicable to common stock...................... (9,742,000) 5,698,000 27,237,000 (9,094,000) 14,099,000 Net income (loss) applicable to common stock per share: Basic........................... $ (.61) $ .31 $ 1.49 $ (.48) $ .79 Diluted......................... $ (.61) $ .30 $ 1.45 $ (.48) $ .76
F-25 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Six Flags Entertainment Corporation We have audited the accompanying consolidated balance sheets of Six Flags Entertainment Corporation as of December 28, 1997 and December 29, 1996 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 28, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Six Flags Entertainment Corporation at December 28, 1997 and December 29, 1996 and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 28, 1997 in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, New York February 14, 1998 F-26 SIX FLAGS ENTERTAINMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997 (IN THOUSANDS)
1995 1996 1997 ---------- ---------- ---------- Revenues: Operating services......................................................... $ 366,665 $ 405,558 $ 427,569 Sales of products.......................................................... 255,030 268,150 271,046 Other...................................................................... 7,762 7,168 10,051 ---------- ---------- ---------- 629,457 680,876 708,666 ---------- ---------- ---------- Costs and expenses: Operating, general and administrative expenses............................. 388,137 419,756 443,359 Cost of products sold...................................................... 91,138 105,988 101,239 Depreciation............................................................... 51,848 55,090 58,902 Amortization............................................................... 31,596 32,327 25,591 Interest, net.............................................................. 63,282 76,530 84,430 Minority interest.......................................................... -- 1,297 (1,147) ---------- ---------- ---------- 626,001 690,988 712,374 ---------- ---------- ---------- Income (loss) before income taxes............................................ 3,456 (10,112) (3,708) Income tax expense........................................................... 6,743 5,137 -- ---------- ---------- ---------- Net loss..................................................................... $ (3,287) $ (15,249) $ (3,708) ---------- ---------- ---------- ---------- ---------- ----------
See notes to consolidated financial statements. F-27 SIX FLAGS ENTERTAINMENT CORPORATION CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 29, 1996 AND DECEMBER 28, 1997 (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1996 1997 ---------- ---------- ASSETS Current assets: Cash and cash equivalents................................................................. $ 45,587 $ 16,805 Receivables, net.......................................................................... 6,559 3,258 Receivable from affiliate................................................................. -- 4,000 Inventories, net.......................................................................... 13,526 14,338 Maintenance supplies...................................................................... 6,620 8,051 Prepaid expenses and other current assets................................................. 4,150 3,848 ---------- ---------- Total current assets...................................................................... 76,442 50,300 Property and equipment, net............................................................... 489,068 492,137 Investment in co-venture parks, net....................................................... 19,135 78,370 Excess of cost over net assets acquired, net.............................................. 205,117 196,928 Deferred financing costs, net............................................................. 24,278 20,171 Other assets, net......................................................................... 12,727 26,784 ---------- ---------- Total assets.............................................................................. $ 826,767 $ 864,690 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable.......................................................................... $ 29,518 $ 21,055 Accrued liabilities....................................................................... 49,885 43,390 Current portion of long-term debt......................................................... 38,332 26,130 Short-term borrowings..................................................................... 1,585 30,503 ---------- ---------- Total current liabilities................................................................. 119,320 121,078 Long-term debt............................................................................ 714,993 753,369 Other long-term liabilities............................................................... 14,728 12,420 Minority interest......................................................................... 1,297 150 Commitments and contingencies Stockholders' Deficit: Class A Convertible Preferred Stock ($.01 par value per share: 6,100,000 shares authorized; 5,100,000 shares issued and outstanding at December 29, 1996 and December 28, 1997; $243,572 and $273,499 aggregate liquidation preference at December 29, 1996 and December 28, 1997, respectively).................................................... 51 51 Class B Convertible Preferred Stock ($.01 par value per share; 4,900,000 shares authorized, issued and outstanding at December 29, 1996 and December 28, 1997; $196,000 aggregate liquidation preference at December 29, 1996 and December 28, 1997)............ 49 49 Class A Common Stock ($.01 par value per share; 6,100,000 shares authorized; 51 shares issued and outstanding at December 29, 1996 and December 28, 1997)...................... -- -- Class B Common Stock ($.01 par value per share: 20,000,000 shares authorized; 49 shares issued and outstanding at December 29, 1996 and December 28, 1997)...................... -- -- Additional paid-in capital................................................................ 35,983 40,217 Accumulated deficit....................................................................... (56,159) (59,867) Unearned compensation reserved stock awards............................................... (3,495) (2,777) ---------- ---------- Total stockholders' deficit............................................................... (23,571) (22,327) ---------- ---------- Total liabilities and stockholders' deficit............................................... $ 826,767 $ 864,690 ---------- ---------- ---------- ----------
See notes to consolidated financial statements. F-28 SIX FLAGS ENTERTAINMENT CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997 (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
PREFERRED STOCK A PREFERRED STOCK B COMMON STOCK ADDITIONAL ---------------------- ---------------------- ------------------------ PAID-IN ACCUMULATED SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT --------- ----------- --------- ----------- ----------- ----------- ----------- ------------ Balance at January 1, 1995... -- $ -- -- $ -- 300 $ -- $ 122,320 $ (37,623) Net loss..................... -- -- -- -- -- -- -- (3,287) 1995 Refinancing............. -- -- -- -- -- -- (90,843) -- 1995 Recapitalization........ 5,100,000 51 4,900,000 49 (200) -- (100) -- Reserved stock awards........ -- -- -- -- -- -- 4,372 -- Amortization of unearned compensation............... -- -- -- -- -- -- -- -- --------- ----- --------- ----- --- ----- ----------- ------------ Balance at December 31, 1995....................... 5,100,000 51 4,900,000 49 100 -- 35,749 (40,910) Net loss..................... -- -- -- -- -- -- -- (15,249) Reserved stock awards........ -- -- -- -- -- -- 234 -- Amortization of unearned compensation............... -- -- -- -- -- -- -- -- --------- ----- --------- ----- --- ----- ----------- ------------ Balance at December 29, 1996....................... 5,100,000 51 4,900,000 49 100 -- 35,983 (56,159) Net loss..................... -- -- -- -- -- -- -- (3,708) Reserved stock awards........ -- -- -- -- -- -- 234 -- Amortization of unearned compensation............... -- -- -- -- -- -- -- -- Capital contribution......... -- -- -- -- -- -- 4,000 -- --------- ----- --------- ----- --- ----- ----------- ------------ Balance at December 28, 1997....................... 5,100,000 $ 51 4,900,000 $ 49 100 $ -- $ 40,217 $ (59,867) --------- ----- --------- ----- --- ----- ----------- ------------ --------- ----- --------- ----- --- ----- ----------- ------------ STOCKHOLDERS' UNEARNED EQUITY COMPENSATION (DEFICIT) --------------- ------------- Balance at January 1, 1995... $ -- $ 84,697 Net loss..................... -- (3,287) 1995 Refinancing............. -- (90,843) 1995 Recapitalization........ -- -- Reserved stock awards........ (4,372) -- Amortization of unearned compensation............... 220 220 ------- ------------- Balance at December 31, 1995....................... (4,152) (9,213) Net loss..................... -- (15,249) Reserved stock awards........ (234) -- Amortization of unearned compensation............... 891 891 ------- ------------- Balance at December 29, 1996....................... (3,495) (23,571) Net loss..................... -- (3,708) Reserved stock awards........ (234) -- Amortization of unearned compensation............... 952 952 Capital contribution......... -- 4,000 ------- ------------- Balance at December 28, 1997....................... $ (2,777) $ (22,327) ------- ------------- ------- -------------
See notes to consolidated financial statements. F-29 SIX FLAGS ENTERTAINMENT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997 (IN THOUSANDS)
1995 1996 1997 ----------- ---------- ---------- OPERATING ACTIVITIES: Net loss..................................................................... $ (3,287) $ (15,249) $ (3,708) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization.............................................. 83,444 87,417 84,493 Noncash interest expense................................................... 26,998 43,688 48,552 Minority interest.......................................................... -- 1,297 (1,147) Inventory reserve.......................................................... -- 1,077 -- Deferred income taxes...................................................... 806 5,137 -- Changes in current assets and liabilities: Receivables................................................................ 3,068 401 3,301 Inventories................................................................ (1,518) (3,648) (812) Maintenance supplies....................................................... (303) (914) (1,431) Prepaid expenses and other current assets.................................. (1,308) 43 302 Accounts payable and accrued liabilities................................... 17,820 9,286 (14,958) Other, net................................................................... (1,133) 67 (4,289) ----------- ---------- ---------- Net cash provided by operating activities.................................... 124,587 128,602 110,303 ----------- ---------- ---------- INVESTING ACTIVITIES: Investment in co-venture parks............................................... (8,729) (5,548) (10,654) Cost of acquisitions, including real estate held for development............. (39,593) -- -- Purchase of co-venture limited partnership units............................. -- -- (62,678) Prepayment of SFOT partnership obligation.................................... -- -- (10,725) Purchase of property and equipment........................................... (45,578) (75,627) (67,675) Proceeds from sale of land and property...................................... -- -- 2,000 ----------- ---------- ---------- Net cash used in investing activities........................................ (93,900) (81,175) (149,732) ----------- ---------- ---------- FINANCING ACTIVITIES: Net proceeds from related party debt......................................... 65,969 -- -- Proceeds from revolving lines of credit...................................... 2,205 41,673 97,936 Payments on revolving lines of credit........................................ (2,124) (40,881) (58,521) Payments on term loans....................................................... (55,500) (53,000) (59,000) Proceeds from other debt..................................................... -- -- 30,232 ----------- ---------- ---------- Net cash provided by (used in) financing activities.......................... 10,550 (52,208) 10,647 ----------- ---------- ---------- Increase (decrease) in cash and cash equivalents............................. 41,237 (4,781) (28,782) Cash and cash equivalents at beginning of year............................... 9,131 50,368 45,587 ----------- ---------- ---------- Cash and cash equivalents at end of year..................................... $ 50,368 $ 45,587 $ 16,805 ----------- ---------- ---------- ----------- ---------- ----------
See notes to consolidated financial statements. F-30 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PRESENTATION Six Flags Entertainment Corporation ("SFEC", and together with its subsidiaries, "Six Flags"), a Delaware corporation, was formed in 1991 to effect the acquisition of S.F. Holdings, Inc. ("Holdings") and its subsidiary Six Flags Theme Parks Inc. ("SFTP"). SFEC owns 100% of the Common Stock of Holdings, which owns 100% of the Common Stock of SFTP. Prior to June 23, 1995, SFEC was wholly owned by Time Warner Entertainment Company, L.P., a Delaware limited partnership ("TWE"). On June 23, 1995, TWE caused SFEC to undergo a recapitalization and TWE sold 51% of its interest in SFEC to an investor group (the "Investor Group") led by Boston Ventures Management, Inc., a private investment management firm (the "1995 Recapitalization"). In connection with the 1995 Recapitalization, SFEC consummated a series of transactions (the "1995 Refinancing", together with the 1995 Recapitalization, the "1995 Refinancing and Recapitalization"). SFEC and Holdings are holding companies which have no significant operations independent of their ownership of SFTP. Accordingly, the consolidated financial statements of Six Flags consist principally of the assets, liabilities, operations and cash flows of SFTP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain amounts have been reclassified to conform to the current year presentation. Six Flags operates twelve "Six Flags" branded theme parks in eight locations throughout the United States. Nine of the theme parks--Six Flags Great Adventure and Wild Safari Animal Park (New York-Philadelphia), Six Flags Great America (Chicago-Milwaukee), Six Flags Magic Mountain and Six Flags Hurricane Harbor (Los Angeles) (collectively "Six Flags California"), Six Flags Astroworld and Six Flags Waterworld (Houston) (collectively "Six Flags Houston"), Six Flags St. Louis (St. Louis) and Six Flags Hurricane Harbor (Dallas-Ft. Worth)--are owned directly by SFTP. Six Flags Fiesta Texas located in San Antonio, Texas is leased by a limited partnership of which a subsidiary of SFTP is a general partner and manages the park. Two parks--Six Flags Over Texas (Dallas-Ft. Worth) and Six Flags Over Georgia (Atlanta)--are operated by SFTP pursuant to partnership agreements (the "co-venture parks"). Six Flags Over Texas is owned by a limited partnership ("Texas Flags") of which the managing general partner is a wholly-owned subsidiary of SFTP. Six Flags Over Georgia is owned by a limited partnership of which the managing general partner is SFOG II, Inc., a Delaware corporation which is a wholly-owned subsidiary of SFEC ("SFOG II"). Six Flags has entered into new partnership agreements for the management of Six Flags Over Georgia and Six Flags Over Texas through 2026 and 2027, respectively. See the Investment In Co-venture Parks footnote for a description of these new agreements. In March 1996, SFTP completed arrangements pursuant to which SFTP, through wholly-owned subsidiaries, manages the Fiesta Texas theme park located in San Antonio, Texas ("Fiesta Park"). The Fiesta Park, which is owned by a subsidiary of La Cantera Development Company ("La Cantera"), an affiliate of United Service Automobile Association ("USAA"), was leased to a newly formed limited partnership (the "Fiesta Partnership") in which SFTP, acting through wholly-owned subsidiaries (the "Six Flags GP"), is a general partner with an approximate 60% equity interest. La Cantera is the limited partner with a 40% equity interest. In connection with these arrangements, the Fiesta Partnership obtained an option to purchase the tangible and intangible assets related to the Fiesta Park as well as the limited partner's interest in the Fiesta Partnership. In addition, Six Flags GP receives an annual management fee and intellectual property fee in connection with the management of the Fiesta Park. The management fee is based on revenues for 1996 and 1997 and will be based on operating profit thereafter. The intellectual property fee is based on revenues. F-31 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SFTP's consolidated results for 1996 include a full year of Fiesta Park's operations. The following unaudited proforma financial information for the 1995 fiscal year gives effect to consolidation of Fiesta Park as if it had occurred at the beginning of the 1995 fiscal year. These proforma results are not necessarily indicative of what the results would have been had SFTP actually managed the park during 1995. Proforma revenues and net loss would have been $672 million and $8.6 million, respectively, if the consolidation of the Fiesta Park occurred at the beginning of the 1995 fiscal year. The 1995, 1996, and 1997 fiscal years each consisted of 52 weeks. The 1995 fiscal year ended on December 31, 1995, while the 1996 and 1997 fiscal years ended on December 29, 1996 and December 28, 1997, respectively. 1995 REFINANCING AND RECAPITALIZATION The 1995 Refinancing and Recapitalization was effected through the following transactions consummated in June 1995: 1. SFEC effected a recapitalization (the "Recapitalization") pursuant to which its Common Stock (all of which was owned by TWE) was recapitalized into shares of Class A Convertible Preferred Stock (representing approximately 51% of the equity), Class B Convertible Preferred Stock (representing approximately 49% of the equity) and Common Stock (the "SFEC Common Stock"), which has nominal value. 2. TWE sold to the Investor Group all of the outstanding shares of SFEC's Class A Convertible Preferred Stock and 51% of the outstanding shares of the SFEC Common Stock. 3. SFTP borrowed $475.0 million on a term basis pursuant to a credit agreement dated as of June 23, 1995 (the "Credit Agreement") with a group of banks. 4. SFTP issued $285.0 million aggregate principal amount of 12.25% Senior Subordinated Discount Notes due 2005 (the "12.25% Notes") at an aggregate issue price of $200.0 million. 5. SFTP paid TWE $640 million in connection with (i) the repurchase of all assets previously sold to TWE as part of the sale and leaseback transactions, (ii) the repayment of intercompany indebtedness and related accrued interest, (iii) a payment as required under a license agreement entered into with TWE and (iv) a payment in consideration of TWE entering into a non-competition agreement for the benefit of Six Flags. The total amount paid to TWE in excess of the outstanding indebtedness to TWE has been accounted for as an equity transaction. 6. SFTP incurred approximately $27.5 million in deferred financing fees and approximately $7.5 million in transaction fees related to the 1995 Refinancing and Recapitalization. The amount paid for transaction fees has been accounted for as an equity transaction. In addition, the 2% participation in a trust, which holds all TWE-owned aircraft, ceased upon the consummation of the 1995 Refinancing and Recapitalization. The elimination of the remaining net book value of this 2% interest (approximately $1.8 million) has been accounted for as an equity transaction. ACCOUNTING AND FINANCIAL REPORTING POLICIES REVENUES AND EXPENSES Operating services revenue consists primarily of theme park admissions and parking, corporate sponsorships and other in-park services. Sales of products consist primarily of revenues from the in-park sales of food and beverages, merchandise, gifts and souvenirs, games of skill and gasoline. Operating F-32 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) expenses consist of theme park employee compensation and benefits (approximately 50%) and advertising media and production (approximately 10%-15%). Park maintenance materials and services, utilities, operating supplies, insurance and other operating service costs account for the remainder. Cost of products sold consists of the cost of food and beverages, gifts and souvenirs, games of skill prizes and gasoline sold. During 1997, Six Flags reversed approximately $7.3 million of expense accruals no longer deemed necessary. Such amounts have been reflected as expense reductions of $0.7 million in cost of products sold, and $6.6 million in operating, general and administrative expenses in the current year statement of operations. INCOME TAXES Six Flags uses the liability method of accounting for income taxes required by FASB Statement No. 109, "Accounting for Income Taxes". CASH EQUIVALENTS Cash equivalents consist of short-term, highly liquid investments purchased with a maturity date of three months or less. INVENTORIES Inventories, primarily products held for resale, are valued at the lower of cost or market. Cost is determined principally using the first-in, first-out method. OFF-SEASON EXPENSES Theme park operations are highly seasonal with substantially all revenues being generated in the second and third quarters. Such revenues are recognized when earned, while cost of products sold, general and administrative expenses, interest on debt and income taxes are recognized when incurred. All other interim period costs related to park operations are considered off-season expenses and are charged to interim periods based upon estimated annual revenues. No costs are deferred at the end of a fiscal year. PROPERTY AND EQUIPMENT Property and equipment, which includes land, rides and attractions, buildings and improvements, and other (principally machinery and equipment) are stated at cost (fair value at the date of acquisition). Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. The estimated lives used in computing depreciation are: Rides and attractions........................................ 3 to 25 years 10 to 33 Buildings and improvements................................... years Other........................................................ 3 to 15 years
INVESTMENT IN CO-VENTURE PARKS Six Flags, through two subsidiaries, is the general partner in two theme park limited partnerships. Six Flags accounts for the parks as co-ventures, i.e., the revenues and expenses (excluding partnership depreciation) are included in Six Flags' consolidated statements of operations and the net amounts distributed to the limited partners are deducted as expenses. Except for the limited partnership units purchased pursuant to the tender offer, Six Flags has no rights or title to the co-venture park assets or to F-33 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) the proceeds from any sale of the co-venture parks' assets. Accordingly, Six Flags' consolidated balance sheets do not include any of the co-venture parks' assets. The investment in co-venture parks included in the consolidated balance sheets represents (i) Six Flags' interest in the estimated future cash flows from the operations of the co-venture parks and is amortized over the life of the partnership agreements, and (ii) the value of Limited Partnership units purchased pursuant to the SFOG tender offer. The co-venture parks contributed revenues of $160.6 million, $152.0 million and $176.8 million to Six Flags in the fiscal years 1995, 1996 and 1997, respectively. See the Investment In Co-venture Parks footnote below for a description of the new agreements extending the management of Six Flags Over Georgia and Six Flags Over Texas, each for another 30-year term. DEFERRED FINANCING COSTS Deferred financing costs consist of debt issuance costs incurred in connection with the Credit Agreement, the issuance of the 12.25% Notes and the issuance of the $192.3 million aggregate principal amount of Zero Coupon Senior Notes due 1999 (the "Zero Coupon Notes") in December 1992. Deferred financing costs are amortized over the life of the related debt. Accumulated amortization of deferred financing costs at December 29, 1996 and December 28, 1997 amounted to $8.3 million and $12.0 million, respectively. EXCESS OF COST OVER NET ASSETS ACQUIRED The excess of cost over net assets acquired is amortized over periods not exceeding forty years using the straight-line method. Accumulated amortization at December 29, 1996 and December 28, 1997 amounted to $39.6 million and $47.7 million, respectively. OTHER ASSETS Other assets consist primarily of intangible assets, which are amortized over periods of two to thirteen years using the straight-line method. Additionally, in 1997, other assets include a $10.7 million prepayment in accordance with the Texas Agreements. See the Investment In Co-venture Parks footnote. REVENUE RECOGNITION In general, Six Flags recognizes operating revenue from ticket sales when guests are admitted to the parks. Theme park operations are highly seasonal and substantially all revenues are generated in the second and third quarters of the fiscal year. CONCENTRATIONS OF CREDIT RISKS Financial instruments, which potentially subject Six Flags to concentrations of credit risk, consist primarily of cash and cash equivalents and receivables. Six Flags places its cash and cash equivalents with high credit, quality institutions and minimizes its credit risk exposure relating to receivables through formal credit policies and monitoring procedures. FINANCIAL INSTRUMENTS The fair value of financial instruments, such as long-term debt, is disclosed when significantly different from the recorded values of such instruments in the consolidated balance sheets pursuant to FASB Statement No. 107, "Disclosure about Fair Value of Financial Instruments." Six Flags generally estimates F-34 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) the fair value of its long-term debt by using discounted cash flow analyses based on Six Flags' current borrowing rates for debt with similar maturities, or by quoted market prices for the same issues. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. IMPAIRMENT OF LONG-LIVED ASSETS The carrying value of long-lived assets, including intangibles, is reviewed if the facts and circumstances, such as significant declines in revenues, earnings or cash flows, or material adverse changes in the business climate, suggest that it may be impaired. Six Flags performs its review by comparing the book value relating to long-lived assets to the estimated future undiscounted cash flows relating to such long-lived assets. If any impairment in the value of the long- lived assets is indicated, the carrying value of the long-lived assets is adjusted to reflect such impairment calculated based on the discounted cash flows of the impaired assets or the assets fair value, as appropriate. ADVERTISING Advertising costs are expensed as incurred or the first time the advertising takes place. Six Flags incurred advertising costs of approximately $53.4 million, $64.6 million and $61.1 million in the 1995, 1996 and 1997 fiscal years, respectively INVENTORIES Inventories at December 29, 1996 and December 28, 1997 consist of the following (in thousands):
1996 1997 --------- --------- Merchandise, gifts and souvenirs........................................ $ 10,892 $ 12,029 Food and beverages...................................................... 1,242 948 Games................................................................... 1,158 1,133 Other................................................................... 234 228 --------- --------- $ 13,526 $ 14,338 --------- --------- --------- ---------
F-35 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) PROPERTY AND EQUIPMENT Property and equipment at December 29, 1996 and December 28, 1997 consist of the following (in thousands):
1996 1997 ----------- ----------- Land................................................................ $ 55,218 $ 50,582 Buildings and improvements.......................................... 249,066 263,475 Rides and attractions............................................... 364,770 389,798 Other............................................................... 8,239 9,033 Construction in progress............................................ 36,950 55,368 ----------- ----------- 714,243 768,256 Less accumulated depreciation....................................... (225,175) (276,119) ----------- ----------- $ 489,068 $ 492,137 ----------- ----------- ----------- -----------
INVESTMENT IN CO-VENTURE PARKS Changes in the investment in co-venture parks at December 29, 1996 and December 28, 1997 are as follows (in thousands):
1996 1997 ---------- ---------- Balance at beginning of period........................................ $ 34,404 $ 19,135 Capital additions made by the co-venture parks........................ 5,436 16,147 Operations, net of distributions to the limited partners.............. 18,603 18,633 Distributions to Six Flags............................................ (18,491) (24,126) Amortization.......................................................... (20,817) (11,515) ---------- ---------- 19,135 18,274 ---------- ---------- Purchase of SFOG limited partnership units............................ -- 62,678 Amortization.......................................................... -- (2,582) ---------- ---------- -- 60,096 ---------- ---------- $ 19,135 $ 78,370 ---------- ---------- ---------- ----------
F-36 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SIX FLAGS OVER GEORGIA On March 18, 1997, Six Flags, Time Warner and TWE completed arrangements pursuant to which SFOG II will manage the Six Flags Over Georgia Park through 2026. Under the agreements governing the new arrangements (the "Georgia Agreements"), the Six Flags Over Georgia Park is owned by a newly formed limited partnership ("Six Flags Over Georgia II") of which SFOG II is the managing general partner. The key elements of the new arrangements are as follows: (i) the limited partner (which is not affiliated with Six Flags) will receive minimum annual distributions of $18.5 million in 1997, increasing each year thereafter in proportion to increases in the cost of living; thereafter, SFOG II will be entitled to receive from available cash (after provision for reasonable reserves and after capital expenditures per annum of approximately 6% of prior year revenues) a management fee equal to 3% of the prior year's gross revenues; and, thereafter, any additional available cash will be distributed 95% to SFOG II and 5% to the limited partner; (ii) in the second quarter of 1997, a subsidiary of SFTP (the "SFTP-SFOG Subsidiary") and a subsidiary of SFEC (the "SFEC-SFOG Subsidiary") made a tender offer for partnership interests ("SFOG LP Units") in Six Flags Fund, Ltd. (L.P.), which owns 99% of the limited partner of Six Flags Over Georgia II, that valued the Six Flags Over Georgia Park at the greater of $250 million or 8.0 times 1997 EBITDA of the Six Flags Over Georgia Park (the "SFOG Tender Offer Price"); (iii) commencing in 1998, and on an annual basis thereafter, the SFTP-SFOG Subsidiary and the SFEC-SFOG Subsidiary will offer to purchase additional SFOG LP Units at a price based on the greater of the SFOG Tender Offer Price or the EBITDA of the Six Flags Over Georgia Park for the prior four years (provided that no more than $50 million of such SFOG LP Units will be acquired by the SFTP-SFOG Subsidiary); and (iv) in 2026, Six Flags and its affiliates will have the option to acquire the Six Flags Over Georgia Park at a price based on the Tender Offer Price, increased in proportion to the increase in the cost of living between December 1996 and December 2026. SFEC, SFTP, and TWE have guaranteed certain of the obligations (including the minimum annual distributions noted in (i) above) of SFOG II and Six Flags Over Georgia II under the Georgia Agreements, and in consideration therefor, SFOG II has agreed to assign to SFTP at least 90% of the cash distributions it receives from time to time from Six Flags Over Georgia II. Six Flags continues to account for the Six Flags Over Georgia Park as a co-venture and includes the revenues and expenses of Six Flags Over Georgia II partnership (excluding partnership depreciation) in Six Flags' consolidated financial statements and deducts as expenses the net amounts distributed to the limited partners. As a result of entering into the Georgia Agreements, Six Flags expects a reduction in net income and net cash flow allocation from Six Flags Over Georgia II. On May 6, 1997, in connection with the closing of the tender offer described above, the SFTP-SFOG Subsidiary and the SFEC-SFOG Subsidiary purchased approximately 17% and 8%, respectively, of SFOG LP Units for approximately $42.4 million and $20.3 million, respectively. The purchase of SFOG LP Units entitles each such purchaser the right to receive minimum annual distributions and any residual distributions (5% of available cash after the minimum annual distributions and management fee distributions) in proportion to the percentage amounts purchased. The purchase of SFOG LP Units by the SFTP-SFOG Subsidiary was financed through a drawdown on Six Flags' secured revolving line of credit available for acquisitions under the Credit Agreement and the purchase of SFOG LP Units by the SFEC-SFOG Subsidiary was financed through loans from TWE, which were subsequently refinanced with demand loans from Chase Bank. See Long-Term Debt footnote. In connection with the purchase of the SFOG LP Units, approximately $49.8 million of the excess of cost over net assets acquired associated with this investment is being amortized over 30 years. The net F-37 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) investment in SFOG LP Units is presented as part of the investment in co-venture parks. Accumulated amortization at December 28, 1997 amounted to $2.6 million. SIX FLAGS OVER TEXAS On November 24, 1997, Six Flags, Time Warner and TWE completed arrangements pursuant to which Six Flags Over Texas, Inc., a wholly-owned subsidiary of SFTP ("SFOT"), will manage the Six Flags Over Texas Park through 2027. Under the agreements governing the new arrangements (the "Texas Agreements"), the Six Flags Over Texas Park will continue to be owned by Texas Flags Ltd., a limited partnership ("Six Flags Over Texas") of which SFOT is the managing general partner. The key elements of the new arrangements are as follows: (i) the limited partner (which is not affiliated with Six Flags) will receive minimum annual distributions of $27.7 million in 1998, increasing each year thereafter in proportion to increases in the cost of living; thereafter, SFOT II will be entitled to receive from available cash (after provision for reasonable reserves and after capital expenditures per annum of approximately 6% of prior year revenues) a management fee equal to 3% of the prior year's gross revenues; and, thereafter, any additional available cash will be distributed 92.5% to SFOT and 7.5% to the limited partner; (ii) in the first quarter of 1998, a subsidiary of SFTP (the "SFTP-SFOT Subsidiary") and a subsidiary of SFEC (the "SFEC-SFOT Subsidiary") have commenced a tender offer for partnership interests ("SFOT LP Units") in Six Flags Over Texas, Ltd., which owns 99% of the limited partner of Six Flags Over Texas, that values the Six Flags Over Texas Park at the greater of $375 million or 8.5 times 1998 EBITDA of the Six Flags Over Texas Park (the "SFOT Tender Offer Price"); (iii) commencing in 1999, and on an annual basis thereafter, the SFTP-SFOT Subsidiary and the SFEC-SFOT Subsidiary will offer to purchase additional SFOT LP Units at a price based on the EBITDA of the Six Flags Over Texas Park for the prior four years; and (iv) in 2027, Six Flags and its affiliates will have the option to acquire the Six Flags Over Texas Park at a price based on the SFOT Tender Offer Price, increased in proportion to the increase in the cost of living between December 1997 and December 2027. SFEC, SFTP and TWE have guaranteed certain of the obligations (including the minimum annual distributions noted in (i) above) of SFOT under the Texas Agreements. Six Flags intends to continue to account for the Six Flags Over Texas Park as a co- venture and to include the revenues and expenses of Texas Flags partnership (excluding partnership depreciation) in Six Flags' consolidated financial statements and deduct as expenses the net amounts distributed to the limited partners. As a result of entering into the Texas Agreements, Six Flags expects a reduction in net income and net cash flow allocation from Texas Flags. In connection with the entering into the Texas Agreements, a subsidiary of SFEC loaned $10.7 million to Texas Flags Ltd. during December 1997 as a prepayment of its obligations under the Texas Agreements. This amount has been included in other assets, net as of December 28, 1997. The tender offer for SFOT LP Units commenced on January 23, 1998 and is expected to close on March 12, 1998. Six Flags will purchase these units through the SFEC-SFOT Subsidiary and will finance the purchase of such units through loans from a syndicate of lenders. F-38 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ACCRUED LIABILITIES Accrued liabilities at December 29, 1996 and December 28, 1997 consist of the following (in thousands):
1996 1997 --------- --------- Insurance............................................................... $ 15,867 $ 15,608 Income taxes payable.................................................... 4,036 557 Real estate and property taxes.......................................... 2,983 3,352 Compensation and payroll taxes.......................................... 7,920 8,728 Interest................................................................ 2,741 3,431 Pension costs........................................................... 2,868 921 Deferred revenue........................................................ 4,422 4,352 Other................................................................... 9,048 6,441 --------- --------- $ 49,885 $ 43,390 --------- --------- --------- ---------
SHORT-TERM BORROWINGS Short-term borrowings at December 29, 1996 and December 28, 1997 consist of the following (in thousands):
1996 1997 --------- --------- 8.5% Note payable to Chase Bank, due March 31, 1998...................... $ -- $ 19,778 7.2% Note payable to TWE, due March 31, 1998............................. -- 10,725 Co-venture parks general partner line of credit.......................... 1,585 -- --------- --------- $ 1,585 $ 30,503 --------- --------- --------- ---------
The proceeds from the note payable to Chase Bank were used to purchase approximately 8% of SFOG LP Units pursuant to the tender offer for such units. The proceeds from the TWE note payable were loaned to Texas Flags Ltd. in connection with the Texas Agreements. See the Investment in Co-venture Parks footnote. The weighted average interest rate of short-term borrowings outstanding as of December 29, 1996 and December 28, 1997 was 7.5 % and 8.5%, respectively. F-39 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LONG-TERM DEBT Long-term debt of Six Flags at December 29, 1996 and December 28, 1997 consists of the following (in thousands):
1996 1997 ---------- ---------- Credit Agreement, due through 2003, interest rates from 8.5% to 9.13%............................................................... $ 366,500 $ 348,500 12.25% Notes of SFTP, due 2005, less unamortized discount of $45,328 and $15,075 at December 29, 1996 and December 28, 1997, respectively........................................................ 239,672 269,925 Zero Coupon Notes of SFEC, due 1999, less unamortized discount of $45,097 and $31,176 at December 29, 1996 and December 28, 1997, respectively........................................................ 147,153 161,074 ---------- ---------- 753,325 779,499 Less current portion.................................................. (38,332) (26,130) ---------- ---------- $ 714,993 $ 753,369 ---------- ---------- ---------- ----------
The scheduled annual maturities of Six Flags' debt are as follows (in thousands): 1998.............................................................. $ 26,130 1999.............................................................. 216,074 2000.............................................................. 65,000 2001.............................................................. 60,000 2002.............................................................. 39,870 Thereafter........................................................ 372,425 --------- $ 779,499 --------- ---------
CREDIT AGREEMENT In 1995, SFTP entered into a $600 million Credit Agreement with a group of lenders. The Credit Agreement consists of a $345 million Tranche A Senior Secured Term Loan Facility (the "Tranche A Term Facility"), a $130 million Tranche B Senior Secured Term Loan Facility (the "Tranche B Term Facility")(together the "Term Facilities"), and a Senior Secured Revolving Credit Facility (the "Revolving Facility"). The Revolving Facility provides for revolving loans to SFTP and the issuance of letters of credit for the account of SFTP in an aggregate principal amount of up to $125 million, of which not more than $12 million may be represented by letters of credit. The interest rates per annum applicable to the Tranche A Term Facility and Revolving Facility are LIBOR plus 2.50%, as adjusted semi-annually. The interest rate per annum applicable to the Tranche B Term Facility is LIBOR plus 3.00%, as adjusted semi-annually. The amounts outstanding under the Term Facilities were $307.5 million at December 28, 1997. At December 29, 1996, there were no amounts borrowed against the Revolving Facility. The amounts borrowed against the Revolving Facility as of December 28, 1997 were $41 million. As of December 28, 1997, the Company had $9.3 million in letters of credit outstanding. Borrowings under the Tranche A Term Facility are payable as to principal in July and September of each year through 2001. Borrowings under the Tranche B Term Facility are payable in July and September of each year through 2002 and in June 23, 2003. SFTP is required to make mandatory prepayments of F-40 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) loans, and letters of credit will be mandatorily reduced based on certain criteria, as defined in the Credit Agreement. At least once during the period from June 30 to August 31 in each fiscal year, SFTP must repay all loans outstanding under the Revolving Facility in excess of an amount equal to the lesser of (a) $50.0 million and (b) the principal amount of loans then outstanding under the Revolving Facility that were used to finance related business acquisitions. SFTP may not make drawings under the Revolving Facility for 30 consecutive days following the date of such repayment. During such period, SFTP must also cause each co-venture park limited partnership to repay all amounts outstanding under their unsecured credit lines and not to make drawings thereunder for 30 consecutive days following the date of such repayment. The obligations of SFTP under the Credit Agreement are unconditionally and irrevocably guaranteed by each of SFTP's direct or indirect subsidiaries, other than the co-venture partnerships and certain special purpose subsidiaries. In addition, the Credit Agreement is secured by first priority security interests in all capital stock and other equity interests of SFEC and its subsidiaries. SFTP is required to pay a per annum fee equal to 2.50%, plus a fronting fee of 0.25%, of the aggregate face amount of outstanding letters of credit under the Revolving Facility and a per annum fee equal to 0.50% on the undrawn portion of the commitments in respect of the Revolving Facility. Commitment fees totaled $0.3 million, $0.6 million and $0.4 million in 1995, 1996 and 1997, respectively. The Credit Agreement contains a number of significant covenants that, among other things, restricts the ability of SFTP to dispose of assets, incur additional indebtedness, repay other indebtedness, amend material agreements, pay dividends, create liens on assets, enter into leases, make investments or acquisitions, engage in mergers or consolidations, make capital expenditures, or engage in certain transactions with subsidiaries and affiliates and will otherwise restrict corporate activities. In addition, under the Credit Agreement SFTP is required to comply with specified financial ratios and tests, including cash interest expense coverage, debt service coverage and debt to earnings ratios. The Credit Agreement also contains provisions that prohibit any modification of the indenture governing the Notes in any manner adverse to the lenders under the Credit Agreement and that limit SFTP's ability to refinance the Notes without the consent of such lenders. In December 1995, SFTP entered into no-cost interest rate collar transactions with certain lenders (or their affiliates) under the Credit Agreement. The interest rate collar transactions effectively protect against an increase in the three month LIBOR above 7% but limits SFTP's ability to benefit from a decline in the three month LIBOR below 4.55% with respect to $172 million, $150 million and $130 million notional amounts of debt during the 1996, 1997 and 1998 fiscal years, respectively. Interest payments/receipts on these interest rate collar agreements will be made quarterly. No such payments/receipts occurred through December 28, 1997. The fair value of the Credit Agreement and related interest rate collar transactions approximated their carrying value as of December 29, 1996 and December 28, 1997. SENIOR SUBORDINATED DISCOUNT NOTES SFTP issued the 12.25% Notes on June 23, 1995 (the "Issue Date") pursuant to an Indenture dated as of such date, among SFTP, the Note Guarantors and United States Trust Company of New York, as trustee. In November 1995, SFTP offered to exchange $285.0 million aggregate principal amount of its 12.25% Series A Senior Subordinated Discount Notes due 2005 (the "Series A Notes" and, together with the 12.25% Notes, the "Notes") for a like principal amount of its 12.25% Notes. The exchange offer expired on December 18, 1995, and $283.5 million aggregate principal amount of the Series A Notes were F-41 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) exchanged for an equal principal amount of 12.25% Notes. The Series A Notes are governed by the same indenture as, and are substantially identical to, the 12.25% Notes. However, unlike the 12.25% Notes, the Series A Notes were issued in a transaction registered under the Securities Act of 1933, as amended. The Notes are and will be unsecured senior subordinated obligations of SFTP, limited to $285.0 million aggregate principal amount, maturing on June 15, 2005. The Notes will accrete in value for purposes of the Indenture until June 15, 1998, at which time the accreted value of the Notes will equal 100% of their principal amount ($285 million). Interest payable in cash will not accrue or be payable prior to June 15, 1998; thereafter, the accreted value of the Notes will no longer increase and cash interest will be payable semi-annually on June 15 and December 15 of each year, commencing December 15, 1998, at a rate of 12.25% per annum. The Notes will be redeemable, at SFTP's option, in whole or in part, at any time on or after June 15, 2000 through maturity. If redeemed during the 12-month period commencing on June 15 of the years set forth below, SFTP will be required to pay the following redemption prices:
PERIOD REDEMPTION PRICE - ---------------------------------------------------------------------------- ---------------- 2000........................................................................ 106.0% 2001........................................................................ 104.0% 2002........................................................................ 102.0% 2003 and thereafter......................................................... 100.0%
In addition, at any time prior to June 15, 1998, SFTP may, subject to certain requirements, redeem Notes having a principal amount of up to 35% of the original aggregate principal amount of the Notes with the net cash proceeds of one or more public equity offering by SFTP at a redemption price equal to 112.25% of the accreted value of the Notes to be redeemed as of the redemption date; provided, however, that at least 65% of the original aggregate principal amount of the Notes must remain outstanding. The fair value of the Notes, estimated based on the quoted market prices, was $230.1 million and $303.5 million at December 29, 1996 and December 28, 1997, respectively. The Notes are guaranteed on an unsecured, senior subordinated basis by Six Flags Over Georgia, Inc., Six Flags Over Texas, Inc. and S.F. Partnership (the "Note Guarantors"), each of which is a wholly-owned subsidiary of SFTP. ZERO COUPON NOTES The Zero Coupon Notes are unsecured obligations of SFEC issued under an Indenture dated as of December 16, 1992, as amended, between SFEC, TWE and the United States Trust Company of New York, as trustee (the "Indenture"). The Zero Coupon Notes may not be redeemed prior to maturity and there will be no periodic payments of interest over the life of the Zero Coupon Notes. TWE has unconditionally and irrevocably agreed that upon a failure by SFEC to pay the principal amount of the Zero Coupon Notes upon maturity, or to pay the Accreted Value Amount (as defined in the Indenture) upon a declaration of acceleration following a Secondary Event of Default (as defined in the Indenture), TWE will offer to purchase the Zero Coupon Notes from the holders thereof at a predetermined price. TWE's obligation to make the offer to purchase will rank PARI PASSU with all other unsecured and unsubordinated obligations for money borrowed of TWE. The fair value of the Notes, estimated based on the quoted market prices, was $154.3 million and $170.1 million at December 29, 1996 and December 28, 1997, respectively. F-42 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) STOCKHOLDERS' EQUITY Pursuant to the 1995 Refinancing and Recapitalization, SFEC's outstanding equity consists of 5,100,000 shares of Class A Convertible Preferred Stock, par value $.01 per share, 4,900,000 shares of Class B Convertible Preferred Stock, par value $.01 per share, 51 shares of Class A Common Stock, par value $.01 per share ("Class A Common Stock"), and 49 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"). The Class A Convertible Preferred Stock has a liquidation preference per share of $40 plus accrued and unpaid dividends to the liquidation date. Dividends accrue on the outstanding shares of Class A Convertible Preferred Stock on a daily basis at the rate of 12% per annum, compounded semi-annually on December 1 and June 1 of each year. Accrued and unpaid dividends for the Class A Convertible Preferred Stock were $39.6 million and $69.5 million at December 29, 1996 and December 28, 1997, respectively. The Class B Convertible Preferred Stock has a liquidation preference per share of $40. No dividends shall accrue on the Class B Convertible Preferred Stock. Members of the Investor Group own 51% of the equity of SFEC, consisting of all of the outstanding shares of Class A Convertible Preferred Stock and Class A Common Stock, and TWE owns 49% of the equity of SFEC, consisting of all of the outstanding shares of Class B Convertible Preferred Stock and Class B Common Stock. SFEC's Class A Convertible Preferred Stock and Class A Common Stock are further divided into shares of voting stock (known as Class A-1 Convertible Preferred Stock and Class A-1 Common Stock, respectively) and non-voting stock (known as Class A-2 Convertible Preferred Stock and Class A-2 Common Stock, respectively). The non-voting shares of each such class were created for the benefit of certain regulated entities (each a "Regulated Holder") whose ability to own voting stock is restricted. Shares of Class A-1 Convertible Preferred Stock and Class A-1 Common Stock may be exchanged by a Regulated Holder on a share-for-share basis for non-voting shares of such class. Shares of Class A-2 Convertible Preferred Stock and Class A-2 Common Stock may be exchanged on a share-for-share basis for voting shares of each such class if such shares are held by a person other than by a Regulated Holder. Except for voting rights specifically accorded to a particular class under Delaware law, the shares of Class A-1 Common Stock and Class B Common Stock vote together as a single class on matters requiring stockholder action. Six Flags has entered into an Employment Agreement ("the Agreement") with an Executive (the "Executive") whereby SFEC agrees to reserve for issuance a certain number of shares of Class B Common Stock (the "Reserved Shares"), as defined in the Agreement. The Reserved Shares will become vested on December 31, 2000, subject to the Executive's employment having continued through such date or prior thereto if certain events occur as defined in the Agreement. Upon vesting of the Reserved Shares, the Executive will be entitled to receive from Six Flags, in addition to the issued shares, any dividends or distributions had such shares been issued and outstanding at the time that such dividends or distributions were declared and paid as defined in the Agreement. Six Flags has recognized compensation expense related to the Reserved Shares during 1996 and 1997. Under the Agreement, the Executive was also granted options to purchase shares of SFEC's Class B Common Stock. The options include an option to purchase an additional 163,936 shares of SFEC's Class B Common Stock (the "Tranche 1 Option"), and a second option to purchase an additional 327,872 shares of SFEC's Class B Common Stock (the "Tranche 2 Option"). The exercise price of the Tranche 1 Option is based on a September 1995 exercise price of $40.64 per share, increasing at a cumulative annual rate of 10%. The exercise price of the Tranche 2 Option is based on a September 1995 exercise price of $40.94, increasing at a cumulative annual rate of 15%. On each September 15 while the Executive is employed under Agreement, the number of shares of SFEC's Class B Common Stock reserved for issuance under the terms of the Tranche 1 Option will decrease by 5,858.9 shares, at which time the Executive will be granted a like number of additional Reserved Shares. In addition, SFEC granted additional options for the purchase F-43 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) of 327,872 shares of SFEC's Class B Common Stock to members of management of Six Flags and its subsidiaries. The terms of these options will be similar to the Tranche 1 Option and Tranche 2 Option described above. The options become exercisable only if there is a triggering event, as defined in the stock option plan agreement. Accordingly, these stock options have been treated as if they were unissued due to the uncertainty regarding the Executive's and other management employees' ability to exercise such options. In 1995, the Financial Accounting Standards Board issued SFAS. No. 123, "Accounting for Stock-Based Compensation," which permits either recording the estimated value of stock-based compensation over the applicable vesting period or disclosing such cost in the notes to the financial statements. Six Flags has adopted the disclosure-only provisions of SFAS 123. Had compensation cost for the stock options been determined consistent with SFAS 123, the proforma effect would not have been significant. PENSION PLAN Six Flags maintains a noncontributory, defined benefit pension plan (the "Plan") covering substantially all of Six Flags' full-time employees. The Plan permits normal retirement at age 65, with early retirement at ages 55 through 64 upon attainment of ten years of credited service. The early retirement benefit is reduced for benefits commencing before age 62. Plan benefits are calculated according to a benefit formula based on age, average compensation over the highest consecutive five-year period during the employee's last ten years of employment and years of service. Plan assets are invested primarily in common stocks and mutual funds. The Plan does not have significant liabilities other than benefit obligations. Under Six Flags' funding policy, contributions to the Plan are determined using the projected unit credit cost method. This funding policy meets the requirements under the Employee Retirement Income Security Act of 1974. F-44 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The reconciliation of the funded status of the Plan for the fiscal years 1996 and 1997 follows (in thousands):
1996 1997 --------- --------- Actuarial present value of current accumulated pension obligations, including vested benefits of $35,615 and $45,289 in 1996 and 1997, respectively.......................................................... $ 41,243 $ 52,436 --------- --------- --------- --------- Actuarial present value of accumulated pension obligations, adjusted for assumptions regarding future compensation levels (projected benefit obligations).......................................................... $ 58,702 $ 68,912 Pension assets at market value.......................................... 60,560 77,024 --------- --------- Projected benefit obligation less than pension assets................... (1,858) (8,112) Unrecognized net gain................................................... 3,389 7,943 Unrecognized prior service costs........................................ 1,337 1,090 --------- --------- Accrued pension liability............................................... $ 2,868 $ 921 --------- --------- --------- ---------
Net pension cost for the fiscal years 1995, 1996 and 1997 included the following components (in thousands):
1995 1996 1997 ---------- --------- ---------- Pension costs for benefits earned........................... $ 2,035 $ 3,133 $ 3,025 Interest cost on projected benefit obligation............... 3,612 4,436 4,858 Actual return on pension assets............................. (3,510) (8,484) (13,584) Net amortization and deferrals.............................. (176) 3,776 7,912 ---------- --------- ---------- Net pension cost............................................ $ 1,961 $ 2,861 $ 2,211 ---------- --------- ---------- ---------- --------- ----------
Measurement of the projected benefit obligation was based on the following assumptions:
1995 1996 1997 --------- --------- --------- Discount rate.......................................................... 7.25% 7.75% 7.25% Return on plan assets.................................................. 9.00% 9.00% 9.00% Expected rate of salary progression.................................... 6.00% 6.00% 5.00%
SAVINGS PLAN Under the provisions of the Six Flags' savings plan, all full-time and seasonal employees of Six Flags completing one year of service (minimum 1,000 hours) and attaining age 21 are eligible to participate and may contribute up to 6% of compensation as a tax deferred basic contribution. Each participant may also elect to make additional contributions of up to 10% of compensation (up to 4% tax deferred). Tax deferred contributions to the savings plan may not exceed amounts defined by the Internal Revenue Service ($9,500 for 1997). Both the basic and additional contributions are at all times vested. Six Flags, at its discretion, may make matching contributions of up to 100% of its employees' basic contributions. Six Flags contributed $0.7 million for each of the 1996 and 1995 Plan years, representing up to 30% of the employees' basic contributions. Six Flags plans to make $0.9 million in contributions for the 1997 plan year. Six Flags matching contributions to the savings plan are made in the first quarter of the succeeding year. F-45 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) INCOME TAXES Significant components of income tax expense are as follows (in thousands):
1995 1996 1997 --------- --------- --------- Current Federal........................................................ $ 3,668 $ -- $ -- State.......................................................... 2,269 -- -- --------- --------- --------- Total current.................................................... 5,937 -- -- --------- --------- --------- Deferred Federal........................................................ 606 4,369 -- State.......................................................... 200 768 -- --------- --------- --------- Total deferred................................................... 806 5,137 -- --------- --------- --------- $ 6,743 $ 5,137 $ -- --------- --------- --------- --------- --------- ---------
Income tax expense (benefit) varied from the U.S. federal statutory income tax rate due to the following (in thousands):
1995 1996 1997 --------- --------- --------- Tax provision (benefit) on income (loss) at U.S. federal statutory rate of 35%....................................... $ 1,209 $ (3,539) $ (1,298) Non-deductible amortization of goodwill....................... 2,762 2,287 2,866 State income taxes, net of federal benefit.................... 1,600 499 -- Carryover of net operating losses............................. -- 5,822 (1,241) Other......................................................... 1,172 68 (327) --------- --------- --------- Income tax expense............................................ $ 6,743 $ 5,137 $ -- --------- --------- --------- --------- --------- ---------
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. F-46 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Significant components of Six Flags' deferred tax assets and liabilities at December 29, 1996 and December 28, 1997 are as follows (in thousands):
1996 1997 ---------- --------- Deferred tax liabilities: Depreciation......................................................... $ 18,800 $ 33,736 Deferral related to tax and fiscal year end difference............... 41,051 46,225 Other................................................................ 22,824 7,256 ---------- --------- Total deferred tax liabilities......................................... 82,675 87,217 ---------- --------- Deferred tax assets: Tax basis in excess of book basis.................................... 58,964 55,467 Net operating loss carryforwards..................................... 24,698 43,071 Other................................................................ 4,835 4,600 ---------- --------- Total deferred tax assets.............................................. 88,497 103,138 Valuation allowance.................................................... (5,822) (15,921) ---------- --------- Net deferred tax assets................................................ 82,675 87,217 ---------- --------- Net deferred income taxes.............................................. $ -- $ -- ---------- --------- ---------- ---------
Realization of deferred tax assets associated with the net operating loss carryforwards is dependent upon generating sufficient taxable income prior to their expiration. Management believes that there is a risk that certain of these net operating loss carryforwards may expire unused and, accordingly, has established a valuation allowance against them. Although realization is not assured for the remaining deferred tax assets, management believes it is more likely than not that they will be realized through future taxable earnings or alternative tax strategies. At December 31, 1997, Six Flags has approximately $123.0 million of net operating loss carryforwards, which expire through 2012. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information consists of the following (in thousands):
1995 1996 1997 ----------- --------- ---------- Cash interest paid........................................ $ 35,282 $ 34,284 $ 36,089 ----------- --------- ---------- ----------- --------- ---------- Income taxes paid......................................... $ 5,401 $ -- $ 3,479 ----------- --------- ---------- ----------- --------- ---------- 1995 Refinancing and Recapitalization: Proceeds from term loans................................ $ 475,000 $ -- $ -- Proceeds from the 12.25% Notes.......................... 200,024 -- -- Repayment of TWE debt................................... (558,453) -- -- Return of capital....................................... (89,047) -- -- Payment of deferred financing fees...................... (27,524) -- -- ----------- --------- ---------- $ -- $ -- $ -- ----------- --------- ---------- ----------- --------- ----------
F-47 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) RELATED PARTY TRANSACTIONS TRANSACTIONS WITH TIME WARNER ENTERTAINMENT COMPANY, L.P. AND AFFILIATES On December 31, 1997, TWE contributed $4.0 million to Six Flags pursuant to an agreement with the Investor Group. This capital contribution is reflected as an affiliate receivable as of December 28, 1997. On May 5, 1997, TWE loaned $19.5 million to a subsidiary of Six Flags. The proceeds from this affiliate loan were used to purchase approximately 8% of SFOG LP Units pursuant to the tender offer for such units. On December 23, 1997, this affiliate loan, along with accrued interest, was refinanced with Chase Bank. On November 24, 1997, TWE loaned $10.7 million to another Six Flags subsidiary. The proceeds of this affiliate loan were loaned to Texas Flags Ltd. in connection with the Texas Agreements. See the Investment In Co-venture Parks footnote. In 1996 and 1997, Six Flags reimbursed TWE and its affiliates $4.4 million and $2.6 million, respectively, for royalties on merchandise, advertising and other expenses. Employees of a subsidiary of TWE served as senior management of Six Flags during 1995. Costs associated with this management team, including compensation and overhead, were charged to Six Flags by TWE. During 1995, Six Flags was also allocated costs for additional services from TWE, including accounting services, insurance coverage, transportation, and other services. Costs allocated from TWE were at a level agreed upon by TWE and Six Flags. Six Flags believes that this method of allocation was reasonable and that the allocated costs approximated the costs which would have been incurred on a stand-alone basis. In 1995, Six Flags recorded approximately $5.3 million for merchandise royalties, advertising, and other expenses, as well as compensation, overhead and other services allocated to Six Flags by TWE. Liabilities relating to such amounts are included in other long-term liabilities in the accompanying consolidated balance sheets. There were no costs allocated from TWE subsequent to June 23, 1995. As part of the 1995 Refinancing and Recapitalization, Six Flags entered into a new license agreement (the "License Agreement") pursuant to which it obtained the exclusive right for a term of 55 years to theme park use in the United States and Canada (excluding the Las Vegas, Nevada metropolitan area) of all animated, cartoon and comic book characters that Warner Bros. and DC Comics have the right to license for such use during the term of the agreement, including all characters which, prior to the effectiveness of the License Agreement, already had been licensed by Warner Bros. and DC Comics to Six Flags for use in connection with Six Flags' theme parks. Under the License Agreement, Six Flags will pay an annual license fee of $500,000 for each of the first ten years of the license term. Thereafter, the license fee will be subject to periodic scheduled increases and will be payable on a per-theme park basis. The annual license fees will also be increased by amounts equal to any third-party payments which may be payable by Warner Bros. or DC Comics as a result of the use of any licensed character by Six Flags. Six Flags entered into an amendment to the License Agreement ("Amendment No. 1") which provides the exclusive right for a period of three years ending December 31, 1998, to theme park use of elements contained in released versions of certain theatrical motion pictures and television shows, along with usage of the "Warner Bros. Backlot Logo" (the "Logo Usage"). Each separate motion picture, television series and/or Logo Usage may be utilized only in connection with live shows within Six Flags' parks. Six Flags was charged $400,000 in total for the years 1996 and 1997 and will be charged $150,000 in 1998 for the rights granted pursuant to Amendment No. 1. F-48 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In addition to the annual license fees described above, Six Flags is also required to pay royalties on sales of products incorporating the licensed characters at standard royalty rates for such products, subject to increase from time to time. Warner Bros. will be entitled to terminate the License Agreement prior to the expiration of the stated term if Six Flags, at any time during the term, is directly or indirectly controlled by a person that derives significant revenues from the production or distribution of motion pictures or engages in certain other businesses competitive with TWE. Six Flags also entered into a license agreement with TWE pursuant to which TWE granted Six Flags a 25-year license to use the trademarks and service marks relating to the "Home Box Office" and "HBO" names and the "HBO" logo for use in connection with the operation of restaurants in Six Flags' theme parks. The TWE license is royalty-free for the first ten years of its term. Thereafter, annual royalties will be established every five years. Six Flags also entered into an agreement entitling Six Flags (i) to use the name "Time Warner" in connection with operating a retail merchandise outlet with the name "Time Warner Studio Store" at Six Flags' theme parks and for establishing a themed area in each of Six Flags' theme parks to be called "Time Warner Studios" and (ii) to stage a concert series in Six Flags' theme parks under the name "Warner Music Rock Review." Six Flags also entered into a license agreement with the Sports Illustrated division of Time Warner pursuant to which Time Warner granted Six Flags a ten-year royalty-free license to use the "Sports Illustrated" and "Sports Illustrated for Kids" trademarks and service marks in connection with the operation of a sports festival at Six Flags' theme parks. The licensor under each of these additional license agreements has the right to terminate the license granted thereby if, during the stated term of any such license agreement, the Warner Bros. License Agreement is terminated for any reason. The licensor also has the right under certain circumstances to suspend the right of any of Six Flags' theme parks to use the licenses granted thereby if the license is not sufficiently utilized in such theme park. At January 1, 1995, Six Flags had amounts outstanding to TWE aggregating $488.0 million. Interest expense relating to the amounts due to TWE for fiscal year 1995 amounted to $18.0 million. At January 1, 1995, accrued interest on the TWE debt amounted to $7.2 million. As part of the 1995 Refinancing, all amounts due to TWE were repaid. COMMITMENTS AND CONTINGENCIES LEGAL PROCEEDINGS AND OTHER Six Flags is a party to lawsuits incidental to its business and against which Six Flags believes it is adequately insured or which will not result in losses material to the consolidated financial position or results of operations of Six Flags. On March 19, 1997, SFTP, and its wholly-owned subsidiary Six Flags Over Georgia, Inc. (collectively, the "Six Flags Parties") commenced a declaratory judgement action in the Superior Court of Gwinnett County, Georgia, entitled Six Flags Over Georgia, Inc. and Six Flags Theme Parks, Inc. v. Six Flags Fund, Ltd. and Avram Salkin, as Trustee of the Claims Court. The Six Flags Parties sought, among other things, a declaration and determination of rights and obligations of the partners of Six Flags Over Georgia, LP with respect to certain disputed partnership affairs and an accounting of all partnership affairs. On April 21, 1997, defendants Six Flags Fund Ltd. and its affiliates (collectively, the "SFOG Fund Parties") filed a motion to discuss the declaratory judgment action as well as an answer and counterclaim naming SFEC and Time Warner Entertainment Company, LP as additional counterclaim-defendants. The counterclaim seeks imposition of a constructive trust, compensatory damages of in excess of $250 million and unspecified punitive damages for alleged breaches of fiduciary duty, conversion, fraud and conspiracy allegedly committed by the counterclaim-defendants in connection with the management of the Six Flags Over F-49 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Georgia theme park (the "Georgia Park"). Six Flags and the other counterclaim-defendants intend to vigorously contest these allegations. On June 9, 1997, the parties entered into a Consent Order in which they agreed, among other things, to realign the parties. An Amended Complaint was then filed by the SFOG Fund Parties as the newly aligned plaintiffs against the Six Flags Parties in which the same substantive claims were asserted. The Six Flags Parties filed their answer denying liability and asserting several affirmative defenses on July 24, 1997. The Six Flags Parties intend to vigorously contest the allegations of the complaint. On February 2, 1995, Six Flags entered into an agreement with the Jackson Township Municipal Utilities Authority of New Jersey (the "Authority") which provides for the extension of the Authority's sanitary sewer collection facilities to Six Flags Great Adventure ("SFGA"), Six Flags' theme park located in Jackson, New Jersey, and connection of the SFGA property to such facilities. SFGA will be entitled to utilize approximately 40% of the total capacity of the extension and the Authority will waive SFGA's fees relating to connecting to the extension. The Authority through the New Jersey Waste Water Treatment Trust ("NJWWTT") plans to issue approximately $6.5 million of tax-exempt bonds (the "Bonds") to finance the costs of the extension. Six Flags has agreed to pay the Authority amounts equal to principal and interest on the Bonds plus fees to the NJWWTT. Such debt service payments are estimated at approximately $0.5 million per annum over the 20-year life of the bonds. In addition, Six Flags has permitted the Authority to retain, as security, $0.9 million that the Authority currently owes to Six Flags. These amounts will be repaid to Six Flags on a pro rata basis as the principal of the Bonds is amortized. Six Flags will be entitled to credits against the debt service payments as new users connect to the extension and pay for the 60% of capacity not used by SFGA. Six Flags made the first principal and interest payment on the bonds, approximately $0.2 million, during the first quarter of 1998. LEASES Six Flags leases certain buildings, vehicles, equipment and rides under operating leases. Vehicles are generally leased under a Fleet Lease Agreement, which provides for early lease termination under certain conditions. All other leases are generally noncancellable and may contain renewal options upon expiration. Total rent expense for the fiscal years ended 1995, 1996 and 1997 was $12.0 million, $8.5 million and $9.7 million, respectively. Minimum future rent payments totaling $16.0 million under commitments for noncancellable operating leases in effect at the end of 1997 are payable as follows: $5.7 million in 1998, $4.3 million in 1999, $3.0 million in 2000, $1.9 million in 2001, $1.0 million in 2002 and $0.1 million for years thereafter. SUBSEQUENT EVENT On February 9, 1998, TWE and Boston Ventures Management, Inc. entered into an agreement with Premier Parks Inc. ("Premier") to sell SFEC for approximately $1.9 billion. Under the terms of the agreement, Premier will acquire 100% of the equity of SFEC for $965 million, subject to adjustment, including $765 million in cash and $200 million in convertible preferred stock of Premier. Premier will assume a total of approximately $890 million of debt. As part of the transaction, the companies will enter into a long-term licensing agreement that gives Premier the exclusive theme park rights in the U.S. and Canada (excluding the Las Vegas, Nevada Metropolitan area) of all Warner Bros. and DC Comics animated cartoon and comic book characters. The transaction is expected to close in the second quarter of 1998. These financial statements do not reflect any adjustments relating to the consummation of the transaction. F-50 SIX FLAGS ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Premier expects to finance the transaction with approximately $700 million of public equity and equity equivalents as well as public debt and bank financing. The consummation of this transaction will cause the reserved shares and options discussed in the Stockholders' Equity footnote to become vested and exercisable, respectively. F-51 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE U.S. UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information..................................................... 2 Incorporation of Certain Information by Reference......................... 2 Prospectus Summary........................................................ 5 Risk Factors.............................................................. 18 Use of Proceeds........................................................... 27 Capitalization............................................................ 28 Selected Historical and Pro Forma Financial and Operating Data............ 29 Unaudited Pro Forma Financial Statements.................................. 35 Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................................. 45 Business.................................................................. 55 Management................................................................ 79 Principal Stockholders.................................................... 83 Description of Six Flags Agreement........................................ 86 Description of Indebtedness............................................... 89 Description of Securities................................................. 95 Description of EqPINES.................................................... 101 Description of Depositary Arrangements.................................... 113 Underwriting.............................................................. 117 Legal Matters............................................................. 120 Experts................................................................... 121 Index to Financial Statements............................................. F-1
13,000,000 SHARES [LOGO] PREMIER PARKS INC. COMMON STOCK ------------------ PROSPECTUS , 1998 --------------------- LEHMAN BROTHERS SALOMON SMITH BARNEY FURMAN SELZ NATIONSBANC MONTGOMERY SECURITIES LLC - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THIS PRELIMINARY OFFICIAL STATEMENT AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO COMPLETION OR AMENDMENT WITHOUT NOTICE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY THEM BE ACCEPTED, PRIOR TO THE TIME THE OFFICIAL STATEMENT IS DELIVERED IN FINAL FORM. UNDER NO CIRCUMSTANCES SHALL THIS PRELIMINARY OFFICIAL STATEMENT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF, THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION, QUALIFICATION OR FILING UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. Subject to Completion, dated March 25, 1998 PROSPECTUS [International Alternate Page] [LOGO] 13,000,000 SHARES PREMIER PARKS INC. COMMON STOCK ------------------- All of the shares of Common Stock offered hereby will be sold by Premier Parks Inc. (collectively with its predecessor, the "Company" or "Premier"). Of the 13,000,000 shares of Common Stock offered, 2,600,000 shares are being offered initially outside the United States and Canada in an international offering (the "International Offering") by the International Managers and 10,400,000 shares are being offered inside the United States and Canada in a concurrent offering (the "U.S. Offering") by the U.S. Underwriters (together with the International Managers, the "Underwriters"). These offerings are collectively referred to herein as the "Offering." See "Underwriting." The Offering is being made in connection with the acquisition (the "Six Flags Acquisition") by the Company of all of the capital stock of Six Flags Entertainment Corporation ("SFEC"). The Company is concurrently offering $ million aggregate principal amount at maturity of its senior discount notes due 2008, with estimated gross proceeds of $250.0 million, $280.0 million aggregate principal amount of its senior notes due 2006, and 5,000,000 Premium Income Equity Securities (the "EqPINES-SM-") representing interests in the Company's mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with estimated gross proceeds of $228.2 million (assuming the underwriters' over-allotment option for 750,000 EqPINES is not exercised). SFEC is concurrently offering $170.0 million aggregate principal amount of senior notes due 2006 (collectively, the "Concurrent Offerings" and, together with the Offering, the "Offerings"). The Offerings will finance, in whole or in part, the Six Flags Acquisition. The Company may also issue depositary shares (the "Seller Depositary Shares") representing interests in up to $200.0 million of the Company's convertible redeemable preferred stock to the current stockholders of SFEC as part of the consideration for the Six Flags Acquisition. The Company may reduce (but not below $100 million) or may eliminate the Seller Depositary Shares by increasing the cash portion of the consideration for the Six Flags Acquisition and may, if issued, redeem the Seller Depositary Shares for cash within 90 days of the closing at the higher of the issuance price and market value. If the Seller Depositary Shares are not issued, the additional cash portion of the consideration for the Six Flags Acquisition will be funded from the net proceeds of the Common Stock Offering. The closing of the Offering is conditioned upon the closing of the Concurrent Offerings and the Six Flags Acquisition. The Common Stock is listed on the New York Stock Exchange (the "NYSE") under the symbol "PKS." On March 23, 1998, the last sales price of the Common Stock, as reported by the NYSE, was $57 3/16 per share. The Company has applied to list the EqPINES on the NYSE. The Mandatorily Convertible Preferred Stock will not be so listed and the Company does not expect that there will be any trading market for the Mandatorily Convertible Preferred Stock except as represented by the EqPINES. ------------------------ SEE "RISK FACTORS" BEGINNING ON PAGE 18 HEREIN FOR CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS(1) COMPANY(2) Per Share................................................ $ $ $ Total(3)................................................. $ $ $
(1) The Company and its operating subsidiaries have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting expenses payable by the Company estimated at $ . (3) The Company has granted options to the Underwriters to purchase up to 1,950,000 additional shares of Common Stock on the same terms and conditions as set forth herein solely to cover over-allotments, if any. If such options were exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company would be be $ , $ and $ , respectively. See "Underwriting." ------------------------ The shares of Common Stock offered by this Prospectus are offered by the International Managers subject to prior sale, to withdrawal, cancellation or modification of the offer without notice, to delivery to and acceptance by the International Managers and to certain further conditions. It is expected that delivery of the shares of Common Stock will be made at the offices of Lehman Brothers Inc., New York, New York, on or about , 1998. -------------------------- LEHMAN BROTHERS SALOMON SMITH BARNEY INTERNATIONAL FURMAN SELZ NATIONSBANC MONTGOMERY SECURITIES LLC , 1998 [International Alternate Page] CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS TO NON-UNITED STATES HOLDERS The following is a general summary of the material United States federal income and estate tax considerations to a Foreign Holder (as defined below) relevant to the ownership and disposition of shares of Common Stock. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), final, temporary and proposed United States Treasury Regulations promulgated thereunder, Service rulings, official pronouncements and judicial decisions, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or different interpretations. This summary does not discuss all the tax consequences that may be relevant to a particular Foreign Holder in light of the holder's particular circumstances and it is not intended to be applicable in all respects to all categories of Foreign Holders, some of whom may be subject to special rules not discussed below. In addition, this summary does not address any state, local or foreign tax considerations that may be relevant to a Foreign Holder's decision to purchase shares of Common Stock. As used herein, a "Foreign Holder" means any person who, for United States federal income tax purposes, is neither (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any State or of any of its territories or possessions or (iii) a domestic trust or estate. ALL HOLDERS THAT ARE FOREIGN HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF SHARES OF COMMON STOCK IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. SALE OR EXCHANGE OF COMMON STOCK Subject to the discussion of backup withholding below, any capital gain realized upon a sale or exchange of Common Stock by a beneficial owner who is a Foreign Holder ordinarily will not be subject to United States federal income tax unless (i) such gain is effectively connected with a trade or business conducted by such Foreign Holder within the United States (in which case the branch profits tax may also apply if the holder is a foreign corporation), (ii) in the case of a Foreign Holder that is an individual, such holder is present in the United States for a period or periods aggregating 183 days or more in the taxable year of the sale or exchange and certain other conditions are met or (iii) the Company is or has been a "United States real property holding corporation" (a "USRPHC") for federal income tax purposes and such Foreign Holder has held, directly or constructively, more than 5% of the outstanding Common Stock within the five-year period ending on the date of the sale or exchange, and no treaty exception is applicable. It is uncertain whether the Company is a USRPHC within the meaning of the Code. If the Company is or becomes a USRPHC then a Foreign Holder described in (iii) of the preceding sentence generally will be subject to United States federal income tax at regular graduated rates on gain recognized on a sale or other disposition of Common Stock. Accordingly, a Foreign Holder that intends to acquire more than 5% of the outstanding Common Stock should consult its tax advisor regarding possible adverse tax consequences to such holder. DIVIDENDS ON COMMON STOCK Generally, any dividends paid on Common Stock will be subject to United States federal withholding tax at a rate of 30% of the amount of the dividend, or at a lower applicable treaty rate. However, if the dividend is effectively connected with a United States trade or business of a Foreign Holder, it will be subject to United States federal income tax on a net basis at ordinary federal income tax rates (in which case the branch profits tax may also apply if such holder is a foreign corporation), and will not be subject to the 30% withholding tax. Under current Treasury Regulations, a holder's status as a non-United States person and eligibility for a tax treaty reduced rate of withholding will be determined by reference to the holder's address and to any outstanding certificates or statements concerning eligibility for a reduced rate of withholding, unless facts and circumstances indicate that reliance on such address, certificates or statements is not warranted. [International Alternate Page] However, the Service has recently issued Regulations that require a non-United States person to provide certifications under penalties of perjury in order to obtain treaty benefits for payments made after December 31, 1998. FEDERAL ESTATE TAXES Common Stock that is beneficially owned by an individual who is neither a citizen nor a resident of the United States at the time of death will be included in such holder's gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. BACKUP WITHHOLDING AND INFORMATION REPORTING Generally, dividends on Common Stock paid to holders that are Foreign Holders that are subject to the 30% or a reduced treaty rate of United States federal withholding tax will be exempt from backup withholding tax. Otherwise, backup withholding of United States federal income tax at a rate of 31% may apply to dividends paid with respect to Common Stock to holders that are not "exempt recipients" and that fail to provide certain information (including the holder's taxpayer identification number) in the manner required by United States law and applicable regulations. Payments of the proceeds from the sale by a holder that is a Foreign Holder of shares of Common Stock made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that if the broker is a United States person, a controlled foreign corporation for United States tax purposes or a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, information reporting may apply to such payments. Payments of the proceeds from the sale of shares of Common Stock to or through the United States office of a broker will be subject to information reporting and backup withholding unless the holder certifies as to its non-United States status or otherwise establishes an exemption from information reporting and backup withholding. [International Alternate Page] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE INTERNATIONAL MANAGERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information..................................................... 2 Incorporation of Certain Information by Reference......................... 2 Prospectus Summary........................................................ 5 Risk Factors.............................................................. 18 Use of Proceeds........................................................... 27 Capitalization............................................................ 28 Selected Historical and Pro Forma Financial and Operating Data............ 29 Unaudited Pro Forma Financial Statements.................................. 35 Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................................. 45 Business.................................................................. 55 Management................................................................ 79 Principal Stockholders.................................................... 83 Description of Six Flags Agreement........................................ 86 Description of Indebtedness............................................... 89 Description of Securities................................................. 95 Description of EqPINES.................................................... 101 Description of Depositary Arrangements.................................... 113 Certain United States Federal Tax Considerations to Non-United States Holders................................................................. 116 Underwriting.............................................................. 118 Legal Matters............................................................. 121 Experts................................................................... 121 Index to Financial Statements............................................. F-1
13,000,000 SHARES [LOGO] PREMIER PARKS INC. COMMON STOCK ------------------ PROSPECTUS , 1998 ------------------------ LEHMAN BROTHERS SALOMON SMITH BARNEY INTERNATIONAL FURMAN SELZ NATIONSBANC MONTGOMERY SECURITIES LLC - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [Convertible Stock] INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. UNDER NO CIRCUMSTANCES SHALL THIS REGISTRATION STATEMENT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF, THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. Subject to Completion, dated March 25, 1998 [Alternate Page-EqPINES] PROSPECTUS 5,000,000 EQPINES-SM- PREMIER PARKS INC. PREMIUM INCOME EQUITY SECURITIES ("EQPINES-SM-") CONSISTING OF DEPOSITARY SHARES, EACH REPRESENTING ONE-FIVE HUNDREDTH OF A SHARE OF % MANDATORILY CONVERTIBLE PREFERRED STOCK --------------------- [LOGO] All of the Premium Income Equity Securities ("EqPINES-SM-") offered hereby (the "Offering" or the "EqPINES Offering") are being sold by Premier Parks Inc. (collectively with its predecessor, the "Company" or "Premier"). Each of the EqPINES represents one five-hundredth of a share of % Mandatorily Convertible Preferred Stock ("Mandatorily Convertible Preferred Stock") of the Company deposited with the Depositary (as defined herein). Each EqPINES, through the Depositary, entitles the holder to all proportional rights and preferences of the share of Mandatorily Convertible Preferred Stock represented thereby. The liquidation preference of each EqPINES is $ , plus accrued and unpaid dividends thereon. See "Description of EqPINES". Unless converted by the holder into the Company's common stock, par value $0.05 per share (the "Common Stock") prior thereto, on , 2001 (the "Mandatory Conversion Date") each EqPINES will automatically convert into a number of shares of Common Stock at the Conversion Rate. The "Conversion Rate" is, subject to adjustment in certain events, equal to (a) if the Conversion Price (as defined below) is greater than or equal to $ (the "Threshold Appreciation Price"), shares of Common Stock per EqPINES, (b) if the Conversion Price is less than the Threshold Appreciation Price but greater than $ (the "Initial Price"), a fraction, equal to the Initial Price divided by the Conversion Price, of one share of Common Stock per EqPINES and (c) if the Conversion Price is less than or equal to the Initial Price, one share of Common Stock per EqPINES. The Threshold Appreciation Price and the Initial Price are also subject to adjustment in certain events. The "Conversion Price" is the average Closing Price (as defined herein) per share of Common Stock for the 20 Trading Days (as defined herein) immediately prior to (but not including) the Mandatory Conversion Date, except as otherwise described herein. See "Description of EqPINES--Mandatory Conversion of EqPINES". At any time prior to the Mandatory Conversion Date, each EqPINES is convertible, in whole but not in part, at the option of the holder thereof into shares of Common Stock, subject to adjustment in certain events. See "Description of EqPINES--Conversion at the Option of the Holder". The value of the Common Stock that will be received by holders of EqPINES upon their conversion may be more or less than the amount paid for the EqPINES offered hereby due to market fluctuations in the price of the Common Stock. Annual dividends on the EqPINES are cumulative at a rate of $ per EqPINES from the date of initial issuance, payable quarterly in arrears on each January 1, April 1, July 1 and October 1, commencing July 1, 1998. The Company may, at its option, pay dividends with cash, shares of Common Stock or in some combination of both, provided that dividends may be paid with Common Stock only if paid on the Regular Dividend Payment Date (as defined herein) for such dividend. For purposes of calculating dividend payments, each share of Common Stock delivered to holders of EqPINES for payment of dividends will be valued at 95% of the average Closing Price for the Common Stock over a ten-Trading Day period preceding the related record date for the dividend payment. See "Description of EqPINES--Dividends" and "-- Mandatory Conversion of EqPINES". The holders of Mandatorily Convertible Preferred Stock (including shares of Mandatorily Convertible Preferred Stock represented by the EqPINES) are not entitled to any voting rights, except as required by applicable state law and with respect to adverse charter and by-law amendments or the authorization or creation of classes of capital stock ranking senior as to payment of dividends or liquidation preference to the Mandatorily Convertible Preferred Stock, and in certain circumstances involving protracted dividend arrearages. See "Description of EqPINES--Voting Rights". The EqPINES Offering is being made in connection with the acquisition (the "Six Flags Acquisition") by the Company of all of the capital stock of Six Flags Entertainment Corporation ("SFEC"). The Company is concurrently offering $ million aggregate principal amount at maturity of its senior discount notes due 2008, with estimated gross proceeds of $250.0 million, $280.0 million aggregate principal amount of its senior notes due 2006, and 13,000,000 shares of Common Stock with estimated gross proceeds of $593.2 million (assuming the underwriters' over-allotment options are not exercised) (the "Common Stock Offering"). SFEC is concurrently offering $170.0 million aggregate principal amount of senior notes due 2006 (collectively, the "Concurrent Offerings" and, together with the EqPINES Offering, the "Offerings"). The Offerings will finance, in whole or in part, the Six Flags Acquisition. The Company may also issue up to depositary shares (the "Seller Depositary Shares") representing interests in up to $200.0 million of the Company's convertible redeemable preferred stock to the current stockholders of SFEC as part of the consideration for the Six Flags Acquisition. The Company may reduce (but not below $100 million) or may eliminate the Seller Depositary Shares by increasing the cash portion of the consideration for the Six Flags Acquisition and may, if issued, redeem the Seller Depositary Shares for cash within 90 days of the closing at the higher of the issuance price and market value. If the Seller Depositary Shares are not issued, the additional cash portion of the consideration for the Six Flags Acquisition will be funded from the net proceeds of the Common Stock Offering. The closing of the Offering is conditioned upon the closing of the Concurrent Offerings and the Six Flags Acquisition. Application will be made to list the EqPINES and the Common Stock issuable on conversion of the Mandatorily Convertible Preferred Stock on the New York Stock Exchange (the "NYSE"). The Mandatorily Convertible Preferred Stock will not be so listed and the Company does not expect that there will be any trading market for the Mandatorily Convertible Preferred Stock except as represented by the EqPINES. The Common Stock is listed on the NYSE under the symbol "PKS". On March 23, 1998, the last sales price of the Common Stock, as reported by the NYSE was $57 3/16 per share. --------------------------- SEE "RISK FACTORS" BEGINNING ON PAGE 19 HEREIN FOR CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS(1) COMPANY(2) Per EqPINES.............................................. $ $ $ Total(3)................................................. $ $ $
(1) The Company and its operating subsidiaries have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting". (2) Before deducting expenses payable by the Company estimated at $ . (3) The Company has granted an option to the Underwriters to purchase up to an additional 750,000 EqPINES on the same terms and conditions as set forth herein solely to cover over-allotments, if any. If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting." --------------------------- The EqPINES offered by this Prospectus are offered by the Underwriters subject to prior sale, to withdrawal, cancellation or modification of the offer without notice, to delivery to and acceptance by the Underwriters and to certain further conditions. It is expected that delivery of the Depositary Receipts evidencing the EqPINES will be made at the offices of Lehman Brothers Inc., New York, New York, on or about , 1998. LEHMAN BROTHERS SALOMON SMITH BARNEY , 1998 [Alternate Page-EqPINES] THE OFFERING Securities........................ 5,000,000 EqPINES, consisting of depositary shares, each representing one five-hundredth of a share of Mandatorily Convertible Preferred Stock, are offered hereby. Each EqPINES entitles the holder to that proportion of all the rights, preferences and privileges of a share of Mandatorily Convertible Preferred Stock (including dividend, conversion, voting and liquidation rights and preferences) represented thereby. Dividends......................... $ per annum per EqPINES cumulative from the date of initial issuance, payable quarterly in arrears on each January 1, April 1, July 1 and October 1, commencing July 1, 1998. The Company may, at its option, pay dividends with cash, shares of Common Stock or in some combination of both, provided that dividends may be paid with Common Stock only if paid on the Regular Dividend Payment Date (as defined herein) for such dividend. For purposes of dividend payments, each share of Common Stock will be valued at 95% of the average Closing Price (as defined herein) for the Common Stock over a ten Trading Day (as defined herein) period preceding the related record date for the dividend payment. See "Description of EqPINES--Dividends" and "--Mandatory Conversion of EqPINES". Mandatory Conversion.............. On , 2001 (the "Mandatory Conversion Date"), each EqPINES will automatically convert into shares of Common Stock at the Conversion Rate. The "Conversion Rate" is, subject to adjustment in certain events, equal to (a) if the Conversion Price (as defined below) is greater than or equal to $ (the "Threshold Appreciation Price"), shares of Common Stock per EqPINES, (b) if the Conversion Price is less than the Threshold Appreciation Price but is greater than $ (the "Initial Price"), a fraction, equal to the Initial Price divided by the Conversion Price, of one share of Common Stock per EqPINES and (c) if the Conversion Price is less than or equal to the Initial Price, one share of Common Stock per EqPINES. The Threshold Application Price and the Initial Price are also subject to adjustment in certain events. The "Conversion Price" is the average Closing Price per share of Common Stock for the 20 Trading Days immediately prior to (but not including) the Mandatory Conversion Date, except as otherwise described herein. See "Description of EqPINES-- Mandatory Conversion of EqPINES". Optional Conversion............... At any time prior to the Mandatory Conversion Date, each EqPINES is convertible, in whole but not in part, at the option of the holder thereof into shares of Common Stock, subject to adjustment in certain events. See "Description of EqPINES--Conversion at the Option of the Holder" and "Description of Depositary Arrangements--Conversion Provisions". Voting Rights..................... The holders of EqPINES will be entitled to direct the voting of the shares of Mandatorily Convertible Preferred Stock represented thereby. See "Description of EqPINES--Voting Rights". The Mandatorily Convertible Preferred Stock has no voting rights, except as required by applicable state law and
13 [Alternate Page-EqPINES] except that (i) if dividends on the Mandatorily Convertible Preferred Stock or any other series of the Company's Preferred Stock are in arrears and unpaid for six quarterly dividend periods the Mandatorily Convertible Preferred Stock (voting as a class with certain other series of Preferred Stock) will be entitled to elect two directors of the Company and (ii) the Mandatorily Convertible Preferred Stock will have voting rights with respect to certain alterations of the Company's Restated Certificate of Incorporation and By-Laws and the creation or authorization of preferred stock or other capital stock (or securities convertible into capital stock) ranking prior to the Mandatorily Convertible Preferred Stock as to the payment of dividends or the distribution of assets upon liquidation. See "Description of Depositary Arrangements--Voting of Mandatorily Convertible Preferred Stock". Liquidation Preference and Ranking......................... The EqPINES, as representative of beneficial ownership interests in the Mandatorily Convertible Preferred Stock, will rank prior to the Common Stock as to payment of dividends and distributions of assets upon liquidation. The liquidation preference of each EqPINES is an amount equal to the sum of (i) $ and (ii) all accrued and unpaid dividends thereon. See "Description of EqPINES--Dividends" and "-- Liquidation Rights". Listing........................... Application will be made to list the EqPINES and the Common Stock issuable on conversion of the Mandatorily Convertible Preferred Stock on the NYSE. The Mandatorily Convertible Preferred Stock will not be so listed and the Company does not expect that there will be any trading market for the Mandatorily Convertible Preferred Stock except as represented by the EqPINES. The Offerings..................... The Company is concurrently offering (i) 13,000,000 shares of Common Stock, with estimated gross proceeds of $593.2 million, (ii) the 5,000,000 EqPINES offered hereby, (iii) $ million aggregate principal amount at maturity of Company Senior Discount Notes, with estimated gross proceeds of $250.0 million and (iv) $280.0 million principal amount of Company Senior Notes. In addition, SFEC is issuing $170.0 million of New SFEC Notes. The Company may also issue Seller Depositary Shares representing interests in up to $200.0 million of Seller Preferred Stock as part of the consideration for the Six Flags Acquisition. See "--The Six Flags Transactions", "Description of Indebtedness--Company Senior Discount Notes", "-- Company Senior Notes", "--New SFEC Notes", "Description of Securities--Preferred Stock--Seller Preferred Stock" and "Description of EqPINES". The Offerings are conditioned upon the closing of all other elements of the Six Flags Transactions. Use of Proceeds................... The Company intends to apply the net proceeds from the Offerings to fund the cash portion of the purchase price for the Six Flags Acquisition; to provide for the repayment in full of the SFEC Zero Coupon Senior Notes; to fund improvements and expansion of the Company's parks, including the parks acquired in the Six Flags Acquisition and the 1997 Acquisitions; to acquire and make improvements at additional theme parks; and for general corporate purposes, including working capital requirements. See "Use of Proceeds".
14 [Alternate Page-EqPINES] NYSE symbols: Common Stock.................... "PKS" EqPINES.........................
15 [Alternate Page-EqPINES] UNDERWRITING Under the terms of and subject to the conditions contained in an underwriting agreement (the "Underwriting Agreement"), among the Company and each of the underwriters named below (the "Underwriters"), each of the several Underwriters has agreed to purchase from the Company, and the Company has agreed to sell to each Underwriter, the aggregate number of EqPINES set forth opposite the name of such Underwriter below:
NUMBER OF UNDERWRITERS EQPINES --------------- Lehman Brothers Inc.............................................................................. Smith Barney Inc. ............................................................................... ------- Total......................................................................................... ------- -------
The Underwriting Agreement provides that the obligations of the Underwriters to purchase EqPINES are subject to the approval of certain legal matters by counsel and to certain other conditions and that if any of the EqPINES are purchased by the Underwriters pursuant to the Underwriting Agreement, all the EqPINES agreed to be purchased by the Underwriters pursuant to the Underwriting Agreement must be so purchased. The closing of each of the EqPINES Offering and the Concurrent Offerings is conditioned upon the closing of the other and of the other Six Flags Transactions. The Company has been advised that the Underwriters propose to offer EqPINES directly to the public initially at the public offering price set forth on the cover page of this Prospectus and to certain selected dealers (who may include the Underwriters) at such public offering price less a selling concession not to exceed $ per EqPINES. The selected dealers may reallow a concession not to exceed $ per EqPINES. After the initial offering of the EqPINES, the offering price, the concession to selected dealers and the reallowance to other dealers may be changed by the Underwriters. Except for the EqPINES to be sold in the EqPINES Offering (and the Mandatorily Convertible Preferred Stock represented thereby), the Seller Preferred Stock and the Common Stock to be sold in the Concurrent Offerings or issued upon conversion of the Convertible Preferred Stock, the Company has agreed not to offer, sell, contract to sell or otherwise issue any shares of Common Stock or other capital stock or securities convertible into or exchangeable for, or any rights to acquire Common Stock or other capital stock, with certain exceptions (including certain exceptions for Common Stock or other capital stock issued or sold in connection with future acquisitions by the Company, including its proposed acquisition of Walibi), prior to the expiration of 90 days from the date of this Prospectus without the prior written consent of Lehman Brothers. The Company's officers, directors and principal stockholders, who hold in the aggregate approximately 6.0 million shares of Common Stock (including shares issuable upon exercise of outstanding options, warrants and restricted stock), have agreed not to, directly or indirectly, offer, sell or otherwise dispose of shares of Common Stock of the Company or any securities convertible into or exchangeable for or any rights to acquire, Common Stock or other capital stock of the Company for 90 days following the date of this Prospectus without the prior written consent of Lehman Brothers. In addition, the Sellers in the Six Flags Acquisition have agreed not to sell any Seller Preferred Stock (or shares of Common Stock issuable upon conversion thereof) acquired by them in the Six Flags Acquisition during such 90-day period. The Company has granted to the Underwriters an option to purchase up to an additional 750,000 EqPINES at the initial public offering price to the public, less the underwriting discounts and commissions shown on the cover page of this Prospectus, solely to cover over-allotments, if any. The option may be exercised at any time up to 30 days after the date of this Prospectus. To the extent that the Underwriters exercise such option, each of the Underwriters will be committed (subject to certain conditions) to purchase a number of additional shares proportionate to such Underwriter's initial commitment as indicated in the preceding table. 117 [Alternate Page-EqPINES] The Company and its operating subsidiaries (including Six Flags) have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments which the Underwriters may be required to make in respect thereof. Until the distribution of the EqPINES offered hereby is completed, rules of the Commission may limit the ability of the Underwriters and certain selling group members to bid for and purchase the EqPINES and the Common Stock. As an exception to these rules, the Underwriters are permitted to engage in certain transactions that stabilize the price of the EqPINES and the Common Stock. Such transactions may consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the EqPINES and the Common Stock. If the Underwriters create a short position in the EqPINES in connection with the EqPINES Offering (I.E., if they sell more EqPINES than are set forth on the cover page of this Prospectus), the Underwriters may reduce that short position by purchasing EqPINES in the open market after the distribution has been completed. The Underwriters also may impose a penalty bid on certain Underwriters and selling group members. This means that if the Underwriters purchase EqPINES in the open market to reduce their short position or to stabilize the price of the EqPINES, they may reclaim the amount of the selling concession from the Underwriters and selling group members who sold those EqPINES as part of the EqPINES Offering. In general, purchases of a security for the purposes of stabilization or to reduce a syndicate short position could cause the price of the security to be higher than it might otherwise be in the absence of such purchases. The imposition of a penalty bid might have an effect on the price of a security to the extent that it were to discourage resales of the security by purchasers in the applicable offering. Neither the Company nor any of the Underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the EqPINES. In addition, neither the Company nor any of the Underwriters makes any representation that the Underwriters will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice. An application will be made to list the EqPINES and the Common Stock into which the Mandatorily Convertible Preferred Stock are convertible on the NYSE. The Mandatorily Convertible Preferred Stock will not be so listed and the Company does not expect that there will be any trading market for the Mandatorily Convertible Preferred Stock except as represented by the EqPINES. The EqPINES are a new issue of securities with no established trading market. While application has been made to list the EqPINES on the NYSE, no assurance can be given as to the development or liquidity of any trading market in the EqPINES. If an active market does not develop, the market price and liquidity of the EqPINES will be adversely affected. Each of Lehman Brothers and Smith Barney Inc. has from time to time provided certain investment banking services to the Company and its affiliates for which they have received customary fees. LBI Group Inc., an affiliate of Lehman Brothers is party to financing commitments provided to the Company in connection with the Six Flags Transactions and has received customary fees in connection therewith. In addition, Lehman Brothers and Smith Barney Inc. acted as underwriters of the Company's 1996 and 1997 public offerings and are acting as underwriters in connection with the Concurrent Offerings and will receive customary fees in connection therewith. An affiliate of Lehman Brothers is a lender under each of the Credit Facilities. LEGAL MATTERS The validity of the EqPINES and the Mandatorily Convertible Preferred Stock offered hereby and certain legal matters in connection with the EqPINES Offering will be passed upon for the Company by Baer Marks & Upham LLP, New York, New York. The Underwriters are being represented by Cravath, Swaine & Moore, New York, New York. 118 [Alternate Page--EqPINES] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information..................................................... 2 Incorporation of Certain Information by Reference......................... 2 Prospectus Summary........................................................ 5 Risk Factors.............................................................. 19 Use of Proceeds........................................................... 28 Capitalization............................................................ 29 Selected Historical and Pro Forma Financial and Operating Data............ 30 Unaudited Pro Forma Financial Statements.................................. 36 Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................................. 46 Business.................................................................. 56 Management................................................................ 80 Principal Stockholders.................................................... 84 Description of Six Flags Agreement........................................ 87 Description of Indebtedness............................................... 90 Description of Securities................................................. 96 Description of EqPINES.................................................... 102 Description of Depositary Arrangements.................................... 114 Underwriting.............................................................. 118 Legal Matters............................................................. 119 Experts................................................................... 120 Index to Financial Statements............................................. F-1
5,000,000 EQPINES-SM- [LOGO] PREMIER PARKS INC. PREMIUM INCOME EQUITY SECURITIES EACH REPRESENTING ONE FIVE-HUNDREDTH OF A SHARE OF % MANDATORILY CONVERTIBLE PREFERRED STOCK ------------------------ PROSPECTUS , 1998 --------------------- LEHMAN BROTHERS SALOMON SMITH BARNEY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the various expenses to be borne by the Registrant in connection with the issuance and distribution of the securities being registered (other than underwriting discounts and commissions). All amounts presented are estimates except the Securities and Exchange Commission registration fee and the National Association of Securities Dealers, Inc. filing fee. Securities and Exchange Commission registration fee............................. $ 349,216 National Association of Securities Dealers, Inc. filing fee..................... 30,500 New York Stock Exchange listing fee............................................. 163,900 Accounting fees and expenses.................................................... 110,000 Legal fees and expenses......................................................... 350,000 Printing and engraving expenses................................................. 630,000 Transfer agent and registrar fees............................................... 10,000 Depositary fees................................................................. 5,000 Miscellaneous................................................................... 151,384 --------- Total fees and expenses......................................................... $1,800,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law which covers the indemnification of directors, officers, employees and agents of a corporation is hereby incorporated herein by reference. Reference is made to Article XXV of the Registrant's By-Laws which provides for indemnification by the Registrant in the manner and to the full extent permitted by Delaware law. Reference is also made to Section 8 of the U.S. Underwriting Agreement and the International Underwriting Agreement, to be filed by amendment as Exhibits 1(a) and 1(b), respectively. ITEM 16. EXHIBITS. See Exhibit Index. ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933. (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. II-1 (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (3) That, for purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this registration statement as of the time it was declared effective. (4) That, for the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) The undersigned Registrant hereby undertakes that, for the purposes of determining any liability under the Securities Act of 1933 (the "Act"), each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference herein shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York on the 24th day of March, 1998. PREMIER PARKS INC. By: /s/ KIERAN E. BURKE ------------------------------------------ Kieran E. Burke CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER II-3 Pursuant to the requirements of the Securities Act of 1933, this registration statement on Form S-3 has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman of the Board and * Chief Executive Officer - ------------------------------ (principal executive March 24, 1998 Kieran E. Burke officer) * Director, President and - ------------------------------ Chief March 24, 1998 Gary Story Operating Officer Chief Financial Officer * and - ------------------------------ Director (principal March 24, 1998 James F. Dannhauser financial and accounting officer) * - ------------------------------ Director March 24, 1998 Paul A. Biddelman * - ------------------------------ Director March 24, 1998 Michael E. Gellert * - ------------------------------ Director March 24, 1998 Jack Tyrrell * - ------------------------------ Director March 24, 1998 Sandy Gurtler * - ------------------------------ Director March 24, 1998 Charles R. Wood *By: JAMES M. COUGHLIN ------------------------- James M. Coughlin Attorney-in-fact II-4 EXHIBIT INDEX
PAGE ----- (1) Underwriting Agreements: (a) Form of U.S. Underwriting Agreement among the Registrant, certain of its subsidiaries, Lehman Brothers Inc., Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC as representatives of the several U.S. Underwriters......................... (b) Form of International Underwriting Agreement among the Registrant, certain of its subsidiaries, Lehman Brothers International (Europe), Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC as representatives of the several International Managers................................................................................... (c) Form of Agreement among U.S. Underwriters and International Managers....................... (d) Form of Underwriting Agreement among the Registrant, certain of its subsidiaries, Lehman Brothers Inc., and Smith Barney Inc. (Premium Income Equity Securities).................... (e) Form of Underwriting Agreement among the Registrant, certain of its subsidiaries, Lehman Brothers Inc., Salomon Brothers Inc and NationsBanc Montgomery Securities LLC as representatives of the several Underwriters (Company Notes)................................ (f) Form of Underwriting Agreement among Six Flags Entertainment Corporation, certain of its subsidiaries, Lehman Brothers Inc., Salomon Brothers Inc. and NationsBanc Montgomery Securities LLC as representatives of the several Underwriters (New SFEC Notes)............. (2) Plan of Acquisition: (a) Agreement and Plan of Merger dated February 9, 1998, among the Registrant, the subsidiaries of the Registrant named therein, the holders of capital stock of Six Flags Entertainment Corporation and Six Flags Entertainment Corporation-- incorporated by reference from Exhibit 10(a) to the Registrant's Current Report on Form 8-K dated February 9, 1998........ (b) Subordinated Indemnity Agreement dated February 9, 1998, among the Registrant, the subsidiaries of the Registrant named therein, Time Warner Inc., the subsidiaries of Time Warner Inc. named therein, Six Flags Entertainment Corporation and the subsidiaries of Six Flags Entertainment Corporation named therein.............................................. (4) Instruments Defining the Rights of Security Holders, Including Indentures: (a) Indenture dated as of August 15, 1995, among the Registrant, the subsidiaries of the Registrant named therein and United States Trust Company of New York, as trustee -- incorporated by reference from Exhibit 4(2) to Registrant's Registration Statement on Form S-1 (Reg. No. 33-62225) declared effective on November 9, 1995 (the "1995 Registration Statement")................................................................................ (b) Form of First Supplemental Indenture dated as of November 9, 1995 --incorporated by reference from Exhibit 4(2.1) to the 1995 Registration Statement........................... (c) Purchase Agreement, dated August 10, 1995, among the Registrant, the subsidiaries of the Registrant named therein and Chemical Securities Inc. --incorporated by reference from Exhibit 4(3) to the 1995 Registration Statement............................................ (d) Exchange and Registration Rights Agreement, dated August 14, 1995, among the Registrant, the subsidiaries of the Registrant named therein and Chemical Securities Inc. -- incorporated by reference from Exhibit 4(4) to the 1995 Registration Statement.............
II-5 (e) Convertible Note Purchase Agreement, dated as of March 3, 1993, between the Registrant and the purchasers named therein (including forms of Senior Subordinated Convertible Notes and Registration Rights Agreement) -- incorporated by reference from Exhibit 4(i) to Form 10-K of the Registrant for the year ended December 31, 1993..................................... (f) Form of Subscription Agreement, dated October 1992, between the Registrant and certain investors -- incorporated by reference from Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated October 30, 1992......................................................... (g) Stock Purchase and Warrant Issuance Agreement, dated October 16, 1989, between the Registrant and Kieran E. Burke -- incorporated by reference from Exhibit 4(i) to Form 10-K of the Registrant for the year ended December 31, 1989..................................... (h) Warrant, dated October 16, 1989, to purchase 131,728 shares of Common Stock issued by the Registration to Kieran E. Burke -- incorporated by reference from Exhibit 4(k) to Form 10-K of the Registrant for the year ended December 31, 1989..................................... (i) Warrant, dated October 16, 1989, to purchase 93,466 shares of Common Stock issued by the Registrant to Kieran E. Burke -- incorporated by reference from Exhibit 4(l) to Form 10-K of the Registrant for the year ended December 31, 1989..................................... (j) Form of Common Stock Certificate -- incorporated by reference from Exhibit 4(l) to the Registrant's Registration Statement on Form S-2 (Reg. No. 333-08281) declared effective on May 28, 1996............................................................................... (k) Form of depositary receipt evidencing ownership of Premium Income Equity Securities (filed as part of Exhibit 4(u) hereof)............................................................ (m) Form of Indenture dated as of February 1, 1997, among the Registrant and the Bank of New York, as trustee (including the form of Notes) -- incorporated by reference from Exhibit 4(l) to the Registrant's Registration Statement on Form S-2 (Reg. No. 333-16573) filed with the Securities and Exchange Commission on January 22, 1997................................. (n) Form of Second Supplemental Indenture dated January 21, 1997 -- incorporated by reference from Exhibit 4(n) to the Registrant's Registration Statement on Form S-2 (Reg. No. 333-16573) filed with the Securities and Exchange Commission on January 22, 1997........... (o) Form of Indenture, dated as of March , 1998, between the Registrant and the Bank of New York....................................................................................... (p) Form of Indenture, dated as of March , 1998, between the Registrant and The Bank of New York....................................................................................... (q) Form of Indenture, dated as of March , 1998, among the Registrant, Six Flags Entertainment Corporation and The Bank of New York....................................................... (r) Form of Certificate of Designation, Rights and Preferences relating to Seller Preferred Stock...................................................................................... (s) Form of Certificate of Designation, Rights and Preferences relating to Mandatorily Convertible Preferred Stock................................................................ (t) Amended and Restated Rights Agreement, dated as of January 12, 1998, between the Registrant and Bank One Trust Company, N.A. (including certificate of designation of Series A Junior Participating Preferred Stock) incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K as amended, dated December 15, 1997................ (u) Form of Deposit Agreement dated as of , 1998, among the Registrant, the Bank of New York, and the holders from time to time of depositary receipts executed and delivered thereunder.......................................................................
II-6 (v) Form of Pledge and Escrow Agreement dated as of , 1998 by and between the Registrant and The Bank of New York, as Trustee (Senior Notes) (included in Exhibit 4(o) hereof) (w) Form of Pledge, Escrow and Disbursement Agreement dated as of , 1998 by and between the Registrant and The Bank of New York, as Trustee (Senior Discount Notes) (included in Exhibit 4(p) hereof) (x) Pledge, Escrow and Disbursement Agreement by and between Six Flags Entertainment Corporation and The Bank of New York, as Trustee (SFEC Notes) (included in Exhibit 4(q) hereof) (5) Opinion of Baer Marks & Upham LLP, including consent...................................................... **(12) (a) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends... **(12) (b) Computation of Ratio of Earnings to Fixed Charges.......................................... (23) Consents: (a) Consent of Baer Marks & Upham LLP (included in Exhibit (5))................................ (b) Consent of KPMG Peat Marwick LLP........................................................... (c) Consent of Ernst & Young LLP............................................................... *(d) Consent of Coopers & Lybrand LLP........................................................... (e) Consent of Carpenter Mountjoy & Bressler, PSC.............................................. **(24) Power of Attorney......................................................................................... **(27) Financial Data Schedule...................................................................................
- ------------------------ * To be incorporated by reference to the Company's Current Report on Form 8-K to be filed prior to the effective date of this Registration Statement ** Previously filed II-7 EX-1.(A) 2 EXHIBIT 1(A) EXHIBIT 1(a) [Draft--3/18/98] 10,400,000 Shares PREMIER PARKS INC. Common Stock U.S. UNDERWRITING AGREEMENT , 1998 Lehman Brothers Inc. Smith Barney Inc. Furman Selz LLC NationsBanc Montgomery Securities LLC As Representatives of the several U.S. Underwriters named in Schedule 1, c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Dear Sirs: Premier Parks Inc., a Delaware corporation (the "Company"), proposes to sell to the U.S. Underwriters named in Schedule 1 hereto (the "U.S. Underwriters"), and the U.S. Underwriters propose, severally and not jointly, to purchase 10,400,000 shares (the "Firm Stock") of the Company's Common Stock, par value $.05 per share (the "Common Stock"). In addition, the Company proposes to grant to the U.S. Underwriters an option to purchase up to an additional 1,560,000 shares of the Common Stock on the terms and for the purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the Option Stock, if purchased, are hereinafter collectively called the "Stock". This is to confirm the agreement concerning the purchase of the Stock from the Company by the U.S. Underwriters. It is understood by all parties that the Company is currently entering into an agreement dated the date hereof (the "International Underwriting Agreement") providing for the sale by the Company of 2,990,000 shares of Common Stock (including the over-allotment option thereunder) (the "International Stock") through arrangements with certain underwriters outside the United States (the "International 2 Managers"), for whom Lehman Brothers International (Europe), Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC are acting as lead managers (the "Lead Managers"). The U.S. Underwriters and the International Managers simultaneously are entering into an agreement between the U.S. and international underwriting syndicates (the "Agreement Between U.S. Underwriters and International Managers") which provides for, among other things, the transfer of shares of Common Stock between the two syndicates. One form of prospectus relating to the Stock and one form of prospectus relating to the International Stock are to be used in connection with the offering (the "Offering") of the Stock and the International Stock. The latter form of prospectus will be identical to the former except for certain substitute pages as included in the registration statement and amendments thereto referred to below. Except as used in Sections 2, 3, 4, 9 and 10 herein, and except as the context may otherwise require, references herein to the Stock shall include all the shares which may be sold pursuant to either this Agreement or the International Underwriting Agreement, and references herein to any prospectus whether in preliminary or final form, and whether as amended or supplemented, shall include both the U.S. and the international versions thereof. As used in this Agreement, the term "Underwriter" includes U.S. Underwriters and International Managers. It is also understood by all parties that the Company is undertaking the Offering in connection with its acquisition (the "Six Flags Acquisition") from the current stockholders (the "Sellers") of all of the capital stock of Six Flags Entertainment Corporation ("SFEC"), and that, in connection with the Six Flags Acquisition, the Company is concurrently offering $ million aggregate principal amount at maturity of its senior discount notes due 2008 (the "Company Senior Discount Notes") with estimated gross proceeds of $250 million, $280 million aggregate principal amount of its senior notes due 2006 (the "Company Senior Notes") and, with the over-allotment option, 5,750,000 Premium Income Equity Securities ("PInES") representing interests in the Company's mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with estimated gross proceeds of $228.2 million. In addition, it is understood by all parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a new $472 million senior secured credit facility (the "Six Flags Credit Facility") under a credit agreement dated the date of this 3 Agreement among it, certain of the Six Flags Subsidiaries (as defined in Section 15) and Lehman Commercial Paper, Inc., and Premier Operations Inc. ("Premier Operations") has entered into a $300 million senior secured credit facility (the "Premier Credit Facility" and, together with the Six Flags Credit Facility, the "Credit Facilities") under a credit agreement among the Company, certain of the Premier Subsidiaries and Premier Partnerships (each as defined in Section 15) and Lehman Commercial Paper, Inc. It is further understood by all parties that, immediately following the Offering, SFEC will offer $170 million aggregate principal amount of senior notes due 2006 (the "New SFEC Notes"), and that, concurrently with the Offering, the Company may issue depositary shares (the "Seller Depositary Shares") representing interests in up to $200 million of the Company's convertible redeemable preferred stock (the "Seller Convertible Redeemable Preferred Stock") to the Sellers as part of the consideration for the Six Flags Acquisition. 1. Representations, Warranties and Agreements of the Company and Certain of the Subsidiaries. The Company and Premier Operations and, as of the First Delivery Date (as hereinafter defined), SFEC and SFTP represent, warrant and agree, jointly and severally, that: (a) A registration statement on Form S-3 (file number 333-45859), and amendments thereto, with respect to the Stock has (i) been prepared by the Company in conformity in all material respects with the requirements of the United States Securities Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and Regulations") of the United States Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. Copies of such registration statement and amendments thereto have been delivered by the Company to you as the representatives (the "Representatives") of the U.S. Underwriters. Upon your written request, but not without your agreement, the Company will also file a Rule 462(b) Registration Statement in accordance with Rule 462(b). As used in this Agreement, "Effective Time" means the date and the time as of which such registration statement, the most recent post-effective amendment thereto, if any, or any Rule 462(b) Registration Statement became or becomes effective; "Effective Date" 4 means the date of the Effective Time; "Preliminary Prospectus" means each prospectus included in such registration statement, or amendments thereof, before it became effective under the Securities Act and any prospectus relating to the Stock filed with the Commission by the Company with the consent of the Representatives pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement" means such registration statement, as amended at the Effective Time, including any documents incorporated by reference therein at such time and all information contained in the final prospectus relating to the Stock filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance with Section 5(a) hereof and deemed to be a part of the registration statement as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations and, in the event any Rule 462(b) Registration Statement becomes effective prior to the First Delivery Date, also means such registration statement as so amended, unless the context otherwise requires; "Prospectus" means such final prospectus, as first filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b) Registration Statement" means the registration statement and any amendments thereto filed pursuant to Rule 462(b) of the Rules and Regulations relating to the offering covered by the initial Registration Statement (file number 333-45859). Reference made herein to any Preliminary Prospectus or to the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date of such Preliminary Prospectus or the Prospectus, as the case may be. The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus. (b) The Registration Statement conforms, and the Prospectus, any further amendments or supplements to the Registration Statement or the Prospectus and any Rule 462(b) Registration Statement will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and do not and will not, as of the applicable Effective Time (as to the Registration Statement and any amendment thereto) and as of the applicable filing date 5 (as to the Prospectus and any amendment or supplement thereto) contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company through the Representatives or the Lead Managers by or on behalf of any Underwriter specifically for inclusion therein. (c) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) The Company, each of the Premier Subsidiaries and, as of the First Delivery Date, each of the Six Flags Subsidiaries have been or will be, as applicable, duly incorporated and are or will be, as applicable, validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Partnerships (as defined in Section 15) is or will be, as applicable, validly existing as a limited partnership in good standing under the laws of their respective jurisdictions of formation; the Company, each of the Premier Subsidiaries and each of the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Subsidiaries and each of the Six Flags Partnerships are or will be, as applicable, duly qualified to do business and are or will be, as applicable, in good standing as foreign entities in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires or will require, as applicable, such qualification, except where the failure to so qualify would not have in the aggregate a material adverse effect on the consolidated financial position, stockholders' equity (or partners' equity, as applicable), results of 6 operations, business or prospects of the Company and the Subsidiaries taken as a whole (a "Material Adverse Effect") and have or will have, as applicable, all corporate or partnership power and authority, as the case may be, necessary to own or hold their respective properties and to conduct the businesses in which they are or will be, as applicable, engaged; none of the subsidiaries (as defined in Rule 405 of the Rules and Regulations) of the Company (other than the Subsidiaries) is a "significant subsidiary", as such term is defined in Rule 405 of the Rules and Regulations; and the assets, liabilities and operations of such other subsidiaries are immaterial to the assets, liabilities, operations and prospects of the Company and the Subsidiaries taken as a whole. (e) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non- assessable and conform in all material respects to the description thereof contained in the Prospectus. All of the issued shares of capital stock of each Premier Subsidiary (in the case of Walibi, S.A. ("Walibi"), a Belgian corporation, to our knowledge) have been, and all of the issued shares of capital stock of each Six Flags Subsidiary, as of the First Delivery Date, will be, duly and validly authorized and issued and are or will be, as applicable, fully paid and non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer (as defined in Section 1(ai)), are or will be, as applicable, owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims arising under the Credit Facilities and the subordinated indemnity agreement among the Company and certain of its affiliates, SFEC and certain of its affiliates and Time Warner Inc. and certain of its affiliates dated , 1998 (the "Subordinated Indemnity Agreement"). 100% of the partnership interest in the Premier Partnerships is held and, as of the First Delivery Date, 100% of the partnership interest in the Six Flags Partnerships, except for the 40% general partnership interest in San Antonio Theme Park, L.P. ("Fiesta Partnership") held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in Six Flags Over Georgia II, L.P. (the "Georgia Co-Venture 7 Partnership") indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in Texas Flags, Ltd. (the "Texas Co- Venture Partnership") indirectly held by investors in Six Flags Fund II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, will be, as applicable, held directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims under the Credit Facilities and the Co-Venture Parks Agreements (as defined in Section 15). (f) The unissued shares of the Stock to be issued and sold by the Company to the U.S. Underwriters hereunder and to the International Managers under the International Underwriting Agreement have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and non-assessable. (g) This Agreement and the International Underwriting Agreement have been duly authorized, executed and delivered by the Company, each of the Premier Subsidiaries and each of the Premier Partnerships that is a party hereto or thereto, and, as of the First Delivery Date, will be duly authorized, executed and delivered by each of the Six Flags Subsidiaries that is a party hereto or thereto. (h) The execution, delivery and performance of this Agreement and the International Underwriting Agreement by the Company and each of the Subsidiaries that are parties hereto or thereto, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or 8 qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Stock by the U.S. Underwriters and the International Managers are obtained, any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets except, in each case, breaches, violations or defaults which, in the aggregate, are not reasonably likely to have a Material Adverse Effect; and except for the registration of the Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Stock by the U.S. Underwriters and the International Managers, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required or, with respect to the Six Flags Subsidiaries will be required, for the execution, delivery and performance of this Agreement or the International Underwriting Agreement by the Company or any of the Subsidiaries that are parties hereto or thereto and the consummation of the transactions contemplated hereby and thereby. (i) Except as disclosed in the Prospectus and as to those rights which have been duly and validly waived, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. (j) The Company has not sold or issued any shares of Common Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than (i) 121,671 shares issued pursuant to the Company's acquisition of all of the membership interests of KKI, LLC on November 7, 1997, (ii) 228,855 shares 9 issued pursuant to the Company's acquisition of at least 49% of the outstanding capital stock of Walibi on March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000 restricted shares issued to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, (iv) 768 shares issued to certain directors of the Company and (v) shares issued pursuant to the Company's employee benefit plans, qualified stock options plans or other employee compensation plans or pursuant to outstanding options, rights or warrants, which, in each case, are disclosed in the Prospectus. (k) Neither the Company nor any of the Subsidiaries has sustained, since the date of the latest audited financial statements included in the Prospectus, any loss or interference with its business from fire, explosion, flood, accident or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus, except losses or interferences which will not, in the aggregate, have a Material Adverse Effect; and, since such date, there has not been any change in the capital stock other than in connection with the Premier Merger (as defined in Section 1(ag)) or long-term debt of the Company or any of the Subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its Subsidiaries, otherwise than as set forth or contemplated in the Prospectus. (l) The historical financial statements (including the related notes and supporting schedules) filed as part of the Registration Statement or included in the Prospectus present fairly the financial condition and results of operations of the entities purported to be shown thereby at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) applied on a consistent basis throughout the periods involved, and, in the case of Walibi, have been reconciled to accounting principles generally accepted in the United States to the extent 10 required by the applicable accounting requirements of the Securities Act and the Rules and Regulations. The pro forma financial statements included in the Prospectus have been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, and comply in all material respects with Regulation S-X under the Securities Act, and the pro forma adjustments have been properly applied to historical amounts in the compilation of such pro forma financial statements. (m) KPMG Peat Marwick LLP, who have certified certain financial statements of the Company, Ernst & Young LLP, who have certified certain financial statements of SFEC, Coopers & Lybrand, who have certified certain financial statements of Walibi and Carpenter Mountjoy & Bressler, who have certified certain financial statements of Kentucky Kingdom, Inc. ("Kentucky Kingdom") whose reports appear in the Prospectus or are incorporated by reference therein and who have each delivered the respective initial letters referred to in Section 7(h) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (n) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except for such liens arising under the Credit Facilities or contemplated in Section 1(e) hereof as are described in the Prospectus or such as would not have a Material Adverse Effect; and all real property and buildings held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as would not have a Material Adverse Effect. (o) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) carry, or are covered by insurance in such amounts and covering such risks (including the risk of earthquakes) as the Company has reasonably concluded, based on its experience, is adequate for the conduct of their respective businesses and the value of their respective properties and as is 11 customary for companies engaged in similar businesses in similar industries. (p) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their respective businesses as presently conducted and, with respect to the Amended and Restated License Agreement among certain affiliates of Warner Bros., SFTP and the Company dated February 9, 1998 (the "License Agreement"), as contemplated by the Prospectus, and have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others with such exceptions as would not have a Material Adverse Effect. (q) Except as otherwise disclosed in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect or are otherwise required to be disclosed in the Prospectus; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (r) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. (s) There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Prospectus or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations. (t) No relationship, direct or indirect, exists between or among the Company or any Subsidiary on the one hand, and the directors, officers, stockholders, 12 customers or suppliers of the Company or any Subsidiary on the other hand, which is required to be described or incorporated by reference in the Prospectus which is not so described or incorporated by reference. (u) No labor disturbance by the employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is imminent which might be reasonably expected to have a Material Adverse Effect. (v) The Company is and, as of the First Delivery Date, SFEC will be in compliance in all material respects with all presently and then applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred or, with respect to SFEC, as of the First Delivery Date will have occurred with respect to any "pension plan" (as defined in ERISA) for which the Company or SFEC, as applicable, would have any material liability; the Company has not incurred and, as of the First Delivery Date, SFEC will not have incurred and neither the Company expects nor SFEC, as of the First Delivery Date, will expect to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company or SFEC, as applicable, would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred or, with respect to SFEC, as of the First Delivery Date, will have occurred whether by action or by failure to act, which might reasonably be expected to cause the loss of such qualification. (w) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) are in compliance in all respects with (i) all presently applicable provisions of the Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder and (ii) all presently applicable state and local laws and regulations relating to the safety of its theme park and water park operations, with such exceptions as would not have a Material Adverse Effect. 13 (x) The Company has filed and, as of the First Delivery Date, SFEC and its subsidiaries will have filed all federal, and all material state and local income and franchise tax returns required to be filed through the date hereof or the First Delivery Date, as applicable, other than those filings being contested in good faith. The Company has paid and, as of the First Delivery Date, SFEC will have paid all taxes of which it has notice or will have notice, as applicable, are due thereon, other than those being contested in good faith and for which adequate reserves have been provided or will have been provided, as applicable, or those currently payable or payable as of the First Delivery Date, as applicable, without penalty or interest and no tax deficiency has been determined adversely to the Company or any of the Subsidiaries which has had, nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company or any of the Subsidiaries, might be reasonably expected to have, a Material Adverse Effect. (y) Since the date as of which information is given in the Prospectus through the date hereof, and except as may otherwise be disclosed in the Prospectus, the Company has not (i) issued or granted any securities or (ii) declared or paid any dividend on its capital stock, and neither the Company nor any of its Subsidiaries has (i) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business or (ii) entered into any material transaction not in the ordinary course of business other than the Six Flags Acquisition. (z) The Company and each of its Subsidiaries (in the case of Walibi, to our knowledge) (i) make and keep accurate books and records and (ii) maintain internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of their financial statements in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) and to maintain accountability for their assets, (C) access to their assets is permitted only in accordance with 14 management's authorization and (D) the recorded accountability for their assets is compared with existing assets at reasonable intervals. (aa) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge) (i) is in violation of its charter or by-laws (or its partnership agreement, as applicable), (ii) is in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation in any material respect of any material law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject or has failed to obtain any material license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business. (ab) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge), nor, to its knowledge, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of the Subsidiaries, has used any corporate or partnership funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (ac) There has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous substances by the Company or any of the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the 15 Company or the Subsidiaries in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for any violation or remedial action which would not have, or could not be reasonably likely to have, singularly or in the aggregate with all such violations and remedial actions, a Material Adverse Effect; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or any of the Subsidiaries or with respect to which the Company or any of the Subsidiaries have knowledge, except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have or would not be reasonably likely to have, singularly or in the aggregate with all such spills, discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to environmental protection. (ad) Neither the Company nor any Subsidiary is an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. (ae) At the First Delivery Date, (i) the Six Flags Acquisition shall be consummated in accordance with the terms of the Agreement and Plan of Merger dated February 9, 1998 among the Company, Premier Operations, Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers (the "Merger Agreement"), and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement, (ii) each of the concurrent offerings by the Company of the Company Senior Discount Notes, the Company Senior Notes and the PInES shall be consummated, (iii) the offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering, (iv) each of the Credit Facilities shall be in effect and available 16 for borrowing and (v) no default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or shall result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (A) the Merger Agreement, (B) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, Premier Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes"), Premier Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"), SFEC's Zero Coupon Notes due 1999 (the "SFEC Zero Coupon Notes"), SFTP's Senior Subordinated Notes due 2005 (the "SFTP Senior Subordinated Notes") and the New SFEC Notes, (C) the credit agreements relating to either of the Credit Facilities or (D) the Stock Purchase Agreement dated December 15, 1997 between Premier Operations (or a to be formed Belgian corporation) and Centrag, S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement"). (af) The statements set forth in the Prospectus under the captions "Business--Licenses", "Business-- Intercompany Services Agreement", "Business--Tax Sharing Agreement", "Description of Six Flags Agreement", "Description of Indebtedness" and "Description of Securities", insofar as they describe the terms of the agreements and securities referred to therein, are accurate and fairly present the information required to be shown. (ag) The merger (the "Premier Merger") of the company formerly known as Premier Parks Inc. with a wholly owned subsidiary of Premier Parks Holdings Corporation has been effected, and, in connection therewith, no stockholder vote was required under applicable Delaware law and the Premier Merger otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ah) No stockholder vote is required under applicable Delaware law in connection with the Six Flags Acquisition, and the Six Flags Acquisition otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ai) The Company has effected the Walibi Acquisition and has commenced a tender offer (the "Walibi 17 Tender Offer") for the remainder of the outstanding capital stock of Walibi as described in the Prospectus. (aj) On or prior to the First Delivery Date, the License Agreement, the Subordinated Indemnity Agreement, the Intercompany Services Agreement and the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. 2. Purchase of the Stock by the U.S. Underwriters. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Company agrees to sell 10,400,000 shares of the Firm Stock to the several U.S. Underwriters and each of the U.S. Underwriters, severally and not jointly, agrees to purchase the number of shares of the Firm Stock set opposite that U.S. Underwriter's name in Schedule 1 hereto. In addition, the Company grants to the U.S. Underwriters an option to purchase up to 1,560,000 shares of Option Stock. Such option is granted solely for the purpose of covering over-allotments in the sale of Firm Stock and is exercisable as provided in Section 4 hereof. Shares of Option Stock shall be purchased severally and not jointly for the account of the U.S. Underwriters in proportion to the number of shares of Firm Stock set opposite the name of such U.S. Underwriters in Schedule 1 hereto. The respective purchase obligations of each U.S. Underwriter with respect to the Option Stock shall be adjusted by the Representatives so that no U.S. Underwriter shall be obligated to purchase Option Stock other than in 100 share amounts. The price of both the Firm Stock and any Option Stock shall be $ per share. The Company shall not be obligated to deliver any of the Stock to be delivered on the First Delivery Date or the Second Delivery Date (as hereinafter defined), as the case may be, except upon payment for all the Stock to be purchased on such Delivery Date as provided herein and in the International Underwriting Agreement. 3. Offering of Stock by the U.S. Underwriters. Upon authorization by the Representatives of the release of the Firm Stock, the several U.S. Underwriters propose to offer the Firm Stock for sale upon the terms and conditions set forth in the Prospectus. 18 Each U.S. Underwriter agrees that, except to the extent permitted by the Agreement Between U.S. Underwriters and International Managers, it will not offer or sell any of the Stock outside of the United States and Canada. 4. Delivery of and Payment for the Stock. Delivery of and payment for the Firm Stock shall be made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time, on the fourth full business day following the date of this Agreement or at such other date or place as shall be determined by agreement between the Representatives and the Company. This date and time are sometimes referred to as the "First Delivery Date." On the First Delivery Date, the Company shall deliver or cause to be delivered certificates representing the Firm Stock to the Representatives for the account of each U.S. Underwriter against payment to or upon the order of the Company of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company will not be responsible for any delay resulting from any action or inaction of any U.S. Underwriter or International Manager) and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each U.S. Underwriter hereunder. Upon delivery, the Firm Stock shall be registered in such names and in such denominations as the Representatives shall request in writing not less than two full business days prior to the First Delivery Date. For the purpose of expediting the checking and packaging of the certificates for the Firm Stock, the Company shall make the certificates representing the Firm Stock available for inspection by the Representatives in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the First Delivery Date. At any time on or before the thirtieth day after the date of this Agreement, the option granted in Section 2 may be exercised by written notice being given to the Company by the Representatives. Such notice shall set forth the aggregate number of shares of Option Stock as to which the option is being exercised, the names in which the shares of Option Stock are to be registered, the denominations in which the shares of Option Stock are to be issued and the date and time, as determined by the Representatives, when the shares of Option Stock are to be delivered; provided, however, that this date and time shall not be earlier than the First Delivery Date nor 19 earlier than the second business day after the date on which the option shall have been exercised nor later than the third business day after the date on which the option shall have been exercised. The date and time the shares of Option Stock are delivered are sometimes referred to as the "Second Delivery Date" and the First Delivery Date and the Second Delivery Date are sometimes each referred to as a "Delivery Date". Delivery of and payment for the Option Stock shall be made at the place specified in the first sentence of the first paragraph of this Section 4 (or at such other place as shall be determined by agreement between the Representatives and the Company) at 10:00 A.M., New York City time, on the Second Delivery Date. On the Second Delivery Date, the Company shall deliver or cause to be delivered the certificates representing the Option Stock to the Representatives for the account of each U.S. Underwriter against payment to or upon the order of the Company of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company will not be responsible for any delay resulting from any action or inaction of any U.S. Underwriter or International Manager), and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each U.S. Underwriter hereunder. Upon delivery, the Option Stock shall be registered in such names and in such denominations as the Representatives shall request in the aforesaid written notice. For the purpose of expediting the checking and packaging of the certificates for the Option Stock, the Company shall make the certificates representing the Option Stock available for inspection by the Representatives in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the Second Delivery Date. 5. Further Agreements of the Company. The Company agrees: (a) To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than Commission's close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to make no 20 further amendment or any supplement to the Registration Statement or to the Prospectus and to file no Rule 462(b) Registration Statement except as permitted herein; to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Representatives with copies thereof; upon your request, to cause the Rule 462(b) Registration Statement, properly completed, to be filed with the Commission pursuant to Rule 462(b) and to provide evidence satisfactory to the Representatives of such filing; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the Stock for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification, to use promptly its reasonable best efforts to obtain its withdrawal; (b) To furnish reasonably promptly to each of the Representatives and to counsel for the U.S. Underwriters a signed copy of the Registration Statement as originally filed with the Commission, each amendment thereto and any Rule 462(b) Registration Statement filed with the Commission, including all consents and exhibits filed therewith; (c) To deliver promptly to the Representatives such number of the following documents as the Representatives shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission, each amendment thereto (in each case excluding exhibits other than this Agreement and the computation of per share earnings) and any Rule 462(b) Registration Statement, (ii) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus and (iii) any document incorporated by reference in the 21 Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is required at any time after the Effective Time in connection with the offering or sale of the Stock or any other securities relating thereto and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Representatives and, upon their request, to file such document and to prepare and furnish without charge to each U.S. Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance. (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Representatives, be required by the Securities Act or requested by the Commission; (e) Prior to filing with the Commission any amendment to the Registration Statement or supplement to the Prospectus, any document incorporated by reference in the Prospectus, any Prospectus pursuant to Rule 424 of the Rules and Regulations or any Rule 462(b) Registration Statement to furnish a copy thereof to the Representatives and counsel for the U.S. Underwriters and obtain the consent of the Representatives to the filing; (f) As soon as practicable after the Effective Date (it being understood that the Company shall have until at least 410 days after the end of the Company's current fiscal quarter), to make generally available to the Company's security holders and to deliver to the Representatives an earnings statement of the Company and its subsidiaries (which need not be audited) complying 22 with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158); (g) For a period of five years following the Effective Date, to furnish to the Representatives copies of all materials furnished by the Company to its public shareholders and all public reports and all reports and financial statements furnished by the Company to the principal national securities exchange upon which the Common Stock may be listed pursuant to requirements of or agreements with such exchange or to the Commission pursuant to the Exchange Act or any rule or regulation of the Commission thereunder; (h) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Stock for offering and sale (or obtain an exemption from registration) under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Stock; provided, however, that the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Stock; (i) For a period of 90 days from the date of the Prospectus, not to, directly or indirectly, (i) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or any securities convertible into or exchangeable for Common Stock (other than the Stock, the International Stock, the PInES, the Mandatorily Convertible Preferred Stock, the Seller Depositary Shares, the Seller Convertible Redeemable Preferred Stock, shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans existing on the date hereof or pursuant to currently outstanding options, warrants or rights or upon the conversion of the Seller Convertible Redeemable Preferred Stock or the Mandatorily Convertible Preferred Stock, and 23 other than shares issued by the Company as consideration to any seller of assets or stock that the Company or any of the Subsidiaries is acquiring, provided that any shares so issued to such seller or sellers, including any shares issued after the date of the Prospectus pursuant to the Walibi Acquisition or the Walibi Tender Offer, in the aggregate, do not exceed one-fifth of the total equity of the Company outstanding at the time of the first such issuance, and further provided that such seller or sellers (other than the sellers of Walibi) contemporaneously with any such issuance or issuances enter into an agreement with the Representatives in substantially the same form as the agreement described in this paragraph (i) for the remainder of the 90 day period), or sell or grant options, rights or warrants with respect to any shares of Common Stock or securities convertible into or exchangeable for Common Stock (other than the grant of options pursuant to option plans existing on the date hereof) or (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case without the prior written consent of Lehman Brothers Inc.; and to cause each officer and director of the Company and Hanseatic Corporation, Richland Ventures, L.P., Richland Ventures II, L.P., Lawrence, Tyrrell, Ortale & Smith, Lawrence, Tyrrell, Ortale & Smith II, L.P., Windcrest Partners, [JG Partnership, Ltd.,] [J. David Grissom] and Robert J. Gellert (in the case of Robert J. Gellert only, limited to (A) shares held for his own account and (B) shares beneficially owned by Lexfor Corporation) to furnish to the Representatives, prior to the First Delivery Date, a letter or letters, in form and substance satisfactory to counsel for the Underwriters, pursuant to which each such person shall agree not to, directly or indirectly, (iii) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or any securities convertible into or exchangeable for Common Stock or (iv) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks 24 of ownership of such shares of Common Stock, whether any such transaction described in clause (iii) or (iv) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case for a period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; (j) To take such steps as shall be necessary to ensure that neither the Company nor any subsidiary shall become an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder; (k) To cause an authorized officer to execute this Agreement on behalf of each of the Six Flags Subsidiaries on the First Delivery Date; (l) Not to waive the lock-up agreements executed by the Sellers in connection with the Six Flags Acquisition whereby each of the Sellers agreed to not sell any Seller Convertible Redeemable Preferred Stock (or shares of Common Stock issuable upon conversion thereof) during the period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; and (m) To make an offer to purchase the SFTP Senior Subordinated Notes following the Six Flags Acquisition in accordance with the provisions of the indenture for the SFTP Senior Subordinated Notes relating to offers to purchase the SFTP Senior Subordinated Notes upon a change of control of SFTP. 6. Expenses. The Company agrees to pay (a) the costs incident to the authorization, issuance, sale and delivery of the Stock and any taxes payable in that connection; (b) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits thereto; (c) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or supplement to the Prospectus or any document incorporated by reference therein, all as provided in 25 this Agreement; (d) the costs of producing and distributing this Agreement, the International Underwriting Agreement, the Agreement Between U.S. Underwriters and International Managers, the Agreement Among International Managers, the International Selling Agreement and any other related documents in connection with the offering, purchase, sale and delivery of the Stock; (e) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of sale of the Stock; (f) listing or other fees incident to the inclusion of the Common Stock (including the Stock) for listing on the New York Stock Exchange; (g) the fees and expenses, if applicable, of qualifying the Stock under the securities laws of the several jurisdictions as provided in Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Underwriters); (h) if one is required pursuant to the rules of the NASD, all fees and expenses of a qualified independent underwriter; and (i) all other costs and expenses incident to the performance of the obligations of the Company or any of the Subsidiaries under this Agreement; provided that, except as provided in this Section 6 and in Section 11, the U.S. Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Stock which they may sell and the expenses of advertising any offering of the Stock made by the U.S. Underwriters. 7. Conditions of U.S. Underwriters' Obligations. The respective obligations of the U.S. Underwriters hereunder are subject to the accuracy, when made and on each Delivery Date, of the representations and warranties of the Company, Premier Operations, SFEC and SFTP contained herein, to the performance by the Company and each of the Subsidiaries that is a party hereto of its obligations hereunder, and to each of the following additional terms and conditions: (a) The Prospectus shall have been timely filed with the Commission in accordance with Section 5(a); no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with. 26 (b) No U.S. Underwriter or International Manager shall have discovered and disclosed to the Company on or prior to such Delivery Date that the Registration Statement or the Prospectus or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of Cravath, Swaine & Moore, counsel for the U.S. Underwriters, is material or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the International Underwriting Agreement, the Stock, the Registration Statement and the Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the U.S. Underwriters, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (d) Baer Marks & Upham LLP shall have furnished to the Representatives its written opinion, as counsel to the Company, addressed to the U.S. Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Representatives, to the effect that: (i) The Company and each of the Premier Subsidiaries and each of the Six Flags Subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and each of the Six Flags Partnerships is validly existing as a limited partnership in good standing under the laws of its jurisdiction of formation; and the Company, the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships are each duly qualified to do business and are in good standing as foreign corporations in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification except where 27 the failure to so qualify would not have a Material Adverse Effect and have all corporate or partnership power and authority necessary to own or hold their respective properties and conduct the businesses in which they are engaged as described in the Prospectus; (ii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company now outstanding (including the shares of Stock being delivered on such Delivery Date) have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus; all of the shares of Stock have been duly authorized and, when issued and delivered to the Representatives for the account of each U.S. Underwriter against payment therefor as provided herein, shall be validly issued, fully paid and non-assessable; to such counsel's knowledge, all of the issued shares of capital stock of each Premier Subsidiary and each Six Flags Subsidiary have been duly and validly authorized and issued and are fully paid, non- assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Subordinated Indemnity Agreement; and 100% of the partnership interest in each of the Premier Partnerships and each of the Six Flags Partnerships is held directly or indirectly by the Company, except for the 40% general partnership interest in Fiesta Partnership held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in the Georgia Co-Venture Partnership indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in the Texas Co- Venture Partnership indirectly held by investors in Six Flags Funds II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, free and clear of all liens, encumbrances, 28 equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Co-Venture Parks Agreements; (iii) There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Stock pursuant to the Company's charter or by-laws or any agreement or other instrument known to such counsel; (iv) To the best of such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (v) Based solely upon oral confirmation from the staff of the Commission, the Registration Statement was declared effective under the Securities Act as of the date and time specified in such opinion; the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and no stop order suspending the effectiveness of the Registration Statement has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the Commission; (vi) The Registration Statement and the Prospectus and any further amendments or supplements thereto made by the Company prior to such Delivery Date (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations; and the documents incorporated by 29 reference in the Prospectus (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion), when they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder; (vii) To the best of such counsel's knowledge, there are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations; (viii) Each of this Agreement and the International Underwriting Agreement has been duly authorized, executed and delivered by the Company and each of the Subsidiaries that is a party hereto or thereto; (ix) The issue and sale of the shares of Stock being delivered on such Delivery Date by the Company and the compliance by the Company and each of the Subsidiaries that is a party hereto or thereto with all of the provisions of this Agreement and the International Underwriting Agreement and the consummation of the transactions contemplated hereby and thereby (including the offerings of the Company Senior Discount Notes, the Company Senior Notes and the New SFEC Notes and the entering into of the Six Flags Credit Facility and any borrowing thereunder in connection with the Six Flags Acquisition) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions 30 result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Stock by the U.S. Underwriters and the International Managers are obtained, any Federal or New York State statute, the General Corporation Law of the State of Delaware, or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets; and, except for the registration of the Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Stock by the U.S. Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement or the International Underwriting Agreement by the Company or any of the Subsidiaries that is a party hereto or thereto and the consummation of the transactions contemplated hereby and thereby; and (x) To the best of such counsel's knowledge, no holders of securities of the Company have rights to require the Company to include such securities with the Stock registered pursuant to the Registration Statement. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and that such counsel is not admitted in any state other than New York; and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided 31 that such counsel shall state that it believes that both the U.S. Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Representatives a written statement, addressed to the U.S. Underwriters and dated such Delivery Date, in form satisfactory to the Representatives, to the effect that (x) such counsel has acted as counsel to the Company on a regular basis (although the Company is also represented with respect to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition, litigation matters, regulatory matters and certain other matters, by other outside counsel), has acted as counsel to the Company in connection with financing transactions since February 1992 and has acted as counsel to the Company in connection with the preparation of the Registration Statement and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. In rendering such statement, such counsel may rely upon the opinion and statement delivered by Weil Gotshal & Manges LLP pursuant to Section 5(e) hereto with respect to the information covered by such opinion and statement. The foregoing opinion and statement may be qualified by a statement to the effect 32 that such counsel does not assume any responsibility for the accuracy or fairness with respect to the information required to be shown under the Securities Act and the Rules and Regulations of the statements contained in the Registration Statement or the Prospectus except for the statements made in the Prospectus under the captions "Prospectus Summary--Other Recent Developments--Walibi", "Business--Intercompany Services Agreement", "Business-- Tax Sharing Agreement", "Description of Indebtedness", "Description of Securities", "Description of PInES" and "Description of Depositary Arrangements" insofar as such statements describe the terms of the Walibi Acquisition and Walibi Tender Offer, the documents or agreements referred to therein, the Stock, the Seller Convertible Redeemable Preferred Stock, the Company's debt instruments or other securities, or the registration rights referred to therein and concern legal matters. (e) Weil Gotshal & Manges LLP shall have furnished to the Representatives its written opinion, as special counsel to the Company, addressed to the U.S. Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Representatives, as to certain matters set forth in Section 7(d) and to the effect that the statements set forth in the Prospectus under the captions "Business--Licenses" and "Description of Six Flags Agreement", insofar as such statements describe the terms of the documents or agreements referred to therein, are accurate, complete and fair. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the U.S. Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Representatives a written statement, addressed to the U.S. Underwriters and dated such Delivery Date, in form satisfactory to the Representatives, to the effect that (x) such counsel has acted as counsel to the Company in connection with the Walibi Acquisition, the Walibi Tender Offer and the Six Flags Acquisition and has reviewed the information (the 33 "Walibi and Six Flags Information") in the Registration Statement relating to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition and the business and operations of Walibi and its subsidiaries and SFEC and its subsidiaries and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The foregoing statement may be qualified by a statement to the effect that the statement's scope is limited to the Walibi and Six Flags Information. (f) Richards, Layton & Finger shall have furnished to the Representatives its written opinion, as special Delaware counsel to the Company, addressed to the U.S. Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Representatives, to the effect that, in connection with the Premier Merger, no shareholder vote was required under applicable Delaware law and, in connection with the Six Flags Acquisition, no shareholder vote is required under applicable Delaware law, and that the Premier Merger and the Six Flags Acquisition otherwise comply in all respects with applicable Delaware law. 34 (g) The Representatives shall have received from Cravath, Swaine & Moore, counsel for the U.S. Underwriters, such opinion or opinions and such statement or statements, dated such Delivery Date, with respect to the issuance and sale of the Stock, the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably require, and the Company and the Subsidiaries shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. (h) At the time of execution of this Agreement, the Representatives shall have received from (I) KPMG Peat Marwick LLP a letter, in form and substance satisfactory to the Representatives, addressed to the U.S. Underwriters and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings, except for the financial information and other matters covered in the letters from Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler described immediately hereinafter; (II) Ernst & Young LLP a letter, in form and substance satisfactory to the Representatives, addressed to the U.S. Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to SFEC and its subsidiaries as have been previously agreed to by such firm and the Representatives; (III) Coopers & Lybrand a letter, in form and substance satisfactory to the Representatives, addressed to the U.S. Underwriters and dated the date 35 hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Walibi and its subsidiaries, as have been previously agreed to by such firm and the Representatives; and (IV) Carpenter Mountjoy & Bressler a letter, in form and substance satisfactory to the Representatives, addressed to the U.S. Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Kentucky Kingdom, as have been previously agreed to by such firm and the Representatives. (i) With respect to the letters of KPMG Peat Marwick LLP, Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to in the preceding paragraph and delivered to the Representatives concurrently with the execution of this Agreement (the "initial letters"), the Company shall have furnished to the Representatives a letter (the "bring-down letters") of each of such accountants, addressed to the U.S. Underwriters and dated such Delivery Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the bring- down letter (or, in the case of the letter of KPMG Peat Marwick LLP, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial 36 letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter. (j) The Company shall have furnished to the Representatives a certificate, dated such Delivery Date, of its Chairman of the Board, its President or a Vice President and its chief financial officer stating that: (i) The representations, warranties and agreements of the Company and each of Premier Operations, SFEC and SFTP in Section 1 are true and correct as of such Delivery Date; the Company and each of the Subsidiaries that is a party hereto have complied with all their agreements contained herein; and the conditions set forth in Sections 7(a) and 7(k) have been fulfilled; and (ii) They have carefully examined the Registration Statement and the Prospectus and, in their opinion (A) as of the Effective Date, the Registration Statement and Prospectus did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since the Effective Date no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement or the Prospectus. (k) Since the date of the latest audited financial statements included or incorporated by reference in the Prospectus there shall not have been any change in the capital stock (or partners' equity, as applicable) other than the Premier Merger or long-term debt of the Company or any of the Subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its subsidiaries, otherwise, in each case, than as set forth or contemplated in the Prospectus, the effect of which, in any such case, is, in the judgment of the Representatives, so material (to the Company and its Subsidiaries, taken as a whole) and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Stock being delivered on 37 such Delivery Date on the terms and in the manner contemplated in the Prospectus. (l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities. (m) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of a majority in interest of the several U.S. Underwriters, impracticable or inadvisable to proceed with the public offering or delivery of the Stock being delivered on such Delivery Date on the terms and in the manner contemplated in the Prospectus. (n) The Six Flags Acquisition shall have been or shall be consummated concurrently with the Offering and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement. 38 (o) Each of the offerings by the Company of the Company Senior Discount Notes, the Company Senior Notes and the PInES shall have been or shall be consummated concurrently with the Offering. (p) The offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering. (q) Each of the Premier Credit Facility and the Six Flags Credit Facility shall be in effect and available for borrowing. (r) No default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or would result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (i) the Merger Agreement, (ii) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, the 1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes, the SFTP Senior Subordinated Notes and the New SFEC Notes, (iii) the credit agreement relating to either the Premier Credit Facility or the Six Flags Credit Facility or (iv) the Walibi Agreement. (s) The Premier Merger shall have been consummated. (t) Each of (i) the License Agreement, (ii) the Subordinated Indemnity Agreement, (iii) the Intercompany Services Agreement and (iv) the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. (u) An authorized officer shall have executed this Agreement on behalf of each of the Six Flags Subsidiaries. (v) Delivery of and payment for the Firm Stock under the International Underwriting Agreement shall have occurred concurrently with delivery of and payment for the Firm Stock hereunder on the First Delivery Date. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they 39 are in form and scope reasonably satisfactory to counsel for the U.S. Underwriters. 8. Indemnification and Contribution. (a) The Company and the Subsidiaries that are parties hereto, jointly and severally, shall indemnify and hold harmless each U.S. Underwriter (including any Underwriter in its role as qualified independent underwriter pursuant to the rules of the NASD), its officers and employees and each person, if any, who controls any U.S. Underwriter within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Stock), to which that U.S. Underwriter, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto or (B) in any blue sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying any or all of the Stock under the securities laws of any jurisdiction (any such application, document or information being hereinafter called a Blue Sky Application ), (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by any U.S. Underwriter in connection with, or relating in any manner to, the Stock or the Offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company and the Subsidiaries that are parties hereto shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such U.S. Underwriter 40 through its gross negligence or willful misconduct), and shall reimburse each U.S. Underwriter and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that U.S. Underwriter, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiaries that are parties hereto shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any such amendment or supplement, or in any Blue Sky Application, in reliance upon and in conformity with written information concerning any U.S. Underwriter or any International Manager furnished to the Company through the Representatives or Lead Managers by or on behalf of any U.S. Underwriter or International Manager specifically for inclusion therein; and provided further that with respect to any such untrue statement or omission made in the Preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not enure to the benefit of the U.S. Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Stock concerned if, to the extent that such sale was an initial sale by such U.S. Underwriter and any such loss, claim, damage or liability of such U.S. Underwriter is a result of the fact that both (A) a copy of the Prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Stock to such person, and (B) the untrue statement or omission in the Preliminary Prospectus was corrected in the Prospectus unless, in either case, such failure to deliver the Prospectus was a result of noncompliance by the Company with Section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company or any of the Subsidiaries that are parties hereto may otherwise have to any U.S. Underwriter or to any officer, employee or controlling person of that U.S. Underwriter. (b) Each U.S. Underwriter, severally and not jointly, shall indemnify and hold harmless the Company and the Subsidiaries that are parties hereto, each of their respective officers and employees, each of their respective directors, and each person, if any, who controls the Company or any 41 Subsidiary that is a party hereto within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any Subsidiary that is a party hereto or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such U.S. Underwriter furnished to the Company through the Representatives by or on behalf of that U.S. Underwriter specifically for inclusion therein, and shall reimburse the Company, any such Subsidiary and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company, any such Subsidiary or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any U.S. Underwriter may otherwise have to the Company, any such Subsidiary, or any such director, officer, employee or controlling person. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to 42 an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Representatives shall have the right, upon written notice to the Company, to employ counsel to represent jointly the Representatives and those other U.S. Underwriters and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the U.S. Underwriters against the Company and the Subsidiaries that are parties hereto under this Section 8 if, in the reasonable judgment of the Representatives, it is advisable for the Representatives and those U.S. Underwriters, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the reasonable fees and expenses of such separate counsel shall be paid, jointly and severally, by the Company and the Subsidiaries that are parties hereto. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such 43 action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(c) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the U.S. Underwriters on the other from the offering of the Stock or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiaries that are parties hereto on the one hand and the U.S. Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the U.S. Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Stock purchased under this Agreement (before deducting expenses) received by the Company on the one hand, and the total underwriting discounts and commissions received by the U.S. Underwriters with respect to the shares of the Stock purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the shares of the Stock under this Agreement, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the U.S. Underwriters, the intent of the parties and their relative 44 knowledge, access to information and opportunity to correct or prevent such statement or omission. For purposes of the preceding two sentences, the net proceeds deemed to be received by the Company shall be deemed to be also for the benefit of the Subsidiaries that are parties hereto and information supplied by the Company shall also be deemed to have been supplied by the Subsidiaries that are parties hereto. The Company, the Subsidiaries that are parties hereto and the U.S. Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the U.S. Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no U.S. Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Stock underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such U.S. Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The U.S. Underwriters' obligations to contribute as provided in this Section 8(d) are several in proportion to their respective underwriting obligations and not joint. (e) The U.S. Underwriters severally confirm and the Company and the Subsidiaries that are parties hereto acknowledge that the statements with respect to the public offering of the Stock by the U.S. Underwriters set forth in the first and last paragraphs on the cover page of, the legend concerning stabilization on the third page of and statements under the caption "Underwriting" including but not limited to the concession and reallowance figures, the Prospectus constitute the only information concerning such U.S. Underwriters furnished in writing to the Company by or on 45 behalf of the U.S. Underwriters specifically for inclusion in the Registration Statement and the Prospectus. 9. Defaulting U.S. Underwriters. If, on either Delivery Date, any U.S. Underwriter defaults in the performance of its obligations under this Agreement, the remaining non-defaulting U.S. Underwriters shall be obligated to purchase the Stock which the defaulting U.S. Underwriter agreed but failed to purchase on such Delivery Date in the respective proportions which the number of shares of the Firm Stock set opposite the name of each remaining non-defaulting U.S. Underwriter in Schedule 1 hereto bears to the total number of shares of the Firm Stock set opposite the names of all the remaining non-defaulting U.S. Underwriters in Schedule 1 hereto; provided, however, that the remaining non-defaulting U.S. Underwriters shall not be obligated to purchase any of the Stock on such Delivery Date if the total number of shares of the Stock which the defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to purchase on such date exceeds 9.09% of the total number of shares of the Stock to be purchased on such Delivery Date, and any remaining non-defaulting U.S. Underwriter shall not be obligated to purchase more than 110% of the number of shares of the Stock which it agreed to purchase on such Delivery Date pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting U.S. Underwriters, or those other underwriters satisfactory to the Representatives who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the Stock to be purchased on such Delivery Date. If the remaining U.S. Underwriters or other underwriters satisfactory to the Representatives do not elect to purchase the shares which the defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to purchase on such Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the obligation of the U.S. Underwriters to purchase, and of the Company to sell, the Option Stock) shall terminate without liability on the part of any non- defaulting U.S. Underwriter or the Company, except that the Company will continue to be liable for the payment of expenses to the extent set forth in Section 6. As used in this Agreement, the term "U.S. Underwriter" includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto who, 46 pursuant to this Section 9, purchases Stock which a defaulting U.S. Underwriter agreed but failed to purchase. Nothing contained herein shall relieve a defaulting U.S. Underwriter of any liability it may have to the Company for damages caused by its default. If other underwriters are obligated or agree to purchase the Stock of a defaulting or withdrawing U.S. Underwriter, either the Representatives or the Company may postpone the Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the U.S. Underwriters may be necessary in the Registration Statement, the Prospectus or in any other document or arrangement. 10. Termination. The obligations of the U.S. Underwriters hereunder may be terminated by the Representatives by notice given to and received by the Company prior to delivery of and payment for the Firm Stock if, prior to that time, any of the events described in Sections 7(k), 7(l) or 7(m) shall have occurred or if the U.S. Underwriters shall decline to purchase the Stock for any reason permitted under this Agreement. 11. Reimbursement of U.S. Underwriters' Expenses. If the Company shall fail to tender the Stock for delivery to the U.S. Underwriters by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the U.S. Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled (other than by reason of any events described in Section 7(m) except for the suspension of trading or minimum prices of the securities of the Company), the Company will reimburse the U.S. Underwriters for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by the U.S. Underwriters in connection with this Agreement and the proposed purchase of the Stock, and promptly following demand the Company shall pay the full amount thereof to the Representatives. If this Agreement is terminated pursuant to Section 9 by reason of the default of one or more U.S. Underwriters, the Company shall not be obligated to reimburse any defaulting U.S. Underwriter on account of those expenses. 12. Notices, etc. All statements, requests, notices and agreements hereunder shall be in writing, and: 47 (a) if to the U.S. Underwriters, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers Inc., Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-526-6588), with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285; (b) if to the Company or any of the Subsidiaries, shall be delivered or sent by mail, telex or facsimile transmission to 122 East 42nd Street, 49th Floor, New York, NY 10168, Attention: Kieran E. Burke (Fax: 212- 949-6203); provided, however, that any notice to a U.S. Underwriter pursuant to Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission to such U.S. Underwriter at its address set forth in its acceptance telex to the Representatives, which address will be supplied to any other party hereto by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the U.S. Underwriters by Lehman Brothers Inc. on behalf of the Representatives. 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the U.S. Underwriters, the Company, the Subsidiaries that are parties hereto and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Company and the applicable Subsidiaries contained in this Agreement shall also be deemed to be for the benefit of the officers and employees of each U.S. Underwriter and the person or persons, if any, who control any U.S. Underwriter within the meaning of Section 15 of the Securities Act and for the benefit of each International Manager (and officers, employees and such controlling persons thereof) who offers or sells any shares of Common Stock in accordance with the terms of the Agreement Between U.S. Underwriters and International Managers and (B) the indemnity agreement of the U.S. Underwriters contained in Section 8(b) of this Agreement shall be deemed to 48 be for the benefit of directors of the Company, officers of the Company who have signed the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 14. Survival. The respective indemnities, representations, warranties and agreements of the Company, the applicable Subsidiaries and the U.S. Underwriters contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Stock and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 15. Definition of the Terms "Business Day", "Premier Subsidiary", "Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership", "Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement, (a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) "Premier Subsidiary" means each of Premier Operations, Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a Massachusetts corporation, Premier Waterworld Concord Inc., a California corporation, Premier Waterworld Sacramento Inc., a California corporation, Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding Inc., a New York corporation, Great Escape LLC, a New York limited liability company, Great Escape Theme Park LLC, a New York limited liability company, Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited liability company, Park Management Corp., a California corporation, Indiana Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier International Holdings, Inc., a Delaware corporation and [other Premier entities held in corporate form and as limited 49 liability companies], (c) "Premier Partnership" means each of Frontier City Partners, Limited Partnership, an Oklahoma limited partnership, Elitch Gardens, L.P., a Colorado limited partnership and [other Premier entities held as limited partnerships], (d) "Six Flags Subsidiary" means each of SFEC, SFTP, [S.F. Holdings, Inc., a Delaware corporation, SFTP Inc., a Delaware corporation, S.F. Sponsorship Services, Inc., a Delaware corporation, Six Flags Over Georgia, Inc., a Delaware corporation, SFOG II, Inc., a Delaware corporation, SFOG II Employee, Inc., a Delaware corporation, SFOG Acquisition A, Inc., a Delaware corporation, SFOG Acquisition B, LLC, a Delaware limited liability company, Six Flags Over Texas, Inc., a Delaware corporation, SFOT Employee, Inc., a Delaware corporation, SFOT Acquisition I, Inc.,, a Delaware corporation, SFOT Acquisition II, Inc., a Delaware corporation, SFOT II, Inc., a Delaware corporation, American National Indemnity Co., a Vermont corporation, Six Flags Beverages, Inc., a Texas corporation, Funtircity Family Entertainment Parks, Inc., a Delaware corporation, Funtricity Vicksburg Family Entertainment Park Inc., a Delaware corporation, Pennrec, Co., a Delaware corporation, Six Flags Admiral, Inc., a Delaware corporation, Six Flags Management Corp., a Delaware corporation, Six Flags Power Plant, Inc., a Delaware corporation, Six Flags Services, Inc., a Delaware Corporation, Six Flags Services of Georgia, Inc., a Georgia corporation, Six Flags Services of Illinois, Inc. , a Delaware corporation, Six Flags Services of Missouri, Inc., a Delaware corporation, Six Flags Services of Texas, Inc., a Delaware corporation, Stars Hall of Fame, Inc., a Delaware corporation, San Antonio Park GP, LLC, a Delaware limited liability company, SFTP San Antonio GP, Inc., a Delaware corporation, Texas Flags Ltd., a Texas corporation, and SFTP San Antonio, Inc., a Delaware corporation], (e) "Six Flags Partnership" means each of Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas Co-Venture Partnership and [Six Flags San Antonio, L.P., a Delaware limited partnership], (f) "Subsidiary" means each of the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships; provided, however, that the term "Subsidiary" shall include the Six Flags Subsidiaries and the Six Flags Partnerships only as of and after the First Delivery Date, and "Co-Venture Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags 50 Services of Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined therein), (ii) the Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP and SFEC and the Related Agreements (as defined therein), and (iii) the Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. 17. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 51 If the foregoing correctly sets forth the agreement among the Company, the Subsidiaries that are parties hereto and the U.S. Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, Premier Parks Inc. By ---------------------------------- Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Subsidiaries (as listed in Section 15 but not including Walibi) By --------------------------------- Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Partnerships (as listed in Section 15) By Each of their respective General Partners By ---------------------------------- Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Six Flags Subsidiaries (as listed in Section 15) By ---------------------------------- 52 Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer Accepted: Lehman Brothers Inc. Smith Barney Inc. Furman Selz LLC NationsBanc Montgomery Securities LLC For themselves and as Representatives of the several U.S. Underwriters named in Schedule 1 hereto By Lehman Brothers Inc. By ---------------------------------- Authorized Representative SCHEDULE 1 Number Underwriters of Firm Shares - ------------ -------------- Lehman Brothers Inc...................................... Smith Barney Inc......................................... Furman Selz LLC.......................................... NationsBanc Montgomery Securities LLC.................... --------------- Total.............................................. --------------- --------------- EX-1.(B) 3 EXHIBIT 1(B) Exhibit 1(b) 2,600,000 Shares PREMIER PARKS INC. Common Stock INTERNATIONAL UNDERWRITING AGREEMENT , 1998 Lehman Brothers International (Europe) Smith Barney Inc. Furman Selz LLC NationsBanc Montgomery Securities LLC As Lead Managers of the several International Managers named in Schedule 1, c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Dear Sirs: Premier Parks Inc., a Delaware corporation (the "Company"), proposes to sell to the International Managers named in Schedule 1 hereto (the "International Managers"), and the International Managers propose, severally and not jointly, to purchase 2,600,000 shares (the "Firm Stock") of the Company's Common Stock, par value $.05 per share (the "Common Stock"). In addition, the Company proposes to grant to the International Managers an option to purchase up to an additional 390,000 shares of the Common Stock on the terms and for the purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the Option Stock, if purchased, are hereinafter collectively called the "Stock". This is to confirm the agreement concerning the purchase of the Stock from the Company by the International Managers. It is understood by all parties that the Company is currently entering into an agreement dated the date hereof (the "U.S. Underwriting Agreement") providing for the sale by the Company of 11,960,000 shares of Common Stock (including the over-allotment option thereunder) (the "U.S. Stock") through arrangements with certain underwriters in the United States (the "U.S. Underwriters"), for whom Lehman Brothers Inc., Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC are acting as representatives (the "Representatives"). The International Managers and the U.S. Underwriters simultaneously are entering into an agreement between the international and U.S. underwriting syndicates (the "Agreement Between U.S. Underwriters and International Managers") which provides for, among other things, the transfer of shares of Common Stock between the two syndicates. One form of prospectus relating to the Stock and one form of prospectus relating to the U.S. Stock are to be used in connection with the offering (the "Offering") of the Stock and the U.S. Stock. The latter form of prospectus will be identical to the former except for certain substitute pages as included in the registration statement and amendments thereto referred to below. Except as used in Sections 2, 3, 4, 9 and 10 herein, and except as the context may otherwise require, references herein to the Stock shall include all the shares which may be sold pursuant to either this Agreement or the U.S. Underwriting Agreement, and references herein to any prospectus whether in preliminary or final form, and whether as amended or supplemented, shall include both the international and the U.S. versions thereof. As used in this Agreement, the term "Underwriter" includes International Managers and U.S. Underwriters. It is also understood by all parties that the Company is undertaking the Offering in connection with its acquisition (the "Six Flags Acquisition") from the current stockholders (the "Sellers") of all of the capital stock of Six Flags Entertainment Corporation ("SFEC"), and that, in connection with the Six Flags Acquisition, the Company is concurrently offering $ million aggregate principal amount at maturity of its senior discount notes due 2008 (the "Company Senior Discount Notes") with estimated gross proceeds of $250 million, $280 million aggregate principal amount of its senior notes due 2006 (the "Company Senior Notes") and, with the over-allotment option, 5,750,000 Premium Income Equity Securities ("PInES") representing interests in the Company's mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with estimated gross proceeds of $228.2 million. In addition, it is understood by all parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a new $472 million senior secured credit facility (the "Six Flags Credit Facility") under a credit agreement dated the date of this Agreement among it, certain of the Six Flags Subsidiaries (as defined in Section 15) and Lehman Commercial Paper, Inc., and 2 Premier Operations Inc. ("Premier Operations") has entered into a $300 million senior secured credit facility (the "Premier Credit Facility" and, together with the Six Flags Credit Facility, the "Credit Facilities") under a credit agreement among the Company, certain of the Premier Subsidiaries and Premier Partnerships (each as defined in Section 15) and Lehman Commercial Paper, Inc. It is further understood by all parties that, immediately following the Offering, SFEC will offer $170 million aggregate principal amount of senior notes due 2006 (the "New SFEC Notes"), and that, concurrently with the Offering, the Company may issue depositary shares (the "Seller Depositary Shares") representing interests in up to $200 million of the Company's convertible redeemable preferred stock (the "Seller Convertible Redeemable Preferred Stock") to the Sellers as part of the consideration for the Six Flags Acquisition. 1. Representations, Warranties and Agreements of the Company and Certain of the Subsidiaries. The Company and Premier Operations and, as of the First Delivery Date (as hereinafter defined), SFEC and SFTP represent, warrant and agree, jointly and severally, that: (a) A registration statement on Form S-3 (file number 333-45859), and amendments thereto, with respect to the Stock has (i) been prepared by the Company in conformity in all material respects with the requirements of the United States Securities Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and Regulations") of the United States Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. Copies of such registration statement and amendments thereto have been delivered by the Company to you as the lead managers (the "Lead Managers") of the International Managers. Upon your written request, but not without your agreement, the Company will also file a Rule 462(b) Registration Statement in accordance with Rule 462(b). As used in this Agreement, "Effective Time" means the date and the time as of which such registration statement, the most recent post-effective amendment thereto, if any, or any Rule 462(b) Registration Statement became or becomes effective; "Effective Date" means the date of the Effective Time; "Preliminary Prospectus" means each prospectus included in such registration statement, or amendments thereof, before it 3 became effective under the Securities Act and any prospectus relating to the Stock filed with the Commission by the Company with the consent of the Lead Managers pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement" means such registration statement, as amended at the Effective Time, including any documents incorporated by reference therein at such time and all information contained in the final prospectus relating to the Stock filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance with Section 5(a) hereof and deemed to be a part of the registration statement as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations and, in the event any Rule 462(b) Registration Statement becomes effective prior to the First Delivery Date, also means such registration statement as so amended, unless the context otherwise requires; "Prospectus" means such final prospectus, as first filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b) Registration Statement" means the registration statement and any amendments thereto filed pursuant to Rule 462(b) of the Rules and Regulations relating to the offering covered by the initial Registration Statement (file number 333-45859). Reference made herein to any Preliminary Prospectus or to the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date of such Preliminary Prospectus or the Prospectus, as the case may be. The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus. (b) The Registration Statement conforms, and the Prospectus, any further amendments or supplements to the Registration Statement or the Prospectus and any Rule 462(b) Registration Statement will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and do not and will not, as of the applicable Effective Time (as to the Registration Statement and any amendment thereto) and as of the applicable filing date (as to the Prospectus and any amendment or supplement thereto) contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not 4 misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company through the Lead Managers or the Representatives by or on behalf of any Underwriter specifically for inclusion therein. (c) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) The Company, each of the Premier Subsidiaries and, as of the First Delivery Date, each of the Six Flags Subsidiaries have been or will be, as applicable, duly incorporated and are or will be, as applicable, validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Partnerships (as defined in Section 15) is or will be, as applicable, validly existing as a limited partnership in good standing under the laws of their respective jurisdictions of formation; the Company, each of the Premier Subsidiaries and each of the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Subsidiaries and each of the Six Flags Partnerships are or will be, as applicable, duly qualified to do business and are or will be, as applicable, in good standing as foreign entities in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires or will require, as applicable, such qualification, except where the failure to so qualify would not have in the aggregate a material adverse effect on the consolidated financial position, stockholders' equity (or partners' equity, as applicable), results of operations, business or prospects of the Company and the Subsidiaries taken as a whole (a "Material Adverse Effect") and have or will have, as applicable, all corporate or partnership power and authority, as the case may be, necessary to own or hold their respective properties and to conduct the businesses in which they 5 are or will be, as applicable, engaged; none of the subsidiaries (as defined in Rule 405 of the Rules and Regulations) of the Company (other than the Subsidiaries) is a "significant subsidiary", as such term is defined in Rule 405 of the Rules and Regulations; and the assets, liabilities and operations of such other subsidiaries are immaterial to the assets, liabilities, operations and prospects of the Company and the Subsidiaries taken as a whole. (e) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus. All of the issued shares of capital stock of each Premier Subsidiary (in the case of Walibi, S.A. ("Walibi"), a Belgian corporation, to our knowledge) have been, and all of the issued shares of capital stock of each Six Flags Subsidiary, as of the First Delivery Date, will be, duly and validly authorized and issued and are or will be, as applicable, fully paid and non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer (as defined in Section 1(ai)), are or will be, as applicable, owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims arising under the Credit Facilities and the subordinated indemnity agreement among the Company and certain of its affiliates, SFEC and certain of its affiliates and Time Warner Inc. and certain of its affiliates dated , 1998 (the "Subordinated Indemnity Agreement"). 100% of the partnership interest in the Premier Partnerships is held and, as of the First Delivery Date, 100% of the partnership interest in the Six Flags Partnerships, except for the 40% general partnership interest in San Antonio Theme Park, L.P. ("Fiesta Partnership") held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in Six Flags Over Georgia II, L.P. (the "Georgia Co-Venture Partnership") indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in Texas Flags, Ltd. (the "Texas Co- Venture Partnership") indirectly held by investors in Six Flags Fund II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, will be, as 6 applicable, held directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims under the Credit Facilities and the Co-Venture Parks Agreements (as defined in Section 15). (f) The unissued shares of the Stock to be issued and sold by the Company to the International Managers hereunder and to the U.S. Underwriters under the U.S. Underwriting Agreement have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and non-assessable. (g) This Agreement and the U.S. Underwriting Agreement have been duly authorized, executed and delivered by the Company, each of the Premier Subsidiaries and each of the Premier Partnerships that is a party hereto or thereto, and, as of the First Delivery Date, will be duly authorized, executed and delivered by each of the Six Flags Subsidiaries that is a party hereto or thereto. (h) The execution, delivery and performance of this Agreement and the U.S. Underwriting Agreement by the Company and each of the Subsidiaries that are parties hereto or thereto, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Stock by the International Managers and the U.S. Underwriters are obtained, any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets except, 7 in each case, breaches, violations or defaults which, in the aggregate, are not reasonably likely to have a Material Adverse Effect; and except for the registration of the Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Stock by the International Managers and the U.S. Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required or, with respect to the Six Flags Subsidiaries will be required, for the execution, delivery and performance of this Agreement or the U.S. Underwriting Agreement by the Company or any of the Subsidiaries that are parties hereto or thereto and the consummation of the transactions contemplated hereby and thereby. (i) Except as disclosed in the Prospectus and as to those rights which have been duly and validly waived, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. (j) The Company has not sold or issued any shares of Common Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than (i) 121,671 shares issued pursuant to the Company's acquisition of all of the membership interests of KKI, LLC on November 7, 1997, (ii) 228,855 shares issued pursuant to the Company's acquisition of at least 49% of the outstanding capital stock of Walibi on March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000 restricted shares issued to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, (iv) 768 shares issued to certain directors of the Company and (v) shares issued pursuant to the Company's employee benefit plans, qualified stock options plans or other employee 8 compensation plans or pursuant to outstanding options, rights or warrants, which, in each case, are disclosed in the Prospectus. (k) Neither the Company nor any of the Subsidiaries has sustained, since the date of the latest audited financial statements included in the Prospectus, any loss or interference with its business from fire, explosion, flood, accident or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus, except losses or interferences which will not, in the aggregate, have a Material Adverse Effect; and, since such date, there has not been any change in the capital stock other than in connection with the Premier Merger (as defined in Section 1(ag)) or long-term debt of the Company or any of the Subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its Subsidiaries, otherwise than as set forth or contemplated in the Prospectus. (l) The historical financial statements (including the related notes and supporting schedules) filed as part of the Registration Statement or included in the Prospectus present fairly the financial condition and results of operations of the entities purported to be shown thereby at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) applied on a consistent basis throughout the periods involved, and, in the case of Walibi, have been reconciled to accounting principles generally accepted in the United States to the extent required by the applicable accounting requirements of the Securities Act and the Rules and Regulations. The pro forma financial statements included in the Prospectus have been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, and comply in all material respects with Regulation S-X under the Securities Act, and the pro forma adjustments have been properly applied 9 to historical amounts in the compilation of such pro forma financial statements. (m) KPMG Peat Marwick LLP, who have certified certain financial statements of the Company, Ernst & Young LLP, who have certified certain financial statements of SFEC, Coopers & Lybrand, who have certified certain financial statements of Walibi and Carpenter Mountjoy & Bressler, who have certified certain financial statements of Kentucky Kingdom, Inc. ("Kentucky Kingdom") whose reports appear in the Prospectus or are incorporated by reference therein and who have each delivered the respective initial letters referred to in Section 7(h) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (n) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except for such liens arising under the Credit Facilities or contemplated in Section 1(e) hereof as are described in the Prospectus or such as would not have a Material Adverse Effect; and all real property and buildings held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as would not have a Material Adverse Effect. (o) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) carry, or are covered by insurance in such amounts and covering such risks (including the risk of earthquakes) as the Company has reasonably concluded, based on its experience, is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. (p) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their respective businesses as presently conducted and, with respect to the Amended and Restated License 10 Agreement among certain affiliates of Warner Bros., SFTP and the Company dated February 9, 1998 (the "License Agreement"), as contemplated by the Prospectus, and have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others with such exceptions as would not have a Material Adverse Effect. (q) Except as otherwise disclosed in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect or are otherwise required to be disclosed in the Prospectus; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (r) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. (s) There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Prospectus or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations. (t) No relationship, direct or indirect, exists between or among the Company or any Subsidiary on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any Subsidiary on the other hand, which is required to be described or incorporated by reference in the Prospectus which is not so described or incorporated by reference. (u) No labor disturbance by the employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is imminent which might be reasonably expected to have a Material Adverse Effect. (v) The Company is and, as of the First Delivery Date, SFEC will be in compliance in all material 11 respects with all presently and then applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred or, with respect to SFEC, as of the First Delivery Date will have occurred with respect to any "pension plan" (as defined in ERISA) for which the Company or SFEC, as applicable, would have any material liability; the Company has not incurred and, as of the First Delivery Date, SFEC will not have incurred and neither the Company expects nor SFEC, as of the First Delivery Date, will expect to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company or SFEC, as applicable, would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred or, with respect to SFEC, as of the First Delivery Date, will have occurred whether by action or by failure to act, which might reasonably be expected to cause the loss of such qualification. (w) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) are in compliance in all respects with (i) all presently applicable provisions of the Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder and (ii) all presently applicable state and local laws and regulations relating to the safety of its theme park and water park operations, with such exceptions as would not have a Material Adverse Effect. (x) The Company has filed and, as of the First Delivery Date, SFEC and its subsidiaries will have filed all federal, and all material state and local income and franchise tax returns required to be filed through the date hereof or the First Delivery Date, as applicable, other than those filings being contested in good faith. The Company has paid and, as of the First Delivery Date, SFEC will have paid all taxes of which it has notice or will have notice, as applicable, are due thereon, other than those being contested in good faith and for which adequate reserves have been provided or will have been provided, as applicable, or those currently payable or 12 payable as of the First Delivery Date, as applicable, without penalty or interest and no tax deficiency has been determined adversely to the Company or any of the Subsidiaries which has had, nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company or any of the Subsidiaries, might be reasonably expected to have, a Material Adverse Effect. (y) Since the date as of which information is given in the Prospectus through the date hereof, and except as may otherwise be disclosed in the Prospectus, the Company has not (i) issued or granted any securities or (ii) declared or paid any dividend on its capital stock, and neither the Company nor any of its Subsidiaries has (i) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business or (ii) entered into any material transaction not in the ordinary course of business other than the Six Flags Acquisition. (z) The Company and each of its Subsidiaries (in the case of Walibi, to our knowledge) (i) make and keep accurate books and records and (ii) maintain internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of their financial statements in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) and to maintain accountability for their assets, (C) access to their assets is permitted only in accordance with management's authorization and (D) the recorded accountability for their assets is compared with existing assets at reasonable intervals. (aa) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge) (i) is in violation of its charter or by-laws (or its partnership agreement, as applicable), (ii) is in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement 13 or other material agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation in any material respect of any material law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject or has failed to obtain any material license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business. (ab) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge), nor, to its knowledge, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of the Subsidiaries, has used any corporate or partnership funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (ac) There has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous substances by the Company or any of the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or the Subsidiaries in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for any violation or remedial action which would not have, or could not be reasonably likely to have, singularly or in the aggregate with all such violations and remedial actions, a Material Adverse Effect; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to 14 or caused by the Company or any of the Subsidiaries or with respect to which the Company or any of the Subsidiaries have knowledge, except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have or would not be reasonably likely to have, singularly or in the aggregate with all such spills, discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to environmental protection. (ad) Neither the Company nor any Subsidiary is an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. (ae) At the First Delivery Date, (i) the Six Flags Acquisition shall be consummated in accordance with the terms of the Agreement and Plan of Merger dated February 9, 1998 among the Company, Premier Operations, Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers (the "Merger Agreement"), and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement, (ii) each of the concurrent offerings by the Company of the Company Senior Discount Notes, the Company Senior Notes and the PInES shall be consummated, (iii) the offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering, (iv) each of the Credit Facilities shall be in effect and available for borrowing and (v) no default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or shall result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (A) the Merger Agreement, (B) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, Premier Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes"), Premier Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"), SFEC's Zero Coupon Notes due 1999 (the "SFEC Zero Coupon Notes"), SFTP's Senior Subordinated Notes due 2005 (the "SFTP Senior Subordinated Notes") and the New SFEC Notes, (C) the credit agreements relating to either of the Credit 15 Facilities or (D) the Stock Purchase Agreement dated December 15, 1997 between Premier Operations (or a to be formed Belgian corporation) and Centrag, S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement"). (af) The statements set forth in the Prospectus under the captions "Business--Licenses", "Business--Intercompany Services Agreement", "Business--Tax Sharing Agreement", "Description of Six Flags Agreement", "Description of Indebtedness" and "Description of Securities", insofar as they describe the terms of the agreements and securities referred to therein, are accurate and fairly present the information required to be shown. (ag) The merger (the "Premier Merger") of the company formerly known as Premier Parks Inc. with a wholly owned subsidiary of Premier Parks Holdings Corporation has been effected, and, in connection therewith, no stockholder vote was required under applicable Delaware law and the Premier Merger otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ah) No stockholder vote is required under applicable Delaware law in connection with the Six Flags Acquisition, and the Six Flags Acquisition otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ai) The Company has effected the Walibi Acquisition and has commenced a tender offer (the "Walibi Tender Offer") for the remainder of the outstanding capital stock of Walibi as described in the Prospectus. (aj) On or prior to the First Delivery Date, the License Agreement, the Subordinated Indemnity Agreement, the Intercompany Services Agreement and the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. 2. Purchase of the Stock by the International Managers. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Company agrees to sell 2,600,000 shares of the Firm Stock to the several International Managers and each of the International Managers, severally and not jointly, agrees 16 to purchase the number of shares of the Firm Stock set opposite that International Manager's name in Schedule 1 hereto. In addition, the Company grants to the International Managers an option to purchase up to 390,000 shares of Option Stock. Such option is granted solely for the purpose of covering over-allotments in the sale of Firm Stock and is exercisable as provided in Section 4 hereof. Shares of Option Stock shall be purchased severally and not jointly for the account of the International Managers in proportion to the number of shares of Firm Stock set opposite the name of such International Managers in Schedule 1 hereto. The respective purchase obligations of each International Manager with respect to the Option Stock shall be adjusted by the Lead Managers so that no International Manager shall be obligated to purchase Option Stock other than in 100 share amounts. The price of both the Firm Stock and any Option Stock shall be $ per share. The Company shall not be obligated to deliver any of the Stock to be delivered on the First Delivery Date or the Second Delivery Date (as hereinafter defined), as the case may be, except upon payment for all the Stock to be purchased on such Delivery Date as provided herein and in the U.S. Underwriting Agreement. 3. Offering of Stock by the International Managers. Upon authorization by the Lead Managers of the release of the Firm Stock, the several International Managers propose to offer the Firm Stock for sale upon the terms and conditions set forth in the Prospectus. Each International Manager agrees that, except to the extent permitted by the Agreement Between U.S. Underwriters and International Managers, it will not offer or sell any of the Stock outside of the United States and Canada. 4. Delivery of and Payment for the Stock. Delivery of and payment for the Firm Stock shall be made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time, on the fourth full business day following the date of this Agreement or at such other date or place as shall be determined by agreement between the Lead Managers and the 17 Company. This date and time are sometimes referred to as the "First Delivery Date." On the First Delivery Date, the Company shall deliver or cause to be delivered certificates representing the Firm Stock to the Lead Managers for the account of each International Manager against payment to or upon the order of the Company of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company will not be responsible for any delay resulting from any action or inaction of any International Manager or U.S. Underwriter) and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each International Manager hereunder. Upon delivery, the Firm Stock shall be registered in such names and in such denominations as the Lead Managers shall request in writing not less than two full business days prior to the First Delivery Date. For the purpose of expediting the checking and packaging of the certificates for the Firm Stock, the Company shall make the certificates representing the Firm Stock available for inspection by the Lead Managers in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the First Delivery Date. At any time on or before the thirtieth day after the date of this Agreement, the option granted in Section 2 may be exercised by written notice being given to the Company by the Lead Managers. Such notice shall set forth the aggregate number of shares of Option Stock as to which the option is being exercised, the names in which the shares of Option Stock are to be registered, the denominations in which the shares of Option Stock are to be issued and the date and time, as determined by the Lead Managers, when the shares of Option Stock are to be delivered; provided, however, that this date and time shall not be earlier than the First Delivery Date nor earlier than the second business day after the date on which the option shall have been exercised nor later than the third business day after the date on which the option shall have been exercised. The date and time the shares of Option Stock are delivered are sometimes referred to as the "Second Delivery Date" and the First Delivery Date and the Second Delivery Date are sometimes each referred to as a "Delivery Date". Delivery of and payment for the Option Stock shall be made at the place specified in the first sentence of the first paragraph of this Section 4 (or at such other place as shall be determined by agreement between the Lead Managers and the Company) at 10:00 A.M., New York City time, on the Second 18 Delivery Date. On the Second Delivery Date, the Company shall deliver or cause to be delivered the certificates representing the Option Stock to the Lead Managers for the account of each International Manager against payment to or upon the order of the Company of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company will not be responsible for any delay resulting from any action or inaction of any International Manager or U.S. Underwriter), and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each International Manager hereunder. Upon delivery, the Option Stock shall be registered in such names and in such denominations as the Lead Managers shall request in the aforesaid written notice. For the purpose of expediting the checking and packaging of the certificates for the Option Stock, the Company shall make the certificates representing the Option Stock available for inspection by the Lead Managers in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the Second Delivery Date. 5. Further Agreements of the Company. The Company agrees: (a) To prepare the Prospectus in a form approved by the Lead Managers and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than Commission's close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to make no further amendment or any supplement to the Registration Statement or to the Prospectus and to file no Rule 462(b) Registration Statement except as permitted herein; to advise the Lead Managers, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Lead Managers with copies thereof; upon your request, to cause the Rule 462(b) Registration Statement, properly completed, to be filed with the Commission pursuant to Rule 462(b) and to provide evidence satisfactory to the Lead Managers of such filing; to advise the Lead Managers, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the 19 suspension of the qualification of the Stock for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification, to use promptly its reasonable best efforts to obtain its withdrawal; (b) To furnish reasonably promptly to each of the Lead Managers and to counsel for the International Managers a signed copy of the Registration Statement as originally filed with the Commission, each amendment thereto and any Rule 462(b) Registration Statement filed with the Commission, including all consents and exhibits filed therewith; (c) To deliver promptly to the Lead Managers such number of the following documents as the Lead Managers shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission, each amendment thereto (in each case excluding exhibits other than this Agreement and the computation of per share earnings) and any Rule 462(b) Registration Statement, (ii) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus and (iii) any document incorporated by reference in the Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is required at any time after the Effective Time in connection with the offering or sale of the Stock or any other securities relating thereto and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Lead Managers and, upon their request, to file such document and to prepare and furnish without charge to each International Manager and 20 to any dealer in securities as many copies as the Lead Managers may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance. (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Lead Managers, be required by the Securities Act or requested by the Commission; (e) Prior to filing with the Commission any amendment to the Registration Statement or supplement to the Prospectus, any document incorporated by reference in the Prospectus, any Prospectus pursuant to Rule 424 of the Rules and Regulations or any Rule 462(b) Registration Statement to furnish a copy thereof to the Lead Managers and counsel for the International Managers and obtain the consent of the Lead Managers to the filing; (f) As soon as practicable after the Effective Date (it being understood that the Company shall have until at least 410 days after the end of the Company's current fiscal quarter), to make generally available to the Company's security holders and to deliver to the Lead Managers an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158); (g) For a period of five years following the Effective Date, to furnish to the Lead Managers copies of all materials furnished by the Company to its public shareholders and all public reports and all reports and financial statements furnished by the Company to the principal national securities exchange upon which the Common Stock may be listed pursuant to requirements of or agreements with such exchange or to the Commission pursuant to the Exchange Act or any rule or regulation of the Commission thereunder; (h) Promptly from time to time to take such action as the Lead Managers may reasonably request to qualify the Stock for offering and sale (or obtain an exemption from registration) under the securities laws of such jurisdictions as the Lead Managers may request and to comply with such laws so as to permit the continuance of 21 sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Stock; provided, however, that the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Stock; (i) For a period of 90 days from the date of the Prospectus, not to, directly or indirectly, (i) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or any securities convertible into or exchangeable for Common Stock (other than the Stock, the U.S. Stock, the PInES, the Mandatorily Convertible Preferred Stock, the Seller Depositary Shares, the Seller Convertible Redeemable Preferred Stock, shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans existing on the date hereof or pursuant to currently outstanding options, warrants or rights or upon the conversion of the Seller Convertible Redeemable Preferred Stock or the Mandatorily Convertible Preferred Stock, and other than shares issued by the Company as consideration to any seller of assets or stock that the Company or any of the Subsidiaries is acquiring, provided that any shares so issued to such seller or sellers, including any shares issued after the date of the Prospectus pursuant to the Walibi Acquisition or the Walibi Tender Offer, in the aggregate, do not exceed one-fifth of the total equity of the Company outstanding at the time of the first such issuance, and further provided that such seller or sellers (other than the sellers of Walibi) contemporaneously with any such issuance or issuances enter into an agreement with the Lead Managers in substantially the same form as the agreement described in this paragraph (i) for the remainder of the 90 day period), or sell or grant options, rights or warrants with respect to any shares of Common Stock or securities convertible into or exchangeable for Common Stock (other than the grant of options pursuant to option plans existing on the date hereof) or (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership 22 of such shares of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case without the prior written consent of Lehman Brothers Inc.; and to cause each officer and director of the Company and Hanseatic Corporation, Richland Ventures, L.P., Richland Ventures II, L.P., Lawrence, Tyrrell, Ortale & Smith, Lawrence, Tyrrell, Ortale & Smith II, L.P., Windcrest Partners, [JG Partnership, Ltd.,] [J. David Grissom] and Robert J. Gellert (in the case of Robert J. Gellert only, limited to (A) shares held for his own account and (B) shares beneficially owned by Lexfor Corporation) to furnish to the Lead Managers, prior to the First Delivery Date, a letter or letters, in form and substance satisfactory to counsel for the Underwriters, pursuant to which each such person shall agree not to, directly or indirectly, (iii) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or any securities convertible into or exchangeable for Common Stock or (iv) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Common Stock, whether any such transaction described in clause (iii) or (iv) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case for a period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; (j) To take such steps as shall be necessary to ensure that neither the Company nor any subsidiary shall become an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder; (k) To cause an authorized officer to execute this Agreement on behalf of each of the Six Flags Subsidiaries on the First Delivery Date; (l) Not to waive the lock-up agreements executed by the Sellers in connection with the Six Flags Acquisition whereby each of the Sellers agreed to not sell any Seller Convertible Redeemable Preferred Stock 23 (or shares of Common Stock issuable upon conversion thereof) during the period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; and (m) To make an offer to purchase the SFTP Senior Subordinated Notes following the Six Flags Acquisition in accordance with the provisions of the indenture for the SFTP Senior Subordinated Notes relating to offers to purchase the SFTP Senior Subordinated Notes upon a change of control of SFTP. 6. Expenses. The Company agrees to pay (a) the costs incident to the authorization, issuance, sale and delivery of the Stock and any taxes payable in that connection; (b) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits thereto; (c) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or supplement to the Prospectus or any document incorporated by reference therein, all as provided in this Agreement; (d) the costs of producing and distributing this Agreement, the U.S. Underwriting Agreement, the Agreement Between U.S. Underwriters and International Managers, the Agreement Among International Managers, the International Selling Agreement and any other related documents in connection with the offering, purchase, sale and delivery of the Stock; (e) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of sale of the Stock; (f) listing or other fees incident to the inclusion of the Common Stock (including the Stock) for listing on the New York Stock Exchange; (g) the fees and expenses, if applicable, of qualifying the Stock under the securities laws of the several jurisdictions as provided in Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Underwriters or foreign counsel to the International Managers); (h) if one is required pursuant to the rules of the NASD, all fees and expenses of a qualified independent underwriter; and (i) all other costs and expenses incident to the performance of the obligations of the Company or any of the Subsidiaries under this Agreement; provided that, except as provided in this Section 6 and in Section 11, the International Managers shall 24 pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Stock which they may sell and the expenses of advertising any offering of the Stock made by the International Managers. 7. Conditions of International Managers' Obligations. The respective obligations of the International Managers hereunder are subject to the accuracy, when made and on each Delivery Date, of the representations and warranties of the Company, Premier Operations, SFEC and SFTP contained herein, to the performance by the Company and each of the Subsidiaries that is a party hereto of its obligations hereunder, and to each of the following additional terms and conditions: (a) The Prospectus shall have been timely filed with the Commission in accordance with Section 5(a); no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with. (b) No International Manager or U.S. Underwriter shall have discovered and disclosed to the Company on or prior to such Delivery Date that the Registration Statement or the Prospectus or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of Cravath, Swaine & Moore, counsel for the International Managers, is material or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the U.S. Underwriting Agreement, the Stock, the Registration Statement and the Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the International Managers, and the Company shall have furnished to such counsel all documents and information 25 that they may reasonably request to enable them to pass upon such matters. (d) Baer Marks & Upham LLP shall have furnished to the Lead Managers its written opinion, as counsel to the Company, addressed to the International Managers and dated such Delivery Date, in form reasonably satisfactory to the Lead Managers, to the effect that: (i) The Company and each of the Premier Subsidiaries and each of the Six Flags Subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and each of the Six Flags Partnerships is validly existing as a limited partnership in good standing under the laws of its jurisdiction of formation; and the Company, the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships are each duly qualified to do business and are in good standing as foreign corporations in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification except where the failure to so qualify would not have a Material Adverse Effect and have all corporate or partnership power and authority necessary to own or hold their respective properties and conduct the businesses in which they are engaged as described in the Prospectus; (ii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company now outstanding (including the shares of Stock being delivered on such Delivery Date) have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus; all of the shares of 26 Stock have been duly authorized and, when issued and delivered to the Lead Managers for the account of each International Manager against payment therefor as provided herein, shall be validly issued, fully paid and non-assessable; to such counsel's knowledge, all of the issued shares of capital stock of each Premier Subsidiary and each Six Flags Subsidiary have been duly and validly authorized and issued and are fully paid, non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Subordinated Indemnity Agreement; and 100% of the partnership interest in each of the Premier Partnerships and each of the Six Flags Partnerships is held directly or indirectly by the Company, except for the 40% general partnership interest in Fiesta Partnership held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in the Georgia Co-Venture Partnership indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in the Texas Co- Venture Partnership indirectly held by investors in Six Flags Funds II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Co-Venture Parks Agreements; (iii) There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Stock pursuant to the Company's charter or by-laws or any agreement or other instrument known to such counsel; (iv) To the best of such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; 27 (v) Based solely upon oral confirmation from the staff of the Commission, the Registration Statement was declared effective under the Securities Act as of the date and time specified in such opinion; the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and no stop order suspending the effectiveness of the Registration Statement has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the Commission; (vi) The Registration Statement and the Prospectus and any further amendments or supplements thereto made by the Company prior to such Delivery Date (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations; and the documents incorporated by reference in the Prospectus (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion), when they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder; (vii) To the best of such counsel's knowledge, there are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations; (viii) Each of this Agreement and the U.S. Underwriting Agreement has been duly authorized, executed and delivered by the Company and each of the Subsidiaries that is a party hereto or thereto; 28 (ix) The issue and sale of the shares of Stock being delivered on such Delivery Date by the Company and the compliance by the Company and each of the Subsidiaries that is a party hereto or thereto with all of the provisions of this Agreement and the U.S. Underwriting Agreement and the consummation of the transactions contemplated hereby and thereby (including the offerings of the Company Senior Discount Notes, the Company Senior Notes and the New SFEC Notes and the entering into of the Six Flags Credit Facility and any borrowing thereunder in connection with the Six Flags Acquisition) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Stock by the International Managers and the U.S. Underwriters are obtained, any Federal or New York State statute, the General Corporation Law of the State of Delaware, or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets; and, except for the registration of the Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Stock by the International Managers, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, 29 delivery and performance of this Agreement or the U.S. Underwriting Agreement by the Company or any of the Subsidiaries that is a party hereto or thereto and the consummation of the transactions contemplated hereby and thereby; and (x) To the best of such counsel's knowledge, no holders of securities of the Company have rights to require the Company to include such securities with the Stock registered pursuant to the Registration Statement. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and that such counsel is not admitted in any state other than New York; and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the International Managers and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Lead Managers a written statement, addressed to the International Managers and dated such Delivery Date, in form satisfactory to the Lead Managers, to the effect that (x) such counsel has acted as counsel to the Company on a regular basis (although the Company is also represented with respect to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition, litigation matters, regulatory matters and certain other matters, by other outside counsel), has acted as counsel to the Company in connection with financing transactions since February 1992 and has acted as counsel to the Company in connection with the preparation of the Registration Statement and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such 30 counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. In rendering such statement, such counsel may rely upon the opinion and statement delivered by Weil Gotshal & Manges LLP pursuant to Section 5(e) hereto with respect to the information covered by such opinion and statement. The foregoing opinion and statement may be qualified by a statement to the effect that such counsel does not assume any responsibility for the accuracy or fairness with respect to the information required to be shown under the Securities Act and the Rules and Regulations of the statements contained in the Registration Statement or the Prospectus except for the statements made in the Prospectus under the captions "Prospectus Summary--Other Recent Developments--Walibi", "Business--Intercompany Services Agreement", "Business-- Tax Sharing Agreement", "Description of Indebtedness", "Description of Securities", "Description of PInES" and "Description of Depositary Arrangements" insofar as such statements describe the terms of the Walibi Acquisition and Walibi Tender Offer, the documents or agreements referred to therein, the Stock, the Seller Convertible Redeemable Preferred Stock, the Company's debt instruments or other securities, or the registration rights referred to therein and concern legal matters. (e) Weil Gotshal & Manges LLP shall have furnished to the Lead Managers its written opinion, as special counsel to the Company, addressed to the International Managers and dated such Delivery Date, in form reasonably satisfactory to the Lead Managers, as to certain matters set forth in Section 7(d) and to the effect that the statements set forth in the Prospectus under the captions "Business--Licenses" and "Description of Six Flags Agreement", insofar as such statements describe the terms of the documents or agreements referred to therein, are accurate, complete and fair. 31 In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the International Managers and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Lead Managers a written statement, addressed to the International Managers and dated such Delivery Date, in form satisfactory to the Lead Managers, to the effect that (x) such counsel has acted as counsel to the Company in connection with the Walibi Acquisition, the Walibi Tender Offer and the Six Flags Acquisition and has reviewed the information (the "Walibi and Six Flags Information") in the Registration Statement relating to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition and the business and operations of Walibi and its subsidiaries and SFEC and its subsidiaries and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The foregoing statement may be qualified 32 by a statement to the effect that the statement's scope is limited to the Walibi and Six Flags Information. (f) Richards, Layton & Finger shall have furnished to the Lead Managers its written opinion, as special Delaware counsel to the Company, addressed to the International Managers and dated such Delivery Date, in form reasonably satisfactory to the Lead Managers, to the effect that, in connection with the Premier Merger, no shareholder vote was required under applicable Delaware law and, in connection with the Six Flags Acquisition, no shareholder vote is required under applicable Delaware law, and that the Premier Merger and the Six Flags Acquisition otherwise comply in all respects with applicable Delaware law. (g) The Lead Managers shall have received from Cravath, Swaine & Moore, counsel for the International Managers, such opinion or opinions and such statement or statements, dated such Delivery Date, with respect to the issuance and sale of the Stock, the Registration Statement, the Prospectus and other related matters as the Lead Managers may reasonably require, and the Company and the Subsidiaries shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. (h) At the time of execution of this Agreement, the Lead Managers shall have received from (I) KPMG Peat Marwick LLP a letter, in form and substance satisfactory to the Lead Managers, addressed to the International Managers and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings, except for the financial information and other matters covered in the letters from Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler described immediately 33 hereinafter; (II) Ernst & Young LLP a letter, in form and substance satisfactory to the Lead Managers, addressed to the International Managers and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to SFEC and its subsidiaries as have been previously agreed to by such firm and the Lead Managers; (III) Coopers & Lybrand a letter, in form and substance satisfactory to the Lead Managers, addressed to the International Managers and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Walibi and its subsidiaries, as have been previously agreed to by such firm and the Lead Managers; and (IV) Carpenter Mountjoy & Bressler a letter, in form and substance satisfactory to the Lead Managers, addressed to the International Managers and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Kentucky Kingdom, as have been previously agreed to by such firm and the Lead Managers. (i) With respect to the letters of KPMG Peat Marwick LLP, Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to in the preceding paragraph and delivered to the Lead Managers concurrently with the execution of this Agreement (the "initial letters"), the Company shall have furnished to the Lead Managers a letter (the "bring-down letters") of each of such accountants, addressed to the International Managers and dated such Delivery Date (i) confirming that they are independent public accountants within the 34 meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the bring- down letter (or, in the case of the letter of KPMG Peat Marwick LLP, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter. (j) The Company shall have furnished to the Lead Managers a certificate, dated such Delivery Date, of its Chairman of the Board, its President or a Vice President and its chief financial officer stating that: (i) The representations, warranties and agreements of the Company and each of Premier Operations, SFEC and SFTP in Section 1 are true and correct as of such Delivery Date; the Company and each of the Subsidiaries that is a party hereto have complied with all their agreements contained herein; and the conditions set forth in Sections 7(a) and 7(k) have been fulfilled; and (ii) They have carefully examined the Registration Statement and the Prospectus and, in their opinion (A) as of the Effective Date, the Registration Statement and Prospectus did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since the Effective Date no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement or the Prospectus. (k) Since the date of the latest audited financial statements included or incorporated by reference in the Prospectus there shall not have been any change in the capital stock (or partners' equity, as applicable) other than the Premier Merger or long-term debt of the Company or any of the Subsidiaries or any change, or any 35 development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its subsidiaries, otherwise, in each case, than as set forth or contemplated in the Prospectus, the effect of which, in any such case, is, in the judgment of the Lead Managers, so material (to the Company and its Subsidiaries, taken as a whole) and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Stock being delivered on such Delivery Date on the terms and in the manner contemplated in the Prospectus. (l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities. (m) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of a majority in interest of the several International Managers, impracticable or inadvisable to proceed with 36 the public offering or delivery of the Stock being delivered on such Delivery Date on the terms and in the manner contemplated in the Prospectus. (n) The Six Flags Acquisition shall have been or shall be consummated concurrently with the Offering and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement. (o) Each of the offerings by the Company of the Company Senior Discount Notes, the Company Senior Notes and the PInES shall have been or shall be consummated concurrently with the Offering. (p) The offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering. (q) Each of the Premier Credit Facility and the Six Flags Credit Facility shall be in effect and available for borrowing. (r) No default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or would result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (i) the Merger Agreement, (ii) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, the 1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes, the SFTP Senior Subordinated Notes and the New SFEC Notes, (iii) the credit agreement relating to either the Premier Credit Facility or the Six Flags Credit Facility or (iv) the Walibi Agreement. (s) The Premier Merger shall have been consummated. (t) Each of (i) the License Agreement, (ii) the Subordinated Indemnity Agreement, (iii) the Intercompany Services Agreement and (iv) the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. (u) An authorized officer shall have executed this Agreement on behalf of each of the Six Flags Subsidiaries. 37 (v) Delivery of and payment for the Firm Stock under the U.S. Underwriting Agreement shall have occurred concurrently with delivery of and payment for the Firm Stock hereunder on the First Delivery Date. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and scope reasonably satisfactory to counsel for the International Managers. 8. Indemnification and Contribution. (a) The Company and the Subsidiaries that are parties hereto, jointly and severally, shall indemnify and hold harmless each International Manager (including any Underwriter in its role as qualified independent underwriter pursuant to the rules of the NASD), its officers and employees and each person, if any, who controls any International Manager within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Stock), to which that International Manager, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto or (B) in any blue sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying any or all of the Stock under the securities laws of any jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by any International Manager in connection with, or relating in any manner to, the Stock or the Offering contemplated hereby, and which is included as 38 part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company and the Subsidiaries that are parties hereto shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such International Manager through its gross negligence or willful misconduct), and shall reimburse each International Manager and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that International Manager, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiaries that are parties hereto shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any such amendment or supplement, or in any Blue Sky Application, in reliance upon and in conformity with written information concerning any International Manager or U.S. Underwriter, furnished to the Company through the Lead Managers or Representatives by or on behalf of any International Manager or U.S. Underwriter specifically for inclusion therein; and provided further that with respect to any such untrue statement or omission made in the Preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not enure to the benefit of the International Manager from whom the person asserting any such losses, claims, damages or liabilities purchased the Stock concerned if, to the extent that such sale was an initial sale by such International Manager and any such loss, claim, damage or liability of such International Manager is a result of the fact that both (A) a copy of the Prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Stock to such person, and (B) the untrue statement or omission in the Preliminary Prospectus was corrected in the Prospectus unless, in either case, such failure to deliver the Prospectus was a result of noncompliance by the Company with Section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company or any of the Subsidiaries that are parties hereto may otherwise have to any 39 International Manager or to any officer, employee or controlling person of that International Manager. (b) Each International Manager, severally and not jointly, shall indemnify and hold harmless the Company and the Subsidiaries that are parties hereto, each of their respective officers and employees, each of their respective directors, and each person, if any, who controls the Company or any Subsidiary that is a party hereto within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any Subsidiary that is a party hereto or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such International Manager furnished to the Company through the Lead Managers by or on behalf of that International Manager specifically for inclusion therein, and shall reimburse the Company, any such Subsidiary and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company, any such Subsidiary or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any International Manager may otherwise have to the Company, any such Subsidiary, or any such director, officer, employee or controlling person. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement 40 of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Lead Managers shall have the right, upon written notice to the Company, to employ counsel to represent jointly the Lead Managers and those other International Managers and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the International Managers against the Company and the Subsidiaries that are parties hereto under this Section 8 if, in the reasonable judgment of the Lead Managers, it is advisable for the Lead Managers and those International Managers, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the reasonable fees and expenses of such separate counsel shall be paid, jointly and severally, by the Company and the Subsidiaries that are parties hereto. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder 41 (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(c) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the International Managers on the other from the offering of the Stock or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiaries that are parties hereto on the one hand and the International Managers on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the International Managers on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Stock purchased under this Agreement (before deducting expenses) received by the Company on the one hand, and the total underwriting discounts and commissions received by the International Managers with respect to the shares of the Stock purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the shares of the Stock under this Agreement, in each case as set forth in the 42 table on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the International Managers, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. For purposes of the preceding two sentences, the net proceeds deemed to be received by the Company shall be deemed to be also for the benefit of the Subsidiaries that are parties hereto and information supplied by the Company shall also be deemed to have been supplied by the Subsidiaries that are parties hereto. The Company, the Subsidiaries that are parties hereto and the International Managers agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the International Managers were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no International Manager shall be required to contribute any amount in excess of the amount by which the total price at which the Stock underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such International Manager has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The International Managers' obligations to contribute as provided in this Section 8(d) are several in proportion to their respective underwriting obligations and not joint. (e) The International Managers severally confirm and the Company and the Subsidiaries that are parties hereto acknowledge that the statements with respect to the public offering of the Stock by the International Managers set forth in the first and last paragraphs on the cover page of, the 43 legend concerning stabilization on the third page of and statements under the caption "Underwriting" including but not limited to the concession and reallowance figures, the Prospectus constitute the only information concerning such International Managers furnished in writing to the Company by or on behalf of the International Managers specifically for inclusion in the Registration Statement and the Prospectus. 9. Defaulting International Managers. If, on either Delivery Date, any International Manager defaults in the performance of its obligations under this Agreement, the remaining non-defaulting International Managers shall be obligated to purchase the Stock which the defaulting International Manager agreed but failed to purchase on such Delivery Date in the respective proportions which the number of shares of the Firm Stock set opposite the name of each remaining non-defaulting International Manager in Schedule 1 hereto bears to the total number of shares of the Firm Stock set opposite the names of all the remaining non-defaulting International Managers in Schedule 1 hereto; provided, however, that the remaining non-defaulting International Managers shall not be obligated to purchase any of the Stock on such Delivery Date if the total number of shares of the Stock which the defaulting International Manager or International Managers agreed but failed to purchase on such date exceeds 9.09% of the total number of shares of the Stock to be purchased on such Delivery Date, and any remaining non-defaulting International Manager shall not be obligated to purchase more than 110% of the number of shares of the Stock which it agreed to purchase on such Delivery Date pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting International Managers, or those other underwriters satisfactory to the Lead Managers who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the Stock to be purchased on such Delivery Date. If the remaining International Managers or other underwriters satisfactory to the Lead Managers do not elect to purchase the shares which the defaulting International Manager or International Managers agreed but failed to purchase on such Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the obligation of the International Managers to purchase, and of the Company to sell, the Option Stock) shall terminate without liability on the part of any non-defaulting International Manager or the Company, except that the Company will continue to be liable 44 for the payment of expenses to the extent set forth in Section 6. As used in this Agreement, the term "International Manager" includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Stock which a defaulting International Manager agreed but failed to purchase. Nothing contained herein shall relieve a defaulting International Manager of any liability it may have to the Company for damages caused by its default. If other underwriters are obligated or agree to purchase the Stock of a defaulting or withdrawing International Manager, either the Lead Managers or the Company may postpone the Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the International Managers may be necessary in the Registration Statement, the Prospectus or in any other document or arrangement. 10. Termination. The obligations of the International Managers hereunder may be terminated by the Lead Managers by notice given to and received by the Company prior to delivery of and payment for the Firm Stock if, prior to that time, any of the events described in Sections 7(k), 7(l) or 7(m) shall have occurred or if the International Managers shall decline to purchase the Stock for any reason permitted under this Agreement. 11. Reimbursement of International Managers' Expenses. If the Company shall fail to tender the Stock for delivery to the International Managers by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the International Managers' obligations hereunder required to be fulfilled by the Company is not fulfilled (other than by reason of any events described in Section 7(m) except for the suspension of trading or minimum prices of the securities of the Company), the Company will reimburse the International Managers for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by the International Managers in connection with this Agreement and the proposed purchase of the Stock, and promptly following demand the Company shall pay the full amount thereof to the Lead Managers. If this Agreement is terminated pursuant to Section 9 by reason of the default of one or more International Managers, the Company shall not be 45 obligated to reimburse any defaulting International Manager on account of those expenses. 12. Notices, etc. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the International Managers, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers International (Europe), Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-526-6588), with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285; (b) if to the Company or any of the Subsidiaries, shall be delivered or sent by mail, telex or facsimile transmission to 122 East 42nd Street, 49th Floor, New York, NY 10168, Attention: Kieran E. Burke (Fax: 212-949-6203); provided, however, that any notice to an International Manager pursuant to Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission to such International Manager at its address set forth in its acceptance telex to the Lead Managers, which address will be supplied to any other party hereto by the Lead Managers upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the International Managers by Lehman Brothers International (Europe) on behalf of the Lead Managers. 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the International Managers, the Company, the Subsidiaries that are parties hereto and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Company and the applicable Subsidiaries contained in this Agreement shall also be deemed to be for the benefit of the officers and employees of each International Manager and the person or persons, if any, who control any International Manager within the meaning of Section 15 of the Securities Act 46 and for the benefit of each U.S. Underwriter (and officers, employees and such controlling persons thereof) who offers or sells any shares of Common Stock in accordance with the terms of the Agreement Between U.S. Underwriters and International Managers and (B) the indemnity agreement of the International Managers contained in Section 8(b) of this Agreement shall be deemed to be for the benefit of directors of the Company, officers of the Company who have signed the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 14. Survival. The respective indemnities, representations, warranties and agreements of the Company, the applicable Subsidiaries and the International Managers contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Stock and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 15. Definition of the Terms "Business Day", "Premier Subsidiary", "Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership", "Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement, (a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) "Premier Subsidiary" means each of Premier Operations, Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a Massachusetts corporation, Premier Waterworld Concord Inc., a California corporation, Premier Waterworld Sacramento Inc., a California corporation, Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding Inc., a New York corporation, Great Escape LLC, a New York limited liability company, Great Escape Theme Park LLC, a New York limited liability company, Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park 47 Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited liability company, Park Management Corp., a California corporation, Indiana Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier International Holdings, Inc., a Delaware corporation and [other Premier entities held in corporate form and as limited liability companies], (c) "Premier Partnership" means each of Frontier City Partners, Limited Partnership, an Oklahoma limited partnership, Elitch Gardens, L.P., a Colorado limited partnership and [other Premier entities held as limited partnerships], (d) "Six Flags Subsidiary" means each of SFEC, SFTP,[S.F. Holdings, Inc., a Delaware corporation, SFTP Inc., a Delaware corporation, S.F. Sponsorship Services, Inc., a Delaware corporation, Six Flags Over Georgia, Inc., a Delaware corporation, SFOG II, Inc., a Delaware corporation, SFOG II Employee, Inc., a Delaware corporation, SFOG Acquisition A, Inc., a Delaware corporation, SFOG Acquisition B, LLC, a Delaware limited liability company, Six Flags Over Texas, Inc., a Delaware corporation, SFOT Employee, Inc., a Delaware corporation, SFOT Acquisition I, Inc.,, a Delaware corporation, SFOT Acquisition II, Inc., a Delaware corporation, SFOT II, Inc., a Delaware corporation, American National Indemnity Co., a Vermont corporation, Six Flags Beverages, Inc., a Texas corporation, Funtircity Family Entertainment Parks, Inc., a Delaware corporation, Funtricity Vicksburg Family Entertainment Park Inc., a Delaware corporation, Pennrec, Co., a Delaware corporation, Six Flags Admiral, Inc., a Delaware corporation, Six Flags Management Corp., a Delaware corporation, Six Flags Power Plant, Inc., a Delaware corporation, Six Flags Services, Inc., a Delaware Corporation, Six Flags Services of Georgia, Inc., a Georgia corporation, Six Flags Services of Illinois, Inc. , a Delaware corporation, Six Flags Services of Missouri, Inc., a Delaware corporation, Six Flags Services of Texas, Inc., a Delaware corporation, Stars Hall of Fame, Inc., a Delaware corporation, San Antonio Park GP, LLC, a Delaware limited liability company, SFTP San Antonio GP, Inc., a Delaware corporation, Texas Flags Ltd., a Texas corporation, and SFTP San Antonio, Inc., a Delaware corporation] (e) "Six Flags Partnership" means each of Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas Co-Venture Partnership and [Six Flags San Antonio, L.P., a Delaware limited partnership] (f) "Subsidiary" means each of the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships; provided, however, that the term "Subsidiary" shall include the Six Flags Subsidiaries and the Six Flags Partnerships only as of and after the First Delivery 48 Date, and "Co-Venture Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined therein), (ii) the Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP and SFEC and the Related Agreements (as defined therein), and (iii) the Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. 17. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 49 If the foregoing correctly sets forth the agreement among the Company, the Subsidiaries that are parties hereto and the International Managers, please indicate your acceptance in the space provided for that purpose below. Very truly yours, Premier Parks Inc. By Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Subsidiaries (as listed in Section 15 but not including Walibi) By Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Partnerships (as listed in Section 15) By Each of their respective General Partners By Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Six Flags Subsidiaries (as listed in Section 15) By Name: Kieran E. Burke 50 Title: Chairman of the Board and Chief Executive Officer Accepted: Lehman Brothers Inc. Smith Barney Inc. Furman Selz LLC NationsBanc Montgomery Securities LLC For themselves and as Lead Managers of the several International Managers named in Schedule 1 hereto By Lehman Brothers International (Europe) By -------------------------------------- Authorized Representative 51 SCHEDULE 1
Number Underwriters of Firm Shares - ------------ -------------- Lehman Brothers International (Europe)............ Smith Barney Inc.................................. Furman Selz LLC................................... NationsBanc Montgomery Securities LLC............. ---------- Total....................................... ---------- ----------
EX-1.(C) 4 EXHIBIT 1(C) EXHIBIT 1(c) [Draft--3/11/98] 13,000,000 Shares PREMIER PARKS INC. Common Stock AGREEMENT BETWEEN U.S. UNDERWRITERS AND INTERNATIONAL MANAGERS , 1998 AGREEMENT by and between (a) the U.S. Underwriters (the "U.S. Underwriters") named in Schedule 1 to the U.S. Underwriting Agreement dated the date hereof (the "U.S. Underwriting Agreement") among Premier Parks Inc., a Delaware corporation (the "Company"), its subsidiaries which are parties thereto, Six Flags Entertainment Corporation ("SFEC") and its subsidiaries which are parties thereto, and Lehman Brothers Inc., Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC, as Representatives (the "Representatives") of the U.S. Underwriters, and (b) the International Managers (the "International Managers") named in Schedule 1 to the International Underwriting Agreement dated the date hereof (the "International Underwriting Agreement") among the Company, its subsidiaries which are parties thereto, SFEC and its subsidiaries which are parties thereto, and Lehman Brothers International (Europe), Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC as Lead Managers (the "Lead Managers") for the International Managers. WHEREAS, the U.S. Underwriters, pursuant to the U.S. Underwriting Agreement, have agreed to purchase from the Company an aggregate of 10,400,000 shares of the Company's Common Stock (par value $.05 per share) (the "U.S. Stock") to be offered and sold in the United States and Canada, and the International Managers, pursuant to the International Underwriting Agreement, have agreed to purchase from the Company an aggregate of 2,600,000 shares of the Company's Common Stock (par value $.05 per share) (the "International Stock") to be offered and sold outside the United States and Canada; the U.S. Stock and the International Stock are hereinafter collectively referred to as the "Firm Stock"; 2 WHEREAS, solely for the purpose of covering over-allotments, the U.S. Underwriters, pursuant to the U.S. Underwriting Agreement, have been granted options by the Company to purchase up to 1,560,000 additional shares of the Company's Common Stock (the "U.S. Option Stock") and the International Managers, pursuant to the International Underwriting Agreement, have been granted options by the Company to purchase up to 390,000 additional shares of the Company's Common Stock (the "International Option Stock") (the U.S. Option Stock and the International Option Stock are hereinafter collectively referred to as the "Option Stock", and the Firm Stock and the Option Stock are hereinafter collectively referred to as the "Stock"); and WHEREAS, in connection with the foregoing, the Representatives and the Lead Managers deem it necessary and advisable that certain of the activities of the U.S. Underwriters and the International Managers be coordinated pursuant to this Agreement; NOW, THEREFORE, the Representatives (on behalf of the U.S. Underwriters) and the Lead Managers (on behalf of the International Managers) hereby agree as follows: 1. (a) The U.S. Underwriters, acting through the Representatives, and the International Managers, acting through the Lead Managers, agree that they will consult with each other as to the availability for sale to the public of Stock purchased pursuant to the U.S. Underwriting Agreement and the International Underwriting Agreement, from time to time until the earliest of (i) the termination of the provisions of the Supplemental Agreement Among U.S. Underwriters dated the date hereof (the "Agreement Among U.S. Underwriters"), (ii) the termination of the provisions of the Agreement Among International Managers dated the date hereof (the "Agreement Among International Managers") or (iii) a mutual agreement of the U. S. Underwriters, acting through the Representatives, and the International Managers, acting through the Lead Managers, to terminate the selling restrictions set forth in Sections 2(a) and 2(b) of this Agreement. (b) At any time and from time to time as mutually agreed between the Representatives and the Lead Managers, the Representatives may sell (for the accounts of one or more U.S. Underwriters) to the Lead Managers (for the ac counts of the International Managers) such number of shares 3 of U.S. Stock purchased pursuant to the U.S. Underwriting Agreement and remaining unsold, as may be so mutually agreed upon. From time to time as mutually agreed between the Lead Managers and the Representatives, the Lead Managers may sell (for the accounts of one or more International Managers) to the Representatives (for the accounts of U.S. Underwriters) such number of shares of International Stock purchased pursuant to the International Underwriting Agreement and remaining unsold, as may be so mutually agreed upon. (c) Unless otherwise determined by mutual agree ment between the Representatives and the Lead Managers, the price of any Stock so purchased or sold shall be the public offering price as then in effect for Stock being sold by the U.S. Underwriters and the International Managers less the selling concession allocable to such Stock. Settlement between the Representatives and the Lead Managers with respect to any Stock which the Representatives and the Lead Managers have agreed to purchase or sell pursuant to this Agreement shall occur at least two business days prior to each Delivery Date specified in the U.S. Underwriting Agreement and, in the case of purchases and sales made thereafter, as promptly as practicable but in no event later than three business days after the transaction date. Certificates for the Stock so purchased shall be delivered on the respective settlement dates. The liability for payment to the Company of the purchase price of the Stock being purchased by the U.S. Underwriters under the U.S. Underwriting Agreement and the liability for payment to the Company of the purchase price of the Stock being purchased by the International Managers under the International Underwriting Agreement, respectively, shall not be affected by the provisions of this Agreement. The U.S. Underwriters and the International Managers shall pay any sales or transfer taxes, fees or other charges payable in connection with the sale or delivery of Stock sold by them under this Agreement. (d) The obligations of the U.S. Underwriters in respect of any purchase or sale of Stock hereunder shall be pro rata in accordance with the proportion of the total number of shares of Stock which the U.S. Underwriters are obligated to purchase from the Company pursuant to the U.S. Underwriting Agreement; provided, however, that if the net purchases of International Stock hereunder by the U.S. Underwriters exceed 15% of the aggregate number of shares of U.S. Stock to be purchased from the Company by the U.S. Underwriters pursuant to the U.S. Underwriting Agreement, 4 the excess shares of International Stock shall be purchased by such U.S. Underwriters as shall be designated by the Representatives. 2. (a) (i) Each U.S. Underwriter agrees that, except for (i) purchases and sales pursuant to Section 1 hereof, (ii) transactions described in paragraph (c) of this Section 2, (iii) stabilization transactions contemplated under Section 3 hereof and (iv) other transactions spe cifically approved by the Representatives and the Lead Managers, (A) it is not purchasing any Stock for the account of anyone other than a U.S. or Canadian Person (as defined below), (B) it has not offered or sold, and will not offer, sell, resell or deliver, directly or indirectly, any of the Stock or distribute any Preliminary Prospectus or U.S. Pro spectus (each as defined in the Agreement Among U.S. Underwriters) to anyone other than a U.S. or Canadian Person and (C) that any dealer to whom it may sell any of the Stock (x) will represent that it is not purchasing for the account of anyone other than a U.S. or Canadian Person and (y) will agree that it will not offer, sell, resell or deliver, directly or indirectly, any of the Stock or distribute any Preliminary Prospectus or U.S. Prospectus to anyone other than a U.S. or Canadian Person or to any other dealer who does not so represent and agree. (ii) Each U.S. Underwriter agrees that each offer of shares made by it in Canada shall be made pursuant to applicable Canadian securities laws. (b) Each International Manager agrees that, except for (i) purchases and sales pursuant to Section 1 hereof, (ii) transactions described in paragraph (c) of this Section 2, (iii) stabilization transactions contemplated under Section 3 hereof and (iv) other transactions specifically approved by the Lead Managers and the Representatives, (A) it is not purchasing any Stock for the account of any U.S. or Canadian Person, (B) it has not of fered or sold, and will not offer, sell, resell or deliver, directly or indirectly, any of the Stock or distribute any Preliminary Prospectus or International Prospectus (each as defined in the Agreement Among International Managers) to any U.S. or Canadian Person and (C) that any dealer to whom it may sell any of the Stock (x) will represent that it is not purchasing for the account of any U.S. or Canadian Person and (y) will agree that it will not offer, sell, resell or deliver, directly or indirectly, any of the Stock or distribute any Preliminary Prospectus or International 5 Prospectus to any U.S. or Canadian Person or to any other dealer who does not so represent and agree. (c) The limitations of this Section 2 shall not restrict (i) offers, sales, resales, deliveries or dis tributions by a U.S. Underwriter to or through investment advisors who are U.S. or Canadian Persons, or other U.S. or Canadian Persons exercising investment discretion, who are purchasing for the account of anyone other than a U.S. or Canadian Person, or offers, sales, resales, deliveries or distributions by an International Manager to or through investment advisors who are not U.S. or Canadian Persons, or other persons exercising investment discretion who are not U.S. or Canadian Persons, who are purchasing for the account of a U.S. or Canadian Person, (ii) purchases by a U.S. Underwriter who is also acting as an International Manager of Stock for the account of anyone other than a U.S. or Canadian Person, or purchases by an International Manager who is also acting as a U.S. Underwriter of Stock for the account of a U.S. or Canadian Person or (iii) offers or sales by a U.S. Underwriter who is also acting as an International Manager of Stock to anyone other than a U.S. or Canadian Person, or offers or sales by an International Manager who is also acting as a U.S. Underwriter of Stock to a U.S. or Canadian Person. (d) As used herein, "U.S. or Canadian Person" means any resident or citizen of the United States or Canada, any corporation, partnership or other entity created or organized in or under the laws of the United States or Canada or any political subdivision thereof or any estate or trust the income of which is subject to United States federal income taxation or Canadian income taxation regardless of the source (other than the foreign branch of any U.S. or Canadian Person), and includes any United States or Canadian branch of a person other than a U.S. or Canadian Person. The term "United States" means the United States of America (including the states thereof and the District of Columbia) and its territories, its possessions and other areas subject to its jurisdiction and the term "Canada" means Canada, its provinces, territories, possessions and other areas subject to its jurisdiction. 3. (a) All stabilization transactions, if any, conducted in the United States or Canada shall be conducted through Lehman Brothers Inc., and all stabilization trans actions, if any, conducted outside the United States and Canada shall be conducted through Lehman Brothers 6 International (Europe), so that stabilization activities both within and outside the United States and Canada shall be coordinated and conducted in compliance with any applicable laws and regulations. (b) The U.S. Underwriters shall have responsi bility with respect to any action which the Representatives may take to make over-allotments in arranging for sales of Stock in the United States and Canada, and the International Managers shall have responsibility with respect to any action which the Lead Managers may take to make over-allotments in arranging for sales of Stock outside the United States and Canada. (c) The Lead Managers undertake, and agree to cause each of the International Managers to undertake, that in connection with the distribution of the Stock they will comply with the prohibitions against trading by persons interested in a distribution set forth in Regulation M under the United States Securities Exchange Act of 1934, as amended, and Sections 9 and 10 of the Agreement Among International Managers. The International Managers will cause each dealer who has agreed to participate or is participating in the distribution to give a similar undertaking. (d) All stabilization transactions conducted by Lehman Brothers Inc. or Lehman Brothers International (Europe) shall be for the respective accounts of the several U.S. Underwriters and the several International Managers in the proportions set forth in Section 4 hereof. In no event shall the net commitment pursuant to overallotment of such stabilization transactions, including the net commitment for long or short account represented by the Stock purchased or sold pursuant to Section 1 hereof, exceed in the case of each U.S. Underwriter or International Manager, 15% of the aggregate initial public offering price of the total number of shares of Stock which such U.S. Underwriter or Interna tional Manager is obligated to purchase pursuant to the U.S. Underwriting Agreement or the International Underwriting Agreement, as the case may be, and this Agreement. 4. The Representatives and the Lead Managers shall agree as to the expenses which will constitute expenses of the underwriting and distribution of the Stock common to the U.S. Underwriters and the International Managers which expenses, as well as any stabilizing profits, shall be allocated between the U.S. Underwriters, on the one 7 hand, and the International Managers, on the other hand, in the same proportions as the number of shares of Stock agreed to be purchased under the U.S. Underwriting Agreement and the number of shares of Stock agreed to be purchased under the International Underwriting Agreement bear to the total number of shares of Stock. It is agreed that such common expenses shall, unless otherwise agreed by the Representatives and the Lead Managers, be limited to any losses or expenses incurred in stabilizing the market price of the Stock in accordance with Section 3 hereof. Except with respect to such common expenses, the U.S. Underwriters will pay the aggregate expenses incurred in connection with the purchase, carrying or sale of the Stock purchased by the U.S. Underwriters from the Company and the International Managers will pay the aggregate expenses incurred in connection with the purchase, carrying or sale of the Stock purchased by the International Managers from the Company. 5. The Representatives and the Lead Managers agree that: (a) the Lead Managers will not establish a Delivery Date under the International Underwriting Agreement which differs from that established under the U.S. Underwriting Agreement, and if such Delivery Date is postponed by action of the U.S. Underwriters as provided in the U.S. Underwriting Agreement or by action of the International Managers as provided in the International Underwriting Agreement, it will be post poned to a date and time mutually agreed upon by the Representatives and the Lead Managers; (b) changes in the respective public offering prices or in the respective selling concessions and reallowances to dealers will be made only by mutual agreement until the time specified in Section 1(a) hereof; (c) the Representatives and the Lead Managers will each keep the other fully informed of the progress of the offering and distribution of the Stock; (d) the Representatives will not cause the termination of the Agreement Among U.S. Underwriters and the Lead Managers will not cause the termination of the Agreement Among International Managers without, in each case, the consent of the other until 30 days after the date hereof; and 8 (e) advertising with respect to the offering shall be as determined by Lehman Brothers Inc. 6. This Agreement may be amended prior to any Delivery Date specified in the U.S. Underwriting Agreement and the International Underwriting Agreement by mutual written consent of the Representatives and the Lead Managers. 7. This Agreement may be signed in several coun terparts, which together shall constitute one and the same instrument. 9 8. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to choice of law or conflicts of law principles thereof. IN WITNESS WHEREOF, this Agreement has been executed on the date first above written. LEHMAN BROTHERS INC. SMITH BARNEY INC. FURMAN SELZ LLC NATIONSBANC MONTGOMERY SECURITIES LLC For themselves and as Repre- sentatives for each of the several U.S. Underwriters by LEHMAN BROTHERS INC. by ------------------------------- Authorized Representative LEHMAN BROTHERS INTERNATIONAL (EUROPE) SMITH BARNEY INC. FURMAN SELZ LLC NATIONSBANC MONTGOMERY SECURITIES LLC For themselves and as Lead Managers for each of the several International Managers by LEHMAN BROTHERS INTERNATIONAL (EUROPE) by ------------------------------- Authorized Representative EX-1.(D) 5 EXHIBIT 1(D) Exhibit 1(d) 5,000,000 PInES(-SM-) PREMIER PARKS INC. Premium Income Equity Securities ("PInES(-SM-)") UNDERWRITING AGREEMENT , 1998 Lehman Brothers Inc. Smith Barney Inc. c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Dear Sirs: Premier Parks Inc., a Delaware corporation (the "Company"), proposes to sell to the Underwriters named in Schedule 1 hereto (the "Underwriters"), and the Underwriters propose, severally and not jointly, to purchase 5,000,000 PInES (the "Firm Securities") consisting of depositary shares (the "PInES"), each representing one-five hundredth of a share of the Company's % mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred Stock"). In addition, the Company proposes to grant to the Underwriters an option to purchase up to an additional 750,000 PInES on the terms and for the purposes set forth in Section 2 (the "Option Securities"). The Firm Securities and the Option Securities, if purchased, are hereinafter collectively called the "Securities". This is to confirm the agreement concerning the purchase of the Securities from the Company by the Underwriters. A form of prospectus relating to the Securities is to be used in connection with the offering (the "Offering") of the Securities. It is also understood by all parties that the Company is undertaking the Offering in connection with its acquisition (the "Six Flags Acquisition") from the current stockholders (the "Sellers") of all of the capital stock of Six Flags Entertainment Corporation ("SFEC"), and that, in connection with the Six Flags Acquisition, the Company is concurrently offering $ million aggregate principal amount at maturity of its senior discount notes due 2008 (the "Company Senior Discount Notes") with estimated gross proceeds of $250 million, $280 million aggregate principal amount of its senior notes due 2006 (the "Company Senior Notes") and, with the over-allotment option, 14,950,000 shares (the "Concurrent Common Stock") of the Company's Common Stock, par value $.05 per share (the "Common Stock") with estimated gross proceeds of $ million. In addition, it is understood by all parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a new $472 million senior secured credit facility (the "Six Flags Credit Facility") under a credit agreement dated the date of this Agreement among it, certain of the Six Flags Subsidiaries (as defined in Section 15) and Lehman Commercial Paper, Inc., and Premier Operations Inc. ("Premier Operations") has entered into a $300 million senior secured credit facility (the "Premier Credit Facility" and, together with the Six Flags Credit Facility, the "Credit Facilities") under a credit agreement among the Company, certain of the Premier Subsidiaries and Premier Partnerships (each as defined in Section 15) and Lehman Commercial Paper, Inc. It is further understood by all parties that, immediately following the Offering, SFEC will offer $170 million aggregate principal amount of senior notes due 2006 (the "New SFEC Notes"), and that, concurrently with the Offering, the Company may issue depositary shares (the "Seller Depositary Shares") representing interests in up to $200 million of the Company's convertible redeemable preferred stock (the "Seller Convertible Redeemable Preferred Stock") to the Sellers as part of the consideration for the Six Flags Acquisition. 1. Representations, Warranties and Agreements of the Company and Certain of the Subsidiaries. The Company and Premier Operations and, as of the First Delivery Date (as hereinafter defined), SFEC and SFTP represent, warrant and agree, jointly and severally, that: (a) A registration statement on Form S-3 (file number 333-45859), and amendments thereto, with respect to the Securities, the Mandatorily Convertible Preferred Stock and the Common Stock, issuable upon conversion of the Mandatorily Convertible Preferred Stock or as dividends on the Mandatorily Convertible Preferred Stock, has (i) been prepared by the Company in conformity in all material respects with the requirements of the United 2 States Securities Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and Regulations") of the United States Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. Copies of such registration statement and amendments thereto have been delivered by the Company to you as the Underwriters. Upon your written request, but not without your agreement, the Company will also file a Rule 462(b) Registration Statement in accordance with Rule 462(b). As used in this Agreement, "Effective Time" means the date and the time as of which such registration statement, the most recent post-effective amendment thereto, if any, or any Rule 462(b) Registration Statement became or becomes effective; "Effective Date" means the date of the Effective Time; "Preliminary Prospectus" means each prospectus included in such registration statement, or amendments thereof, before it became effective under the Securities Act and any prospectus relating to the Securities filed with the Commission by the Company with the consent of the Underwriters pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement" means such registration statement, as amended at the Effective Time, including any documents incorporated by reference therein at such time and all information contained in the final prospectus relating to the Securities filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance with Section 5(a) hereof and deemed to be a part of the registration statement as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations and, in the event any Rule 462(b) Registration Statement becomes effective prior to the First Delivery Date, also means such registration statement as so amended, unless the context otherwise requires; "Prospectus" means such final prospectus, as first filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b) Registration Statement" means the registration statement and any amendments thereto filed pursuant to Rule 462(b) of the Rules and Regulations relating to the offering covered by the initial Registration Statement (file number 333-45859). Reference made herein to any Preliminary Prospectus or to the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of 3 the date of such Preliminary Prospectus or the Prospectus, as the case may be. The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus. (b) The Registration Statement conforms, and the Prospectus, any further amendments or supplements to the Registration Statement or the Prospectus and any Rule 462(b) Registration Statement will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and do not and will not, as of the applicable Effective Time (as to the Registration Statement and any amendment thereto) and as of the applicable filing date (as to the Prospectus and any amendment or supplement thereto) contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for inclusion therein. (c) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) The Company, each of the Premier Subsidiaries and, as of the First Delivery Date, each of the Six Flags Subsidiaries have been or will be, as applicable, duly incorporated and are or will be, as applicable, validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Partnerships (as defined in Section 15) is or will be, as applicable, validly existing as a limited partnership in good standing under the laws of their respective jurisdictions of formation; the Company, each of the Premier Subsidiaries and each of 4 the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Subsidiaries and each of the Six Flags Partnerships are or will be, as applicable, duly qualified to do business and are or will be, as applicable, in good standing as foreign entities in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires or will require, as applicable, such qualification, except where the failure to so qualify would not have in the aggregate a material adverse effect on the consolidated financial position, stockholders' equity (or partners' equity, as applicable), results of operations, business or prospects of the Company and the Subsidiaries taken as a whole (a "Material Adverse Effect") and have or will have, as applicable, all corporate or partnership power and authority, as the case may be, necessary to own or hold their respective properties and to conduct the businesses in which they are or will be, as applicable, engaged; none of the subsidiaries (as defined in Rule 405 of the Rules and Regulations) of the Company (other than the Subsidiaries) is a "significant subsidiary", as such term is defined in Rule 405 of the Rules and Regulations; and the assets, liabilities and operations of such other subsidiaries are immaterial to the assets, liabilities, operations and prospects of the Company and the Subsidiaries taken as a whole. (e) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus. All of the issued shares of capital stock of each Premier Subsidiary (in the case of Walibi, S.A. ("Walibi"), a Belgian corporation, to our knowledge) have been, and all of the issued shares of capital stock of each Six Flags Subsidiary, as of the First Delivery Date, will be, duly and validly authorized and issued and are or will be, as applicable, fully paid and non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer (as defined in Section 1(ai)), are or will be, as applicable, owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims arising under the Credit Facilities and the subordinated indemnity agreement among the 5 Company and certain of its affiliates, SFEC and certain of its affiliates and Time Warner Inc. and certain of its affiliates dated , 1998 (the "Subordinated Indemnity Agreement"). 100% of the partnership interest in the Premier Partnerships is held and, as of the First Delivery Date, 100% of the partnership interest in the Six Flags Partnerships, except for the 40% general partnership interest in San Antonio Theme Park, L.P. ("Fiesta Partnership") held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in Six Flags Over Georgia II, L.P. (the "Georgia Co-Venture Partnership") indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in Texas Flags, Ltd. (the "Texas Co- Venture Partnership") indirectly held by investors in Six Flags Fund II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, will be, as applicable, held directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims under the Credit Facilities and the Co-Venture Parks Agreements (as defined in Section 15). (f) The unissued shares of the Securities to be issued and sold by the Company to the Underwriters hereunder have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and non-assessable. The unissued shares of Mandatorily Convertible Preferred Stock to be issued in exchange by the Company to the Depositary (as defined herein) under the Deposit Agreement (as defined herein) have been duly and validly authorized and, when issued and exchanged for depositary receipts therefor as provided in the Deposit Agreement, will be duly and validly issued, fully paid and non-assessable. The shares of Common Stock, issuable upon the conversion of the Mandatorily Convertible Preferred Stock or as dividends on the Mandatorily Convertible Preferred Stock, have been duly and validly authorized and reserved for issuance upon such conversion or dividend, will be validly issued, fully paid and non-assessable. (g) This Agreement has been duly authorized, executed and delivered by the Company, each of the Premier Subsidiaries and each of the Premier Partnerships that is a party hereto or thereto, and, as of the First 6 Delivery Date, will be duly authorized, executed and delivered by each of the Six Flags Subsidiaries that is a party hereto or thereto. The Deposit Agreement relating to the Securities (the "Deposit Agreement") has been duly authorized, executed and delivered by the Company and the Depositary named therein (the "Depositary"). (h) The execution, delivery and performance of this Agreement and the Deposit Agreement by the Company and each of the Subsidiaries that are parties hereto, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Securities by the Underwriters and the exchange of the Mandatorily Convertible Preferred Stock for depositary receipts by the Depositary are obtained, any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets except, in each case, breaches, violations or defaults which, in the aggregate, are not reasonably likely to have a Material Adverse Effect; and except for the registration of the Securities and the Mandatorily Convertible Preferred Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Securities by the Underwriters and the exchange of the Mandatorily Convertible Preferred Stock for depositary receipts by the Depositary, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required or, with respect to the Six 7 Flags Subsidiaries will be required, for the execution, delivery and performance of this Agreement or the Deposit Agreement by the Company or any of the Subsidiaries that are parties hereto and the consummation of the transactions contemplated hereby and thereby. (i) Except as disclosed in the Prospectus and as to those rights which have been duly and validly waived, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. (j) The Company has not sold or issued any shares of capital stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than the following Common Stock: (i) 121,671 shares issued pursuant to the Company's acquisition of all of the membership interests of KKI, LLC on November 7, 1997, (ii) 228,855 shares issued pursuant to the Company's acquisition of at least 49% of the outstanding capital stock of Walibi on March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000 restricted shares issued to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, (iv) 768 shares issued to certain directors of the Company and (v) shares issued pursuant to the Company's employee benefit plans, qualified stock options plans or other employee compensation plans or pursuant to outstanding options, rights or warrants, which, in each case, are disclosed in the Prospectus. (k) Neither the Company nor any of the Subsidiaries has sustained, since the date of the latest audited financial statements included in the Prospectus, any loss or interference with its business from fire, explosion, flood, accident or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus, 8 except losses or interferences which will not, in the aggregate, have a Material Adverse Effect; and, since such date, there has not been any change in the capital stock other than in connection with the Premier Merger (as defined in Section 1(ag)) or long-term debt of the Company or any of the Subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its Subsidiaries, otherwise than as set forth or contemplated in the Prospectus. (l) The historical financial statements (including the related notes and supporting schedules) filed as part of the Registration Statement or included in the Prospectus present fairly the financial condition and results of operations of the entities purported to be shown thereby at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) applied on a consistent basis throughout the periods involved, and, in the case of Walibi, have been reconciled to accounting principles generally accepted in the United States to the extent required by the applicable accounting requirements of the Securities Act and the Rules and Regulations. The pro forma financial statements included in the Prospectus have been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, and comply in all material respects with Regulation S-X under the Securities Act, and the pro forma adjustments have been properly applied to historical amounts in the compilation of such pro forma financial statements. (m) KPMG Peat Marwick LLP, who have certified certain financial statements of the Company, Ernst & Young LLP, who have certified certain financial statements of SFEC, Coopers & Lybrand, who have certified certain financial statements of Walibi and Carpenter Mountjoy & Bressler, who have certified certain financial statements of Kentucky Kingdom, Inc. ("Kentucky Kingdom") whose reports appear in the Prospectus or are incorporated by reference therein and who have each delivered the respective initial letters referred to in 9 Section 7(h) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (n) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except for such liens arising under the Credit Facilities or contemplated in Section 1(e) hereof as are described in the Prospectus or such as would not have a Material Adverse Effect; and all real property and buildings held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as would not have a Material Adverse Effect. (o) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) carry, or are covered by insurance in such amounts and covering such risks (including the risk of earthquakes) as the Company has reasonably concluded, based on its experience, is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. (p) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their respective businesses as presently conducted and, with respect to the Amended and Restated License Agreement among certain affiliates of Warner Bros., SFTP and the Company dated February 9, 1998 (the "License Agreement"), as contemplated by the Prospectus, and have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others with such exceptions as would not have a Material Adverse Effect. (q) Except as otherwise disclosed in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the 10 Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect or are otherwise required to be disclosed in the Prospectus; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (r) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. (s) There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Prospectus or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations. (t) No relationship, direct or indirect, exists between or among the Company or any Subsidiary on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any Subsidiary on the other hand, which is required to be described or incorporated by reference in the Prospectus which is not so described or incorporated by reference. (u) No labor disturbance by the employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is imminent which might be reasonably expected to have a Material Adverse Effect. (v) The Company is and, as of the First Delivery Date, SFEC will be in compliance in all material respects with all presently and then applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred or, with respect to SFEC, as of the First Delivery Date will have occurred with respect to any "pension plan" (as defined in ERISA) for which the Company or SFEC, as applicable, would have any material liability; the Company has not incurred and, as of the First Delivery Date, SFEC will not have incurred and neither the Company expects nor SFEC, as of the First Delivery Date, will expect to incur 11 material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company or SFEC, as applicable, would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred or, with respect to SFEC, as of the First Delivery Date, will have occurred whether by action or by failure to act, which might reasonably be expected to cause the loss of such qualification. (w) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) are in compliance in all respects with (i) all presently applicable provisions of the Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder and (ii) all presently applicable state and local laws and regulations relating to the safety of its theme park and water park operations, with such exceptions as would not have a Material Adverse Effect. (x) The Company has filed and, as of the First Delivery Date, SFEC and its subsidiaries will have filed all federal, and all material state and local income and franchise tax returns required to be filed through the date hereof or the First Delivery Date, as applicable, other than those filings being contested in good faith. The Company has paid and, as of the First Delivery Date, SFEC will have paid all taxes of which it has notice or will have notice, as applicable, are due thereon, other than those being contested in good faith and for which adequate reserves have been provided or will have been provided, as applicable, or those currently payable or payable as of the First Delivery Date, as applicable, without penalty or interest and no tax deficiency has been determined adversely to the Company or any of the Subsidiaries which has had, nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company or any of the Subsidiaries, might be reasonably expected to have, a Material Adverse Effect. (y) Since the date as of which information is given in the Prospectus through the date hereof, and except as may otherwise be disclosed in the Prospectus, 12 the Company has not (i) issued or granted any securities or (ii) declared or paid any dividend on its capital stock, and neither the Company nor any of its Subsidiaries has (i) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business or (ii) entered into any material transaction not in the ordinary course of business other than the Six Flags Acquisition. (z) The Company and each of its Subsidiaries (in the case of Walibi, to our knowledge) (i) make and keep accurate books and records and (ii) maintain internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of their financial statements in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) and to maintain accountability for their assets, (C) access to their assets is permitted only in accordance with management's authorization and (D) the recorded accountability for their assets is compared with existing assets at reasonable intervals. (aa) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge) (i) is in violation of its charter or by-laws (or its partnership agreement, as applicable), (ii) is in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation in any material respect of any material law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject or has failed to obtain any material license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business. 13 (ab) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge), nor, to its knowledge, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of the Subsidiaries, has used any corporate or partnership funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (ac) There has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous substances by the Company or any of the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or the Subsidiaries in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for any violation or remedial action which would not have, or could not be reasonably likely to have, singularly or in the aggregate with all such violations and remedial actions, a Material Adverse Effect; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or any of the Subsidiaries or with respect to which the Company or any of the Subsidiaries have knowledge, except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have or would not be reasonably likely to have, singularly or in the aggregate with all such spills, discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have the meanings specified in any applicable local, state, 14 federal and foreign laws or regulations with respect to environmental protection. (ad) Neither the Company nor any Subsidiary is an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. (ae) At the First Delivery Date, (i) the Six Flags Acquisition shall be consummated in accordance with the terms of the Agreement and Plan of Merger dated February 9, 1998 among the Company, Premier Operations, Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers (the "Merger Agreement"), and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement, (ii) each of the concurrent offerings by the Company of the Company Senior Discount Notes, the Company Senior Notes and the Concurrent Common Stock shall be consummated, (iii) the offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering, (iv) each of the Credit Facilities shall be in effect and available for borrowing and (v) no default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or shall result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (A) the Merger Agreement, (B) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, Premier Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes"), Premier Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"), SFEC's Zero Coupon Notes due 1999 (the "SFEC Zero Coupon Notes"), SFTP's Senior Subordinated Notes due 2005 (the "SFTP Senior Subordinated Notes") and the New SFEC Notes, (C) the credit agreements relating to either of the Credit Facilities or (D) the Stock Purchase Agreement dated December 15, 1997 between Premier Operations (or a to be formed Belgian corporation) and Centrag, S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement"). (af) The statements set forth in the Prospectus under the captions "Business--Licenses", "Business-- Intercompany Services Agreement", "Business--Tax Sharing Agreement", "Description of Six Flags Agreement", "Description of Indebtedness", "Description of 15 Securities", "Description of PInES" and "Description of Depositary Arrangements", insofar as they describe the terms of the agreements and securities referred to therein, are accurate and fairly present the information required to be shown. (ag) The merger (the "Premier Merger") of the company formerly known as Premier Parks Inc. with a wholly owned subsidiary of Premier Parks Holdings Corporation has been effected, and, in connection therewith, no stockholder vote was required under applicable Delaware law and the Premier Merger otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ah) No stockholder vote is required under applicable Delaware law in connection with the Six Flags Acquisition, and the Six Flags Acquisition otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ai) The Company has effected the Walibi Acquisition and has commenced a tender offer (the "Walibi Tender Offer") for the remainder of the outstanding capital stock of Walibi as described in the Prospectus. (aj) On or prior to the First Delivery Date, the License Agreement, the Subordinated Indemnity Agreement, the Intercompany Services Agreement and the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. 2. Purchase of the Securities by the Underwriters. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Company agrees to sell 5,000,000 shares of the Firm Securities to the several Underwriters and each of the Underwriters, severally and not jointly, agrees to purchase the number of shares of the Firm Securities set opposite that Underwriter's name in Schedule 1 hereto. In addition, the Company grants to the Underwriters an option to purchase up to 750,000 shares of Option Securities. Such option is granted solely for the purpose of covering over-allotments in the sale of Firm Securities and is exercisable as provided in Section 4 hereof. Shares of Option Securities shall be purchased severally and not jointly for the account of the Underwriters in proportion to the number of 16 Firm Securities set opposite the name of such Underwriters in Schedule 1 hereto. The price of both the Firm Securities and any Option Securities shall be $ per share. The Company shall not be obligated to deliver any of the Securities to be delivered on the First Delivery Date or the Second Delivery Date (as hereinafter defined), as the case may be, except upon payment for all the Securities to be purchased on such Delivery Date as provided herein. 3. Offering of Securities by the Underwriters. The several Underwriters propose to offer the Firm Securities for sale upon the terms and conditions set forth in the Prospectus. 4. Delivery of and Payment for the Stock. Delivery of and payment for the Firm Securities shall be made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time, on the fourth full business day following the date of this Agreement or at such other date or place as shall be determined by agreement between the Underwriters and the Company. This date and time are sometimes referred to as the "First Delivery Date." On the First Delivery Date, the Company shall deliver or cause to be delivered certificates representing the Firm Securities to the Underwriters for the account of each Underwriter against payment to or upon the order of the Company of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company will not be responsible for any delay resulting from any action or inaction of any Underwriter) and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each Underwriter hereunder. Upon delivery, the Firm Securities shall be registered in such names and in such denominations as the Underwriters shall request in writing not less than two full business days prior to the First Delivery Date. For the purpose of expediting the checking and packaging of the certificates for the Firm Securities, the Company shall make the certificates representing the Firm Securities available for inspection by the Underwriters in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the First Delivery Date. At any time on or before the thirtieth day after the date of this Agreement, the option granted in Section 2 17 may be exercised by written notice being given to the Company by the Underwriters. Such notice shall set forth the aggregate number of shares of Option Securities as to which the option is being exercised, the names in which the shares of Option Securities are to be registered, the denominations in which the shares of Option Securities are to be issued and the date and time, as determined by the Underwriters, when the shares of Option Securities are to be delivered; provided, however, that this date and time shall not be earlier than the First Delivery Date nor earlier than the second business day after the date on which the option shall have been exercised nor later than the third business day after the date on which the option shall have been exercised. The date and time the shares of Option Securities are delivered are sometimes referred to as the "Second Delivery Date" and the First Delivery Date and the Second Delivery Date are sometimes each referred to as a "Delivery Date". Delivery of and payment for the Option Securities shall be made at the place specified in the first sentence of the first paragraph of this Section 4 (or at such other place as shall be determined by agreement between the Underwriters and the Company) at 10:00 A.M., New York City time, on the Second Delivery Date. On the Second Delivery Date, the Company shall deliver or cause to be delivered the certificates representing the Option Securities to the Underwriters for the account of each Underwriter against payment to or upon the order of the Company of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company will not be responsible for any delay resulting from any action or inaction of any Underwriter), and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each Underwriter hereunder. Upon delivery, the Option Securities shall be registered in such names and in such denominations as the Underwriters shall request in the aforesaid written notice. For the purpose of expediting the checking and packaging of the certificates for the Option Securities, the Company shall make the certificates representing the Option Securities available for inspection by the Underwriters in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the Second Delivery Date. 5. Further Agreements of the Company. The Company agrees: 18 (a) To prepare the Prospectus in a form approved by the Underwriters and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than Commission's close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to make no further amendment or any supplement to the Registration Statement or to the Prospectus and to file no Rule 462(b) Registration Statement except as permitted herein; to advise the Underwriters, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Underwriters with copies thereof; upon your request, to cause the Rule 462(b) Registration Statement, properly completed, to be filed with the Commission pursuant to Rule 462(b) and to provide evidence satisfactory to the Underwriters of such filing; to advise the Underwriters, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification, to use promptly its reasonable best efforts to obtain its withdrawal; (b) To furnish reasonably promptly to each of the Underwriters and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, each amendment thereto and any Rule 462(b) Registration Statement filed with the Commission, including all consents and exhibits filed therewith; (c) To deliver promptly to the Underwriters such number of the following documents as the Underwriters shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the 19 Commission, each amendment thereto (in each case excluding exhibits other than this Agreement and the computation of per share earnings) and any Rule 462(b) Registration Statement, (ii) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus and (iii) any document incorporated by reference in the Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is required at any time after the Effective Time in connection with the offering or sale of the Securities or any other securities relating thereto and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Underwriters and, upon their request, to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Underwriters may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance. (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Underwriters, be required by the Securities Act or requested by the Commission; (e) Prior to filing with the Commission any amendment to the Registration Statement or supplement to the Prospectus, any document incorporated by reference in the Prospectus, any Prospectus pursuant to Rule 424 of the Rules and Regulations or any Rule 462(b) Registration Statement to furnish a copy thereof to the Underwriters and counsel for the Underwriters and obtain the consent of the Underwriters to the filing; (f) As soon as practicable after the Effective Date (it being understood that the Company shall have until at least 410 days after the end of the Company's current fiscal quarter), to make generally available to 20 the Company's security holders and to deliver to the Underwriters an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158); (g) For a period of five years following the Effective Date, to furnish to the Underwriters copies of all materials furnished by the Company to its public shareholders and all public reports and all reports and financial statements furnished by the Company to the principal national securities exchange upon which the PInES may be listed pursuant to requirements of or agreements with such exchange or to the Commission pursuant to the Exchange Act or any rule or regulation of the Commission thereunder; (h) Promptly from time to time to take such action as the Underwriters may reasonably request to qualify the Securities for offering and sale (or obtain an exemption from registration) under the securities laws of such jurisdictions as the Underwriters may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Stock; provided, however, that the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Stock; (i) For a period of 90 days from the date of the Prospectus, not to, directly or indirectly, (i) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or any securities convertible into or exchangeable for Common Stock (other than the Securities, the Concurrent Common Stock, the Mandatorily Convertible Preferred Stock, the Seller Depositary Shares, the Seller Convertible Redeemable Preferred Stock, shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans existing on the date hereof or pursuant to currently outstanding options, warrants or rights or upon the 21 conversion of the Seller Convertible Redeemable Preferred Stock or the Mandatorily Convertible Preferred Stock, and other than shares issued by the Company as consideration to any seller of assets or stock that the Company or any of the Subsidiaries is acquiring, provided that any shares so issued to such seller or sellers, including any shares issued after the date of the Prospectus pursuant to the Walibi Acquisition or the Walibi Tender Offer, in the aggregate, do not exceed one-fifth of the total equity of the Company outstanding at the time of the first such issuance, and further provided that such seller or sellers (other than the sellers of Walibi) contemporaneously with any such issuance or issuances enter into an agreement with the Underwriters in substantially the same form as the agreement described in this paragraph (i) for the remainder of the 90 day period), or sell or grant options, rights or warrants with respect to any shares of Common Stock or securities convertible into or exchangeable for Common Stock (other than the grant of options pursuant to option plans existing on the date hereof) or (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case without the prior written consent of Lehman Brothers Inc.; and to cause each officer and director of the Company and Hanseatic Corporation, Richland Ventures, L.P., Richland Ventures II, L.P., Lawrence, Tyrrell, Ortale & Smith, Lawrence, Tyrrell, Ortale & Smith II, L.P., Windcrest Partners, [JG Partnership, Ltd.,] [J. David Grissom] and Robert J. Gellert (in the case of Robert J. Gellert only, limited to (A) shares held for his own account and (B) shares beneficially owned by Lexfor Corporation) to furnish to the Underwriters, prior to the First Delivery Date, a letter or letters, in form and substance satisfactory to counsel for the Underwriters, pursuant to which each such person shall agree not to, directly or indirectly, (iii) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or any securities convertible into or exchangeable for Common Stock or (iv) enter into any swap or other derivatives transaction that transfers to another, in 22 whole or in part, any of the economic benefits or risks of ownership of such shares of Common Stock, whether any such transaction described in clause (iii) or (iv) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case for a period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; (j) To take such steps as shall be necessary to ensure that neither the Company nor any subsidiary shall become an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder; (k) To cause an authorized officer to execute this Agreement on behalf of each of the Six Flags Subsidiaries on the First Delivery Date; (l) Not to waive the lock-up agreements executed by the Sellers in connection with the Six Flags Acquisition whereby each of the Sellers agreed to not sell any Seller Convertible Redeemable Preferred Stock (or shares of Common Stock issuable upon conversion thereof) during the period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; and (m) To make an offer to purchase the SFTP Senior Subordinated Notes following the Six Flags Acquisition in accordance with the provisions of the indenture for the SFTP Senior Subordinated Notes relating to offers to purchase the SFTP Senior Subordinated Notes upon a change of control of SFTP. 6. Expenses. The Company agrees to pay (a) the costs incident to the authorization, issuance, sale and delivery of the Securities and any taxes payable in that connection; (b) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits thereto; (c) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or supplement to the Prospectus or any document incorporated by reference therein, all as provided in this Agreement; (d) the costs of producing and distributing 23 this Agreement, the Deposit Agreement and any other related documents in connection with the offering, purchase, sale and delivery of the Securities; (e) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of sale of the Securities; (f) listing or other fees incident to the inclusion of the PInES and the Common Stock, issuable upon conversion of the Mandatorily Convertible Preferred Stock or as dividends on the Mandatorily Convertible Preferred Stock, for listing on the New York Stock Exchange; (g) the fees and expenses, if applicable, of qualifying the Securities under the securities laws of the several jurisdictions as provided in Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Underwriters); (h) if one is required pursuant to the rules of the NASD, all fees and expenses of a qualified independent underwriter; (i) all other costs and expenses incident to the performance of the obligations of the Company or any of the Subsidiaries under this Agreement; and (j) all fees and expenses of the Depositary; provided that, except as provided in this Section 6 and in Section 11, the Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Securities which they may sell and the expenses of advertising any offering of the Securities made by the Underwriters. 7. Conditions of Underwriters' Obligations. The respective obligations of the Underwriters hereunder are subject to the accuracy, when made and on each Delivery Date, of the representations and warranties of the Company, Premier Operations, SFEC and SFTP contained herein, to the performance by the Company and each of the Subsidiaries that is a party hereto of its obligations hereunder, and to each of the following additional terms and conditions: (a) The Prospectus shall have been timely filed with the Commission in accordance with Section 5(a); no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with. (b) No Underwriter shall have discovered and disclosed to the Company on or prior to such Delivery 24 Date that the Registration Statement or the Prospectus or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of Cravath, Swaine & Moore, counsel for the Underwriters, is material or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Securities, the Registration Statement and the Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Underwriters, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (d) Baer Marks & Upham LLP shall have furnished to the Underwriters its written opinion, as counsel to the Company, addressed to the Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Underwriters, to the effect that: (i) The Company and each of the Premier Subsidiaries and each of the Six Flags Subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and each of the Six Flags Partnerships is validly existing as a limited partnership in good standing under the laws of its jurisdiction of formation; and the Company, the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships are each duly qualified to do business and are in good standing as foreign corporations in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification except where the failure to so qualify would not have a Material Adverse Effect and have all corporate or partnership power and authority necessary to own or hold their respective properties and conduct the 25 businesses in which they are engaged as described in the Prospectus; (ii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company now outstanding (including the shares of the Securities being delivered on such Delivery Date and the shares of Mandatorily Convertible Preferred Stock) have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus; all of the shares of the Securities and the shares of Mandatorily Convertible Preferred Stock have been duly authorized and, when issued and delivered to the Underwriters for the account of each Underwriter against payment therefor as provided herein and to the Depositary in accordance with the Deposit Agreement, respectively, shall be validly issued, fully paid and non-assessable; the shares of Common Stock, issuable upon the conversion of the Mandatorily Convertible Preferred Stock or as dividends on the Mandatorily Convertible Preferred Stock, have been duly and validly authorized and reserved for issuance upon such conversion or dividend, will be validly issued, fully paid and nonassessable; such Common Stock conforms in all material respects to the description thereof contained in the Prospectus; to such counsel's knowledge, all of the issued shares of capital stock of each Premier Subsidiary and each Six Flags Subsidiary have been duly and validly authorized and issued and are fully paid, non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Subordinated Indemnity Agreement; and 100% of the partnership interest in each of the Premier Partnerships and each of the Six Flags Partnerships is held directly or indirectly by the Company, except for the 40% general partnership interest in Fiesta Partnership held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in the Georgia Co-Venture 26 Partnership indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in the Texas Co- Venture Partnership indirectly held by investors in Six Flags Funds II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Co-Venture Parks Agreements; (iii) There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Securities or the Mandatorily Convertible Preferred Stock pursuant to the Company's charter or by-laws or any agreement or other instrument known to such counsel; (iv) To the best of such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (v) Based solely upon oral confirmation from the staff of the Commission, the Registration Statement was declared effective under the Securities Act as of the date and time specified in such opinion; the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and no stop order suspending the effectiveness of the Registration Statement has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the Commission; (vi) The Registration Statement and the Prospectus and any further amendments or 27 supplements thereto made by the Company prior to such Delivery Date (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations; and the documents incorporated by reference in the Prospectus (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion), when they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder; (vii) To the best of such counsel's knowledge, there are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations; (viii) This Agreement has been duly authorized, executed and delivered by the Company and each of the Subsidiaries that is a party hereto; (ix) The Deposit Agreement relating to the Securities has been duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery thereof by the Depositary named therein, constitutes a valid and binding instrument enforceable against the Company in accordance with its terms (except to the extent that (a) enforcement thereof may be limited by (1) bankruptcy, reorganization, insolvency, fraudulent transfer, moratorium or other laws now or hereafter in effect relating to creditors' rights generally and (2) general principles of equity (regardless of whether at law or in equity) and except to the extent that rights to contribution and indemnification may be violative of public policy underlying any law, rule or regulation (including any Federal or state 28 securities law, rule or regulation); assuming payment of the purchase price by the Underwriters, each of the Securities represents a one-five hundredth interest in a validly issued, outstanding, fully paid and nonassessable share of Mandatorily Convertible Preferred Stock; and the Securities, when issued under the Deposit Agreement in accordance with the provisions of the Deposit Agreement, will be validly issued, and, assuming due execution and delivery of the depositary receipts relating to the Securities by the Depositary pursuant to the Deposit Agreement, such depositary receipts will entitle the holders thereof to the benefits provided therein and in the Deposit Agreement; (x) The issue and sale of the shares of the Securities and the issue and exchange of the shares of Mandatorily Convertible Preferred Stock both being delivered on such Delivery Date by the Company, the issuance of Common Stock upon the conversion of or as dividends on the Mandatorily Convertible Preferred Stock and the compliance by the Company and each of the Subsidiaries that is a party hereto with all of the provisions of this Agreement and the Deposit Agreement and the consummation of the transactions contemplated hereby and thereby (including the offerings of the Company Senior Discount Notes, the Company Senior Notes and the New SFEC Notes and the entering into of the Six Flags Credit Facility and any borrowing thereunder in connection with the Six Flags Acquisition) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Securities by the Underwriters, the exchange of the Mandatorily Convertible Preferred Stock for depositary receipts by the Depositary and the issuance of Common Stock upon the conversion of or as dividends on the Mandatorily Convertible Preferred Stock are obtained, any Federal or New York State statute, the General Corporation Law of the State of Delaware, or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets; and, except for the registration of the Securities and the Mandatorily Convertible Preferred Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and 29 applicable state or foreign securities laws in connection with the purchase and distribution of the Securities by the Underwriters and the exchange of the Mandatorily Convertible Preferred Stock for depositary receipts by the Depositary and the issuance of Common Stock upon the conversion of or as dividends on the Mandatorily Convertible Preferred Stock are obtained, any Federal or New York State statute, the General Corporation Law of the State of Delaware, or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets; and, except for the registration of the Securities and the Mandatorily Convertible Preferred Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Securities by the Underwriters and the exchange of the Mandatorily Convertible Preferred Stock for depositary receipts by the Depositary, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement or the Deposit Agreement by the Company or any of the Subsidiaries that is a party hereto and the consummation of the transactions contemplated hereby and thereby; and (xi) To the best of such counsel's knowledge, no holders of securities of the Company have rights to require the Company to include such securities with the Securities or the Mandatorily Convertible Preferred Stock registered pursuant to the Registration Statement. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and that such counsel is not admitted in any state other than New York; and, in respect of matters of fact, may rely upon certificates of 30 officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Underwriters a written statement, addressed to the Underwriters and dated such Delivery Date, in form satisfactory to the Underwriters, to the effect that (x) such counsel has acted as counsel to the Company on a regular basis (although the Company is also represented with respect to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition, litigation matters, regulatory matters and certain other matters, by other outside counsel), has acted as counsel to the Company in connection with financing transactions since February 1992 and has acted as counsel to the Company in connection with the preparation of the Registration Statement and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. In rendering such statement, such counsel may rely upon the opinion and statement delivered by Weil Gotshal & Manges LLP pursuant to Section 5(e) hereto with respect to the information covered by such opinion and statement. The foregoing opinion and statement may be qualified by a statement to the effect that such counsel does not assume any responsibility for 31 the accuracy or fairness with respect to the information required to be shown under the Securities Act and the Rules and Regulations of the statements contained in the Registration Statement or the Prospectus except for the statements made in the Prospectus under the captions "Prospectus Summary--Other Recent Developments--Walibi", "Business--Intercompany Services Agreement", "Business--Tax Sharing Agreement", "Description of Indebtedness", "Description of Securities", "Description of PInES" and "Description of Depositary Arrangements" insofar as such statements describe the terms of the Walibi Acquisition and Walibi Tender Offer, the documents or agreements referred to therein, the Stock, the Seller Convertible Redeemable Preferred Stock, the Company's debt instruments or other securities, or the registration rights referred to therein and concern legal matters. (e) Weil Gotshal & Manges LLP shall have furnished to the Underwriters its written opinion, as special counsel to the Company, addressed to the Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Underwriters, as to certain matters set forth in Section 7(d) and to the effect that the statements set forth in the Prospectus under the captions "Business-- Licenses" and "Description of Six Flags Agreement", insofar as such statements describe the terms of the documents or agreements referred to therein, are accurate, complete and fair. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Underwriters a written statement, addressed to the Underwriters and dated such Delivery Date, in form satisfactory to the Underwriters, to the effect that (x) such counsel has acted as counsel to the Company in connection with the Walibi Acquisition, the Walibi Tender Offer and the Six Flags Acquisition and has reviewed the information (the "Walibi and Six Flags Information") in the Registration Statement relating to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags 32 Acquisition and the business and operations of Walibi and its subsidiaries and SFEC and its subsidiaries and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The foregoing statement may be qualified by a statement to the effect that the statement's scope is limited to the Walibi and Six Flags Information. (f) Richards, Layton & Finger shall have furnished to the Underwriters its written opinion, as special Delaware counsel to the Company, addressed to the Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Underwriters, to the effect that, in connection with the Premier Merger, no shareholder vote was required under applicable Delaware law and, in connection with the Six Flags Acquisition, no shareholder vote is required under applicable Delaware law, and that the Premier Merger and the Six Flags Acquisition otherwise comply in all respects with applicable Delaware law. (g) The Underwriters shall have received from Cravath, Swaine & Moore, counsel for the Underwriters, such opinion or opinions and such statement or statements, dated such Delivery Date, with respect to the 33 issuance and sale of the Stock, the Registration Statement, the Prospectus and other related matters as the Underwriters may reasonably require, and the Company and the Subsidiaries shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. (h) At the time of execution of this Agreement, the Underwriters shall have received from (I) KPMG Peat Marwick LLP a letter, in form and substance satisfactory to the Underwriters, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings, except for the financial information and other matters covered in the letters from Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler described immediately hereinafter; (II) Ernst & Young LLP a letter, in form and substance satisfactory to the Underwriters, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to SFEC and its subsidiaries as have been previously agreed to by such firm and the Underwriters; (III) Coopers & Lybrand a letter, in form and substance satisfactory to the Underwriters, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the 34 conclusions and findings of such firm with respect to certain financial information and other matters relating to Walibi and its subsidiaries, as have been previously agreed to by such firm and the Underwriters; and (IV) Carpenter Mountjoy & Bressler a letter, in form and substance satisfactory to the Underwriters, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Kentucky Kingdom, as have been previously agreed to by such firm and the Underwriters. (i) With respect to the letters of KPMG Peat Marwick LLP, Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to in the preceding paragraph and delivered to the Underwriters concurrently with the execution of this Agreement (the "initial letters"), the Company shall have furnished to the Underwriters a letter (the "bring-down letters") of each of such accountants, addressed to the Underwriters and dated such Delivery Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the bring-down letter (or, in the case of the letter of KPMG Peat Marwick LLP, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter. (j) The Company shall have furnished to the Underwriters a certificate, dated such Delivery Date, of its Chairman of the Board, its President or a Vice President and its chief financial officer stating that: 35 (i) The representations, warranties and agreements of the Company and each of Premier Operations, SFEC and SFTP in Section 1 are true and correct as of such Delivery Date; the Company and each of the Subsidiaries that is a party hereto have complied with all their agreements contained herein; and the conditions set forth in Sections 7(a) and 7(k) have been fulfilled; and (ii) They have carefully examined the Registration Statement and the Prospectus and, in their opinion (A) as of the Effective Date, the Registration Statement and Prospectus did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since the Effective Date no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement or the Prospectus. (k) Since the date of the latest audited financial statements included or incorporated by reference in the Prospectus there shall not have been any change in the capital stock (or partners' equity, as applicable) other than the Premier Merger or long-term debt of the Company or any of the Subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its subsidiaries, otherwise, in each case, than as set forth or contemplated in the Prospectus, the effect of which, in any such case, is, in the judgment of the Underwriters, so material (to the Company and its Subsidiaries, taken as a whole) and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities being delivered on such Delivery Date on the terms and in the manner contemplated in the Prospectus. (l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no 36 such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities. (m) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of a majority in interest of the several Underwriters, impracticable or inadvisable to proceed with the public offering or delivery of the Securities being delivered on such Delivery Date on the terms and in the manner contemplated in the Prospectus. (n) The Six Flags Acquisition shall have been or shall be consummated concurrently with the Offering and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement. (o) Each of the offerings by the Company of the Company Senior Discount Notes, the Company Senior Notes and the Concurrent Common Stock shall have been or shall be consummated concurrently with the Offering. (p) The offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering. 37 (q) Each of the Premier Credit Facility and the Six Flags Credit Facility shall be in effect and available for borrowing. (r) No default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or would result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (i) the Merger Agreement, (ii) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, the 1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes, the SFTP Senior Subordinated Notes and the New SFEC Notes, (iii) the credit agreement relating to either the Premier Credit Facility or the Six Flags Credit Facility, (iv) the Walibi Agreement or (v) the Deposit Agreement. (s) The Premier Merger shall have been consummated. (t) Each of (i) the License Agreement, (ii) the Subordinated Indemnity Agreement, (iii) the Intercompany Services Agreement, (iv) the Tax Sharing Agreement and (v) the Deposit Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. (u) An authorized officer shall have executed this Agreement on behalf of each of the Six Flags Subsidiaries. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and scope reasonably satisfactory to counsel for the Underwriters. 8. Indemnification and Contribution. (a) The Company and the Subsidiaries that are parties hereto, jointly and severally, shall indemnify and hold harmless each Underwriter (including any Underwriter in its role as qualified independent underwriter pursuant to the rules of the NASD), its officers and employees and each person, if any, who controls any Underwriter within the meaning of the Securities Act, from and against any loss, 38 claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Securities), to which that Underwriter, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto or (B) in any blue sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying any or all of the Securities under the securities laws of any jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by any Underwriter in connection with, or relating in any manner to, the Securities or the Offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company and the Subsidiaries that are parties hereto shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its gross negligence or willful misconduct), and shall reimburse each Underwriter and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Underwriter, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiaries that are parties hereto shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the 39 Registration Statement or the Prospectus, or in any such amendment or supplement, or in any Blue Sky Application, in reliance upon and in conformity with written information concerning any Underwriter furnished to the Company by any Underwriter specifically for inclusion therein; and provided further that with respect to any such untrue statement or omission made in the Preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not enure to the benefit of the Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned if, to the extent that such sale was an initial sale by such Underwriter and any such loss, claim, damage or liability of such Underwriter is a result of the fact that both (A) a copy of the Prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Securities to such person, and (B) the untrue statement or omission in the Preliminary Prospectus was corrected in the Prospectus unless, in either case, such failure to deliver the Prospectus was a result of noncompliance by the Company with Section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company or any of the Subsidiaries that are parties hereto may otherwise have to any Underwriter or to any officer, employee or controlling person of that Underwriter. (b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the Company and the Subsidiaries that are parties hereto, each of their respective officers and employees, each of their respective directors, and each person, if any, who controls the Company or any Subsidiary that is a party hereto within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any Subsidiary that is a party hereto or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the 40 untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Underwriter furnished to the Company by that Underwriter specifically for inclusion therein, and shall reimburse the Company, any such Subsidiary and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company, any such Subsidiary or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Underwriter may otherwise have to the Company, any such Subsidiary, or any such director, officer, employee or controlling person. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Underwriters shall have the right, upon written notice to the Company, to employ counsel to represent jointly the Underwriters and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which 41 indemnity may be sought by the Underwriters against the Company and the Subsidiaries that are parties hereto under this Section 8 if, in the reasonable judgment of the Underwriters, it is advisable for the Underwriters, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the reasonable fees and expenses of such separate counsel shall be paid, jointly and severally, by the Company and the Subsidiaries that are parties hereto. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(c) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not 42 permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities purchased under this Agreement (before deducting expenses) received by the Company on the one hand, and the total underwriting discounts and commissions received by the Underwriters with respect to the shares of the Securities purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the shares of the Securities under this Agreement, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. For purposes of the preceding two sentences, the net proceeds deemed to be received by the Company shall be deemed to be also for the benefit of the Subsidiaries that are parties hereto and information supplied by the Company shall also be deemed to have been supplied by the Subsidiaries that are parties hereto. The Company, the Subsidiaries that are parties hereto and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the 43 Securities underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 8(d) are several in proportion to their respective underwriting obligations and not joint. (e) The Underwriters severally confirm and the Company and the Subsidiaries that are parties hereto acknowledge that the statements with respect to the public offering of the Securities by the Underwriters set forth in the first and last paragraphs on the cover page of, the legend concerning stabilization on the third page of and statements under the caption "Underwriting" including but not limited to the concession and reallowance figures, the Prospectus constitute the only information concerning such Underwriters furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion in the Registration Statement and the Prospectus. 9. Defaulting Underwriters. If, on either Delivery Date, any Underwriter defaults in the performance of its obligations under this Agreement, the remaining non-defaulting Underwriter shall be obligated to purchase the Securities which the defaulting Underwriter agreed but failed to purchase on such Delivery Date; provided, however, that the remaining non-defaulting Underwriter shall not be obligated to purchase any of the Securities on such Delivery Date if the total number of shares of the Securities which the defaulting Underwriter agreed but failed to purchase on such date exceeds 9.09% of the total number of shares of the Securities to be purchased on such Delivery Date, and the remaining non-defaulting Underwriter shall not be obligated to purchase more than 110% of the number of shares of the Securities which it agreed to purchase on such Delivery Date pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting Underwriter, or those other underwriters satisfactory to the non-defaulting Underwriter who so agree, shall have the right, but shall not be obligated, to purchase, 44 in such proportion as may be agreed upon among them, all the Securities to be purchased on such Delivery Date. If the remaining Underwriter or other underwriters satisfactory to the remaining Underwriter do not elect to purchase the shares which the defaulting Underwriter agreed but failed to purchase on such Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the obligation of the Underwriters to purchase, and of the Company to sell, the Option Securities) shall terminate without liability on the part of the non-defaulting Underwriter or the Company, except that the Company will continue to be liable for the payment of expenses to the extent set forth in Section 6. As used in this Agreement, the term "Underwriter" includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Securities which a defaulting Underwriter agreed but failed to purchase. Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company for damages caused by its default. If other underwriters are obligated or agree to purchase the Securities of a defaulting or withdrawing Underwriter, either the non-defaulting Underwriter or the Company may postpone the Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement, the Prospectus or in any other document or arrangement. 10. Termination. The obligations of the Underwriters hereunder may be terminated by the Underwriters by notice given to and received by the Company prior to delivery of and payment for the Firm Securities if, prior to that time, any of the events described in Sections 7(k), 7(l) or 7(m) shall have occurred or if the Underwriters shall decline to purchase the Securities for any reason permitted under this Agreement. 11. Reimbursement of Underwriters' Expenses. If the Company shall fail to tender the Securities for delivery to the Underwriters by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled (other than by reason of any events described in Section 7(m) except for the 45 suspension of trading or minimum prices of the securities of the Company), the Company will reimburse the Underwriters for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by the Underwriters in connection with this Agreement and the proposed purchase of the Securities, and promptly following demand the Company shall pay the full amount thereof to the Underwriters. If this Agreement is terminated pursuant to Section 9 by reason of the default of one or more Underwriters, the Company shall not be obligated to reimburse any defaulting Underwriter on account of those expenses. 12. Notices, etc. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Underwriters, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers Inc., Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-526-6588), with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285; (b) if to the Company or any of the Subsidiaries, shall be delivered or sent by mail, telex or facsimile transmission to 122 East 42nd Street, 49th Floor, New York, NY 10168, Attention: Kieran E. Burke (Fax: 212- 949-6203); provided, however, that any notice to a Underwriter pursuant to Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its acceptance telex , which address will be supplied to any other party hereto by the Underwriters upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the Underwriters. 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Company, the Subsidiaries that are parties hereto and their respective successors. This Agreement and the terms and provisions hereof are for the sole 46 benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Company and the applicable Subsidiaries contained in this Agreement shall also be deemed to be for the benefit of the officers and employees of each Underwriter and the person or persons, if any, who control any Underwriter within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the Underwriters contained in Section 8(b) of this Agreement shall be deemed to be for the benefit of directors of the Company, officers of the Company who have signed the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 14. Survival. The respective indemnities, representations, warranties and agreements of the Company, the applicable Subsidiaries and the Underwriters contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 15. Definition of the Terms "Business Day", "Premier Subsidiary", "Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership", "Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement, (a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) "Premier Subsidiary" means each of Premier Operations, Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a Massachusetts corporation, Premier Waterworld Concord Inc., a California corporation, Premier Waterworld Sacramento Inc., a California corporation, Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding Inc., a New York corporation, Great Escape LLC, a New York limited liability company, Great Escape Theme Park LLC, 47 a New York limited liability company, Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited liability company, Park Management Corp., a California corporation, Indiana Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier International Holdings, Inc., a Delaware corporation and [other Premier entities held in corporate form and as limited liability companies], (c) "Premier Partnership" means each of Frontier City Partners, Limited Partnership, an Oklahoma limited partnership, Elitch Gardens, L.P., a Colorado limited partnership and [other Premier entities held as limited partnerships], (d) "Six Flags Subsidiary" means each of SFEC, SFTP, [S.F. Holdings, Inc., a Delaware corporation, SFTP Inc., a Delaware corporation, S.F. Sponsorship Services, Inc., a Delaware corporation, Six Flags Over Georgia, Inc., a Delaware corporation, SFOG II, Inc., a Delaware corporation, SFOG II Employee, Inc., a Delaware corporation, SFOG Acquisition A, Inc., a Delaware corporation, SFOG Acquisition B, LLC, a Delaware limited liability company, Six Flags Over Texas, Inc., a Delaware corporation, SFOT Employee, Inc., a Delaware corporation, SFOT Acquisition I, Inc.,, a Delaware corporation, SFOT Acquisition II, Inc., a Delaware corporation, SFOT II, Inc., a Delaware corporation, American National Indemnity Co., a Vermont corporation, Six Flags Beverages, Inc., a Texas corporation, Funtircity Family Entertainment Parks, Inc., a Delaware corporation, Funtricity Vicksburg Family Entertainment Park Inc., a Delaware corporation, Pennrec, Co., a Delaware corporation, Six Flags Admiral, Inc., a Delaware corporation, Six Flags Management Corp., a Delaware corporation, Six Flags Power Plant, Inc., a Delaware corporation, Six Flags Services, Inc., a Delaware Corporation, Six Flags Services of Georgia, Inc., a Georgia corporation, Six Flags Services of Illinois, Inc. , a Delaware corporation, Six Flags Services of Missouri, Inc., a Delaware corporation, Six Flags Services of Texas, Inc., a Delaware corporation, Stars Hall of Fame, Inc., a Delaware corporation, San Antonio Park GP, LLC, a Delaware limited liability company, SFTP San Antonio GP, Inc., a Delaware corporation, Texas Flags Ltd., a Texas corporation, and SFTP San Antonio, Inc., a Delaware corporation], (e) "Six Flags Partnership" means each of Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas Co-Venture Partnership and [Six Flags San Antonio, L.P., a Delaware limited partnership], (f) "Subsidiary" means each of the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships; provided, however, that the term 48 "Subsidiary" shall include the Six Flags Subsidiaries and the Six Flags Partnerships only as of and after the First Delivery Date, and "Co-Venture Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined therein), (ii) the Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP and SFEC and the Related Agreements (as defined therein), and (iii) the Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. 17. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 49 If the foregoing correctly sets forth the agreement among the Company, the Subsidiaries that are parties hereto and the Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, Premier Parks Inc. By Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Subsidiaries (as listed in Section 15 but not including Walibi) By Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Partnerships (as listed in Section 15) By Each of their respective General Partners By Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Six Flags Subsidiaries (as listed in Section 15) By Name: Kieran E. Burke 50 Title: Chairman of the Board and Chief Executive Officer Accepted: Lehman Brothers Inc. Smith Barney Inc. By Lehman Brothers Inc. By ---------------------- Authorized Representative 51 SCHEDULE 1
Number Underwriters of Firm Shares - ------------- --------------- Lehman Brothers Inc......................... Smith Barney Inc............................ ---------- Total................................. ---------- ----------
EX-1.(E) 6 SR. NOTES U/W AGREEMENT Exhibit 1.(e) L&W Draft--3/19/98 PREMIER PARKS INC. $___________ Aggregate Principal Amount at Maturity of __% Senior Discount Notes due 2008 $280,000,000 _% Senior Notes due 2006 UNDERWRITING AGREEMENT , 1998 Lehman Brothers Inc. Salomon Brothers Inc NationsBanc Montgomery Securities LLC As Representatives of the several Underwriters named in Schedule 1, c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Dear Sirs: Premier Parks Inc., a Delaware corporation (the "Company"), proposes to sell to the several Underwriters (the "Offering") named on Schedule 1 hereto (the "Underwriters") $___________ aggregate principal amount at maturity of __% Senior Discount Notes due 2008 of the Company (the "Company Senior Discount Notes") and $280,000,000 __% Senior Notes due 2006 of the Company (the "Company Senior Notes" and, together with the Company Senior Discount Notes, the "Notes"). The Notes are to be issued under two separate indentures, to be entered into and to be dated as of _______, 1998 (the "Indentures") between the Company and The Bank of New York, as Trustee. In addition, the Company will enter into a pledge, escrow and disbursement agreement (the "Discount Note Escrow Agreement") which will secure certain of the Company's obligations under the Company Senior Discount Notes and a pledge, escrow and disbursement agreement (the "Senior Note Escrow Agreement" and together with the Discount Note Escrow Agreement, the "Escrow Agreements") which will secure certain of the Company's obligations under the Company Senior Notes. It is also understood by all parties that the Company is undertaking the Offering in connection with its acquisition (the "Six Flags Acquisition") from the current stockholders (the "Sellers") of all of the capital stock of 2 Six Flags Entertainment Corporation ("SFEC"), and that, in connection with the Six Flags Acquisition, the Company is concurrently offering (the "Common Stock Offering"), with the over-allotment option, _______ shares of its Common Stock (the "Stock") and, with the over-allotment option, 5,750,000 Premium Income Equity Securities ("PInES") representing interests in the Company's mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with estimated gross proceeds of $228.2 million. In addition, it is understood by all parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a new $472 million senior secured credit facility (the "Six Flags Credit Facility") under a credit agreement dated the date of this Agreement among it, certain of the Six Flags Subsidiaries (as defined in Section 15) and Lehman Commercial Paper, Inc., and Premier Operations Inc. ("Premier Operations") has entered into a $300 million senior secured credit facility (the "Premier Credit Facility" and, together with the Six Flags Credit Facility, the "Credit Facilities") under a credit agreement among the Company, certain of the Premier Subsidiaries and Premier Partnerships (each as defined in Section 15) and Lehman Commercial Paper, Inc. It is further understood by all parties that, immediately following the Offering, SFEC will offer $170 million aggregate principal amount of senior notes due 2006 (the "New SFEC Notes"), and that, concurrently with the Offering, the Company may issue depositary shares (the "Seller Depositary Shares") representing interests in up to $200 million of the Company's convertible redeemable preferred stock (the "Seller Convertible Redeemable Preferred Stock") to the Sellers as part of the consideration for the Six Flags Acquisition. 1. Representations, Warranties and Agreements of the Company and Certain of the Subsidiaries. The Company and Premier Operations and, as of the First Delivery Date (as hereinafter defined), SFEC and SFTP represent, warrant and agree, jointly and severally, that: (a) A registration statement on Form S-3 (file number 333-46167), and amendments thereto, with respect to the Notes has (i) been prepared by the Company in conformity in all material respects with the requirements of the United States Securities Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and Regulations") of the United States Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. Copies of such registration statement and amendments thereto have been delivered by the Company to you as the representatives (the "Representatives") of the Underwriters. Upon your written request, but not without your agreement, the Company will also file a Rule 462(b) Registration Statement in accordance with Rule 462(b). As used in 3 this Agreement, "Effective Time" means the date and the time as of which such registration statement, the most recent post-effective amendment thereto, if any, or any Rule 462(b) Registration Statement became or becomes effective; "Effective Date" means the date of the Effective Time; "Preliminary Prospectus" means each prospectus included in such registration statement, or amendments thereof, before it became effective under the Securities Act and any prospectus relating to the Notes filed with the Commission by the Company with the consent of the Representatives pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement" means such registration statement, as amended at the Effective Time, including any documents incorporated by reference therein at such time and all information contained in the final prospectus relating to the Notes filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance with Section 5(a) hereof and deemed to be a part of the registration statement as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations and, in the event any Rule 462(b) Registration Statement becomes effective prior to the First Delivery Date, also means such registration statement as so amended, unless the context otherwise requires; "Prospectus" means such final prospectus, as first filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b) Registration Statement" means the registration statement and any amendments thereto filed pursuant to Rule 462(b) of the Rules and Regulations relating to the offering covered by the initial Registration Statement (file number 333-46167). Reference made herein to any Preliminary Prospectus or to the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date of such Preliminary Prospectus or the Prospectus, as the case may be. The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus. (b) The Registration Statement conforms, and the Prospectus, any further amendments or supplements to the Registration Statement or the Prospectus and any Rule 462(b) Registration Statement will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and do not and will not, as of the applicable Effective Time (as to the Registration Statement and any amendment thereto) and as of the applicable filing date (as to the Prospectus and any amendment or supplement thereto) contain an untrue statement of a material fact or omit to state a 4 material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein. (c) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) The Company, each of the Premier Subsidiaries and, as of the First Delivery Date, each of the Six Flags Subsidiaries have been or will be, as applicable, duly incorporated and are or will be, as applicable, validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Partnerships (as defined in Section 15) is or will be, as applicable, validly existing as a limited partnership in good standing under the laws of their respective jurisdictions of formation; the Company, each of the Premier Subsidiaries and each of the Premier Partnerships and, as of the First Delivery Date, each of the Six Flags Subsidiaries and each of the Six Flags Partnerships are or will be, as applicable, duly qualified to do business and are or will be, as applicable, in good standing as foreign entities in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires or will require, as applicable, such qualification, except where the failure to so qualify would not have in the aggregate a material adverse effect on the consolidated financial position, stockholders' equity (or partners' equity, as applicable), results of operations, business or prospects of the Company and the Subsidiaries taken as a whole (a "Material Adverse Effect") and have or will have, as applicable, all corporate or partnership power and authority, as the case may be, necessary to own or hold their respective properties and to conduct the businesses in which they are or will be, as applicable, engaged; none of the subsidiaries (as defined in Rule 405 of the Rules and Regulations) of the Company 5 (other than the Subsidiaries) is a "significant subsidiary", as such term is defined in Rule 405 of the Rules and Regulations; and the assets, liabilities and operations of such other subsidiaries are immaterial to the assets, liabilities, operations and prospects of the Company and the Subsidiaries taken as a whole. (e) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus. All of the issued shares of capital stock of each Premier Subsidiary (in the case of Walibi, S.A. ("Walibi"), a Belgian corporation, to our knowledge) have been, and all of the issued shares of capital stock of each Six Flags Subsidiary, as of the First Delivery Date, will be, duly and validly authorized and issued and are or will be, as applicable, fully paid and non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer (as defined in Section 1(ai)), are or will be, as applicable, owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims arising under the Credit Facilities and the subordinated indemnity agreement among the Company and certain of its affiliates, SFEC and certain of its affiliates and Time Warner Inc. and certain of its affiliates dated , 1998 (the "Subordinated Indemnity Agreement"). 100% of the partnership interest in the Premier Partnerships is held and, as of the First Delivery Date, 100% of the partnership interest in the Six Flags Partnerships, except for the 40% general partnership interest in San Antonio Theme Park, L.P. ("Fiesta Partnership") held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in Six Flags Over Georgia II, L.P. (the "Georgia Co-Venture Partnership") indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in Texas Flags, Ltd. (the "Texas Co-Venture Partnership") indirectly held by investors in Six Flags Fund II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, will be, as applicable, held directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims under the Credit Facilities and the Co-Venture Parks Agreements (as defined in Section 15). (f) The unissued shares of the Stock to be issued and sold by the Company pursuant to the Common Stock 6 Offering have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and non-assessable. (g) This Agreement has been duly authorized, executed and delivered by the Company, each of the Premier Subsidiaries and each of the Premier Partnerships that is a party hereto, and, as of the First Delivery Date, will be duly authorized, executed and delivered by each of the Six Flags Subsidiaries that is a party hereto. (h) The execution, delivery and performance of this Agreement, the Indentures and the Escrow Agreements by the Company and each of the Subsidiaries that are parties hereto or thereto, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters are obtained, any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets except, in each case, breaches, violations or defaults which, in the aggregate, are not reasonably likely to have a Material Adverse Effect; and except for the registration of the Notes under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required or, with respect to the Six Flags Subsidiaries will be required, for the execution, delivery and performance of this Agreement, the Indentures or the Escrow Agreements by the Company or any of the Subsidiaries 7 that are parties hereto or thereto and the consummation of the transactions contemplated hereby and thereby. (i) Except as disclosed in the Prospectus and as to those rights which have been duly and validly waived, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. (j) The Company has not sold or issued any shares of Common Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than (i) 121,671 shares issued pursuant to the Company's acquisition of all of the membership interests of KKI, LLC on November 7, 1997, (ii) 228,855 shares issued pursuant to the Company's acquisition of at least 49% of the outstanding capital stock of Walibi on March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000 restricted shares issued to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, (iv) 768 shares issued to certain directors of the Company and (v) shares issued pursuant to the Company's employee benefit plans, qualified stock options plans or other employee compensation plans or pursuant to outstanding options, rights or warrants, which, in each case, are disclosed in the Prospectus. (k) Neither the Company nor any of the Subsidiaries has sustained, since the date of the latest audited financial statements included in the Prospectus, any loss or interference with its business from fire, explosion, flood, accident or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus, except losses or interferences which will not, in the aggregate, have a Material Adverse Effect; and, since such date, there has not been any change in the capital stock other than in connection with the Premier Merger (as defined in Section 1(ag)) or long-term debt of the Company or any of the Subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, 8 management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its Subsidiaries, otherwise than as set forth or contemplated in the Prospectus. (l) The historical financial statements (including the related notes and supporting schedules) filed as part of the Registration Statement or included in the Prospectus present fairly the financial condition and results of operations of the entities purported to be shown thereby at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) applied on a consistent basis throughout the periods involved, and, in the case of Walibi, have been reconciled to accounting principles generally accepted in the United States to the extent required by the applicable accounting requirements of the Securities Act and the Rules and Regulations. The pro forma financial statements included in the Prospectus have been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, and comply in all material respects with Regulation S-X under the Securities Act, and the pro forma adjustments have been properly applied to historical amounts in the compilation of such pro forma financial statements. (m) KPMG Peat Marwick LLP, who have certified certain financial statements of the Company, Ernst & Young LLP, who have certified certain financial statements of SFEC, Coopers & Lybrand, who have certified certain financial statements of Walibi and Carpenter Mountjoy & Bressler, who have certified certain financial statements of Kentucky Kingdom, Inc. ("Kentucky Kingdom") whose reports appear in the Prospectus or are incorporated by reference therein and who have each delivered the respective initial letters referred to in Section 7(h) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (n) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except for such liens arising under the Credit Facilities or contemplated in Section 1(e) hereof as are described in the Prospectus or such as would not have a Material Adverse Effect; and all real property and buildings held under lease by 9 the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as would not have a Material Adverse Effect. (o) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) carry, or are covered by insurance in such amounts and covering such risks (including the risk of earthquakes) as the Company has reasonably concluded, based on its experience, is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. (p) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their respective businesses as presently conducted and, with respect to the Amended and Restated License Agreement among certain affiliates of Warner Bros., SFTP and the Company dated February 9, 1998 (the "License Agreement"), as contemplated by the Prospectus, and have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others with such exceptions as would not have a Material Adverse Effect. (q) Except as otherwise disclosed in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect or are otherwise required to be disclosed in the Prospectus; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (r) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. (s) There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Prospectus or filed as exhibits to the Registration Statement or incorporated 10 therein by reference as permitted by the Rules and Regulations. (t) No relationship, direct or indirect, exists between or among the Company or any Subsidiary on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any Subsidiary on the other hand, which is required to be described or incorporated by reference in the Prospectus which is not so described or incorporated by reference. (u) No labor disturbance by the employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is imminent which might be reasonably expected to have a Material Adverse Effect. (v) The Company is and, as of the First Delivery Date, SFEC will be in compliance in all material respects with all presently and then applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred or, with respect to SFEC, as of the First Delivery Date will have occurred with respect to any "pension plan" (as defined in ERISA) for which the Company or SFEC, as applicable, would have any material liability; the Company has not incurred and, as of the First Delivery Date, SFEC will not have incurred and neither the Company expects nor SFEC, as of the First Delivery Date, will expect to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company or SFEC, as applicable, would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred or, with respect to SFEC, as of the First Delivery Date, will have occurred whether by action or by failure to act, which might reasonably be expected to cause the loss of such qualification. (w) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) are in compliance in all respects with (i) all presently applicable provisions of the Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder and (ii) all presently applicable state and local laws and regulations relating to the safety of its theme park and water park operations, with such exceptions as would not have a Material Adverse Effect. 11 (x) The Company has filed and, as of the First Delivery Date, SFEC and its subsidiaries will have filed all federal, and all material state and local income and franchise tax returns required to be filed through the date hereof or the First Delivery Date, as applicable, other than those filings being contested in good faith. The Company has paid and, as of the First Delivery Date, SFEC will have paid all taxes of which it has notice or will have notice, as applicable, are due thereon, other than those being contested in good faith and for which adequate reserves have been provided or will have been provided, as applicable, or those currently payable or payable as of the First Delivery Date, as applicable, without penalty or interest and no tax deficiency has been determined adversely to the Company or any of the Subsidiaries which has had, nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company or any of the Subsidiaries, might be reasonably expected to have, a Material Adverse Effect. (y) Since the date as of which information is given in the Prospectus through the date hereof, and except as may otherwise be disclosed in the Prospectus, the Company has not (i) issued or granted any securities or (ii) declared or paid any dividend on its capital stock, and neither the Company nor any of its Subsidiaries has (i) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business or (ii) entered into any material transaction not in the ordinary course of business other than the Six Flags Acquisition. (z) The Company and each of its Subsidiaries (in the case of Walibi, to our knowledge) (i) make and keep accurate books and records and (ii) maintain internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of their financial statements in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) and to maintain accountability for their assets, (C) access to their assets is permitted only in accordance with management's authorization and (D) the recorded accountability for their assets is compared with existing assets at reasonable intervals. (aa) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge) (i) is in violation of its charter or by-laws (or its partnership agreement, as applicable), (ii) is in 12 default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation in any material respect of any material law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject or has failed to obtain any material license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business. (ab) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge), nor, to its knowledge, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of the Subsidiaries, has used any corporate or partnership funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (ac) There has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous substances by the Company or any of the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or the Subsidiaries in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for any violation or remedial action which would not have, or could not be reasonably likely to have, singularly or in the aggregate with all such violations and remedial actions, a Material Adverse Effect; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or any of the Subsidiaries or 13 with respect to which the Company or any of the Subsidiaries have knowledge, except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have or would not be reasonably likely to have, singularly or in the aggregate with all such spills, discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to environmental protection. (ad) Neither the Company nor any Subsidiary is an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. (ae) At the First Delivery Date, (i) the Six Flags Acquisition shall be consummated in accordance with the terms of the Agreement and Plan of Merger dated February 9, 1998 among the Company, Premier Operations, Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers (the "Merger Agreement"), and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement, (ii) each of the concurrent offerings by the Company of the Stock and the PInES shall be consummated, (iii) the offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering, (iv) each of the Credit Facilities shall be in effect and available for borrowing and (v) no default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or shall result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (A) the Merger Agreement, (B) the Indentures, Premier Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes"), Premier Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"), SFEC's Zero Coupon Notes due 1999 (the "SFEC Zero Coupon Notes"), SFTP's Senior Subordinated Notes due 2005 (the "SFTP Senior Subordinated Notes") and the New SFEC Notes, (C) the credit agreements relating to either of the Credit Facilities or (D) the Stock Purchase Agreement dated December 15, 1997 between Premier Operations (or a to be formed Belgian corporation) and Centrag, S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement"). (af) The statements set forth in the Prospectus under the captions "Business--Licenses", "Business--Intercompany Services Agreement", "Business--Tax 14 Sharing Agreement", "Description of Six Flags Agreement", "Description of Other Indebtedness," "Description of Capital Stock," "Certain United States Federal Income Tax Considerations" and "Description of Notes", insofar as they describe the terms of the agreements and securities referred to therein, are accurate and fairly present the information required to be shown. (ag) The merger (the "Premier Merger") of the company formerly known as Premier Parks Inc. with a wholly owned subsidiary of Premier Parks Holdings Corporation has been effected, and, in connection therewith, no stockholder vote was required under applicable Delaware law and the Premier Merger otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ah) No stockholder vote is required under applicable Delaware law in connection with the Six Flags Acquisition, and the Six Flags Acquisition otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ai) The Company has effected the Walibi Acquisition and has commenced a tender offer (the "Walibi Tender Offer") for the remainder of the outstanding capital stock of Walibi as described in the Prospectus. (aj) On or prior to the First Delivery Date, the License Agreement, the Subordinated Indemnity Agreement, the Intercompany Services Agreement and the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. (ak) The Company has full power and authority to enter into the Indentures; the Indentures have been duly authorized by the Company; and on the First Delivery Date, the Indentures will have been duly executed and delivered by the Company and, assuming due authorization, execution and delivery of the Indentures by the Trustee, the Indentures will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (al) The Company has full power and authority to offer and sell the Notes; the Notes have been duly 15 authorized by the Company; and when the Notes are delivered and paid for pursuant to this Agreement on the First Delivery Date, such Notes will have been duly executed, authenticated, issued and delivered (assuming due authentication of the Notes by the Trustee) and, assuming due authentication of the Notes by the Trustee, such Notes will constitute valid and legally binding obligations of the Company, entitled to the benefits of the Indentures and enforceable in accordance with their terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (am) The Company has full power and authority to enter into the Escrow Agreements; the Escrow Agreements have been duly authorized by the Company; and when duly executed and delivered by the Company (assuming due authorization, execution and delivery by the Trustee), will be valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (an) The Indentures, the Escrow Agreements and the Notes conform in all material respects to the descriptions thereof contained in the Prospectus. (ao) Neither the Company nor any Subsidiary has taken, directly or indirectly, any action which is designed to or which has constituted or which might reasonably have been expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection with the Offering. (ap) The Indentures shall have been qualified under and will comply in all material respects with the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). 2. Purchase of the Notes by the Underwriters. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Company agrees to sell to the several Underwriters and each of the Underwriters, severally and not jointly, agrees to purchase from the Company, (i) the Company Senior Notes at a purchase price of 100% of the principal amount thereof and 16 (ii) the Company Senior Discount Notes at a purchase price of __% of the principal amount at maturity thereof, in each case, plus accrued interest, if any, from March __, 1998, to the First Delivery Date, the respective principal amounts of Notes set forth opposite that Underwriter's name in Schedule 1 hereto. 3. Offering of Notes by the Underwriters. Upon authorization by the Representatives of the release of the Notes, the several Underwriters propose to offer the Notes for sale upon the terms and conditions set forth in the Prospectus. 4. Delivery of and Payment for the Notes. Delivery of and payment for the Notes shall be made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time, on the fifth full business day following the date of this Agreement or at such other date or place as shall be determined by agreement between the Representatives and the Company. This date and time are sometimes referred to as the "First Delivery Date." On the First Delivery Date, the Company shall deliver or cause to be delivered several Notes in definitive form, registered in the name of Cede & Co., nominee of The Depository Trust Company ("DTC"), or such other names as the Underwriters may request upon at least two business days' notice to the Company (collectively, the "Global Notes") to the Representatives against payment by the Company of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company will not be responsible for any delay resulting from any action or inaction of any Underwriter) and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each Underwriter hereunder. For the purpose of expediting the checking and packaging of the Global Notes, the Company shall make the certificates representing the Global Notes available for inspection by the Representatives in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the First Delivery Date. 5. Further Agreements of the Company. The Company agrees: (a) To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than Commission's close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to make no further amendment or any supplement to the Registration Statement or to the Prospectus and to 17 file no Rule 462(b) Registration Statement except as permitted herein; to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Representatives with copies thereof; upon your request, to cause the Rule 462(b) Registration Statement, properly completed, to be filed with the Commission pursuant to Rule 462(b) and to provide evidence satisfactory to the Representatives of such filing; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the Notes for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification, to use promptly its reasonable best efforts to obtain its withdrawal; (b) To furnish reasonably promptly to each of the Representatives and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, each amendment thereto and any Rule 462(b) Registration Statement filed with the Commission, including all consents and exhibits filed therewith; (c) To deliver promptly to the Representatives such number of the following documents as the Representatives shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission, each amendment thereto (in each case excluding exhibits other than this Agreement and the computation of per share earnings) and any Rule 462(b) Registration Statement, (ii) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus and (iii) any document incorporated by reference in the Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is required at any time after the Effective Time in connection with the offering or sale of the Notes or any other securities relating thereto and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to 18 make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Representatives and, upon their request, to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance. (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Representatives, be required by the Securities Act or requested by the Commission; (e) Prior to filing with the Commission any amendment to the Registration Statement or supplement to the Prospectus, any document incorporated by reference in the Prospectus, any Prospectus pursuant to Rule 424 of the Rules and Regulations or any Rule 462(b) Registration Statement to furnish a copy thereof to the Representatives and counsel for the Underwriters and obtain the consent of the Representatives to the filing; (f) As soon as practicable after the Effective Date (it being understood that the Company shall have until at least 410 days after the end of the Company's current fiscal quarter), to make generally available to the Company's security holders and to deliver to the Representatives an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158); (g) For so long as any of the Notes are outstanding, to deliver without charge to the Underwriters and the Trustee, promptly upon their becoming available, copies of (i) all reports or other publicly available information that the Company shall mail or otherwise make available to its securities holders and (ii) all reports, financial statements and proxy or information statements filed by the Company with the Commission or any national securities exchange and such other publicly available information concerning the Company or its Subsidiaries; 19 (h) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Notes for offering and sale (or obtain an exemption from registration) under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Notes; provided, however, that the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Notes; (i) For a period of 90 days from the date of the Prospectus, not to, directly or indirectly, (i) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any [debt securities issued or guaranteed by the Company or any Subsidiary and having a maturity of more than one year from the date of issue, any] shares of Common Stock or any securities convertible into or exchangeable for Common Stock (other than the Stock, the PInES, the Mandatorily Convertible Preferred Stock, the Seller Depositary Shares, the Seller Convertible Redeemable Preferred Stock, shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans existing on the date hereof or pursuant to currently outstanding options, warrants or rights or upon the conversion of the Seller Convertible Redeemable Preferred Stock or the Mandatorily Convertible Preferred Stock, and other than shares issued by the Company as consideration to any seller of assets or stock that the Company or any of the Subsidiaries is acquiring, provided that any shares so issued to such seller or sellers, including any shares issued after the date of the Prospectus pursuant to the Walibi Acquisition or the Walibi Tender Offer, in the aggregate, do not exceed one-[third] of the total equity of the Company outstanding at the time of the first such issuance, and further provided that such seller or sellers (other than the sellers of Walibi) contemporaneously with any such issuance or issuances enter into an agreement with the Representatives in substantially the same form as the agreement described in this paragraph (i) for the remainder of the 90 day period), or sell or grant options, rights or warrants with respect to any shares of Common Stock or securities convertible into or exchangeable for Common Stock (other than the grant of options pursuant to option plans existing on the date hereof) or (ii) enter 20 into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case without the prior written consent of Lehman Brothers Inc.; and to cause each officer and director of the Company and Hanseatic Corporation, Richland Ventures, L.P., Richland Ventures II, L.P., Lawrence, Tyrrell, Ortale & Smith, Lawrence, Tyrrell, Ortale & Smith II, L.P., Windcrest Partners, [JG Partnership, Ltd.,] [J. David Grissom] and Robert J. Gellert (in the case of Robert J. Gellert only, limited to (A) shares held for his own account and (B) shares beneficially owned by Lexfor Corporation) to furnish to the Representatives, prior to the First Delivery Date, a letter or letters, in form and substance satisfactory to counsel for the Underwriters, pursuant to which each such person shall agree not to, directly or indirectly, (iii) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or any securities convertible into or exchangeable for Common Stock or (iv) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Common Stock, whether any such transaction described in clause (iii) or (iv) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, in each case for a period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; (j) To take such steps as shall be necessary to ensure that neither the Company nor any subsidiary shall become an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder; (k) To cause an authorized officer to execute this Agreement on behalf of each of the Six Flags Subsidiaries on the First Delivery Date; (l) Not to waive the lock-up agreements executed by the Sellers in connection with the Six Flags Acquisition whereby each of the Sellers agreed to not sell any Seller Convertible Redeemable Preferred Stock (or shares of Common Stock issuable upon conversion thereof) during the period of 90 days from the date of 21 the Prospectus, without the prior written consent of Lehman Brothers Inc.; and (m) To make an offer to purchase the SFTP Senior Subordinated Notes following the Six Flags Acquisition in accordance with the provisions of the indenture for the SFTP Senior Subordinated Notes relating to offers to purchase the SFTP Senior Subordinated Notes upon a change of control of SFTP. (n) In connection with the Offering, until the Representatives shall have notified the Company and the other Underwriters of the completion of the resale of the Notes, none of the Company nor any of its affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Notes or attempt to induce any person to purchase any Notes; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Notes; (o) To not take, directly or indirectly, any action which is designed to stabilize or manipulate, or which constitutes or which might reasonably be expected to cause or result in stabilization or manipulation, of the price of any security of the Company in connection with the offering of the Notes; (p) Upon the closing of the offering of the Notes, (i) to deposit with and pledge to the Trustee for the benefit of holders of the Company Senior Notes $_______ which shall be used to purchase Government Securities (as defined in the Escrow Agreements) in such amount as will be sufficient upon receipt of scheduled interest and principal payments of such securities, in the opinion of a nationally recognized firm of public accountants selected by the Company, to provide for payment in full of the Scheduled Interest Payments (as defined in the Senior Note Escrow Agreement) and (ii) to deposit with and pledge to the Trustee for the benefit of holders of the Company Senior Discount Notes $_______ which shall be used to purchase Government Securities. The Company will take all actions necessary to pledge, assign and set over to the Trustee, for the benefit of holders of the respective Notes, and irrevocably grant to the Trustee for the benefit of the holders of the respective Notes a first priority security interest in all of its right, title and interest in such Government Securities held by the Trustee or on its behalf, in order to secure the respective obligations of the Company as set forth in the Escrow Agreements; and 22 (q) To use its best efforts to do and perform all things necessary to perfect, to the extent permitted by law, a first priority security interest in favor of the Trustee for the benefit of the holders of the respective Notes, in the Escrow Account and the Restricted Cash Account. 6. Expenses. The Company agrees to pay (a) the costs incident to the authorization, issuance, sale and delivery of the Notes and any taxes payable in that connection; (b) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits thereto; (c) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or supplement to the Prospectus or any document incorporated by reference therein, all as provided in this Agreement; (d) the costs of producing and distributing this Agreement, the Indentures, the Escrow Agreements, the Notes and any other related documents in connection with the offering, purchase, sale and delivery of the Notes; (e) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of sale of the Notes; (f) listing or other fees incident to the inclusion of the Common Stock (including the Stock) for listing on the New York Stock Exchange; (g) the fees and expenses, if applicable, of qualifying the Notes under the securities laws of the several jurisdictions as provided in Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Underwriters); (h) if one is required pursuant to the rules of the NASD, all fees and expenses of a qualified independent underwriter; (i) the fees and expenses of the Trustee including fees and disbursements of counsel) under the Escrow Agreements; (j) all fees and expenses (including fees and expenses of counsel) of the Company in connection with approval of the Notes by DTC for "book-entry" transfer and (k) all other costs and expenses incident to the performance of the obligations of the Company or any of the Subsidiaries under this Agreement; provided that, except as provided in this Section 6 and in Section 11, the Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Notes which they may sell and the expenses of advertising any offering of the Notes made by the Underwriters. 7. Conditions of Underwriters' Obligations. The respective obligations of the Underwriters hereunder are subject to the accuracy, when made and on the First Delivery Date, of the representations and warranties of the Company, Premier Operations, SFEC and SFTP contained herein, to the 23 performance by the Company and each of the Subsidiaries that is a party hereto of its obligations hereunder, and to each of the following additional terms and conditions: (a) The Prospectus shall have been timely filed with the Commission in accordance with Section 5(a); no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with. (b) No Underwriter shall have discovered and disclosed to the Company on or prior to the First Delivery Date that the Registration Statement or the Prospectus or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of Latham & Watkins, counsel for the Underwriters, is material or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Indentures, the Escrow Agreements, the Notes, the Registration Statement and the Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Underwriters, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (d) Baer Marks & Upham LLP shall have furnished to the Representatives its written opinion, as counsel to the Company, addressed to the Underwriters and dated the First Delivery Date, in form reasonably satisfactory to the Representatives, to the effect that: (i) The Company and each of the Premier Subsidiaries and each of the Six Flags Subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and each of the Six Flags Partnerships is validly existing as a limited partnership in good standing 24 under the laws of its jurisdiction of formation; and the Company, the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships are each duly qualified to do business and are in good standing as foreign corporations in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification except where the failure to so qualify would not have a Material Adverse Effect and have all corporate or partnership power and authority necessary to own or hold their respective properties and conduct the businesses in which they are engaged as described in the Prospectus; (ii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company now outstanding (including the shares of Stock being delivered on the First Delivery Date) have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus; all of the shares of Stock have been duly authorized and, when issued and delivered to the Representatives for the account of each Underwriter against payment therefor as provided herein, shall be validly issued, fully paid and non-assessable; to such counsel's knowledge, all of the issued shares of capital stock of each Premier Subsidiary and each Six Flags Subsidiary have been duly and validly authorized and issued and are fully paid, non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Subordinated Indemnity Agreement; and 100% of the partnership interest in each of the Premier Partnerships and each of the Six Flags Partnerships is held directly or indirectly by the Company, except for the 40% general partnership interest in Fiesta Partnership held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in the Georgia Co-Venture Partnership indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in the Texas Co-Venture Partnership indirectly held by investors in Six Flags Funds II, Ltd. (L.P.), of which approximately % are not 25 affiliated with the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Co-Venture Parks Agreements; (iii) There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Stock pursuant to the Company's charter or by-laws or any agreement or other instrument known to such counsel; (iv) To the best of such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (v) Based solely upon oral confirmation from the staff of the Commission, the Registration Statement was declared effective under the Securities Act as of the date and time specified in such opinion; the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and no stop order suspending the effectiveness of the Registration Statement has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the Commission; (vi) The Registration Statement and the Prospectus and any further amendments or supplements thereto made by the Company prior to the First Delivery Date (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations; and the documents incorporated by reference in the Prospectus (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which 26 such counsel need express no opinion), when they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder; (vii) To the best of such counsel's knowledge, there are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations; (viii) This Agreement has been duly authorized, executed and delivered by the Company and each of the Subsidiaries that is a party hereto; (ix) The issue and sale of the Notes being delivered on the First Delivery Date by the Company and the compliance by the Company and each of the Subsidiaries that is a party hereto with all of the provisions of this Agreement, the Escrow Agreements and the Indentures and the consummation of the transactions contemplated hereby and by the Six Flags Acquisition (including the offerings of the Stock and the New SFEC Notes and the entering into of the Six Flags Credit Facility and any borrowing thereunder in connection with the Six Flags Acquisition) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters are obtained, any Federal or New York State statute, the General Corporation Law of the State of Delaware, or any order, rule or regulation known to such counsel of any court or governmental agency or body having 27 jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets; and, except for the registration of the Notes under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement, the Indentures or the Escrow Agreements by the Company or any of the Subsidiaries that is a party hereto or thereto and the consummation of the transactions contemplated hereby and thereby; (x) To the best of such counsel's knowledge, no holders of securities of the Company have rights to require the Company to include such securities with the Notes registered pursuant to the Registration Statement; (xi) The Company has full power and authority to enter into the Indentures; the Indentures have been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery of the Indentures by the Trustee, the Indentures constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law); (xii) The Company has full power and authority to offer and sell the Notes; the Notes have been duly authorized, executed, authenticated, issued and delivered (assuming due authentication of the Notes by the Trustee) and, assuming due authentication of the Notes by the Trustee, such Notes constitute valid and legally binding obligations of the Company, entitled to the benefits of the Indentures and enforceable in accordance with their terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general 28 equitable principles (whether considered in a proceeding in equity or at law); (xiii) The Company has full power and authority to enter into the Escrow Agreements; the Escrow Agreements have been duly authorized, executed and delivered by the Company (assuming due authorization, execution and delivery by the Trustee), and are be valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law); (xiv) The Indentures, the Escrow Agreements and the Notes conform in all material respects to the descriptions thereof contained in the Prospectus; and (xv) The Indentures have been qualified under and comply in all material respects with the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and that such counsel is not admitted in any state other than New York; and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Representatives a written statement, addressed to the Underwriters and dated the First Delivery Date, in form satisfactory to the Representatives, to the effect that (x) such counsel has acted as counsel to the Company on a regular basis (although the Company is also represented with respect to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition, litigation matters, regulatory matters and certain other matters, by other outside counsel), has acted as counsel to the Company in connection with financing transactions since February 29 1992 and has acted as counsel to the Company in connection with the preparation of the Registration Statement and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. In rendering such statement, such counsel may rely upon the opinion and statement delivered by Weil Gotshal & Manges LLP pursuant to Section 7(e) hereto with respect to the information covered by such opinion and statement. The foregoing opinion and statement may be qualified by a statement to the effect that such counsel does not assume any responsibility for the accuracy or fairness with respect to the information required to be shown under the Securities Act and the Rules and Regulations of the statements contained in the Registration Statement or the Prospectus except for the statements made in the Prospectus under the captions "Prospectus Summary--Other Recent Developments--Walibi", "Business--Intercompany Services Agreement", "Business--Tax Sharing Agreement", "Description of Other Indebtedness", "Description of Notes", "Description of Capital Stock", and "Certain United States Federal Income Tax Considerations" insofar as such statements describe the terms of the Walibi Acquisition and Walibi Tender Offer, the documents or agreements referred to therein, the Notes, the Stock, the Seller Convertible Redeemable Preferred Stock, the Company's other debt instruments or other securities, or the registration rights referred to therein and concern legal matters. 30 (e) Weil Gotshal & Manges LLP shall have furnished to the Representatives its written opinion, as special counsel to the Company, addressed to the Underwriters and dated the First Delivery Date, in form reasonably satisfactory to the Representatives, as to certain matters set forth in Section 7(d) and to the effect that the statements set forth in the Prospectus under the captions "Business--Licenses" and "Description of Six Flags Agreement", insofar as such statements describe the terms of the documents or agreements referred to therein, are accurate, complete and fair. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Representatives a written statement, addressed to the Underwriters and dated the First Delivery Date, in form satisfactory to the Representatives, to the effect that (x) such counsel has acted as counsel to the Company in connection with the Walibi Acquisition, the Walibi Tender Offer and the Six Flags Acquisition and has reviewed the information (the "Walibi and Six Flags Information") in the Registration Statement relating to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition and the business and operations of Walibi and its subsidiaries and SFEC and its subsidiaries and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the 31 circumstances under which they were made, not misleading. The foregoing statement may be qualified by a statement to the effect that the statement's scope is limited to the Walibi and Six Flags Information. (f) Richards, Layton & Finger shall have furnished to the Representatives its written opinion, as special Delaware counsel to the Company, addressed to the Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Representatives, to the effect that, in connection with the Premier Merger, no shareholder vote was required under applicable Delaware law and, in connection with the Six Flags Acquisition, no shareholder vote is required under applicable Delaware law, and that the Premier Merger and the Six Flags Acquisition otherwise comply in all respects with applicable Delaware law. (g) The Representatives shall have received from Latham & Watkins, counsel for the Underwriters, such opinion or opinions and such statement or statements, dated the First Delivery Date, with respect to the issuance and sale of the Notes, the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably require, and the Company and the Subsidiaries shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. (h) At the time of execution of this Agreement, the Representatives shall have received from (I) KPMG Peat Marwick LLP a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings, except for the financial information and other matters covered in the letters from Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler described immediately hereinafter; (II) Ernst & Young LLP a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and 32 dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to SFEC and its subsidiaries as have been previously agreed to by such firm and the Representatives; (III) Coopers & Lybrand a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Walibi and its subsidiaries, as have been previously agreed to by such firm and the Representatives; and (IV) Carpenter Mountjoy & Bressler a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Kentucky Kingdom, as have been previously agreed to by such firm and the Representatives. (i) With respect to the letters of KPMG Peat Marwick LLP, Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to in the preceding paragraph and delivered to the Representatives concurrently with the execution of this Agreement (the "initial letters"), the Company shall have furnished to the Representatives a letter (the "bring-down letters") of each of such accountants, addressed to the Underwriters and dated the First Delivery Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the bring-down letter (or, in the case of the letter of KPMG Peat Marwick LLP, with respect to matters involving changes or developments since the respective dates as of which 33 specified financial information is given in the Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter. (j) The Company shall have furnished to the Representatives a certificate, dated the First Delivery Date, of its Chairman of the Board, its President or a Vice President and its chief financial officer stating that: (i) The representations, warranties and agreements of the Company and each of Premier Operations, SFEC and SFTP in Section 1 are true and correct as of the First Delivery Date; the Company and each of the Subsidiaries that is a party hereto have complied with all their agreements contained herein; and the conditions set forth in Sections 7(a) and 7(k) have been fulfilled; and (ii) They have carefully examined the Registration Statement and the Prospectus and, in their opinion (A) as of the Effective Date, the Registration Statement and Prospectus did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since the Effective Date no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement or the Prospectus. (k) Since the date of the latest audited financial statements included or incorporated by reference in the Prospectus there shall not have been any change in the capital stock (or partners' equity, as applicable) other than the Premier Merger or long-term debt of the Company or any of the Subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its subsidiaries, otherwise, in each case, than as set forth or contemplated in the Prospectus, the effect of which, in any such case, is, in the judgment of the Representatives, so material (to the Company and its Subsidiaries, taken as a whole) and adverse as to make it impracticable or inadvisable to proceed with the 34 public offering or the delivery of the Notes being delivered on the First Delivery Date on the terms and in the manner contemplated in the Prospectus. (l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities. (m) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of a majority in interest of the several Underwriters, impracticable or inadvisable to proceed with the public offering or delivery of the Notes being delivered on the First Delivery Date on the terms and in the manner contemplated in the Prospectus. (n) The Six Flags Acquisition shall have been or shall be consummated concurrently with the Offering and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement. (o) Each of the offerings by the Company of the Stock and the PInES shall have been or shall be consummated concurrently with the Offering. 35 (p) The offering by SFEC of the New SFEC Notes shall be consummated immediately following the Offering. (q) Each of the Premier Credit Facility and the Six Flags Credit Facility shall be in effect and available for borrowing. (r) No default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or would result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (i) the Merger Agreement, (ii) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, the 1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes, the SFTP Senior Subordinated Notes and the New SFEC Notes, (iii) the credit agreement relating to either the Premier Credit Facility or the Six Flags Credit Facility or (iv) the Walibi Agreement. (s) The Premier Merger shall have been consummated. (t) Each of (i) the License Agreement, (ii) the Subordinated Indemnity Agreement, (iii) the Intercompany Services Agreement and (iv) the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. (u) An authorized officer shall have executed this Agreement on behalf of each of the Six Flags Subsidiaries. (v) The Company and the Trustee shall have entered into the Indentures and the Escrow Agreements and the Underwriters shall have received counterparts, conformed as executed, thereof and the Notes shall have been duly executed and delivered by the Company and authenticated by the Trustee. (w) After the First Delivery Date, no lien will exist upon the Restricted Cash Account and Escrow Account (and no right or option to acquire the same will exist in favor of any other person or entity), except for the pledge and security interest in favor of the Trustee to be created or provided for in the Escrow Agreements, which pledge and security interest constitute a first priority perfected pledge and security interest in and to the Restricted Cash Account and Escrow Account. 36 (x) The Underwriters shall have received an opinion of a nationally recognized firm of public accountants selected by the Company, which provides that the amount of proceeds deposited with the Trustee pursuant to the Senior Note Escrow Agreement is of an amount that will be sufficient upon receipt of scheduled interest and principal payments of Government Securities purchased thereunder to provide for payment in full of the Scheduled Interest Payments. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and scope reasonably satisfactory to counsel for the Underwriters. 8. Indemnification and Contribution. (a) The Company and the Subsidiaries that are parties hereto, jointly and severally, shall indemnify and hold harmless each Underwriter (including any Underwriter in its role as qualified independent underwriter pursuant to the rules of the NASD), its officers and employees and each person, if any, who controls any Underwriter within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Notes), to which that Underwriter, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto or (B) in any blue sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying any or all of the Notes under the securities laws of any jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by any Underwriter in connection with, or relating in any manner to, the Notes or the Offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company and the Subsidiaries that are parties hereto shall not be liable under this clause (iii) to the extent 37 that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its gross negligence or willful misconduct), and shall reimburse each Underwriter and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Underwriter, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiaries that are parties hereto shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any such amendment or supplement, or in any Blue Sky Application, in reliance upon and in conformity with written information concerning any Underwriter furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein; and provided further that with respect to any such untrue statement or omission made in the Preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not enure to the benefit of the Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Notes concerned if, to the extent that such sale was an initial sale by such Underwriter and any such loss, claim, damage or liability of such Underwriter is a result of the fact that both (A) a copy of the Prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Notes to such person, and (B) the untrue statement or omission in the Preliminary Prospectus was corrected in the Prospectus unless, in either case, such failure to deliver the Prospectus was a result of noncompliance by the Company with Section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company or any of the Subsidiaries that are parties hereto may otherwise have to any Underwriter or to any officer, employee or controlling person of that Underwriter. (b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the Company and the Subsidiaries that are parties hereto, each of their respective officers and employees, each of their respective directors, and each person, if any, who controls the Company or any Subsidiary that is a party hereto within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any Subsidiary that is a party hereto or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, 38 liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Underwriter furnished to the Company through the Representatives by or on behalf of that Underwriter specifically for inclusion therein, and shall reimburse the Company, any such Subsidiary and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company, any such Subsidiary or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Underwriter may otherwise have to the Company, any such Subsidiary, or any such director, officer, employee or controlling person. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable 39 costs of investigation; provided, however, that the Representatives shall have the right, upon written notice to the Company, to employ counsel to represent jointly the Representatives and those other Underwriters and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Underwriters against the Company and the Subsidiaries that are parties hereto under this Section 8 if, in the reasonable judgment of the Representatives, it is advisable for the Representatives and those Underwriters, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the reasonable fees and expenses of such separate counsel shall be paid, jointly and severally, by the Company and the Subsidiaries that are parties hereto. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(c) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not 40 permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Notes purchased under this Agreement (before deducting expenses) received by the Company on the one hand, and the total underwriting discounts and commissions received by the Underwriters with respect to the shares of the Notes purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the shares of the Notes under this Agreement, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. For purposes of the preceding two sentences, the net proceeds deemed to be received by the Company shall be deemed to be also for the benefit of the Subsidiaries that are parties hereto and information supplied by the Company shall also be deemed to have been supplied by the Subsidiaries that are parties hereto. The Company, the Subsidiaries that are parties hereto and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Notes underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 41 Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 8(d) are several in proportion to their respective underwriting obligations and not joint. (e) The Underwriters severally confirm and the Company and the Subsidiaries that are parties hereto acknowledge that the statements with respect to the public offering of the Notes by the Underwriters set forth in the first and last paragraphs on the cover page of, the legend concerning stabilization on the third page of and statements under the caption "Underwriting" including but not limited to the concession and reallowance figures, the Prospectus constitute the only information concerning such Underwriters furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion in the Registration Statement and the Prospectus. 9. Defaulting Underwriters. If, on either Delivery Date, any Underwriter defaults in the performance of its obligations under this Agreement, the remaining non-defaulting Underwriters shall be obligated to purchase the Notes which the defaulting Underwriter agreed but failed to purchase on the First Delivery Date in the respective proportions which the aggregate principal amount of Notes set opposite the name of each remaining non-defaulting Underwriter in Schedule 1 hereto bears to the total aggregate principal amount of Notes set opposite the names of all the remaining non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the remaining non-defaulting Underwriters shall not be obligated to purchase any of the Notes on the First Delivery Date if the total aggregate principal amount of Notes which the defaulting Underwriter or Underwriters agreed but failed to purchase on such date exceeds 9.09% of the total aggregate principal amount of Notes to be purchased on the First Delivery Date, and any remaining non-defaulting Underwriter shall not be obligated to purchase more than 110% of the aggregate principal amount of Notes which it agreed to purchase on the First Delivery Date pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or those other underwriters satisfactory to the Representatives who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the Notes to be purchased on the First Delivery Date. If the remaining Underwriters or other underwriters satisfactory to the Representatives do not elect to purchase the shares which the defaulting Underwriter or Underwriters agreed but failed to purchase on the First Delivery Date, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company, except that 42 the Company will continue to be liable for the payment of expenses to the extent set forth in Section 6. As used in this Agreement, the term "Underwriter" includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Notes which a defaulting Underwriter agreed but failed to purchase. Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company for damages caused by its default. If other underwriters are obligated or agree to purchase the Notes of a defaulting or withdrawing Underwriter, either the Representatives or the Company may postpone the Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement, the Prospectus or in any other document or arrangement. 10. Termination. The obligations of the Underwriters hereunder may be terminated by the Representatives by notice given to and received by the Company prior to delivery of and payment for the Notes if, prior to that time, any of the events described in Sections 7(k), 7(l) or 7(m) shall have occurred or if the Underwriters shall decline to purchase the Notes for any reason permitted under this Agreement. 11. Reimbursement of Underwriters' Expenses. If the Company shall fail to tender the Notes for delivery to the Underwriters by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled (other than by reason of any events described in Section 7(m) except for the suspension of trading or minimum prices of the securities of the Company), the Company will reimburse the Underwriters for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by the Underwriters in connection with this Agreement and the proposed purchase of the Notes, and promptly following demand the Company shall pay the full amount thereof to the Representatives. If this Agreement is terminated pursuant to Section 9 by reason of the default of one or more Underwriters, the Company shall not be obligated to reimburse any defaulting Underwriter on account of those expenses. 12. Notices, etc. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Underwriters, shall be delivered or sent by mail, telex or facsimile transmission to Lehman 43 Brothers Inc., Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-526-6588), with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285; (b) if to the Company or any of the Subsidiaries, shall be delivered or sent by mail, telex or facsimile transmission to 122 East 42nd Street, 49th Floor, New York, NY 10168, Attention: Kieran E. Burke (Fax: 212-949-6203); provided, however, that any notice to a Underwriter pursuant to Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its acceptance telex to the Representatives, which address will be supplied to any other party hereto by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the Representatives. 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Company, the Subsidiaries that are parties hereto and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Company and the applicable Subsidiaries contained in this Agreement shall also be deemed to be for the benefit of the officers and employees of each Underwriter and the person or persons, if any, who control any Underwriter within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the Underwriters contained in Section 8(b) of this Agreement shall be deemed to be for the benefit of directors of the Company, officers of the Company who have signed the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 14. Survival. The respective indemnities, representations, warranties and agreements of the Company, the applicable Subsidiaries and the Underwriters contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and 44 payment for the Notes and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 15. Definition of the Terms "Business Day", "Premier Subsidiary", "Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership", "Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement, (a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) "Premier Subsidiary" means each of Premier Operations, Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a Massachusetts corporation, Premier Waterworld Concord Inc., a California corporation, Premier Waterworld Sacramento Inc., a California corporation, Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding Inc., a New York corporation, Great Escape LLC, a New York limited liability company, Great Escape Theme Park LLC, a New York limited liability company, Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited liability company, Park Management Corp., a California corporation, Indiana Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier International Holdings, Inc., a Delaware corporation and [other Premier entities held in corporate form and as limited liability companies], (c) "Premier Partnership" means each of Frontier City Partners, Limited Partnership, an Oklahoma limited partnership, Elitch Gardens, L.P., a Colorado limited partnership and [other Premier entities held as limited partnerships], (d) "Six Flags Subsidiary" means each of SFEC, SFTP and [other Six Flags entities held in corporate form or as limited liability companies], (e) "Six Flags Partnership" means each of Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas Co-Venture Partnership and [other Six Flags entities held as limited partnerships], (f) "Subsidiary" means each of the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships; provided, however, that the term "Subsidiary" shall include the Six Flags Subsidiaries and the Six Flags Partnerships only as of and after the First Delivery Date, and "Co-Venture Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, 45 Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined therein), (ii) the Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP and SFEC and the Related Agreements (as defined therein), and (iii) the Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. 17. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 46 If the foregoing correctly sets forth the agreement among the Company, the Subsidiaries that are parties hereto and the Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, Premier Parks Inc. By -------------------------------- Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Subsidiaries (as listed in Section 15 but not including Walibi) By -------------------------------- Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Partnerships (as listed in Section 15) By Each of their respective General Partners By -------------------------------- Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Six Flags Subsidiaries (as listed in Section 15) By -------------------------------- Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer Accepted: 47 Lehman Brothers Inc. Salomon Brothers Inc NationsBanc Montgomery Securities LLC For themselves and as Representatives of the several Underwriters named in Schedule 1 hereto By Lehman Brothers Inc. By -------------------------------- Authorized Representative SCHEDULE 1 Aggregate Principal Amount at Maturity of Company Senior Underwriters Discount Notes - ------------ -------------- Lehman Brothers Inc............................... Salomon Brothers Inc.............................. NationsBanc Montgomery Securities LLC............. ---------- Total......................................... ========== Aggregate Principal Amount of Company Senior Underwriters Notes - ------------ ----------------- Lehman Brothers Inc............................... Salomon Brothers Inc.............................. NationsBanc Montgomery Securities LLC............. ---------- Total......................................... ========== EX-1.(F) 7 SFEC U/W AGREEMENT L&W Draft--3/23/98 Exhibit 1(f) SIX FLAGS ENTERTAINMENT CORPORATION PREMIER PARKS INC. $170,000,000 _% Senior Notes due 2006 UNDERWRITING AGREEMENT , 1998 Lehman Brothers Inc. Salomon Brothers Inc NationsBanc Montgomery Securities LLC As Representatives of the several Underwriters named in Schedule 1, c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Dear Sirs: Six Flags Entertainment Corporation, a Delaware corporation ("SFEC"), proposes to sell to the several Underwriters (the "Offering") named on Schedule 1 hereto (the "Underwriters") $170,000,000 __% Senior Notes due 2006 of the Company (the "Notes"). The Notes will be fully and unconditionally guaranteed (the "Guarantee" on a fully subordinated basis by Premier Parks Inc., a Delaware corporation (the "Company"). The Notes are to be issued under an indenture, to be entered into and to be dated as of _______, 1998 (the "Indenture") between the Company, SFEC and The Bank of New York, as Trustee. In addition, SFEC will enter into a pledge, escrow and disbursement agreement (the "Escrow Agreement") which will secure certain of the Company's and SFEC's obligations under the Notes. It is also understood by all parties that SFEC is undertaking the Offering in connection with the Company's acquisition (the "Six Flags Acquisition") from the current stockholders (the "Sellers") of all of the capital stock of SFEC, and that, in connection with the Six Flags Acquisition, the Company is concurrently offering (the "Common Stock Offering"), with the over-allotment option, _______ shares of its Common Stock (the "Stock"), $________ million aggregate principal amount at maturity of its senior discount notes due 2 2008 (the "Company Senior Discount Notes") with estimated gross proceeds of $250 million, $280 million aggregate principal amount of its senior notes due 2006 (the "Company Senior Notes") and, with the over-allotment option, 5,750,000 Premium Income Equity Securities ("PInES") representing interests in the Company's mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with estimated gross proceeds of $228.2 million. In addition, it is understood by all parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a new $472 million senior secured credit facility (the "Six Flags Credit Facility") under a credit agreement dated the date of this Agreement among it, certain of the Six Flags Subsidiaries (as defined in Section 15) and Lehman Commercial Paper, Inc., and Premier Operations Inc. ("Premier Operations") has entered into a $300 million senior secured credit facility (the "Premier Credit Facility" and, together with the Six Flags Credit Facility, the "Credit Facilities") under a credit agreement among the Company, certain of the Premier Subsidiaries and Premier Partnerships (each as defined in Section 15) and Lehman Commercial Paper, Inc. It is further understood by all parties that, concurrently with the Offering, the Company may issue depositary shares (the "Seller Depositary Shares") representing interests in up to $200 million of the Company's convertible redeemable preferred stock (the "Seller Convertible Redeemable Preferred Stock") to the Sellers as part of the consideration for the Six Flags Acquisition. 1. Representations, Warranties and Agreements of the Company, SFEC and Certain of the Subsidiaries. The Company and Premier Operations (as to themselves and their subsidiaries) and, SFEC and SFTP (as to themselves and their subsidiaries) represent, warrant and agree, jointly and severally, that: (a) A registration statement on Form S-3 (file number 333-46897), and amendments thereto, with respect to the Notes has (i) been prepared by the Company and SFEC in conformity in all material respects with the requirements of the United States Securities Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and Regulations") of the United States Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. Copies of such registration statement and amendments thereto have been delivered by the Company and SFEC to you as the representatives (the "Representatives") of the Underwriters. Upon your written request, but not without your agreement, the Company and SFEC will also file a Rule 462(b) Registration Statement in accordance with Rule 462(b). As used in this Agreement, 3 "Effective Time" means the date and the time as of which such registration statement, the most recent post-effective amendment thereto, if any, or any Rule 462(b) Registration Statement became or becomes effective; "Effective Date" means the date of the Effective Time; "Preliminary Prospectus" means each prospectus included in such registration statement, or amendments thereof, before it became effective under the Securities Act and any prospectus relating to the Notes filed with the Commission by the Company and SFEC with the consent of the Representatives pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement" means such registration statement, as amended at the Effective Time, including any documents incorporated by reference therein at such time and all information contained in the final prospectus relating to the Notes filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance with Section 5(a) hereof and deemed to be a part of the registration statement as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations and, in the event any Rule 462(b) Registration Statement becomes effective prior to the First Delivery Date, also means such registration statement as so amended, unless the context otherwise requires; "Prospectus" means such final prospectus, as first filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b) Registration Statement" means the registration statement and any amendments thereto filed pursuant to Rule 462(b) of the Rules and Regulations relating to the offering covered by the initial Registration Statement (file number 333-46897). Reference made herein to any Preliminary Prospectus or to the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date of such Preliminary Prospectus or the Prospectus, as the case may be. The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus. (b) The Registration Statement conforms, and the Prospectus, any further amendments or supplements to the Registration Statement or the Prospectus and any Rule 462(b) Registration Statement will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and do not and will not, as of the applicable Effective Time (as to the Registration Statement and any amendment thereto) and as of the applicable filing date (as to the Prospectus and any amendment or supplement thereto) contain an untrue statement of a material fact or omit to state a 4 material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company and SFEC through the Representatives by or on behalf of any Underwriter specifically for inclusion therein. (c) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) The Company, each of the Premier Subsidiaries and, each of the Six Flags Subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and each of the Six Flags Partnerships (as defined in Section 15) is validly existing as a limited partnership in good standing under the laws of their respective jurisdictions of formation; the Company, each of the Premier Subsidiaries and each of the Premier Partnerships and each of the Six Flags Subsidiaries and each of the Six Flags Partnerships are duly qualified to do business and are in good standing as foreign entities in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, except where the failure to so qualify would not have in the aggregate a material adverse effect on the consolidated financial position, stockholders' equity (or partners' equity, as applicable), results of operations, business or prospects of the Company and the Subsidiaries taken as a whole and the Six Flags Subsidiaries taken as a whole (a "Material Adverse Effect") and have or will have, as applicable, all corporate or partnership power and authority, as the case may be, necessary to own or hold their respective properties and to conduct the businesses in which they are or will be, as applicable, engaged; none of the subsidiaries (as defined in Rule 405 of the Rules and Regulations) of the Company (other than the Subsidiaries) and none of the subsidiaries of SFEC (other than the remaining Six Flags Subsidiaries) is a "significant subsidiary", as such term is defined in Rule 405 of the Rules and 5 Regulations; and the assets, liabilities and operations of such other subsidiaries are immaterial to the assets, liabilities, operations and prospects of the Company, and the Subsidiaries taken as a whole and the Six Flags Subsidiaries taken as a whole. (e) The Company and SFEC has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company and SFEC have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus. All of the issued shares of capital stock of each Premier Subsidiary (in the case of Walibi, S.A. ("Walibi"), a Belgian corporation, to our knowledge) have been, and all of the issued shares of capital stock of each Six Flags Subsidiary, has been duly and validly authorized and issued, are fully paid and non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer (as defined in Section 1(ai)), are owned directly or indirectly by the Company and SFEC, as the case may be, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims arising under the Credit Facilities and the subordinated indemnity agreement among the Company and certain of its affiliates, SFEC and certain of its affiliates and Time Warner Inc. and certain of its affiliates dated , 1998 (the "Subordinated Indemnity Agreement"). 100% of the partnership interest in the Premier Partnerships is held and, as of the First Delivery Date, 100% of the partnership interest in the Six Flags Partnerships, except for the 40% general partnership interest in San Antonio Theme Park, L.P. ("Fiesta Partnership") held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in Six Flags Over Georgia II, L.P. (the "Georgia Co-Venture Partnership") indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in Texas Flags, Ltd. (the "Texas Co-Venture Partnership") indirectly held by investors in Six Flags Fund II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, will be, as applicable, held directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except for liens, encumbrances, equities or claims under the Credit Facilities and the Co-Venture Parks Agreements (as defined in Section 15). (f) The unissued shares of the Stock to be issued and sold by the Company pursuant to the Common Stock Offering have been duly and validly authorized and, when issued and delivered against payment therefor as 6 provided herein, will be duly and validly issued, fully paid and non-assessable. (g) This Agreement has been duly authorized, executed and delivered by the Company, SFEC, each of the Premier Subsidiaries and each of the Premier Partnerships that is a party hereto, and, has been duly authorized, executed and delivered by each of the Six Flags Subsidiaries that is a party hereto. (h) The execution, delivery and performance of this Agreement, the Indenture and the Escrow Agreement by the Company and each of the Subsidiaries that are parties hereto or thereto, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters are obtained, any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets except, in each case, breaches, violations or defaults which, in the aggregate, are not reasonably likely to have a Material Adverse Effect; and except for the registration of the Notes under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state and foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement, the Indenture or the Escrow Agreement by the Company or any of the Subsidiaries that are parties hereto or thereto and the consummation of the transactions contemplated hereby and thereby. (i) Except as disclosed in the Prospectus and as to those rights which have been duly and validly waived, there are no contracts, agreements or 7 understandings between the Company, SFEC and any person granting such person the right to require the Company and SFEC to file a registration statement under the Securities Act with respect to any securities of the Company and SFEC owned or to be owned by such person or to require the Company and SFEC to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company and SFEC under the Securities Act. (j) The Company has not sold or issued any shares of Common Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than (i) 121,671 shares issued pursuant to the Company's acquisition of all of the membership interests of KKI, LLC on November 7, 1997, (ii) 228,855 shares issued pursuant to the Company's acquisition of at least 49% of the outstanding capital stock of Walibi on March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000 restricted shares issued to the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, (iv) 768 shares issued to certain directors of the Company and (v) shares issued pursuant to the Company's employee benefit plans, qualified stock options plans or other employee compensation plans or pursuant to outstanding options, rights or warrants, which, in each case, are disclosed in the Registration Statement. (k) Neither the Company nor any of the Subsidiaries has sustained, since the date of the latest audited financial statements included in the Registration Statement, any loss or interference with its business from fire, explosion, flood, accident or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Registration Statement, except losses or interferences which will not, in the aggregate, have a Material Adverse Effect; and, since such date, there has not been any change in the capital stock other than in connection with the Premier Merger (as defined in Section 1(ag)) or long-term debt of the Company or any of the Subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and the Subsidiaries, otherwise than as set forth or contemplated in the Registration Statement. 8 (l) The historical financial statements (including the related notes and supporting schedules) filed as part of the Registration Statement or included in the Prospectus present fairly the financial condition and results of operations of the entities purported to be shown thereby at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) applied on a consistent basis throughout the periods involved, and, in the case of Walibi, have been reconciled to accounting principles generally accepted in the United States to the extent required by the applicable accounting requirements of the Securities Act and the Rules and Regulations. The pro forma financial statements included in the Prospectus have been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, and comply in all material respects with Regulation S-X under the Securities Act, and the pro forma adjustments have been properly applied to historical amounts in the compilation of such pro forma financial statements. (m) KPMG Peat Marwick LLP, who have certified certain financial statements of the Company, Ernst & Young LLP, who have certified certain financial statements of SFEC, Coopers & Lybrand, who have certified certain financial statements of Walibi and Carpenter Mountjoy & Bressler, who have certified certain financial statements of Kentucky Kingdom, Inc. ("Kentucky Kingdom") whose reports appear in the Registration Statement or are incorporated by reference therein and who have each delivered the respective initial letters referred to in Section 7(h) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (n) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except for such liens arising under the Credit Facilities or contemplated in Section 1(e) hereof as are described in the Registration Statement or such as would not have a Material Adverse Effect; and all real property and buildings held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as would not have a Material Adverse Effect. 9 (o) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) carry, or are covered by insurance in such amounts and covering such risks (including the risk of earthquakes) as the Company and SFEC has reasonably concluded, based on their respective experience, is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. (p) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their respective businesses as presently conducted and, with respect to the Amended and Restated License Agreement among certain affiliates of Warner Bros., SFTP and the Company dated February 9, 1998 (the "License Agreement"), as contemplated by the Prospectus, and have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others with such exceptions as would not have a Material Adverse Effect. (q) Except as otherwise disclosed in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect or are otherwise required to be disclosed in the Prospectus; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (r) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. (s) There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Prospectus or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations. 10 (t) No relationship, direct or indirect, exists between or among the Company or any Subsidiary on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any Subsidiary on the other hand, which is required to be described or incorporated by reference in the Prospectus which is not so described or incorporated by reference. (u) No labor disturbance by the employees of the Company or any Subsidiary exists or, to the knowledge of the Company or SFEC, is imminent which might be reasonably expected to have a Material Adverse Effect. (v) The Company and SFEC are in compliance in all material respects with all presently and then applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company or SFEC, as applicable, would have any material liability; the Company or SFEC have not incurred and neither the Company nor SFEC expects, to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company or SFEC, as applicable, would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred whether by action or by failure to act, which might reasonably be expected to cause the loss of such qualification. (w) The Company and each of the Subsidiaries (in the case of Walibi, to our knowledge) are in compliance in all respects with (i) all presently applicable provisions of the Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder and (ii) all presently applicable state and local laws and regulations relating to the safety of its theme park and water park operations, with such exceptions as would not have a Material Adverse Effect. (x) The Company, SFEC and their subsidiaries have filed all federal, and all material state and local income and franchise tax returns required to be filed through the date hereof other than those filings being contested in good faith. The Company and SFEC have paid all taxes of which each of them has notice are due thereon, other than those being contested in good faith and for which adequate reserves have been provided or 11 those currently payable without penalty or interest and no tax deficiency has been determined adversely to the Company or any of the Subsidiaries which has had, nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company or any of the Subsidiaries, might be reasonably expected to have, a Material Adverse Effect. (y) Since the date as of which information is given in the Prospectus through the date hereof, and except as may otherwise be disclosed in the Registration Statement, neither the Company nor SFEC has (i) issued or granted any securities or (ii) declared or paid any dividend on its capital stock, and neither the Company nor any of its Subsidiaries has (i) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business or (ii) entered into any material transaction not in the ordinary course of business other than the Six Flags Acquisition. (z) The Company and each of its Subsidiaries (in the case of Walibi, to our knowledge) (i) make and keep accurate books and records and (ii) maintain internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of their financial statements in conformity with generally accepted accounting principles in the United States (or, in the case of Walibi, generally accepted accounting principles in Belgium) and to maintain accountability for their assets, (C) access to their assets is permitted only in accordance with management's authorization and (D) the recorded accountability for their assets is compared with existing assets at reasonable intervals. (aa) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge) (i) is in violation of its charter or by-laws (or its partnership agreement, as applicable), (ii) is in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation in any material respect of any material law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject or has failed to 12 obtain any material license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business. (ab) Neither the Company nor any of the Subsidiaries (in the case of Walibi, to our knowledge), nor, to its knowledge, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of the Subsidiaries, has used any corporate or partnership funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (ac) There has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous substances by the Company or any of the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the knowledge of the Company or SFEC, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or the Subsidiaries in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for any violation or remedial action which would not have, or could not be reasonably likely to have, singularly or in the aggregate with all such violations and remedial actions, a Material Adverse Effect; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or any of the Subsidiaries or with respect to which the Company or any of the Subsidiaries have knowledge, except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have or would not be reasonably likely to have, singularly or in the aggregate with all such spills, discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have the meanings specified in any applicable local, state, 13 federal and foreign laws or regulations with respect to environmental protection. (ad) Neither the Company nor any Subsidiary is an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. (ae) At the First Delivery Date, (i) the Six Flags Acquisition shall be consummated in accordance with the terms of the Agreement and Plan of Merger dated February 9, 1998 among the Company, Premier Operations, Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers (the "Merger Agreement"), and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement, (ii) each of the concurrent offerings by the Company of the Stock, Company Senior Notes, Company Discount Notes and the PInES shall be consummated, (iii) the offering by SFEC of the Notes shall be consummated immediately following Offering of the Stock, (iv) each of the Credit Facilities shall be in effect and available for borrowing and (v) no default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or shall result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (A) the Merger Agreement, (B) the indentures relating to the Company Senior Notes, the Company Discount Notes, Premier Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes"), Premier Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"), SFEC's Zero Coupon Notes due 1999 (the "SFEC Zero Coupon Notes"), SFTP's Senior Subordinated Notes due 2005 (the "SFTP Senior Subordinated Notes") and the Notes, (C) the credit agreements relating to either of the Credit Facilities or (D) the Stock Purchase Agreement dated December 15, 1997 between Premier Operations (or a to be formed Belgian corporation) and Centrag, S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement"). (af) The statements set forth in the Prospectus under the captions "Business--Licenses", "Certain Transactions", "Description of Six Flags Agreement", "Description of Other Company Indebtedness", and "Description of Notes", insofar as they describe the terms of the agreements and securities referred to therein, are accurate and fairly present the information required to be shown. (ag) The merger (the "Premier Merger") of the company formerly known as Premier Parks Inc. with a wholly owned subsidiary of Premier Parks Holdings 14 Corporation has been effected, and, in connection therewith, no stockholder vote was required under applicable Delaware law and the Premier Merger otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ah) No stockholder vote is required under applicable Delaware law in connection with the Six Flags Acquisition, and the Six Flags Acquisition otherwise complies in all respects with the General Corporation Law of the State of Delaware. (ai) The Company has effected the Walibi Acquisition and has commenced a tender offer (the "Walibi Tender Offer") for the remainder of the outstanding capital stock of Walibi as described in the Prospectus. (aj) the License Agreement, the Subordinated Indemnity Agreement, the Intercompany Services Agreement and the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. (ak) The Company and SFEC have full power and authority to enter into the Indenture; the Indenture has been duly authorized by the Company and SFEC; and the Indenture will have been duly executed and delivered by the Company and SFEC and, assuming due authorization, execution and delivery of the Indenture by the Trustee, the Indenture will constitute valid and legally binding obligations of the Company and SFEC, enforceable in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (al) SFEC has full power and authority to offer and sell the Notes; the Notes have been duly authorized by SFEC; and when the Notes are delivered and paid for pursuant to this Agreement on the First Delivery Date; such Notes will have been duly executed, authenticated, issued and delivered (assuming due authentication of the Notes by the Trustee) and, assuming due authentication of the Notes by the Trustee, such Notes will constitute valid and legally binding obligations of SFEC, entitled to the benefits of the Indenture and enforceable in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general 15 equitable principles (whether considered in a proceeding in equity or at law). (am) The SFEC has full power and authority to enter into the Escrow Agreement; the Escrow Agreement has been duly authorized by SFEC; and when duly executed and delivered by SFEC (assuming due authorization, execution and delivery by the Trustee), will be valid and legally binding obligations of SFEC, enforceable against SFEC in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (an) The Indenture, the Escrow Agreement, the Guarantee and the Notes conform in all material respects to the descriptions thereof contained in the Prospectus. (ao) Neither the Company nor any Subsidiary has taken, directly or indirectly, any action which is designed to or which has constituted or which might reasonably have been expected to cause or result in stabilization or manipulation of the price of any security of the Company or SFEC in connection with the Offering. (ap) The Indenture shall have been qualified under and will comply in all material respects with the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). (aq) The Guarantee endorsed on the Notes has been duly authorized by the Company, and, when the Notes are executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with this Agreement, the Guarantee will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms and will be entitled to the benefits of the Indenture, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). 2. Purchase of the Notes by the Underwriters. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, SFEC agrees to sell to the several Underwriters and each of 16 the Underwriters, severally and not jointly, agrees to purchase from SFEC, (i) the Notes at a purchase price of 100% of the principal amount thereof plus accrued interest, if any, from March __, 1998, to the First Delivery Date, the respective principal amounts of Notes set forth opposite that Underwriter's name in Schedule 1 hereto. 3. Offering of Notes by the Underwriters. Upon authorization by the Representatives of the release of the Notes, the several Underwriters propose to offer the Notes for sale upon the terms and conditions set forth in the Prospectus. 4. Delivery of and Payment for the Notes. Delivery of and payment for the Notes shall be made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time, on the fifth full business day following the date of this Agreement or at such other date or place as shall be determined by agreement between the Representatives and the Company. This date and time are sometimes referred to as the "First Delivery Date." On the First Delivery Date, the Company or SFEC shall deliver or cause to be delivered Notes in definitive form, registered in the name of Cede & Co., nominee of The Depository Trust Company ("DTC"), or such other names as the Underwriters may request upon at least two business days' notice to SFEC (collectively, the "Global Notes") to the Representatives against payment by the Company or SFEC of the purchase price by wire transfer in immediately available funds. Time shall be of the essence (except that the Company or SFEC will not be responsible for any delay resulting from any action or inaction of any Underwriter) and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each Underwriter hereunder. For the purpose of expediting the checking and packaging of the Global Notes, the Company or SFEC shall make the certificates representing the Global Notes available for inspection by the Representatives in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the First Delivery Date. 5. Further Agreements of the Company and SFEC. Each of the Company and SFEC, jointly and not severally, agrees: (a) To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than Commission's close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities 17 Act; to make no further amendment or any supplement to the Registration Statement or to the Prospectus and to file no Rule 462(b) Registration Statement except as permitted herein; to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Representatives with copies thereof; upon your request, to cause the Rule 462(b) Registration Statement, properly completed, to be filed with the Commission pursuant to Rule 462(b) and to provide evidence satisfactory to the Representatives of such filing; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the Notes for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification, to use promptly its reasonable best efforts to obtain its withdrawal; (b) To furnish reasonably promptly to each of the Representatives and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, each amendment thereto and any Rule 462(b) Registration Statement filed with the Commission, including all consents and exhibits filed therewith; (c) To deliver promptly to the Representatives such number of the following documents as the Representatives shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission, each amendment thereto (in each case excluding exhibits other than this Agreement and the computation of per share earnings) and any Rule 462(b) Registration Statement, (ii) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus and (iii) any document incorporated by reference in the Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is required at any time after the Effective Time in connection with the offering or sale of the Notes or any other securities relating thereto and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented 18 would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Representatives and, upon their request, to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance. (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company the Representatives, be required by the Securities Act or requested by the Commission; (e) Prior to filing with the Commission any amendment to the Registration Statement or supplement to the Prospectus, any document incorporated by reference in the Prospectus, any Prospectus pursuant to Rule 424 of the Rules and Regulations or any Rule 462(b) Registration Statement to furnish a copy thereof to the Representatives and counsel for the Underwriters and obtain the consent of the Representatives to the filing; (f) As soon as practicable after the Effective Date (it being understood that the Company and SFEC shall have until at least 410 days after the end of the Company's current fiscal quarter), to make generally available to the Company's and SFEC's security holders and to deliver to the Representatives an earnings statement of the Company and SFEC and their subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company Rule 158); (g) For so long as any of the Notes are outstanding, to deliver without charge to the Underwriters and the Trustee, promptly upon their becoming available, copies of (i) all reports or other publicly available information that the Company or SFEC shall mail or otherwise make available to its securities holders and (ii) all reports, financial statements and proxy or information statements filed by 19 the Company or SFEC with the Commission or any national securities exchange and such other publicly available information concerning the Company or the Subsidiaries; (h) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Notes for offering and sale (or obtain an exemption from registration) under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Notes; provided, however, that the Company and SFEC shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Notes; (i) For a period of 90 days from the date of the Prospectus, not to, directly or indirectly, sell, contract to sell, grant any option to purchase, issue any instrument convertible into or exchangeable for, or otherwise transfer or dispose of, any debt securities of any of the Six Flags Subsidiaries having a maturity of more than one year from the date of issue of such securities, except with the prior written consent of Lehman Brothers Inc; (j) To take such steps as shall be necessary to ensure that neither the Company, SFEC nor any of their subsidiaries shall become an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder; (k) To cause an authorized officer to execute this Agreement on behalf of each of the Six Flags Subsidiaries on the First Delivery Date; (l) Not to waive the lock-up agreements executed by the Sellers in connection with the Six Flags Acquisition whereby each of the Sellers agreed to not sell any Seller Convertible Redeemable Preferred Stock (or shares of Common Stock issuable upon conversion thereof) during the period of 90 days from the date of the Prospectus, without the prior written consent of Lehman Brothers Inc.; and (m) To make an offer to purchase the SFTP Senior Subordinated Notes following the Six Flags Acquisition in accordance with the provisions of the indenture for the SFTP Senior Subordinated Notes relating to offers 20 to purchase the SFTP Senior Subordinated Notes upon a change of control of SFTP. (n) In connection with the Offering, until the Representatives shall have notified the Company and SFEC and the other Underwriters of the completion of the resale of the Notes, none of the Company, SFEC nor any of their affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Notes or attempt to induce any person to purchase any Notes; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Notes; (o) To not take, directly or indirectly, any action which is designed to stabilize or manipulate, or which constitutes or which might reasonably be expected to cause or result in stabilization or manipulation, of the price of any security of SFEC in connection with the offering of the Notes; (p) Upon the closing of the offering of the Notes, to deposit with and pledge to the Trustee for the benefit of holders of the Notes $_______ which shall be used to purchase Government Securities (as defined in the Escrow Agreement) in such amount as will be sufficient upon receipt of scheduled interest and principal payments of such securities, in the opinion of a nationally recognized firm of public accountants selected by the Company, to provide for payment in full at maturity of the SFEC Zero Coupon Senior Notes. SFEC will take all actions necessary to pledge, assign and set over to the Trustee, for the benefit of holders of the Notes, and irrevocably grant to the Trustee for the benefit of the holders of the Notes a first priority security interest in all of its right, title and interest in such Government Securities held by the Trustee or on its behalf, in order to secure the respective obligations of SFEC as set forth in the Escrow Agreement; and (q) To use its best efforts to do and perform all things necessary to perfect, to the extent permitted by law, a first priority security interest in favor of the Trustee for the benefit of the holders of the respective Notes, in the Escrow Account. 6. Expenses. The Company and SFEC agree to pay (a) the costs incident to the authorization, issuance, sale and delivery of the Notes and any taxes payable in that connection; (b) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits 21 thereto; (c) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or supplement to the Prospectus or any document incorporated by reference therein, all as provided in this Agreement; (d) the costs of producing and distributing this Agreement, the Indenture, the Escrow Agreement, the Notes and any other related documents in connection with the offering, purchase, sale and delivery of the Notes; (e) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of sale of the Notes; (f) listing or other fees incident to the inclusion of the Common Stock (including the Stock) for listing on the New York Stock Exchange; (g) the fees and expenses, if applicable, of qualifying the Notes under the securities laws of the several jurisdictions as provided in Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Underwriters); (h) if one is required pursuant to the rules of the NASD, all fees and expenses of a qualified independent underwriter; (i) the fees and expenses of the Trustee including fees and disbursements of counsel) under the Escrow Agreement; (j) all fees and expenses (including fees and expenses of counsel) of SFEC in connection with approval of the Notes by DTC for "book-entry" transfer and (k) all other costs and expenses incident to the performance of the obligations of the Company or any of the Subsidiaries under this Agreement; provided that, except as provided in this Section 6 and in Section 11, the Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Notes which they may sell and the expenses of advertising any offering of the Notes made by the Underwriters. 7. Conditions of Underwriters' Obligations. The respective obligations of the Underwriters hereunder are subject to the accuracy, when made and on the First Delivery Date, of the representations and warranties of the Company, Premier Operations, SFEC and SFTP contained herein, to the performance by the Company and each of the Subsidiaries that is a party hereto of its obligations hereunder, and to each of the following additional terms and conditions: (a) The Prospectus shall have been timely filed with the Commission in accordance with Section 5(a); no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or 22 the Prospectus or otherwise shall have been complied with. (b) No Underwriter shall have discovered and disclosed to the Company on or prior to the First Delivery Date that the Registration Statement or the Prospectus or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of Latham & Watkins, counsel for the Underwriters, is material or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Indenture, the Escrow Agreement, the Notes, the Registration Statement and the Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Underwriters, and the Company and SFEC shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (d) Baer Marks & Upham LLP shall have furnished to the Representatives its written opinion, as counsel to the Company, addressed to the Underwriters and dated the First Delivery Date, in form reasonably satisfactory to the Representatives, to the effect that: (i) The Company and each of the Premier Subsidiaries and each of the Six Flags Subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation; each of the Premier Partnerships and each of the Six Flags Partnerships is validly existing as a limited partnership in good standing under the laws of its jurisdiction of formation; and the Company, the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships are each duly qualified to do business and are in good standing as foreign corporations in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification except where the failure to so qualify would not have a Material Adverse Effect and have all corporate or partnership power and authority necessary to own 23 or hold their respective properties and conduct the businesses in which they are engaged as described in the Prospectus; (ii) Each of the Company and SFEC has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company now outstanding (including the shares of Stock being delivered on the First Delivery Date) have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus; all of the shares of Stock have been duly authorized and, when issued and delivered to the Representatives for the account of each Underwriter against payment therefor as provided herein and in the Registration Statement, shall be validly issued, fully paid and non-assessable; to such counsel's knowledge, all of the issued shares of capital stock of each Premier Subsidiary and each Six Flags Subsidiary have been duly and validly authorized and issued and are fully paid, non-assessable and, except for the capital stock of Walibi that is subject to the Walibi Tender Offer, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Subordinated Indemnity Agreement; and 100% of the partnership interest in each of the Premier Partnerships and each of the Six Flags Partnerships is held directly or indirectly by the Company, except for the 40% general partnership interest in Fiesta Partnership held by Fiesta Texas Theme Park, Ltd., the 99% limited partnership interest in the Georgia Co-Venture Partnership indirectly held by investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated with the Company, and the 99% limited partnership interest in the Texas Co-Venture Partnership indirectly held by investors in Six Flags Funds II, Ltd. (L.P.), of which approximately % are not affiliated with the Company, free and clear of all liens, encumbrances, equities or claims, except for liens, encumbrances, equities or claims arising under the Credit Facilities and the Co-Venture Parks Agreements; (iii) There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Stock pursuant to the Company's and 24 SFEC's charter or by-laws or any agreement or other instrument known to such counsel; (iv) To the best of such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property or assets of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or any of the Subsidiaries, might have a Material Adverse Effect; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (v) Based solely upon oral confirmation from the staff of the Commission, the Registration Statement was declared effective under the Securities Act as of the date and time specified in such opinion; the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and no stop order suspending the effectiveness of the Registration Statement has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the Commission; (vi) The Registration Statement and the Prospectus and any further amendments or supplements thereto made by the Company or SFEC prior to the First Delivery Date (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations; and the documents incorporated by reference in the Prospectus (other than the financial statements and related schedules therein and other financial or statistical data included therein, as to which such counsel need express no opinion), when they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder; (vii) To the best of such counsel's knowledge, there are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by 25 the Securities Act or by the Rules and Regulations which have not been described or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations; (viii) This Agreement has been duly authorized, executed and delivered by the Company and each of the Subsidiaries that is a party hereto; (ix) The issue and sale of the Notes being delivered on the First Delivery Date by SFEC (including, without limitation, the Guarantee) and the compliance by the Company and each of the Subsidiaries that is a party hereto with all of the provisions of this Agreement, the Escrow Agreement and the Indenture and the consummation of the transactions contemplated hereby and by the Six Flags Acquisition (including the offerings of the Stock, the Company Senior Notes and Company Discount Notes and the entering into of the Six Flags Credit Facility and any borrowing thereunder in connection with the Six Flags Acquisition) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the property or assets of the Company or any of the Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws or other constitutive documents of the Company or any of the Subsidiaries or, assuming that all consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters are obtained, any Federal or New York State statute, the General Corporation Law of the State of Delaware, or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties or assets; and, except for the registration of the Notes under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and distribution of the Notes by the Underwriters, 26 no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement, the Indenture or the Escrow Agreement by the Company or any of the Subsidiaries that is a party hereto or thereto and the consummation of the transactions contemplated hereby and thereby; and (x) To the best of such counsel's knowledge, no holders of securities of the Company or SFEC have rights to require the Company or SFEC to include such securities with the Notes registered pursuant to the Registration Statement. (xi) The Company and SFEC have full power and authority to enter into the Indenture; the Indenture has been duly authorized, executed and delivered by the Company and SFEC and, assuming due authorization, execution and delivery of the Indenture by the Trustee, the Indenture constitutes valid and legally binding obligations of the Company and SFEC, enforceable in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (xii) SFEC has full power and authority to offer and sell the Notes; the Notes have been duly authorized, executed, authenticated, issued and delivered (assuming due authentication of the Notes by the Trustee) and, assuming due authentication of the Notes by the Trustee, such Notes constitute valid and legally binding obligations of the Company and SFEC, entitled to the benefits of the Indenture and enforceable in accordance with their terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (xiii) SFEC has full power and authority to enter into the Escrow Agreement; the Escrow Agreement has been duly authorized, executed and delivered by SFEC (assuming due authorization, execution and delivery by the Trustee), and is a valid and legally binding obligation of SFEC, 27 enforceable against SFEC in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (xiv) The Indenture, the Escrow Agreement and the Notes conform in all material respects to the descriptions thereof contained in the Prospectus. (xv) The Indenture has been qualified under and comply in all material respects with the Trust Indenture Act. (xvi) The Guarantee endorsed on the Notes has been duly authorized by the Company, and, when the Notes are executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with this Agreement, the Guarantee will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms and will be entitled to the benefits of the Indenture, except that the enforcement thereof may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). [Perfection opinions relating to the Escrow Accounts to come] In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and that such counsel is not admitted in any state other than New York; and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Representatives a written statement, addressed to the Underwriters and dated the First Delivery Date, in form satisfactory to the Representatives, to the effect that (x) such counsel has acted as counsel to the Company on a regular basis 28 (although the Company is also represented with respect to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition, litigation matters, regulatory matters and certain other matters, by other outside counsel), has acted as counsel to the Company in connection with financing transactions since February 1992 and has acted as counsel to the Company in connection with the preparation of the Registration Statement and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. In rendering such statement, such counsel may rely upon the opinion and statement delivered by Weil Gotshal & Manges LLP pursuant to Section 7(e) hereto with respect to the information covered by such opinion and statement. The foregoing opinion and statement may be qualified by a statement to the effect that such counsel does not assume any responsibility for the accuracy or fairness with respect to the information required to be shown under the Securities Act and the Rules and Regulations of the statements contained in the Registration Statement or the Prospectus except for the statements made in the Prospectus under the captions "Prospectus Summary--Other Recent Developments--Walibi", "Certain Transactions", "Description of Other Company Indebtedness" and "Description of Notes", insofar as such statements describe the terms of the Walibi Acquisition and Walibi Tender Offer, the documents or agreements referred to therein, the Notes, the Stock, the Seller Convertible Redeemable Preferred Stock, the Company's other debt instruments or other securities, 29 or the registration rights referred to therein and concern legal matters. (e) Weil Gotshal & Manges LLP shall have furnished to the Representatives its written opinion, as special counsel to the Company, addressed to the Underwriters and dated the First Delivery Date, in form reasonably satisfactory to the Representatives, as to certain matters set forth in Section 7(d) and to the effect that the statements set forth in the Prospectus under the captions "Business--Licenses" and "Description of Six Flags Agreement", insofar as such statements describe the terms of the documents or agreements referred to therein, are accurate, complete and fair. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and, in respect of matters of fact, may rely upon certificates of officers of the Company or the Subsidiaries, provided that such counsel shall state that it believes that both the Underwriters and it are justified in relying upon such certificates. Such counsel shall also have furnished to the Representatives a written statement, addressed to the Underwriters and dated the First Delivery Date, in form satisfactory to the Representatives, to the effect that (x) such counsel has acted as counsel to the Company in connection with the Walibi Acquisition, the Walibi Tender Offer and the Six Flags Acquisition and has reviewed the information (the "Walibi and Six Flags Information") in the Registration Statement relating to the Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition and the business and operations of Walibi and its subsidiaries and SFEC and its subsidiaries and (y) based on the foregoing, no facts have come to the attention of such counsel which lead it to believe that (I) the Registration Statement (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief), as of the Effective Date, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (II) any documents incorporated by reference in the Prospectus (other than the financial statements and other financial and statistical data contained therein, as to which such counsel need express no belief) when they were filed 30 with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The foregoing statement may be qualified by a statement to the effect that the statement's scope is limited to the Walibi and Six Flags Information. (f) Richards, Layton & Finger shall have furnished to the Representatives its written opinion, as special Delaware counsel to the Company, addressed to the Underwriters and dated such Delivery Date, in form reasonably satisfactory to the Representatives, to the effect that, in connection with the Premier Merger, no shareholder vote was required under applicable Delaware law and, in connection with the Six Flags Acquisition, no shareholder vote is required under applicable Delaware law, and that the Premier Merger and the Six Flags Acquisition otherwise comply in all respects with applicable Delaware law. (g) The Representatives shall have received from Latham & Watkins, counsel for the Underwriters, such opinion or opinions and such statement or statements, dated the First Delivery Date, with respect to the issuance and sale of the Notes, the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably require, and the Company and the Subsidiaries shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. (h) At the time of execution of this Agreement, the Representatives shall have received from (I) KPMG Peat Marwick LLP a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings, except for the financial information and other matters covered in the letters from Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler described 31 immediately hereinafter; (II) Ernst & Young LLP a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to SFEC and its subsidiaries as have been previously agreed to by such firm and the Representatives; (III) Coopers & Lybrand a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Walibi and its subsidiaries, as have been previously agreed to by such firm and the Representatives; and (IV) Carpenter Mountjoy & Bressler a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof, the conclusions and findings of such firm with respect to certain financial information and other matters relating to Kentucky Kingdom, as have been previously agreed to by such firm and the Representatives. (i) With respect to the letters of KPMG Peat Marwick LLP, Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to in the preceding paragraph and delivered to the Representatives concurrently with the execution of this Agreement (the "initial letters"), the Company shall have furnished to the Representatives a letter (the "bring-down letters") of each of such accountants, addressed to the Underwriters and dated the First Delivery Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the bring- 32 down letter (or, in the case of the letter of KPMG Peat Marwick LLP, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter. (j) The Company and SFEC shall have furnished to the Representatives a certificate, dated the First Delivery Date, of its Chairman of the Board, its President or a Vice President and its chief financial officer stating that: (i) The representations, warranties and agreements of the Company and each of Premier Operations, SFEC and SFTP in Section 1 are true and correct as of the First Delivery Date; the Company and each of the Subsidiaries that is a party hereto have complied with all their agreements contained herein; and the conditions set forth in Sections 7(a) and 7(k) have been fulfilled; and (ii) They have carefully examined the Registration Statement and the Prospectus and, in their opinion (A) as of the Effective Date, the Registration Statement and Prospectus did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since the Effective Date no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement or the Prospectus. (k) Since the date of the latest audited financial statements included or incorporated by reference in the Prospectus there shall not have been any change in the capital stock (or partners' equity, as applicable) other than the Premier Merger or long-term debt of the Company or any of the Subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity (or partners' equity, as applicable) or results of operations of the Company and its subsidiaries, otherwise, in each case, than as set forth or contemplated in the Prospectus, the effect of which, in any such case, is, in the judgment of the 33 Representatives, so material (to the Company and its Subsidiaries, taken as a whole) and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Notes being delivered on the First Delivery Date on the terms and in the manner contemplated in the Prospectus. (l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's or SFEC's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's or SFEC's debt securities. (m) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company or SFEC on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of a majority in interest of the several Underwriters, impracticable or inadvisable to proceed with the public offering or delivery of the Notes being delivered on the First Delivery Date on the terms and in the manner contemplated in the Prospectus. (n) The Six Flags Acquisition shall have been or shall be consummated concurrently with the Offering and without any material waiver of any of the conditions precedent to any of the parties' obligations under the Merger Agreement. 34 (o) Each of the offerings by the Company of the Stock and the PInES shall have been or shall be consummated concurrently with the Offering. (p) Each of the Premier Credit Facility and the Six Flags Credit Facility shall be in effect and available for borrowing. (q) No default or event which, with notice or lapse of time or both, would constitute such a default shall have occurred and be continuing, or would result from the transactions contemplated hereby to occur prior to, concurrently with or immediately following the consummation of the Offering, under (i) the Merger Agreement, (ii) the indentures relating to any of the Company Senior Discount Notes, the Company Senior Notes, the 1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes, the SFTP Senior Subordinated Notes and the SFEC, (iii) the credit agreement relating to either the Premier Credit Facility or the Six Flags Credit Facility or (iv) the Walibi Agreement. (r) The Premier Merger shall have been consummated. (s) Each of (i) the License Agreement, (ii) the Subordinated Indemnity Agreement, (iii) the Intercompany Services Agreement and (iv) the Tax Sharing Agreement shall have been entered into by the parties thereto with the provisions described in the Prospectus. (t) An authorized officer shall have executed this Agreement on behalf of each of the Six Flags Subsidiaries. (u) The Company and the Trustee shall have entered into the Indenture and the Escrow Agreement and the Underwriters shall have received counterparts, conformed as executed, thereof and the Notes shall have been duly executed and delivered by the Company and authenticated by the Trustee. (v) After the First Delivery Date, no lien will exist upon the Escrow Account (and no right or option to acquire the same will exist in favor of any other person or entity), except for the pledge and security interest in favor of the Trustee to be created or provided for in the Escrow Agreement, which pledge and security interest constitutes a first priority perfected pledge and security interest in and to the Escrow Account. 35 (w) The Underwriters shall have received an opinion of a nationally recognized firm of public accountants selected by the Company, which provides that the amount of proceeds deposited with the Trustee pursuant to the Senior Note Escrow Agreement is of an amount that will be sufficient upon receipt of scheduled interest and principal payments of Government Securities purchased thereunder to defease the SFEC Zero Coupon Senior Notes. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and scope reasonably satisfactory to counsel for the Underwriters. 8. Indemnification and Contribution. (a) The Company and the Subsidiaries that are parties hereto, jointly and severally, shall indemnify and hold harmless each Underwriter (including any Underwriter in its role as qualified independent underwriter pursuant to the rules of the NASD), its officers and employees and each person, if any, who controls any Underwriter within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Notes), to which that Underwriter, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto or (B) in any blue sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying any or all of the Notes under the securities laws of any jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by any Underwriter in connection with, or relating in any manner to, the Notes or the Offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company and the 36 Subsidiaries that are parties hereto shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its gross negligence or willful misconduct), and shall reimburse each Underwriter and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Underwriter, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiaries that are parties hereto shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any such amendment or supplement, or in any Blue Sky Application, in reliance upon and in conformity with written information concerning any Underwriter furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein; and provided further that with respect to any such untrue statement or omission made in the Preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not enure to the benefit of the Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Notes concerned if, to the extent that such sale was an initial sale by such Underwriter and any such loss, claim, damage or liability of such Underwriter is a result of the fact that both (A) a copy of the Prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Notes to such person, and (B) the untrue statement or omission in the Preliminary Prospectus was corrected in the Prospectus unless, in either case, such failure to deliver the Prospectus was a result of noncompliance by the Company or SFEC with Section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company or any of the Subsidiaries that are parties hereto may otherwise have to any Underwriter or to any officer, employee or controlling person of that Underwriter. (b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the Company and the Subsidiaries that are parties hereto, each of their respective officers and employees, each of their respective directors, and each person, if any, who controls the Company or any Subsidiary that is a party hereto within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any Subsidiary that 37 is a party hereto or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Underwriter furnished to the Company or SFEC through the Representatives by or on behalf of that Underwriter specifically for inclusion therein, and shall reimburse the Company, any such Subsidiary and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company, any such Subsidiary or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Underwriter may otherwise have to the Company, any such Subsidiary, or any such director, officer, employee or controlling person. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the 38 indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Representatives shall have the right, upon written notice to the Company, to employ counsel to represent jointly the Representatives and those other Underwriters and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Underwriters against the Company and the Subsidiaries that are parties hereto under this Section 8 if, in the reasonable judgment of the Representatives, it is advisable for the Representatives and those Underwriters, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the reasonable fees and expenses of such separate counsel shall be paid, jointly and severally, by the Company and the Subsidiaries that are parties hereto. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(c) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the 39 Subsidiaries that are parties hereto on the one hand and the Underwriters on the other from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiaries that are parties hereto on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Notes purchased under this Agreement (before deducting expenses) received by SFEC on the one hand, and the total underwriting discounts and commissions received by the Underwriters with respect to the shares of the Notes purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the shares of the Notes under this Agreement, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or SFEC or the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. For purposes of the preceding two sentences, the net proceeds deemed to be received by the SFEC shall be deemed to be also for the benefit of Company and the Subsidiaries that are parties hereto and information supplied by the Company or SFEC shall also be deemed to have been supplied by the Subsidiaries that are parties hereto. The Company, the Subsidiaries that are parties hereto and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Notes underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay 40 by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 8(d) are several in proportion to their respective underwriting obligations and not joint. (e) The Underwriters severally confirm and the Company and the Subsidiaries that are parties hereto acknowledge that the statements with respect to the public offering of the Notes by the Underwriters set forth in the first and last paragraphs on the cover page of, the legend concerning stabilization on the fourth page of and statements under the caption "Underwriting" including but not limited to the concession and reallowance figures, the Prospectus constitute the only information concerning such Underwriters furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion in the Registration Statement and the Prospectus. 9. Defaulting Underwriters. If, on either Delivery Date, any Underwriter defaults in the performance of its obligations under this Agreement, the remaining non-defaulting Underwriters shall be obligated to purchase the Notes which the defaulting Underwriter agreed but failed to purchase on the First Delivery Date in the respective proportions which the aggregate principal amount of Notes set opposite the name of each remaining non-defaulting Underwriter in Schedule 1 hereto bears to the total aggregate principal amount of Notes set opposite the names of all the remaining non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the remaining non-defaulting Underwriters shall not be obligated to purchase any of the Notes on the First Delivery Date if the total aggregate principal amount of Notes which the defaulting Underwriter or Underwriters agreed but failed to purchase on such date exceeds 9.09% of the total aggregate principal amount of Notes to be purchased on the First Delivery Date, and any remaining non-defaulting Underwriter shall not be obligated to purchase more than 110% of the aggregate principal amount of Notes which it agreed to purchase on the First Delivery Date pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or those other underwriters satisfactory to the Representatives who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the Notes to be purchased on the First Delivery Date. If the remaining Underwriters or other underwriters satisfactory to the Representatives do not elect to purchase 41 the shares which the defaulting Underwriter or Underwriters agreed but failed to purchase on the First Delivery Date, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company, except that the Company will continue to be liable for the payment of expenses to the extent set forth in Section 6. As used in this Agreement, the term "Underwriter" includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Notes which a defaulting Underwriter agreed but failed to purchase. Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company for damages caused by its default. If other underwriters are obligated or agree to purchase the Notes of a defaulting or withdrawing Underwriter, either the Representatives or the Company may postpone the Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement, the Prospectus or in any other document or arrangement. 10. Termination. The obligations of the Underwriters hereunder may be terminated by the Representatives by notice given to and received by the Company and SFEC prior to delivery of and payment for the Notes if, prior to that time, any of the events described in Sections 7(k), 7(l) or 7(m) shall have occurred or if the Underwriters shall decline to purchase the Notes for any reason permitted under this Agreement. 11. Reimbursement of Underwriters' Expenses. If SFEC shall fail to tender the Notes for delivery to the Underwriters by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled by the Company or SFEC is not fulfilled (other than by reason of any events described in Section 7(m) except for the suspension of trading or minimum prices of the securities of the Company), the Company and SFEC will reimburse the Underwriters for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by the Underwriters in connection with this Agreement and the proposed purchase of the Notes, and promptly following demand the Company shall pay the full amount thereof to the Representatives. If this Agreement is terminated pursuant to Section 9 by reason of the default of one or more Underwriters, the Company shall not be obligated to reimburse any defaulting Underwriter on account of those expenses. 42 12. Notices, etc. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Underwriters, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers Inc., Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-526-6588), with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285; (b) if to the Company or any of the Subsidiaries, shall be delivered or sent by mail, telex or facsimile transmission to 122 East 42nd Street, 49th Floor, New York, NY 10168, Attention: Kieran E. Burke (Fax: 212-949-6203); provided, however, that any notice to a Underwriter pursuant to Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its acceptance telex to the Representatives, which address will be supplied to any other party hereto by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the Representatives. 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Company, the Subsidiaries that are parties hereto and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Company and the applicable Subsidiaries contained in this Agreement shall also be deemed to be for the benefit of the officers and employees of each Underwriter and the person or persons, if any, who control any Underwriter within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the Underwriters contained in Section 8(b) of this Agreement shall be deemed to be for the benefit of directors of the Company and SFEC, officers of the Company and SFEC who have signed the Registration Statement and any person controlling the Company and SFEC within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 43 14. Survival. The respective indemnities, representations, warranties and agreements of the Company, the applicable Subsidiaries and the Underwriters contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Notes and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 15. Definition of the Terms "Business Day", "Premier Subsidiary", "Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership", "Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement, (a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) "Premier Subsidiary" means each of Premier Operations, Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a Massachusetts corporation, Premier Waterworld Concord Inc., a California corporation, Premier Waterworld Sacramento Inc., a California corporation, Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding Inc., a New York corporation, Great Escape LLC, a New York limited liability company, Great Escape Theme Park LLC, a New York limited liability company, Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited liability company, Park Management Corp., a California corporation, Indiana Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier International Holdings, Inc., a Delaware corporation and [other Premier entities held in corporate form and as limited liability companies], (c) "Premier Partnership" means each of Frontier City Partners, Limited Partnership, an Oklahoma limited partnership, Elitch Gardens, L.P., a Colorado limited partnership and [other Premier entities held as limited partnerships], (d) "Six Flags Subsidiary" means each of SFEC, SFTP and [other Six Flags entities held in corporate form or as limited liability companies], (e) "Six Flags Partnership" means each of Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas Co-Venture Partnership and [other Six Flags entities held as limited partnerships], (f) "Subsidiary" means each of the Premier Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships; and "Co-Venture Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, 44 Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined therein), (ii) the Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP and SFEC and the Related Agreements (as defined therein), and (iii) the Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. 17. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 19. Effect of SFEC Execution. For all purposes hereunder, the representations, warranties and agreements of SFEC hereunder shall only take effect and be enforceable on the First Delivery Date, and shall do so as if agreed to and entered into as of the date hereof. 45 If the foregoing correctly sets forth the agreement among the Company, the Subsidiaries that are parties hereto and the Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, Premier Parks Inc. By ____________________________________ Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Subsidiaries (as listed in Section 15 but not including Walibi) By ____________________________________ Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Premier Partnerships (as listed in Section 15) By Each of their respective General Partners By ____________________________________ Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer The Six Flags Subsidiaries (as listed in Section 15) By ____________________________________ Name: Kieran E. Burke Title: Chairman of the Board and Chief Executive Officer 46 Accepted: Lehman Brothers Inc. Salomon Brothers Inc NationsBanc Montgomery Securities LLC For themselves and as Representatives of the several Underwriters named in Schedule 1 hereto By Lehman Brothers Inc. By _______________________________ Authorized Representative SCHEDULE 1 Aggregate Principal Amount of Underwriters Notes - ------------ --------- Lehman Brothers Inc............................... Salomon Brothers Inc.............................. NationsBanc Montgomery Securities LLC............. --------- Total......................................... ========= EX-2.(B) 8 EXHIBIT 2(B) Exhibit 2(b) SUBORDINATED INDEMNITY AGREEMENT SUBORDINATED INDEMNITY AGREEMENT, dated as of _____________, 1998 (this "Agreement"), by and among Six Flags Entertainment Corporation ("SFEC"), Six Flags Theme Parks Inc. ("SFTP"), SFOG II, Inc. ("SFOG") and SFT Holdings, Inc. ("SFT Holdings" and, together with SFEC, SFTP, SFOG and SFT Holdings, the "Six Flags Parties"), Time Warner Inc. ("TWX"), Time Warner Entertainment Company, L.P. ("TWE") and TW-SPV Co. ("TW-SPV Co.") and, together with TWX and TWE, the "TW Parties"), Premier Parks Inc. ("Holdco") and [GP Holdings], a wholly-owned subsidiary of Holdco ("GP Holdings" and, together with Holdco, the "Premier Parties".) W I T N E S S E T H : WHEREAS, Holdco, certain subsidiaries of Holdco, SFEC, TWE, and the other holders of the capital stock of SFEC, are parties to the Agreement and Plan of Merger, dated as of February 9, 1998 (the "Merger Agreement"), pursuant to which, among other things, a wholly-owned subsidiary of Holdco will be merged into and with SFEC, Holdco will become the holder of all of the outstanding and issued capital stock of SFEC, and SFEC will thereby become a wholly-owned subsidiary of Holdco (the "Merger"); WHEREAS, SFEC and certain of its subsidiaries are party to (i) the Overall Agreement, dated as of February 15, 1997 ( the "Georgia Overall Agreement"); (ii) the Related Agreements (as defined in the Georgia Overall 2 Agreement) and identified on Schedule 2 attached hereto (the "Georgia Related Agreements" and, together with the Georgia Overall Agreement, the "Georgia Agreements"); (iii) the Overall Agreement, dated as of November 24, 1997 (the "Texas Overall Agreement"); and (iv) the Related Agreements (as defined in the Texas Overall Agreement and identified on Schedule 3 attached hereto) (the "Texas Related Agreements" and, together with the Texas Overall Agreement, the "Texas Agreements"); WHEREAS, pursuant to the Georgia Agreements, the Georgia Obligors (as defined below) (A) are required to make or guarantee pursuant to an Other Guarantee (as defined below) certain payments, to the extent there is not "Available Cash" to make such payments, including without limitation (i) the payments by the Georgia Partnership (as defined below) of "Minimum Amount Distributions" and "Percentage Distributions" pursuant to Article VI of the Georgia Partnership Agreement (as defined below), (ii) the payments by the Georgia Partnership of "Base Rent" under Article IV of the Georgia Park Lease (as defined below) and (iii) the expenditure of certain amounts on capital expenditures in the Georgia Park (as defined below) pursuant to Section C of Article XVII of the Georgia Partnership Agreement, and (B) are required to perform and comply or guarantee pursuant to an Other Guarantee performance and compliance with certain covenants, agreements and obligations, including without limitation the purchase by the Georgia Acquisition Subsidiaries (as defined below) of Georgia Units (as defined below) on an annual basis pursuant to Article III of the Georgia Overall Agreement, in each case when and as the 3 same shall be required to be paid, performed or complied with under the Georgia Agreements (the payments of all of the amounts required to be paid, and the performance and compliance with all of the covenants, agreements, and obligations, by the Georgia Obligors under the Georgia Agreements are referred to herein as the "Georgia Agreements Obligations"); WHEREAS, to support the performance of the Georgia Agreements Obligations for the benefit of the Georgia Beneficiaries (as defined below), (i) SFOG Acquisition A, Inc. ("SFOG Acquisition A") and SFOG Acquisition B, L.L.C. ("SFOG Acquisition B" and, together with SFOG Acquisition A, the "Georgia Acquisition Subsidiaries") executed and delivered to Six Flags Fund, Ltd. (L.P.) ("Georgia Fund"), SFG-I, L.L.C. ("SFG-I") and Six Flags Over Georgia, L.L.C. ("Flags Georgia, L.L.C." and, together with SFG-I and Georgia Fund, the "Georgia Beneficiaries") that certain Secured General Continuing Guarantee and Pledge Agreement, dated as of March 18, 1997 (the "Georgia Acquisition Subsidiaries Guarantee"), (ii) SFTP and SFEC executed and delivered to the Georgia Beneficiaries the General Continuing Guarantee, dated as of March 18, 1997 (the "SFEC/SFTP Georgia Guarantee"), and (iii) TWX and TWE executed and delivered to the Georgia Beneficiaries the General Continuing Guarantee and Non-Competition Agreement, dated as of February 15, 1997 (the "Georgia Guarantee"); WHEREAS, pursuant to the Texas Agreements, the Texas Obligors (as defined below) (A) are required to make or guarantee pursuant to an Other Guarantee certain payments, to the extent there is not "Available Cash" to make such payments, 4 including without limitation (i) the payments by the Texas Partnership (as defined below) of "Minimum Amount Distributions" and "Percentage Distributions" pursuant to Article VI of the Texas Partnership Agreement (as defined below), (ii) the payments by the Texas Partnership of "Base Rent" under Article IV of the Texas Park Lease (as defined below), (iii) the expenditures of certain amounts on capital expenditures in the Texas Park (as defined below) pursuant to Section C. of Article XVII of the Texas Partnership Agreement, and (B) are required to perform and comply or guarantee pursuant to an Other Guarantee performance or compliance with certain covenants, agreements and obligations, including without limitation the purchase by the Texas Acquisition Subsidiaries (as defined below) of Texas Units (as defined below) on an annual basis pursuant to Article III of the Texas Overall Agreement, in each case when and as the same shall be required to be paid, performed or complied with in the Texas Agreements (the payments of all of the amounts required to be paid, and the performance and compliance with all of the covenants, agreements, and obligations, by the Texas Obligors under the Texas Agreements are referred to herein as the "Texas Agreements Obligations"); WHEREAS, to secure and support the performance of the Texas Agreements Obligations for the benefit of the Texas Beneficiaries (as defined below) in connection with the Texas Overall Agreement, (i) SFOT Acquisition I, Inc. ("SFOT Acquisition I") and SFOT Acquisition II, Inc. ("SFOT Acquisition II" and, together with SFOT Acquisition I, the "Texas Acquisition Subsidiaries") executed and delivered to Six Flags Over Texas Fund, Ltd. ("Texas Fund"), Flags' Directors,L.L.C. ("Flags' 5 Directors") and Six Flags Fund II, Ltd. ("Texas Fund II" and, together with Texas Fund and Flags' Directors, the "Texas Beneficiaries") the General and Continuing Guarantee, dated as of January 6, 1998 (the "Texas Acquisition Subsidiaries Guarantee"), (ii) SFTP and SFEC executed and delivered to the Texas Beneficiaries that certain General Continuing Guarantee, dated as of January 6, 1998 (the "SFTP/SFEC Texas Guarantee"), and (iii) TWX and TWE executed and delivered the General Continuing Guarantee and Non-Competition Agreement, dated as of November 24, 1997 (the "Texas Guarantee" and, together with the Georgia Guarantee, the "TW Guarantees"); WHEREAS, pursuant to the Indenture, dated as of December 16, 1992, by SFEC and TWE to United States Trust of New York, as trustee thereunder ("ZCN Trustee"), as amended by the First Supplemental Indenture, dated as of February 22, 1993 and the Second Supplemental Indenture, dated as of November 8, 1995 (as the same may be amended, the "Zero Coupon Notes Indenture") TWE has guaranteed the obligations of SFEC under the Zero Coupon Senior Notes due 1999 of SFEC (the "Zero Coupon Notes") issued pursuant to the Zero Coupon Notes Indenture; WHEREAS, in order to support the obligations of the Holdco Parties hereunder, the record ownership of the outstanding capital stock of certain subsidiaries of SFEC will be transferred to TW-SPV Co., a special purpose bankruptcy remote subsidiary of TWE, in connection with the transactions contemplated hereby; and WHEREAS, in order to induce TWE, as holder of all of the outstanding Class B Common Stock and Class B Preferred Stock of SFEC, and Holdco to enter into 6 the Merger Agreement, Holdco, GP Holdings and the Six Flags Parties desire to enter into this Agreement with the TW Parties and the TW Parties and the Holdco Parties desire to make the agreements provided for herein in consideration of, inter alia, the undertakings of the Holdco Parties and the TW Parties set forth herein. The Merger Agreement and all agreements relating thereto shall be conclusively presumed to have been entered into by TWE and Holdco in reliance upon this Agreement. NOW, THEREFORE, for good and valuable consideration, including the covenants and agreements hereinafter set forth, the adequacy and validity of which the parties hereby acknowledge, the parties hereto agree as follows: ARTICLE 1 DEFINED TERMS 1.1 Definitions. For purposes of this Agreement, the following terms shall have the meanings ascribed to them in this Section 1.1 (such meanings to be applicable equally to both singular and plural forms of the terms defined). 1.1.1 "Accelerated Put" shall have the meaning ascribed to such term in Section 6.1 of the Georgia Acquisition Subsidiaries Guarantee and Section 6.1 of the Texas Acquisition Subsidiaries Guarantee, respectively. 1.1.2 "Accelerated Put Price" shall mean the "Put Price" as such term is defined in the Texas Acquisition Subsidiaries Guarantee and the Georgia Acquisition Subsidiaries Guarantee, respectively. 7 1.1.3 "Acquisition Companies" shall mean the Acquisition Subsidiaries and the Acquisition Holding Companies. 1.1.4 "Acquisition Holding Companies" shall mean SFOT Acquisition I Holdings, Inc. ("SFOT I Holdings"), SFOT Acquisition II Holdings, Inc. ("SFOT II Holdings"), SFOG Acquisition A Holdings, Inc. ("SFOG A Holdings") and SFOG Acquisition B Holdings, Inc. ("SFOG B Holdings"). 1.1.5 "Acquisition Subsidiaries" shall mean the Georgia Acquisition Subsidiaries and the Texas Acquisition Subsidiaries. 1.1.6 "affiliate" with respect to any Person, shall mean any Person controlling, controlled by or under common control with such Person. 1.1.7 "Aggregate Georgia End-of-Term Option Payment" shall mean all sums necessary to consummate the Georgia End-of-Term Option Transactions. 1.1.8 "Aggregate Texas End-of-Term Option Payment" shall mean all sums necessary to consummate the Texas End-of-Term Option Transactions. 1.1.9 "Beneficiaries" shall mean, collectively, (i) the Georgia Beneficiaries and any successors thereto, (ii) the Texas Beneficiaries and any successors thereto and (iii) the holders from time to time of the Zero Coupon Notes and the ZCN Trustee. 1.1.10 "Business Day" shall mean any day other than a Saturday, Sunday or Federal holiday on which banking institutions in New York, New York are permitted to be closed for the purpose of transacting business. 8 1.1.11 "Capital Lease" shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with Generally Accepted Accounting Principles, either would be required to be classified and accounted for as a capital lease on the balance sheet of such Person or otherwise be disclosed as such in a note to such balance sheet, other than any such lease under which such Person is the lessor. 1.1.12 "Capital Lease Obligation" shall mean, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder that, in accordance with Generally Accepted Accounting Principles, would appear on the balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed in a note to such balance sheet. 1.1.13 "control" (including the terms "controlling," "controlled by" and "under common control") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 1.1.14 "Covenant Defeasance" shall mean discharge or defeasance of the Zero Coupon Notes Indenture (i) pursuant to Section 401 or 403 thereof, provided TWE is furnished with satisfactory evidence of such discharge ordefeasance or (ii) pursuant to Section 402(A) thereof without regard to Sections 402(B), (C), (D) and (E); provided that the Trustee referred to in paragraph (A) need not be the Trustee under the Zero Coupon Indenture but must be a trustee or escrow agent not affiliated with Holdco that is reasonably satisfactory to TWE pursuant to a trust 9 agreement, security agreement or escrow agreement, reasonably satisfactory to TWE, and with respect to which TWE is a third party beneficiary and that otherwise meets all of the other requirements of paragraph (A) of Section 402. 1.1.15 "Designated Leverage Amount" shall mean (a) $950,000,000 minus (b) the aggregate amounts of Indebtedness repaid pursuant to clause (ii) of Section 6.1.1(b). 1.1.16 "Eligible Unitholder" shall mean a Unitholder that delivers a valid and appropriate Notice of Election to Exercise in connection with an Accelerated Put. 1.1.17 "End-of-Term Option" shall have the meaning ascribed to such term in the Texas Guarantee and the Georgia Guarantee, respectively. 1.1.18 "End-of-Term Option Exercise Date" (i) with respect to an End-of-Term Option under the Texas Overall Agreement, shall mean the earlier to occur of (x) December 31, 2025 or (y) the date that is 30 days after notice from Texas Fund to the Texas Acquisition Subsidiaries (which notice the TW Parties shall promptly deliver to Holdco and SFEC) that the End-of-Term Option must be exercised or will lapse, and (ii) with respect to an End-of-Term Option under the Georgia Overall Agreement shall mean the earlier to occur of (x) December 31, 2024 or (y) the date that is 30 days after notice from Georgia Fund to the Georgia Acquisition Subsidiaries (which notice the TW Parties shall promptly deliver to Holdco and SFEC) that the End-of-Term Option must be exercised or will lapse. 10 1.1.19 "End-of-Term Option Settlement Date" with respect to an End-of-Term Option under the Georgia Overall Agreement or an End-of-Term Option (or Accelerated End-of-Term Option) under the Texas Overall Agreement, shall mean the date on which the End-of-Term Option Price (or other payments) must be paid to the applicable Unitholders (or the applicable general partner (or general partners) in case of an Accelerated End-of-Term Option) pursuant to the provisions of each such agreement, respectively. 1.1.20 "Equity Interests" means capital stock and all warrants, options or other rights to acquire capital stock (but excluding any debt security that is convertible into, or exchangeable for, capital stock.) 1.1.21 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto. 1.1.22 "Excluded Obligations" shall mean the obligations of the TW Parties set forth herein, in the Merger Agreement, the Georgia Litigation Indemnity Agreement and the License Agreement. 1.1.23 "Generally Accepted Accounting Principles" shall mean United States generally accepted accounting principles as in effect from time to time. 1.1.24 "Georgia End-of-Term Transactions" shall mean the transactions described in clauses (b), (c) and (d) of Section 8.2 and clauses (a) and (b) of Section 8.4 of the Georgia Overall Agreement. 1.1.25 "Georgia Fund Interests" shall mean, in the case of End-of-Term Option, all interests in Georgia Fund, Six Flags Over Georgia II, L.P. 11 and Six Flags Over Georgia, Ltd. described in clauses (b) through (d) of Section 8.2 of the Georgia Overall Agreement. 1.1.26 "Georgia General Partner" shall mean the Salkin Family Trust (created by Declaration of Trust dated May 15, 1980, as amended) or any successor managing general partner of Georgia Fund. 1.1.27 "GL" shall have the meaning ascribed to such term in the Merger Agreement. 1.1.28 "Georgia Obligors" shall mean SFEC, SFTP, Six Flags Services of Georgia Inc., SFOG, the Georgia Acquisition Subsidiaries, SFOG II Employee, Inc. and the Georgia Partnership. 1.1.29 "Georgia Park" shall mean the amusement park commonly known, on the date hereof, as Six Flags Over Georgia. 1.1.30 "Georgia Park Lease" shall mean the agreement identified as "Amusement Park Ground Lease" on Schedule 2. 1.1.31 "Georgia Partnership" shall mean Six Flags Over Georgia II, L.P., a Delaware limited partnership and the owner of the improvements that comprise the Georgia Park, and the lessee of the land upon which is situated the Georgia Park. 1.1.32 "Georgia Partnership Agreement" shall mean the Limited Partnership Agreement of Six Flags Over Georgia II, L.P., dated as of March 18, 1997. 12 1.1.33 "Georgia Units" shall mean units of limited partnership interests in Georgia Fund, of which there are 100- 1/31.71 outstanding as of the date hereof. 1.1.34 "GP Holdings" shall mean "GP Holdings" as defined in the Preamble hereto, which shall be a wholly-owned, "bankruptcy remote" special purpose Subsidiary of Holdco (capitalized by Holdco with a contribution of cash in the amount of $1,000), the Organizational Documents of which shall include, among other things, the provisions set forth in Exhibit A hereto. 1.1.35 "GP Holdings Preferred Stock" shall mean the preferred stock, par value $0.01 per share, of GP Holdings having the terms set forth in Exhibit B hereto. 1.1.36 "guarantee" or "guaranty" means any obligation, contingent or otherwise, of any Person, direct or indirect, guaranteeing any Indebtedness or the performance of any other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part). The term "guarantee" or "guaranty" or "guaranteed" used as a verb has a corresponding meaning. 13 1.1.37 "Holdco Notes" shall mean the notes to be issued in a public or Rule 144A offering by Holdco (including the Indentures pursuant to which such notes are issued) to finance, in part, the transactions contemplated by the Merger Agreement, and any subsequently issued notes or other Indebtedness, to the extent that the proceeds of which are used directly to refinance or pay expenses directly relating to, and having a principal amount (which shall include accrued but unpaid interest, any accretions on such principal in respect of discounted principal or paid-in-kind interest) not in excess immediately prior to such refinancing of, such notes or such subsequently issued notes or other Indebtedness. 1.1.38 "Holdco Parties" shall mean the Premier Parties and, for purposes of this Agreement, upon and following the Effective Time of the Merger, the Six Flags Parties. 1.1.39 "Indebtedness" of any Person shall mean (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including without limitation reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured, but not including obligations to trade creditors incurred in the ordinary course of business), (ii) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (iii) all indebtedness created or arising under any conditional sale or other title retention agreements with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such 14 property), (iv) all Capital Lease Obligations of such Person, (v) all Indebtedness guaranteed by such Person to the extent of such guarantee, (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including without limitation accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, but only to the extent of the value of the property, and (vii) any obligations requiring payments in excess of the counter-party obligations under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or derivative agreement of such Person; provided, however, that the Zero Coupon Notes shall not be deemed Indebtedness to the extent a Covenant Defeasance has been effected. 1.1.40 "License Agreement" shall have the meaning ascribed to such term in the Merger Agreement. 1.1.41 "Lien" shall mean any encumbrance, charge, security interest, mortgage, pledge, hypothecation, title defect, title retention agreement, lease, sublease, license, occupancy agreement, easement, covenant running with the land, encroachment, voting trust agreement, restriction, option, right of first offer or refusal, proxy or lien, including, but not limited to, liens for taxes, other than a lien for taxes not yet due and payable. 1.1.42 "Losses" shall mean any and all losses, damages (excluding consequential damages), deficiencies, awards, assessments, amounts paid in 15 good faith settlement, judgments, fines, penalties, interest, costs and expenses (including, without limitation, reasonable legal and other advisory fees, costs and expenses). 1.1.43 "Minimum Net Worth" shall mean stockholder's equity, as determined in accordance with Generally Accepted Accounting Principles, of SFEC immediately following consummation of the transactions contemplated by the Merger Agreement. For purposes of Sections 1.1.43 and 1.1.44, in determining Minimum Net Worth and Net Worth, the Zero Coupon Notes and any securities or other assets supporting a Covenant Defeasance shall be disregarded. 1.1.44 "Net Worth" shall mean stockholders' equity or its equivalent as determined in accordance with Generally Accepted Accounting Principles; provided that in calculating Net Worth, the following principles shall apply: (i) the amortization of goodwill arising solely out of purchase accounting treatment of the S Merger (as such term is defined in the Merger Agreement) shall not be deemed to have been charged, (ii) if any intangible asset is reserved against or "written down" then such Net Worth shall be calculated using the carrying value of such asset as so reserved against or written down, (iii) if any intangible asset is sold or otherwise disposed of then such Net Worth shall be calculated using the carrying value of the proceeds (whether cash, securities or other assets) received in such sale or disposition and (iv) the depreciation of the incremental increase in the basis of an asset arising solely out of purchase accounting treatment of the Merger shall not be deemed to have been charged. In determining Net Worth in accordance with the foregoing, there shall 16 be no "double-counting" (e.g., upon the sale of any asset where depreciation with respect to such asset has been disregarded in accordance with the foregoing clause (iv), gain resulting from such sale shall be calculated with reference to the basis of such asset after adding back an amount equal to such disregarded depreciation). 1.1.45 "Obligors" shall mean, collectively, the Georgia Obligors and the Texas Obligors. 1.1.46 "Organizational Documents" shall mean (a) with respect to a corporation, its articles of incorporation and by-laws, (b) with respect to a partnership, its partnership agreement and its certificate of limited partnership (if a limited partnership) and (c) with respect to a limited liability company, its limited liability company operating agreement (or the equivalent thereof) and its certificate of formation (or the equivalent thereof), in each case as amended. 1.1.47 "Other Guarantee" shall mean the Texas Acquisition Subsidiaries Guarantee, the Georgia Acquisition Subsidiaries Guarantee, the SFEC/SFTP Georgia Guarantee and the SFEC/SFTP Texas Guarantee. 1.1.48 "Permitted Liens" means, with respect to any Person, (a) pledges or deposits by such Person pursuant to a Covenant Defeasance or under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases (other than Capital Leases) to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or United States government bonds to secure surety or appeal bonds to which 17 such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (b) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding in good faith with an appeal or other good faith proceeding for review; (c) Liens for property taxes not yet due or payable or subject to penalties for nonpayment or those which are being contested in good faith by appropriate proceedings; (d) Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; (e) survey exceptions, encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens (i) existing as of the date hereof or (ii) incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of any SF Theme Park or materially impair the use in the operation of the business of any such SF Theme Park; (f) Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming a Subsidiary; provided further, however, that any such Lien may not extend to any other property 18 owned by SFEC or any of its Subsidiaries; (g) Liens on property at the time SFEC or a Subsidiary of SFEC acquired the property, including any acquisition by means of a merger or consolidation with or into SFEC or any Subsidiary of SFEC; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by SFEC or any Subsidiary; (1) Liens to secure the payment of all or a part of the purchase price of, or Capitalized Lease Obligations with respect to, assets or property acquired or constructed after the date hereof; provided, however, that (i) the Indebtedness secured by such Liens is otherwise permitted to be incurred under this Agreement, (ii) such Liens only extend to or cover such acquired or constructed property and do not encumber any other assets or property of SFEC or any Subsidiary thereof, (iii) such Liens are created within 180 days of construction or acquisition of such assets or property, (iv) the principal amount of any Indebtedness secured by any such Lien does not exceed the cost of assets or property so acquired or constructed and (v) the amount of Indebtedness secured by any such Lien is not subsequently increased; (m) Liens arising by reason of any judgment, decree or order of any court or arbitrator, so long as such judgment, decree or order is being contested in good faith and any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree or order shall not have been finally terminated and the period within which such proceedings may be initiated shall not have expired; and (n) Liens securing Senior Indebtedness. 19 1.1.49 "Person" shall mean and include an individual, a partnership, a joint venture, a limited liability company, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. 1.1.50 "Relevant Agreements" shall mean, collectively, the Texas Agreements, the Georgia Agreements and the Zero Coupon Notes Indenture. 1.1.51 "Required Obligations" shall mean, collectively, the Georgia Agreements Obligations, Texas Agreements Obligations and Zero Coupon Notes Obligations; provided that the Required Obligations shall not include (i) any obligations of the Georgia Acquisition Subsidiaries or the Texas Acquisition Subsidiaries to purchase any Units pursuant to the Accelerated Put provisions under the Texas Agreements and the Georgia Agreements, except as specifically provided in Section 4.2 hereunder; or (ii) the Excluded Obligations. 1.1.52 "Restricted Payments" shall mean (i) the payment of any dividend or the making of any distribution on account of the Equity Interests of SFEC or of any Non-Qualified Subsidiary (including, without limitation, any payment in connection with any merger or consolidation involving either SFEC or such NonQualified Subsidiary) or to the direct or indirect holders of the Equity Interests of SFEC or such Non-Qualified Subsidiary in their capacity as such (other than dividends or distributions by SFEC payable in Equity Interests of the issuer thereof (or accretions thereon); (ii) the purchase, redemption, or other acquisition or retirement for value (including, without limitation, in connection with any merger or consolidation involving SFEC or such Non-Qualified Subsidiary) of any Equity Interests of SFEC or 20 any Non-Qualified Subsidiary, or any other affiliate of SFEC (other than any such Equity Interests owned by SFEC or any wholly-owned Subsidiary of SFEC or Units). For purposes of this definition, "Non-Qualified Subsidiaries" shall mean Subsidiaries in which SFEC owns less than all of the equity interests and in which Holdco and its Subsidiaries or affiliates (other than SFEC and its Subsidiaries) owns an equity interest. 1.1.53 "Senior Indebtedness" with respect to any Person, shall mean Indebtedness of such Person for borrowed money that is not by its terms subordinated to any other Indebtedness of such Person. 1.1.54 "SFEC Entities" or "SFEC Entity" shall mean, individually or collectively, SFEC, SFTP, SFT Holdings, SFOT Employee, Inc., Six Flags Over Texas, Inc. ("SFOT"), SFOT Acquisition I, SFOT Acquisition II, SFOT I Holdings, SFOT II Holdings, SFOG, SFOG II Employee, Inc., SFOG Acquisition A, SFOG Acquisition B, SFOG A Holdings, SFOG B Holdings, Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc. and, to the extent applicable, any SFEC Subsidiaries. 1.1.55 "SF Theme Parks" shall mean, collectively, the theme parks set forth on Exhibit C hereto and any additional theme parks hereinafter acquired by SFEC and its Subsidiaries. 1.1.56 "Subsidiary" with respect to any Person, shall mean any corporation 50% or more of the outstanding voting power of which, or any partnership, joint venture, limited liability company or other entity 50% or more of the total equity interest of which, is directly or indirectly owned or controlled by such 21 Person or which such Person is directly or indirectly a general partner or managing member (or acts in similar such capacity). For purposes of this Agreement, all references to "Subsidiaries" of a Person shall be deemed to mean "Subsidiary" if such Person has only one Subsidiary. 1.1.57 "Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other assessments, and all estimated payments thereof, including, but not limited to, income, excise, property, sales, use, value added, franchise, payroll, transfer, transfer gain, gross receipts, withholding, social security and unemployment taxes or other taxes of any kind, imposed by any foreign, Federal, state, county or local government, or any subdivision or agency thereof, and any interest, penalty and expense relating to such taxes, charges, fees, levies or other assessments. 1.1.58 "Texas End-of-Term Option Transactions" shall mean the transactions described in clauses (b), (c) and (d) of Section 7.2 and clauses (a) and (b) of Section 7.4 of the Texas Overall Agreement. 1.1.59 "Texas Fund Interests" shall mean, in the case of an End-of-Term Option, all interests in the Texas Fund, Texas Flags, Ltd. ("Flags") and Six Flags Fund II, Ltd. ("Texas Fund II") described in clauses (b) through (d) of Section 7.2 of the Texas Overall Agreement, and, in the case of an Accelerated End-of-Term Option, all interests in Texas Fund, Flags and Texas Fund II described in clauses (a) and (b) of Section 7.7 of the Texas Overall Agreement. 1.1.60 "Texas General Partner" shall mean Jack D. Knox, or any successor managing general partner of Texas Fund. 22 1.1.61 "Texas Obligors" shall mean SFEC, SFTP, SFOT, the Texas Acquisition Subsidiaries, SFOT Employee, Inc. and the Texas Partnership. 1.1.62 "Texas Park" shall mean the amusement park commonly known, on the date hereof, as Six Flags Over Texas. 1.1.63 "Texas Park Lease" shall mean the agreement identified as "Amusement Park Ground Lease" in Schedule 3. 1.1.64 "Texas Partnership" shall mean Texas Flags, Ltd., a Texas limited partnership and the owner of the improvements that comprise the Texas Park, and the lessee of the land upon which is situated the Texas Park. 1.1.65 "Texas Partnership Agreement" shall mean the Amended and Restated Limited Partnership Agreement of Texas Flags, Ltd., dated as of January 6, 1998. 1.1.66 "Texas Units" shall mean units of limited partnership interests in Texas Fund, of which there are an aggregate of 240.32422 outstanding on the date hereof. 1.1.67 "Transfer" shall mean sell, lease, assign, transfer or otherwise dispose of, hypothecate, mortgage, pledge, or otherwise encumber, in each case directly or indirectly, or by operation of law. 1.1.68 "Triggering Default" shall mean (i) a "Default" as such term is defined in the Georgia Agreements (other than a Default that results from the failure of the TW Parties to perform their obligations with respect to an Accelerated Put as described in Section 4.3 hereof), (ii) a "Default" as such term is defined in the 23 Texas Agreements (other than a Default that results from the failure of the TW Parties to perform their obligations with respect to an Accelerated Put as described in Section 4.3 hereof), (iii) an "Event of Default" as such term is defined in the Zero Coupon Note Indenture, other than as a result of TWE's failure to comply with the provisions of Section 6.2.2 hereof, (iv) a default by any of the Holdco Parties of their covenants, agreements or obligations hereunder (other than an immaterial default that can be cured upon notice), or (v) a failure by the Holdco Parties to pay any amounts owed to the TW Parties hereunder or to otherwise reimburse the TW Parties for any amounts paid by either of such parties under the Georgia Guarantee or the Texas Guarantee. 1.1.69 "TWE Notes Guarantee" shall have the meaning set forth in Section 1201 of the Zero Coupon Notes Indenture. 1.1.70 "Units" shall mean the Texas Units and the Georgia Units. 1.1.71 "Unitholders" shall mean the holders of Units. 1.1.72 "ZCN Trustee" shall mean the Trustee under the Zero Coupon Notes Indenture, or any successor trustee thereunder. 1.2 Other Defined Terms: 1.2.1 For purposes of this Agreement, the following terms shall have the meanings ascribed to them in the Section of this Agreement or in the Relevant Agreement set forth opposite them below:
Term Section/Agreement ------- ------------------- Accelerated End-of-Term Option 4.5.1
24
Term Section/Agreement -------- ------------------- Accelerated End-of-Term Option Notice 4.5.1 Accelerated Option Notice Date 4.5.1 Accreted Value Amount Zero Coupon Note Indenture Aggregate Liquidity Put Price 4.2.2 Asserted Third Party Liability 7.3.1 Beneficial Shares 3.3 Beneficial Share Assignment 3.3 Claims Notice 7.3.1 Direct Claim 7.3.3 Direct Claim Notice 7.3.3 Eligible Securities 8.2 End-of-Term Option Texas Overall Agreement and Georgia Overall Agreement Escrow Agent 7.3.4 Escrow Amounts 7.3.4 ETO Exercise Notice 4.4.1 Flags' Directors Preamble Flags Georgia L.L.C. Preamble Georgia Acquisition Subsidiaries Preamble Georgia Acquisition Subsidiaries Guarantee Preamble Georgia Agreements Preamble Georgia Agreements Obligations Preamble Georgia AP Units 4.3.1 Georgia AP Units Cash Flow Assignment 4.3.1 Georgia Beneficiaries Preamble Georgia Fund Preamble
25
Term Section/Agreement -------- ------------------- Georgia Guarantee Preamble Georgia Overall Agreement Preamble Georgia Related Agreements Preamble Georgia Units Purchaser 4.2.2 Indemnitee 7.3 Indemnitor 7.3 Liquidity Put Certificate 4.2.2 Liquidity Put Notice 4.2.1 Liquidity Put Settlement Date Texas Overall Agreement and Georgia Overall Agreement Liquidity Put Texas Overall Agreement and Georgia Overall Agreement Merger Preamble Merger Agreement Preamble Maturity Zero Coupon Note Indenture Notice of Election to Exercise Texas Overall Agreement and Georgia Overall Agreement Offer to Purchase Zero Coupon Note Indenture Payment Blockage Notice 8.1 Payment Blockage Period 8.1 Principal Amount Zero Coupon Note Indenture Repaid Georgia AP Units 4.3.1 Repaid Texas AP Units 4.3.1 Selling Unitholder 4.2.2 SFEC Subsidiary 6.1.5 SFG-I Preamble SFOG Acquisition A Preamble
26
Term Section/Agreement -------- ------------------- SFOG Acquisition B Preamble SFOG BH Capital Stock 3.1 SFOG Capital Stock 3.1 SFOG IIH Capital Stock 3.1 SFOGA AH Capital Stock 3.1 SFOT Acquisition I Preamble SFOT Acquisition II Preamble SFOT IH Capital Stock 3.1 SFEC/SFTP Georgia Guarantee Preamble SFT H Capital Stock 3.1 SFTP/SFEC Texas Guarantee Preamble Stated Maturity Zero Coupon Note Indenture Subordinated Indemnity Escrow Agreement 7.3.4 Subordination Obligations 8.1 Termination Date 9.1 Texas Agreements Obligations Preamble Texas Acquisition Subsidiaries Preamble Texas Acquisition Subsidiaries Guarantee Preamble Texas AP Units 4.3.1 Texas AP Units Cash Flow Assignment 4.3.1 Texas Agreements Preamble Texas Beneficiaries Preamble Texas Fund Preamble Texas Fund II Preamble Texas Overall Agreement Preamble
27
Term Section/Agreement -------- ------------------- Texas Related Agreements Preamble Texas Guarantee Preamble Texas Units Purchaser 4.2.2 Texas Guarantee Preamble TW Guarantees Preamble 12 1/4Debentures 6.1.5 12 1/4Debentures Indenture 6.1.5 ZCN Trustee Preamble Zero Coupon Notes Preamble Zero Coupon Notes Obligations 2.1 Zero Coupon Notes Indenture Preamble
ARTICLE 2 PERFORMANCE OF OBLIGATIONS 2.1 Zero Coupon Notes. In each case for the sole and exclusive benefit of TWE only, (a) SFEC hereby agrees to, and (b) Holdco agrees to cause SFEC to, perform all of SFEC's obligations under the Zero Coupon Notes Indenture and the Zero Coupon Notes, including, without limitation, the due and punctual payment of the Principal Amount of the Zero Coupon Notes at the Stated Maturity or the Accreted Value Amount upon an acceleration of Maturity and all other amounts due and payable under the Zero Coupon Notes and the Zero Coupon Notes Indenture by SFEC (collectively, the "Zero Coupon Notes Obligations"), when and as the same shall become due and payable, according to the terms of the Zero Coupon Notes and the 28 Zero Coupon Notes Indenture, and (c) SFEC and Holdco each guarantees the payment of all such amounts and the performance of all such obligations thereunder. 2.2 Georgia Obligations. In each case for the sole and exclusive benefit of the TW Parties only, each of the Holdco Parties (a) shall cause the Georgia Obligors to perform the Georgia Agreement Obligations when and as the same shall be payable or required to be performed under the Georgia Agreements and (b) guarantees the payment of all amounts required to be paid and the performance of all covenants, agreements and obligations required to be performed or complied with by the Georgia Obligors thereunder. 2.3 Texas Obligations. In each case for the sole and exclusive benefit of the TW Parties only, each of the Holdco Parties (a) shall cause the Texas Obligors to perform the Texas Agreement Obligations when and as the same shall be payable or required to be performed under the Texas Agreements and (b) guarantees the payments of all amounts required to be paid and the performance of all covenants, agreements and obligations required to be performed or complied with by the Texas Obligors thereunder. 2.4 Continuing and Irrevocable Obligations. The obligations of the Holdco Parties under Sections 2.1 through 2.3 including the guarantees thereunder shall be, except as provided in Article 8, absolute, unconditional and irrevocable, joint and several and shall not terminate unless and until the Required Obligations have been indefeasibly paid and performed in full or otherwise satisfied or waived by the TW Parties or the Texas Beneficiaries and the Georgia Beneficiaries (in a manner that 29 legally relieves and discharges the parties from any liability with respect to the TW Guarantees). 2.5 Nature of Obligations. (a) The liability of each Holdco Party hereunder is independent of and not in consideration of the liability of the Obligors or any other Holdco Party and a separate action or actions may be brought and prosecuted by the TW Parties and their respective permitted successors and assigns, as the case may be, against any Holdco Party and its permitted successors and assigns, whether or not any action is brought or prosecuted against any Obligor or any other Holdco Party or whether or not any Obligor or any other Holdco Party is joined in any such action or actions. The guarantee of each of the Holdco Parties under Sections 2.1 through 2.3 hereof shall be construed as a continuing, absolute, unconditional and irrevocable guarantee of payment and performance (and not merely of collection) without regard to: (i) the legality, validity or enforceability of any of the Texas Agreements, the Georgia Agreements, the Zero Coupon Notes Indenture, the Zero Coupon Notes, the Merger Agreement or any agreement related thereto (other than this Agreement), any of the Required Obligations, any collateral or any Other Guarantee; (ii) any defense (other than indefeasible payment or an applicable statute of limitations), set-off or counterclaim (other than a set-off or counterclaim arising from the failure of the TW Parties to perform their 30 obligations hereunder) that may at any time be available to any Obligor or any Holdco Party against, and any right of set-off at any time held by, the Beneficiaries (or any one of them), the TW Parties or any other Holdco Party; or (iii) any other circumstance whatsoever (with or without notice to or knowledge of any Holdco Party or any Obligor, but excluding circumstances resulting from the failure of the TW Parties to perform the Excluded Obligations), whether or not similar to any of the foregoing, that constitutes, or might be construed to constitute, an equitable or legal discharge of any Obligor or any Holdco Party, in bankruptcy or in any other instance. (b) In the event of default by any Obligor in payment or performance of the Required Obligations, or any part thereof, when such payment or performance becomes due, either by its terms or as the result of the exercise of any power to accelerate, the Holdco Parties, as applicable, shall, pay the amount due thereon to the applicable Beneficiaries or perform or observe the Required Obligations, and it shall not be necessary for the Beneficiaries (and each Holdco Party expressly waives any rights it might otherwise have to require the Beneficiaries or the TW Parties) to proceed against any Obligor, any collateral or any other Person. (c) Suit may be brought or demand may be made against any Obligor or any other Holdco Party, as applicable, separately or together, without impairing the rights of the TW Parties against any Holdco Party or any other Person. 31 2.6 Authorization. Subject to Section 6.2.5, following and during the continuance of a Triggering Default, each Holdco Party authorizes the TW Parties, without notice to or further assent by such Holdco Party and without affecting such Holdco Party's liability hereunder (regardless of whether any subrogation or similar right that such Holdco Party may have or any other right or remedy of such Holdco Party is extinguished or impaired), from time to time, to: (a) terminate, release, compromise, subordinate, extend, or otherwise change the amount or time, manner or place of payment or performance of, or rescind any demand for payment or performance of, the Required Obligations or any part thereof, provided, that, if any such action taken without the consent of such Holdco Party has the effect of increasing the amount of any Required Obligation, then, as to such Holdco Party, the guarantees thereof under Sections 2.1 through 2.3 hereof shall extend only to the Required Obligations without giving effect to such increase in amount; provided, further, that a change in the condition (financial or other) of any Obligor resulting from a forbearance, extension or equivalent of either will not be deemed to be an increase of or to cause an increase of the amount of any Required Obligation within the meaning of the preceding proviso; (b) to the extent permitted by the Georgia Agreements and the Texas Agreements, take and hold any stock of the Acquisition Companies and the preferred stock or assets of GP Holdings, perfect or refrain from perfecting a lien on such stock and assets, and exchange, enforce, subordinate, release (whether 32 intentionally or unintentionally), or take or fail to take any other action in respect of any such stock and assets or lien or any part thereof; (c) exercise, fail to exercise, waive, suspend, terminate or suffer expiration of any of the remedies or rights of the TW Parties against any Obligor or any Holdco Party in respect of any Required Obligations or any collateral, as the TW Parties may elect in their discretion; (d) release, partially, release, add or settle with any Obligor or any Holdco Party, whether expressly, by operation of law or without limitation otherwise; (e) accept partial payments on the Required Obligations and apply all payments or recoveries from any Obligor or any Holdco Party or collateral to such of the Required Obligations as the TW Parties may elect in their discretion, whether or not such Required Obligations are secured or guaranteed; and (f) otherwise deal with any Obligor or any Holdco Party and any collateral as the TW Parties may elect in their discretion. 2.7 Certain Agreements and Waivers by Each Holdco Party. Each Holdco Party hereby agrees that neither any TW Party's rights or remedies nor any Holdco Party's obligations under this Article 2 shall be released, diminished, impaired, reduced or affected by any one or more of the following events, actions, facts or circumstances, and the liability of each Holdco Party under this Article 2 shall be absolute, unconditional and irrevocable irrespective of: 33 (a) the death, insolvency, bankruptcy, disability, dissolution, liquidation, termination, receivership, reorganization, merger, consolidation, change of form, structure or ownership, sale of all assets, or lack of corporate, partnership, limited partnership, limited liability company or other power of any Obligor or any Holdco Party or any other Person at any time liable for the payment or performance of any or all of the Required Obligations; (b) all rights and benefits under applicable law purporting to reduce a guarantor's obligations in proportion to the obligation of the principal or providing that the obligation of a surety or guarantor must neither be larger nor in other respects more burdensome than that of the principal; (c) any requirement of marshaling or any other principle of election of remedies and all rights and defenses arising out of an election of remedies by any TW Party by, even though that election of remedies has destroyed any Holdco Party's rights of subrogation and reimbursement against any Obligor; (d) any right to assert against any TW Party any defense (legal or equitable), set-off, counterclaim and other right that any Holdco Party may now or any time hereafter have against any Obligor; (e) presentment, diligence in making demands hereunder, demand on any other Holdco Party, notice of dishonor or nonperformance, protest, acceptance and notice of acceptance of the guarantees under Sections 2.1 through 2.3 hereof; 34 (f) any order, ruling or plan of reorganization emanating from any proceeding under the Bankruptcy Code with respect to any Obligor or any other Person, including any extension, reduction, composition, or other alteration of the Required Obligations, whether or not consented to by the Holdco Parties; or (g) except to the extent otherwise provided in Section 2.5(a), any rights, defenses and other benefits any Holdco Party may have under the provisions of Section 34.02 of the Texas Business and Commerce Code or Section 10-7-24 of the Official Code of Georgia Annotated, as applicable. 2.8 Duty of Inquiry. Each Holdco Party assumes the responsibility for being and keeping itself informed of the financial condition of each Obligor and of all other circumstances bearing upon the risk of nonpayment or nonperformance of the Required Obligations that diligent inquiry would reveal, and agrees that the TW Parties shall have no duty to advise any Holdco Party of information regarding such condition or any such circumstances. 2.9 Bankruptcy No Discharge. (a) The guarantees of any Holdco Party under Section 2.1 hereof shall not be discharged or otherwise affected, with respect to any other Holdco Party, by any bankruptcy, reorganization or similar proceeding commenced by or against any Obligor, including (i) any discharge of, or bar to stay against collecting, all or any part of the Required Obligations in or as a result of any such proceeding, whether or not assented to by the TW Parties, or (ii) any disallowance of all or any portion of the TW Parties' claim for repayment or performance of the Required 35 Obligations. If acceleration of the time for payment or performance of any Required Obligations is stayed or delayed as a result of any such proceeding, all such amounts shall nonetheless be payable by each Holdco Party, on demand by the TW Parties. (b) If a payment of any Required Obligation by any Obligor is made and is later determined not to have been indefeasibly made in whole or in part, such payment by any such Obligor to the Beneficiaries or the TW Parties, as the case may be, shall not constitute a release of any Holdco Party from any liability hereunder, and (i) the guarantees of the Holdco Parties under Sections 2.1 through 2.3 hereof (and any lien on any collateral securing such guarantees or the Required Obligations) shall continue to be effective or shall be reinstated notwithstanding any prior release, surrender or discharge by any TW Party of the guarantees of the Holdco Parties under Sections 2.1 through 2.3 and /or of any Holdco Party, and (ii) the guarantees of the Holdco Parties under Sections 2.1 through 2.3 (and any lien on any collateral securing such guarantees or the Required Obligations) shall apply to any and all amounts so refunded by any Beneficiaries or the TW Parties or paid by any Beneficiaries or the TW Parties to another Person (including any interest included in such amount), all as though such payment had not been made or such proceeds had not been received. 2.10 Limitation on Obligations. The obligations of each Holdco Party hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Sections 544 or 548 of the United States Bankruptcy Code or any comparable provisions of any applicable law. 36 ARTICLE 3 TRANSFERS OF CAPITAL STOCK 3.1 Capital Stock of SFOG A Holdings, SFOG B Holdings, SFOT I Holdings, SFOT II Holdings, SFOG and SFT Holdings. Immediately following the Effective Time of the Merger: (a) SFEC shall sell, assign, transfer, and convey to TW-SPV Co. all right, title and interest of SFEC in and to the capital stock of SFOG B Holdings (the "SFOG BH Capital Stock") in consideration of $1.00 in cash. Immediately prior to such transfer, SFEC shall cause SFOG B Holdings to incur $_____ of indebtedness, the proceeds of which will immediately be distributed to SFEC.1/ (b) SFEC shall sell, assign, transfer and convey to TW-SPV Co. all right, title and interest of SFEC in and to the capital stock of SFOT II Holdings (the "SFOT IIH Capital Stock") in consideration of $1.00 in cash. Immediately prior to such transfer, SFEC shall cause SFOT II Holdings to incur $_____ of indebtedness, the proceeds of which will immediately be distributed to SFEC.2/ (c) SFTP shall sell, assign, transfer and convey to TW-SPV Co. all right, title and interest of SFTP in and to the capital stock of SFOG A Holdings (the "SFOG AH Capital Stock") in consideration of $1.00 in cash. Immediately prior - -------- 1/ The amount of debt shall equal fair market value of SFOG B Holdings less $1.00. 2/ The amount of debt shall equal the fair market value of SFOT II Holdings less $1.00. 37 to such transfer, Holdco will cause SFOG A Holdings to incur $________3/ of indebtedness, the proceeds of which will immediately be distributed to SFTP. (d) SFTP shall sell, assign, transfer and convey to TW-SPV Co. all right, title and interest of SFTP in and to the capital stock of SFOT I Holdings (the "SFOT IH Capital Stock") in consideration of $1.00 in cash. 3/ The amount of debt shall equal (a) the number of Georgia Units then held by SFOG Acquisition A, multiplied by (b) the acquisition price paid for each such unit (e.g., $2,383,589), less (c) $1.00. Immediately prior to such transfer, Holdco will cause SFOT I Holdings to incur $________4/ of indebtedness, the proceeds of which will immediately be distributed to SFTP. (e) SFEC shall sell, assign, transfer and convey to GP Holdings all right, title and interest of SFEC in and to the capital stock of SFOG (the "SFOG Capital Stock") in consideration of $1.00 in cash. Immediately prior to such transfer, Holdco shall cause SFOG to incur $_____5/ of indebtedness, the proceeds of which will immediately be distributed to SFEC. (f) SFTP shall sell, assign, transfer and convey to GP Holdings all right, title and interest of SFTP in and to the capital stock of SFT Holdings (the "SFT H Capital Stock") in consideration of $1.00 in cash. Immediately - -------- 3/ The amount of debt shalle equal (a) the number of Georgia Units then held by SFOG Acquisition A, multiplied by (b) the acquisition price paid for each such unit (e.g., $2,383,589), less (c) $1.00. 4/ The amount of debt shall equal (a) the number of Texas Units then held by SFOT Acquisition I, multiplied by (b) the acquisition price of each such unit (e.g., $1,457,323), less $1.00. 5/ The amount of debt shall equal the fair market value of the Georgia General Partner, less $1.00 38 prior to such transfer, SFTP will cause SFT Holdings to incur $___6/ of indebtedness, the proceeds of which will immediately be distributed to SFTP. (g) In furtherance of the provisions of this Section 3.1, concurrently with the consummation of each of the transactions described in the foregoing clauses (a) through (f), SFTP and SFEC shall deliver to TW-SPV Co. or GP Holdings, as applicable, such certificate or certificates representing the SFOG BH Capital Stock, the SFOT IIH Capital Stock, SFOG AH Capital Stock, SFOT IH Capital Stock, the SFOG Capital Stock and the SFT H Capital Stock, as applicable, in each case, duly endorsed in blank or accompanied by stock powers duly executed in blank, in form for transfer to TW-SPV Co. or GP Holdings, as applicable, with all appropriate stock transfer tax stamps affixed, in each case, against payment to SFEC or SFTP, as applicable, of the cash consideration due in respect thereof. 3.2 Preferred Stock of GP Holdings. Immediately following the Effective Time of the Mergers, GP Holdings shall, and Holdco shall cause GP Holdings to, issue to TWE 100 fully paid and non-assessable shares of GP Holdings Preferred Stock in consideration of $1.00 in cash. 3.3 Beneficial Assignment of Interests. Immediately following consummation of the transactions contemplated by Section 3.1 hereof, TW-SPV Co. and Holdco shall execute and deliver the Beneficial Share Assignment Agreement substantially in the form Exhibit D (the "Beneficial Share Assignment"), pursuant to - -------- 6/ The amount of debt shall equal the fair market value of the Texas General Partner less $1.00. 39 which, among other things, (A) Holdco shall pay to TW-SPV Co. $4.00 in cash (which payment shall be made immediately following consummation of the transactions contemplated by Section 3.1), and (B) in consideration of such payment, TW-SPV Co. shall take all reasonable actions necessary so that Holdco shall be afforded the economic benefits to be conferred by the ownership of the SFOG AH Capital Stock, SFOG BH Capital Stock, SFOT IH Capital Stock and the SFOT IIH Capital Stock (collectively, the "Beneficial Shares"), by assigning to Holdco, until the occurrence and continuance of a Triggering Default, (x) the right to receive, all cash flow derived from such Beneficial Shares, including all cash flow derived from the Units owned by the Acquisition Subsidiaries on and after the date hereof; such cash flow to be paid to Holdco as soon as practicable, but in no event later than two Business Days, following the receipt thereof by TW-SPV Co. and (y) the right to vote such Beneficial Shares including with respect to the election and removal of directors. In furtherance of the foregoing, the Persons entitled to vote the Beneficial Shares shall cause the Acquisition Subsidiaries and the Acquisition Holding Companies to pay to the holders of its capital stock all cash received in respect of Units, as soon as practicable, but in no event later than two Business Days, following receipt thereof. 3.4 Preferred Stock of Acquisition Companies. TW-SPV Co. shall cause each of the Acquisition Holding Companies to issue to Holdco in consideration of $1.00 a class of preferred stock of each such Acquisition Holding Company, the terms of which will provide the holder of such stock, without duplication, the economic 40 benefits and voting rights (upon the same terms and subject to the same limitations) intended to be conferred upon Holdco under the Beneficial Share Assignment. 3.5 Tax Matters. Solely for all federal, state and local income tax and accounting purposes, (i) the sales, transfers, conveyances and assignments pursuant to Sections 3.1 and 3.3 shall be deemed to be distributions of the Beneficial Shares to Holdco and (ii) Holdco will be deemed the owner of all Beneficial Shares throughout the term of this Agreement and will include all Acquisition Companies in its consolidated federal income tax returns and appropriate combined or unitary returns filed by Holdco or its affiliates. The parties hereto agree to report and otherwise take actions solely for all income tax and accounting purposes with respect to the foregoing transactions consistent with the description contained in the preceding sentence. Holdco will pay (i) all Taxes of all of the Acquisition Companies and of TW-SPV Co., except as is attributable to a breach by the TW Parties of their obligations hereunder and except for any Taxes of TW-SPV Co. arising by reason of being part of any affiliated, combined or unitary group including TWX or any of its affiliates and their respective successors and (ii) all Taxes for which any of them may be liable by reason of being part of any affiliated, combined or unitary group including Holdco, SFEC or any of their respective affiliates or successors and all Taxes of GP Holdings and its successors. Holdco and its affiliates hereby waive any rights of contribution from or subrogation to the Acquisition Companies or TW-SPV Co. with respect to payments of any Taxes or other amounts required to be paid by Holdco pursuant to this Section 3.5. 41 ARTICLE 4 LIQUIDITY PUTS; ACCELERATED PUTS; END-OF-TERM OPTIONS 4.1 General. Without limiting any of the rights or obligations of the parties under Article 2 hereof, the provisions of this Article 4 shall govern the respective rights and obligations of the parties with respect to any Liquidity Put, Accelerated Put, or End-of-Term Option (including any accelerated End-of-Term Option). Notwithstanding the provisions of the Texas Agreements and the Georgia Agreements to the contrary and except as specifically provided for under this Agreement, none of the TW Parties, the Holdco Parties or their respective affiliates shall purchase, offer or agree to purchase or otherwise acquire any Units or take any action that would increase the purchase price of any Units under the Georgia Agreements or the Texas Agreements. 4.2 Procedures Relating to Liquidity Puts. 4.2.1 Liquidity Put Notices. (a) Subject to the further provisions of Section 4.2, the Holdco Parties shall on behalf of the Texas Acquisition Subsidiaries and the Georgia Acquisition Subsidiaries, as the case may be (and for the sole and exclusive benefit of the TW Parties only), administer, observe, comply with and perform, at the sole cost and expense of the Holdco Parties, any and all of the obligations of the Texas Acquisition Subsidiaries and the Georgia Acquisition Subsidiaries with respect to any Liquidity Put, including, without limitation, the preparation and dissemination of notices (each such notice a "Liquidity Put Notice") in respect of such Liquidity Put in 42 accordance with the respective terms and provisions of the Texas Overall Agreement and the Georgia Overall Agreement, the calculation of the Put Price in respect of such Liquidity Put, the determination of the Liquidity Put Number and the payments of amounts necessary to acquire Units in respect of such Liquidity Put. (b) Without limiting SFEC's obligations under Section 4.2.1(a), or any party's obligations under Section 10.2 hereof, (i) each of the Acquisition Subsidiaries shall, and the Persons entitled to vote the Beneficial Shares shall cause each of them to, deliver all information within its possession relating to and in connection with any Liquidity Put to SFEC; and (ii) SFEC shall, not later than five Business Days prior to the date upon which any Liquidity Put Notice is, pursuant to the Texas Overall Agreement or the Georgia Overall Agreement, as applicable, required to be given to the applicable Unitholders, furnish to the TW Parties (a) the form of any such Liquidity Put Notice for its approval (which approval shall not be unreasonably withheld or delayed, provided that, if such Liquidity Put Notice is in the form of Exhibits 3.4(b) and 3.5(b) of the Texas Overall Agreement or the Georgia Overall Agreement, respectively, or if the TW Parties shall fail to approve or disapprove any Liquidity Put Notice within three Business Days following receipt thereof, then, in either case, such Liquidity Put Notice shall be deemed to have been approved by the TW Parties) and (b) copies of all other documents relating to such Liquidity Put Notice, including, without limitation, any information provided to SFEC by the Texas General Partner or the Georgia General Partner in respect thereof. All Liquidity Put Notices shall designate SFEC, acting on behalf of the Texas Acquisition Subsidiaries 43 and the Georgia Acquisition Subsidiaries, as applicable, as the recipient of all Notices of Election to Exercise delivered in respect of any such Liquidity Put Notice. 4.2.2 Payment of Put Price. With respect to each Liquidity Put: (a) Not later than 10 Business Days after April 15 of any year in which Unitholders may, pursuant to the Texas Overall Agreement or the Georgia Overall Agreement, as applicable, exercise Liquidity Put rights, SFEC shall, to the extent any Unitholders exercise such rights, furnish to the TW Parties a certificate (each a "Liquidity Put Certificate") of the Chief Financial Officer of SFEC and Holdco, respectively, setting forth the aggregate number of Texas Units or Georgia Units, as the case may be, to be purchased pursuant to such Liquidity Put, the identity of each Unitholder that delivers a Notice of Election to Exercise in connection with such Liquidity Put (each such Unitholder, a "Selling Unitholder"), the Put Price to be paid to each such Selling Unitholder and the aggregate Put Price to be paid to all such Selling Unitholders (the "Aggregate Liquidity Put Price"). (b) All Texas Units and all Georgia Units for which a valid and appropriate Notice of Election to Exercise is delivered in respect of such Liquidity Put shall, subject to the pro-ration cut-back provisions of Section 3.3(b) of the Texas Overall Agreement and the Georgia Overall Agreement, respectively be purchased by SFOT Acquisition II (the "Texas Units Purchaser") or SFOG Acquisition B (the "Georgia Units Purchaser"), as applicable, unless the parties otherwise agree. (c) Not later than two Business Days prior to the Liquidity Put Settlement Date applicable to such Liquidity Put, (i) the Holdco Parties shall (for 44 the sole and exclusive benefit of the TW Parties only) pay to the Texas Units Purchaser or the Georgia Units Purchaser, as applicable, the Aggregate Liquidity Put Price for such Liquidity Put in immediately available funds in United States Dollars in an account of such Texas Units Purchaser or Georgia Units Purchaser, as the case may be. The Texas Units Purchaser or the Georgia Units Purchaser, as applicable, shall use such funds to purchase from and pay the applicable Put Price (or portion thereof) to each Selling Unitholder in respect of such Selling Unitholder's Texas Units or Georgia Units set forth in the Notice of Election to Exercise delivered by such Selling Unitholder in connection with such Liquidity Put. By virtue of the Beneficial Share Assignment, unless a Triggering Default occurs and is continuing, all cash flow derived from the Units acquired pursuant to this Section 4.2 shall be paid over to Holdco upon receipt by TW-SPV Co. thereof. 4.3 Procedures Relating to Accelerated Puts. 4.3.1 Notice of an Accelerated Put. If at any time there shall occur an event which requires the Texas Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries, as the case may be, to purchase Units pursuant to an Accelerated Put (as defined in Section 6.1 of the Texas Acquisition Subsidiaries Guarantee and the Georgia Acquisition Subsidiaries Guarantee, respectively), then the following shall apply: (a) The TW Parties shall make available to the Georgia Units Purchaser sufficient funds to purchase from and pay to each Eligible Unitholder the Accelerated Put Price applicable to such Accelerated Put. The parties 45 hereby agree to take all actions, and execute all amendments to this Agreement and the Beneficial Share Assignment, reasonably necessary to cause the Georgia Units Purchaser to assign to TWE all cash flow derived from the Georgia Units (the "Georgia AP Units Cash Flow Assignment") purchased pursuant to an Accelerated Put (collectively, "Georgia AP Units"). All Georgia AP Units held by the Georgia Units Purchaser and TWE's rights to the cash flow derived from such Georgia AP Units shall be subject to the provisions of clause (b) of this Section 4.3.1. (b) On the Liquidity Put Settlement Date for each Liquidity Put following the purchase of Georgia AP Units pursuant to clause (a) above, Holdco shall pay to the TW Parties an amount equal to the product of (i) Liquidity Put Number for such Liquidity Put, less any Georgia Units that are actually tendered pursuant to such Liquidity Put (but in no event greater than the number of Georgia AP Units in respect of which payments have not been made by Holdco hereunder (the "Repaid Georgia AP Units")), multiplied by (ii) the lesser of (x) the Put Price for such Liquidity Put (as such Put Price is determined in accordance with Section 3.2 of the Georgia Overall Agreement) and (y) the applicable Accelerated Put Price. Upon any such payment, the Repaid Georgia AP Units shall no longer be subject to the Georgia AP Units Cash Flow Assignment. (c) The TW Parties shall make available to the Texas Units Purchaser sufficient funds to purchase from and pay to each Eligible Unitholder the Accelerated Put Price applicable to such Accelerated Put. The parties hereby agree to take all actions, including executing all amendments to this Agreement and the 46 Beneficial Share Assignment, reasonably necessary to cause the Texas Units Purchaser to assign to TWE all cash flow derived from the Texas Units (the "Texas AP Units Cash Flow Assignment") purchased pursuant to an Accelerated Put (collectively, "Texas AP Units"). All Texas AP Units held by the Texas Units Purchaser and TWE's rights to the cash flow derived from such Texas AP Units shall be subject to the further provisions of clause (d) of this Section 4.3.1. (d) On the Liquidity Put Settlement Date for each Liquidity Put following the purchase of Texas AP Units pursuant to clause (c) above, Holdco shall pay to the TW Parties an amount equal to the product of (i) Liquidity Put Number for such Liquidity Put, less any Texas Units that are actually tendered pursuant to such Liquidity Put (but in no event greater than the number of Texas AP Units in respect of which payments have not been made by Holdco hereunder (the "Repaid Texas AP Units")), multiplied by the lesser of (x) the Put Price for such Liquidity Put (as such Put Price is determined in accordance with Section 3.2 of the Texas Overall Agreement) and (y) the applicable Accelerated Put Price. Upon any such payment, the Repaid Texas AP Units shall no longer be subject to the Texas AP Units Cash Flow Assignment. (e) Solely for all income tax and accounting purposes during the period the cash flow from the Georgia AP Units is assigned to TWE pursuant to the Georgia AP Units Cash Flow Assignment, TWE shall be deemed to be the owner of such Georgia AP Units and as such owner shall be deemed to transfer such Georgia AP Units to the Georgia Units Purchaser pursuant to Section 4.3.1(b) 47 above at such time as the Georgia AP Units are no longer subject to the Georgia AP Units Cash Flow Assignment. Solely for accounting and all income tax purposes during the period the cash flow from the Texas AP Units is assigned to TWE pursuant to the Texas AP Units Cash Flow Assignment, TWE shall be deemed to be the owner of such Texas AP Units and as such owner shall be deemed to transfer of such Texas AP Units to the Texas Units Purchaser pursuant to Section 4.3.1(d) above at such time as the Texas AP Units are no longer subject to the Texas AP Units Cash Flow Assignment. The parties agree to report and otherwise take actions consistent with the foregoing. 4.4 Procedures Relating to End-of-Term Options. The following provisions shall apply to any End-of-Term Option, other than an Accelerated End-of-Term Option under Section 7.7 of the Texas Overall Agreement, which shall be subject to Section 4.5 hereof. 4.4.1 End-of-Term Option Notices. If the Holdco Parties desire to have the Georgia Units Purchaser or the Texas Units Purchaser exercise the End-of-Term Option under the Georgia Overall Agreement and the Texas Overall Agreement, respectively, then, not later than 30 days prior to the applicable End-of-Term Option Exercise Date, the Holdco Parties shall give written notice (an "ETO Exercise Notice") to the Georgia Units Purchaser or Texas Units Purchaser, as applicable (with a copy of such notice to the TW Parties), instructing the Georgia Units Purchaser or the Texas Units Purchaser, as the case may be, to exercise such End-of-Term Option, such notice to set forth the date upon which such End-of-Term Option shall be exercised and 48 include forms of all notices or such other information necessary to effect the exercise of the relevant End-of-Term Option. If any such End-of-Term Option shall lapse without the exercise thereof, the rights and responsibilities with respect to the Units so affected shall be as otherwise provided in this Agreement and the disposition of the Georgia Park and the Texas Park shall be as provided in the Georgia Overall Agreement and the Texas Overall Agreement, respectively. Upon exercise of an End-of-Term Option, the following shall apply: 4.4.2 Actions in respect an End-of-Term Option. (a) With respect to an End-of-Term Option under the Georgia Overall Agreement, provided the Holdco Parties have given a valid and effective ETO Exercise Notice, the Holdco Parties shall have the right and obligation to administer, observe, comply with and perform all obligations of the Georgia Units Purchaser under such End-of-Term Option and shall, not later than three Business Days prior to the End-of-Term Option Settlement Date, pay to the Georgia Units Purchaser (in immediately available funds in United States Dollars in the account of the Georgia Units Purchaser designated by the TW Parties) the Aggregate Georgia-End-of-Term Option Payment. (b) With respect to an End-of-Term Option under the Texas Overall Agreement, provided the Holdco Parties have given a valid and effective ETO Exercise Notice, the Holdco Parties shall have the right and obligation to administer, observe, comply with and perform all obligations of the Texas Units Purchaser under such End-of-Term Option and shall, not later than three Business Days prior to the 49 End-of-Term Option Settlement Date, pay to the Texas Units Purchaser (in immediately available funds in United States Dollars in the account of such Texas Units Purchaser designated by the TW Parties) the Aggregate Texas End-of-Term Option Payment. 4.4.3 Casualty or Loss Accelerated End-of-Term Option. If an End-of-Term Option is deemed accelerated and exercised pursuant to Section 7.6 or 8.6 of the Texas Overall Agreement and Georgia Overall Agreement, respectively, then the Holdco Parties shall be deemed to have given an ETO Exercise Notice in respect of such End-of-Term Option, shall observe, comply with and perform all of the obligations of the applicable Acquisition Subsidiary in respect of such End-of-Term Option and shall undertake the actions described in Sections 4.4.2(a) and 4.4.2(b), as applicable. 4.5 Procedures Relating to An Accelerated End-of-Term Option. 4.5.1 End-of-Term Option Notices. If at any time prior to the 90th day immediately preceding the End-of-Term Option Exercise Date (the "Accelerated Option Notice Date"), the Texas Units Purchaser or affiliates thereof, or the Holdco Parties, or affiliates thereof, shall have acquired all of the Texas Units and the Holdco Parties desire to have the Texas Units Purchaser accelerate the End-of-Term Option as provided under Section 7.7 of the Texas Overall Agreement (an "Accelerated End-of-Term Option"), the Holdco Parties shall by written notice (the "Accelerated End-of-Term Option Notice") to the Texas Units Purchaser, given not later than the Accelerated Option Notice Date (with a copy to the TW Parties), instruct 50 Texas Units Purchaser to effect such Accelerated End-of-Term Option. The Accelerated End-of-Term Option Notice shall set forth the date upon which the Accelerated End-of-Term Option is to be effected and shall include forms of all notices and such other information necessary to effect the Accelerated End-of-Term Option in compliance with the Texas Overall Agreement. If the Holdco Parties shall request the Texas Units Purchaser to effect the Accelerated End-of-Term Option, the following shall apply: 4.5.2 Actions in respect an Accelerated End-of-Term Option. Provided the Holdco Parties shall have delivered a valid and effective Accelerated End-of-Term Option Notice on or prior to the Accelerated Option Notice Date, the Holdco Parties shall have the right and obligation to administer, observe, comply with and perform all obligations of the Texas Units Purchaser with respect to the Accelerated End-of-Term Option. In furtherance of the foregoing, not later than three Business Days prior to the End-of-Term Option Settlement Date, the Holdco Parties shall pay to the Texas Units Purchaser (in immediately available funds in United States Dollars in the account of such Texas Units Purchaser designated by the TW Parties) all sums necessary to acquire the interests of each applicable general partner pursuant to the Accelerated End-of-Term Option provisions of the Texas Overall Agreement. 4.6 Certain Actions Following a Triggering Default. Without limiting the obligations of the Holdco Parties hereunder, following and during the continuation of a Triggering Default, the TW Parties and TW-SPV Co. may take all 51 action necessary to permit the Acquisition Companies to purchase Units pursuant to the terms of the Georgia Agreements and the Texas Agreements. 4.7 Certain Third Party Claims. (a) The Holdco Parties shall indemnify and hold harmless the Acquisition Companies and the TW Parties from and against any Losses arising out of or relating to actions or claims brought by or on behalf of Unitholders in connection with the Acquisition Companies' purchase of Units and their performance of obligations, from and after the Effective Time of the Mergers, under Articles III and VIII of the Georgia Overall Agreement and Articles III and VII of the Texas Overall Agreement. (b) The TW Parties shall indemnify and hold harmless the Holdco Parties from and against any Losses arising out of or relating to actions or claims brought by or on behalf of Unitholders in connection with the Acquisition Companies' purchase of Units and their performance of obligations, prior to the Effective Time of the Mergers, under Articles III and VIII of the Georgia Overall Agreement and Articles III and VII of the Texas Overall Agreement. ARTICLE 5 REPRESENTATIONS AND WARRANTIES 5.1 Representations and Warranties of Holdco and GP Holdings. Holdco and GP Holdings, jointly and severally, represent and warrant to the TW Parties that: 52 5.1.1 Corporate Existence and Power. Each of Holdco and GP Holdings is duly organized and existing in good standing under the laws of its jurisdiction of incorporation, and has all corporate power and authority and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 5.1.2 Corporate and Governmental Authorization; Contravention. The execution, delivery and performance by each of Holdco and GP Holdings of this Agreement are within its corporate power, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under any provision of, applicable law or regulations or the Organizational Documents of Holdco or GP Holdings or any agreement, judgment, injunction, order, decree or other instrument binding upon Holdco or GP Holdings or its assets. 5.1.3 Binding Effect. This Agreement constitutes a valid and binding agreement of each of Holdco and GP Holdings, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting enforcement of creditors' rights generally and general principles of equity (whether considered in a proceeding at law or in equity). 5.2 Representations and Warranties of the TW Parties. TWX and TWE, jointly and severally, represent and warrant to Holdco and GP Holdings that: 53 5.2.1 Corporate Existence and Power. Each of TWX and TWE is duly organized and existing in good standing under the laws of its jurisdiction of incorporation or organization, and has all requisite power and authority and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 5.2.2 Corporate and Governmental Authorization; Contravention. The execution, delivery and performance by each of TWX and TWE of this Agreement are within its corporate or partnership power, as applicable, have been duly authorized by all necessary corporate or partnership action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under any provision of, applicable law or regulations or the Organizational Documents of TWX or TWE, or any agreement, judgment, injunction, order, decree or other instrument binding upon TWX or TWE or its assets. 5.2.3 Binding Effect. This Agreement constitutes a valid and binding agreement of each of TWX and TWE, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting enforcement of creditors' rights generally and general principles of equity (whether considered in a proceeding at law or in equity). 5.3 Representations and Warranties of the Six Flags Parties. Each of the Six Flags Parties, jointly and severally, represents and warrants, that: 54 5.3.1 Corporate Existence and Power. Each such Six Flags Party is duly organized and existing in good standing under the laws of its jurisdiction of incorporation or organization, and has all requisite power and authority and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 5.3.2 Corporate and Governmental Authorization; Contravention. The execution, delivery and performance by each such Six Flags Party of this Agreement are within its corporate or partnership power, as applicable, have been duly authorized by all necessary partnership or corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under any provision of, applicable law or regulations or the Organizational Documents of such Six Flags Party or any agreement, judgment, injunction, order, decree or other instrument binding upon such Six Flags Party or its assets. 5.3.3 Binding Effect. This Agreement constitutes a valid and binding agreement of each such Six Flags Party, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting enforcement of creditors' rights generally and general principles of equity (whether considered in a proceeding at law or in equity). 5.3.4 Stock Ownership of Certain Subsidiaries. Schedule 5.3.4 lists at the Effective Time of the Mergers (i) the authorized number of shares of each 55 class or series of capital stock or other equity interest of each of the Acquisition Companies; (ii) the number of issued and outstanding shares of each such class or series or other equity interest; and (iii) the names of the record owners of the capital stock of, or equity interest in, each such entity and the number of shares of such capital stock or the percentage of such equity interest owned by them. 5.3.5 Effective Time of Representations and Warranties. The representations and warranties of each Six Flags Party shall be deemed to be made to (i) the Holdco Parties prior to the Effective Time of the Mergers and (ii) the TW Parties immediately following the Effective Time of the Mergers. ARTICLE 6 COVENANTS 6.1 Covenants of the Holdco Parties. In order to induce the TW Parties to enter into this Agreement and the Merger Agreement, the Holdco Parties, as applicable, further covenant and agree as follows: 6.1.1 Maintenance of Ownership. (a) From and after the date hereof and until such time as all issued and outstanding Zero Coupon Notes have been paid in full or SFEC shall have effected a Covenant Defeasance with respect to the Zero Coupon Notes Indenture, (i) SFEC shall not (and the Holdco Parties shall cause SFEC not to) Transfer any interest in the capital stock of SFTP; and (ii) SFTP shall not (and the Holdco Parties shall cause SFTP not to) Transfer any SF Theme Park or any material portion thereof 56 (it being understood that the sale or disposition of a ride or attraction in good faith in the ordinary course of business shall for purposes of this Section 6.1 not be deemed a material portion of an SF Theme Park) in any transaction or series of related transactions; provided, however, that (A) Liens may be granted by SFEC and its Subsidiaries in (i) the capital stock of SFTP or any Subsidiary of SFTP or (ii) any SF Theme Park or material portion thereof, in each case solely in connection with bona fide (x) borrowings from an investment bank, a commercial bank, insurance company or similar institutional lender or (y) debt issuances to Persons unaffiliated with Holdco, in each case under any Senior Indebtedness of SFEC or its Subsidiaries permitted under Section 6.1.2 and (B) Liens securing Senior Indebtedness may be foreclosed. (b) Following the repayment in full of all issued and outstanding Zero Coupon Notes or upon the happening of a Covenant Defeasance with respect to the Zero Coupon Notes Indenture, SFEC may not Transfer any SF Theme Park or material portion thereof, unless, (A) such Transfer is a Lien securing Senior Indebtedness or (B) (i) such Transfer is a sale on arm's-length terms to an unaffiliated third party or, with the consent of the TW Parties (such consent not to be unreasonably withheld) to affiliates of SFEC, in each case for fair value in cash, (ii) the net proceeds of such Transfer are used to repay Indebtedness of SFEC, or its Subsidiaries and (iii) after giving effect to such Transfer, the Net Worth of SFEC shall not be less than the Minimum Net Worth; provided, further, that SFEC may make Transfers pursuant to this clause (b) without complying with the foregoing clause (iii), only if (A)(x) such 57 Transfer is required to cure a default or an event which, with the giving of notice or the passage of time, would become a default under, or otherwise maintain compliance with, the financial covenants contained in the agreements governing any of SFEC's or its Subsidiaries' Senior Indebtedness that could not reasonably be cured or complied with without such Transfer and (y) such Transfer otherwise complies with clauses (i) and (ii) above, or (B) such Transfer is a foreclosure of Lien. Following the repayment of any Indebtedness required by the foregoing clause (ii), SFEC may not make any Restricted Payment if after giving effect to such Restricted Payment, (i) SFEC's consolidated indebtedness is then greater than the Designated Leverage Amount and (ii) SFEC's Net Worth would be less than the Minimum Net Worth. (c) At least five Business Days prior to any Transfer of a SF Theme Park or any material portion thereof or the making of any Restricted Payment following any such Transfer, the Holdco Parties shall provide the TW Parties with written notice thereof including a certificate of the chief financial officer of Holdco certifying as to the compliance of such transfer with the provisions of Sections 6.1.1, including a calculation, if applicable, of the Net Worth of SFEC or the Designated Leverage Amount showing with reasonable specificity the changes from Net Worth shown on SFEC's most recent audited balance sheet. (d) For purposes of this Section 6.1.1, Transfers shall not include the granting of Permitted Liens. 6.1.2 Indebtedness. SFEC and its Subsidiaries shall not (i) guarantee any Indebtedness of any Person other than Indebtedness of SFEC or any 58 of its Subsidiaries or (ii) secure any Indebtedness of any Person (other than SFEC or any of its Subsidiaries) by a Lien upon or in property owned by SFEC or any of its Subsidiaries. SFEC and its Subsidiaries shall not incur or suffer to exist any Indebtedness if such Indebtedness is guaranteed by any Person (other than SFEC and its Subsidiaries) or secured by a Lien upon or in assets owned by such Person other than Indebtedness of SFEC, the proceeds of which are used solely to effect the Covenant Defeasance. 6.1.3 Amendment of Documents Relating to the Required Obligations. SFEC shall not, and shall not permit any of its Subsidiaries to, amend or otherwise change the terms of or waive any rights under any of the Relevant Agreements without the prior written consent of the TW Parties, which consent shall not be unreasonably withheld or delayed; provided that the TW Parties may not withhold their consent if the effect of any such amendment, change or waiver would not increase the obligations of the TW Parties under any Relevant Agreement or otherwise would adversely affect the obligations of the TW Parties under or in respect of the TW Guarantee, the Texas Guarantee or the Georgia Guarantee. 6.1.4 Repayment of Zero Coupon Notes. Upon the acceleration or at Stated Maturity of the Zero Coupon Notes, SFEC shall, and Holdco shall cause SFEC to (in each case for the sole and exclusive benefit of the TW Parties only) pay all amounts due in respect of the Zero Coupon Notes and any other amounts due and payable under the Zero Coupon Notes Indenture, including without limitation, the Principal Amount, Accreted Value Amount and Default Interest, if any, in respect of 59 each such Zero Coupon Note; and, in furtherance of SFEC's obligation under this Section 6.1.4, SFEC shall cause SFTP to provide all funds necessary for SFEC to fulfill such obligations, including, without limitation, the declaration of a one-time dividend, or the making of a one-time loan, by SFTP to SFEC in accordance with Section 4.04(3)(b)(vi) of the Indenture, dated June 23, 1995, among SFTP, SFOG, SFOT, Inc. and S.F. Partnership and UST, as amended. The Holdco Parties hereby acknowledge and agree that any refinancing of the Zero Coupon Notes shall be effected without any guarantee (or similar undertaking) of such refinancing by TWE or any affiliate thereof. 6.1.5 Other Agreements. Unless a Covenant Defeasance has been effected or the Zero Coupon Notes have otherwise been repaid in full, none of the Holdco Parties shall enter into or become obligated under any agreement the terms and provisions of which would contractually restrict or prohibit the ability of SFTP to make the restrictive payments contemplated by Section 4.04(b)(vii) under the Indenture, dated as of June 23, 1995, as amended (the "12-1/4% Debentures Indenture") , of SFTP relating to its 12-1/4% Senior Subordinated Discount Notes due 2005 (the "12-1/4% Debentures"). 6.1.6 SFEC Subsidiaries. The Holdco Parties, as applicable, shall, subject to the Holdco Parties' being reasonably satisfied as to compliance with the 12-1/4% Debenture Indenture, cause each direct or indirect Subsidiary of SFEC not currently a party hereto (each, a "SFEC Subsidiary") to execute and deliver to the TW Parties an instrument in form and substance reasonably satisfactory to the TW Parties 60 pursuant to which it will become a party to this Agreement and agree that all such SFEC Subsidiaries shall be bound by the terms of this Agreement; provided that, the foregoing requirement shall not apply to any SFEC Subsidiary that (a) holds immaterial assets and (b) is not liable with respect to any material liabilities. For purposes of this agreement the terms "SF Subsidiaries," "Six Flags Parties" and "Holdco Parties" shall automatically be amended to include such SFEC Subsidiary. If any SFEC Subsidiary is unable to become a party to this Agreement pursuant to the foregoing provisions of this Section 6.1.6, then such Subsidiary shall not (and the Holdco Parties shall cause such Subsidiary not to) incur any Indebtedness other than guarantees of Senior Indebtedness incurred by SFTP or SFEC. 6.1.7 Amendment of Certain Organizational Documents; No Liens; No Transfers. The Holdco Parties shall not, and shall not permit GP Holdings to, amend the Organizational Documents of GP Holdings. The Holdco Parties will not take any action that will result in a Lien being imposed upon the Beneficial Shares, the capital stock of the Acquisition Subsidiaries or the Units, other than pursuant to the Georgia Acquisition Subsidiaries Guarantee and the Texas Acquisition Subsidiaries Guarantee. None of the Holdco Parties shall Transfer any interest in the Beneficial Shares or any shares of capital stock of the Acquisition Companies or GP Holdings or any interests in any of the foregoing. 6.1.8 Repayment of SFOG B Holdings, SFOT II Holdings, SFOG A Holdings, SFOT I Holdings, SFOG, and SFT Holdings Debt. Immediately following the closing of the transactions contemplated by the Merger Agreement and 61 the execution and delivery of the Beneficial Share Assignment, Holdco shall repay, or cause to be repaid, the indebtedness (and satisfy, or cause to be satisfied, any related liabilities and obligations) incurred by SFOG B Holdings, SFOT II Holdings, SFOG A Holdings, SFOT I Holdings, SFOG and SFT Holdings pursuant to Sections 3.1(a) through (f), respectively. 6.1.9 Mergers. No Holdco Party shall merge or consolidate with or into, or transfer all or substantially all of its assets to, any Person, unless the surviving entity or transferee, as the case may be, executes an instrument, in form and substance reasonably satisfactory to the TW Parties, pursuant to which it assumes all of the obligations of such Holdco Party hereunder. 6.2 Covenants of the TW Parties. In order to induce the Holdco Parties to enter into this Agreement and the Merger Agreement, the TW Parties further agree as follows: 6.2.1 Non-Compete Provisions. The TW Parties shall, and shall cause the Warner Bros. division of TWE (or any successor to Warner Bros.) to observe and comply with the non-competition provisions set forth in Article V of the Georgia Guarantee and the Texas Guarantee, respectively. 6.2.2 TWE Zero Coupon Notes Covenants. Subject to the provisions of Section 6.1.4 hereof, until the earlier to occur of (i) payment in full of all issued and outstanding Zero Coupon Notes or (ii) a Covenant Defeasance with respect to the Zero Coupon Notes Indenture, TWE shall, and TWX shall cause TWE to, observe, perform and comply with in all material respects the provisions set forth in 62 Sections 803, 1004, 1008, 1009, 1010 and 1011 (to the extent arising out of a default by TWE and not a default by SFEC) of the Zero Coupon Notes Indenture. 6.2.3 Amendment of Certain Organizational Documents. Prior to the Effective Time of the Mergers, SFEC shall cause the Acquisition Companies, and TWE shall cause TW-SPV Co. and the Acquisition Companies to amend their respective Organizational Documents to include the provisions set forth in Exhibit A hereto, and the TW Parties and the Holdco Parties shall not permit further amendments of such Organizational Documents. 6.2.4 Ownership of the Acquisition Subsidiaries. None of the TW Parties shall Transfer the GP Holdings Preferred Stock, or any interest therein, any interest in TW-SPV Co., or the Acquisition Companies or the Georgia AP Units Cash Flow Assignment or the Texas AP Units Cash Flow Assignment or otherwise take any action that would violate the Georgia Agreements or the Texas Agreements; provided, that TWE may Transfer interests in TW-SPV Co. to TWX or one or more wholly-owned Subsidiaries thereof. The TW Parties will not take any action that would result in a Lien being imposed on the Beneficial Shares, the Georgia AP Units Cash Flow Assignment, the Texas AP Units Cash Flow Assignment, the capital stock of the Acquisition Subsidiaries or the Units, other than pursuant to the Georgia Acquisition Subsidiaries Guarantee and the Texas Acquisition Subsidiaries Guarantee. The TW Parties hereby covenant and agree to cause TW-SPV Co. not to engage in any business or other activity other than the record ownership of the Beneficial Shares and the activities related thereto and to otherwise comply with its obligations hereunder. 63 6.2.5 Ownership of Texas Units and Georgia Units. None of the TW Parties, TW-SPV Co., the Acquisition Companies or the Person entitled to vote the Beneficial Shares, to the extent it is within their respective control, and the Holdco Parties shall permit the Transfer of any interest in any Texas Units or Georgia Units held by the Acquisition Companies. ARTICLE 7 INDEMNIFICATION 7.1 Obligation of the Holdco Parties to Indemnify. Subject to the further terms of this Article 7, each of the Holdco Parties, jointly and severally, agrees to indemnify, defend and hold harmless each of TWE and TWX from and against all Losses based upon, arising out of, relating to or otherwise in respect of (i) the failure of any Holdco Party or Obligor, as applicable, to perform on a full and timely basis any of the Required Obligations, (ii) the failure of any Holdco Party to perform on a full or timely basis its obligations under this Agreement, or under the Subordinated Indemnity Escrow Agreement, (iii) payments made by the TW Parties in respect of the Georgia Guarantee or the Texas Guarantee (other than payments made in respect of any Excluded Obligations), (iv) payments made by the TW Parties or their affiliates in respect of any Required Obligations; and (v) any breach or violation of any covenants, representations or agreements of the Holdco Parties under this Agreement. 7.2 Obligation of the TW Parties to Indemnify. Subject to the further terms of this Article 7, each of TWE and TWX, jointly and severally, agrees to 64 indemnify, defend and hold harmless each of the Holdco Parties from and against all Losses based upon, arising out of, relating to or otherwise in respect of any breach or violation of any covenants, representations or agreements of the TW Parties under this Agreement. 7.3 Procedures Relating to Indemnification. The party making a claim under this Article 7 is referred to as the "Indemnitee," and the party against whom such claims are asserted under this Article 7 is referred to as the "Indemnitor": 7.3.1 Notice of Asserted Third Party Liability. With respect to third party claims, all claims for indemnification by any Indemnitee under this Article 7 shall be asserted and resolved as follows: (a) Promptly after receipt by an Indemnitee of notice of any demand, claim or circumstances which, with the lapse of time, would give rise to a claim or the commencement (or the threatened commencement) of any action, proceeding or investigation (an "Asserted Third Party Liability") that may result in Losses which are subject to indemnification under Section 7.1 or 7.2, as applicable, the Indemnitee shall give notice thereof (the "Claims Notice") to the Indemnitor. The Claims Notice shall describe the Asserted Third Party Liability in reasonable detail, and shall indicate the amount (estimated, if necessary, and to the extent feasible) of the Losses that have been or may be suffered by the Indemnitee. The failure of an Indemnitee to provide a Claims Notice with reasonable promptness shall not adversely affect any indemnification obligations hereunder except to the extent that the Indemnitor is actually prejudiced thereby. 65 7.3.2 Procedures with Respect to Asserted Third Party Liabilities. The Indemnitor may elect to compromise or defend, at its own expense and by its own counsel, any Asserted Third Party Liability. If the Indemnitor elects to compromise or defend such Asserted Third Party Liability, it shall, within 30 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 Indemnitor, in the compromise of, or defense against, such Asserted Third Party Liability. If the Indemnitor elects not to compromise or defend the Asserted Third Party Liability, fails to notify the Indemnitee of its election as herein provided or contests its obligations to defend under this Agreement, the Indemnitee may pay, compromise or defend such Asserted Third Party Liability (at the Indemnifying Party's sole cost and expense). Notwithstanding the foregoing, neither the Indemnitor nor the Indemnitee may settle or compromise any claim over the objection of the other; provided, however, that if the settlement or compromise does not result in any liability to the Indemnitor, consent to settlement or compromise shall not be unreasonably withheld. In any event, the Indemnitee and the Indemnitor may participate at their own expense, in defense of such Asserted Third Party Liability. If the Indemnitor chooses to defend any claim, the Indemnitee shall make available to the Indemnitor any books, records or other documents within its control that are necessary or appropriate for such defense (in the judgment of counsel engaged by the Indemnitor). The Indemnitee has the right to employ its own counsel in any compromise of, or defense against, any Asserted Third Party Liability, or in 66 connection with the Indemnitee's provision of reasonable cooperation and assistance to the Indemnitor or the Indemnitor's counsel as provided above, but the fees, expenses and other charges of such counsel employed by the Indemnitee will be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized in writing by the Indemnitor or (ii) the Indemnitor has not in fact employed counsel to compromise or defend against the Asserted Third Party Liability within a reasonable time, in each of which cases the reasonable fees, disbursements and other charges of counsel retained by the Indemnitee will be at the expense of the Indemnitor. It is understood that the Indemnitor shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time retained by the Indemnitee unless the employment of more than one counsel has been authorized in writing by the Indemnitor. 7.3.3 Direct Claim. In the event that an Indemnitee has a claim for indemnification that does not involve a claim by a third party (a "Direct Claim"), the Indemnitee shall notify the Indemnitor of such Direct Claim at the time such Indemnitee desires to proceed with such claim, specifying, to the extent known, the nature, circumstances and amount of such Direct Claim (a "Direct Claim Notice"), provided, however, the failure of an Indemnitee to provide such Direct Claim Notice with reasonable promptness shall not adversely affect any indemnification obligations hereunder, which shall survive until such claim is resolved hereunder. 67 7.3.4 Escrow Agreement. Holdco, TWE and TWX covenant and agree to enter into concurrently with the execution of this Agreement an escrow agreement (the "Subordinated Indemnity Escrow Agreement") pursuant to which an escrow agent (the "Escrow Agent") reasonably satisfactory to the TW Parties shall maintain an escrow fund, the funding for which shall be determined on an annual basis and shall equal the sum of the "Escrow Amounts" in respect of each of Texas Fund and Georgia Fund. For purposes of the Subordinated Indemnity Escrow Agreement, "Escrow Amounts" shall mean, for each year, with respect to each of Six Flags Over Texas Fund, Ltd. and Six Flags Fund, Ltd. (L.P.) (with reference to the Texas Overall Agreement and the Georgia Overall Agreement, respectively), (x) the excess of (i) the sum of (A) the "Minimum Amount" for such year, plus (B) the "Base Rent" for such year, over (ii) twice the earnings before depreciation and amortization and after minimum mandatory capital expenditures and cash interest expense for Texas Fund and Georgia Fund, as applicable, for the prior year, multiplied by (y) the percentage of the Texas Units or Georgia Units, as the case may be, owned by Persons other than the Acquisition Companies. The Escrow Amounts shall be determined not later than March 31 of each such year7/ and, without limiting any of Holdco's other obligations, Holdco shall deposit such amounts as shall be necessary to equal the Escrow Amounts with the Escrow Agent within five Business Days thereafter, and all amounts held in the Escrow Account in excess of the Escrow Amount shall be returned promptly to - -------- 7/ With respect to determining payments for the first year, 1998 numbers for Texas park will be doubled. Actual 1997 and 1998 results for Georgia will be used. 68 Holdco. All amounts held in escrow shall be used, at the election of the TW Parties, to satisfy amounts owing to the TW Parties under the this Agreement, but only after all cash flow derived from the Texas Units and the Georgia Units then subject to the Beneficial Share Assignments have been applied to such amounts so owing. ARTICLE 8 SUBORDINATION 8.1 Subordination Agreement. (a) Notwithstanding any provision to the contrary set forth herein, the parties agree that all monetary obligations of Holdco pursuant to this Agreement (the "Subordinated Obligations") including, without limitation, all obligations of Holdco with respect to the Required Obligations as set forth in Sections 2.1 through 2.3 hereof, its obligations in respect of the Zero Coupon Notes pursuant to Section 6.1.4 hereof, and its indemnification obligations set forth in Section 7.1 hereof, shall be subordinated to the prior payment in full in cash of all obligations with respect to the Holdco Notes (including interest accruing on such Holdco Notes after the commencement of a bankruptcy case or proceeding at the contract rate whether or not a claim for such interest is an allowed claim in such case or proceeding), and agree that no payment of, on, or on account of, the Subordinated Obligations shall be made by Holdco, if (i) a default has occurred and is continuing with respect to any payment obligation on or with respect to the Holdco Notes; or (ii) a default, other than a payment default, on the Holdco Notes occurs and is continuing that then permits, or with the passage of time or the giving of notice would permit, 69 holders of the Holdco Notes to accelerate their maturity and the TW Parties receive a notice of default (a "Payment Blockage Notice") from a Person authorized to give it under the Holdco Notes or the Holdco Notes Indenture. No new Payment Blockage Period (defined below) may be commenced unless and until 365 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice, and in no event may the total number of days during which any Payment Blockage Period is in effect exceed 179 days in the aggregate during any 365 day consecutive period. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. Without limiting the foregoing, a Payment Blockage Notice shall remain in effect until the earlier of (x) the date on which such nonpayment default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received or (z) such Payment Blockage Notice shall be rescinded by written notice to the TW Parties from the holders of a majority of the outstanding principal amount of the Holdco Notes or their trustee or authorized representative who delivered such notice ("Payment Blockage Period"). (b) In the event that either (i) a default shall have occurred and be continuing with respect to any payment obligation on or with respect to the Holdco Notes or (ii) a Payment Blockage Period is in effect, then, notwithstanding the foregoing provisions, any payment received by the TW Parties in respect of the Subordinated Obligations in contravention of the provisions of the foregoing clause (a) 70 shall, until such default has been cured or waived or such Payment Blockage Period has expired, as applicable, be held in trust for the benefit of and shall, to the extent that at such time all Holdco Notes have not been paid or provided for in full, be paid over to the trustee, or equivalent thereof, in respect of the Holdco Notes, for application to the payment of the Holdco Notes until such default has been cured or waived, such Payment Blockage Period shall have expired or until all such Holdco Notes shall have been paid in full, whichever shall occur first. 8.2 Dissolution, Etc. In the event of any dissolution, winding-up, liquidation or reorganization of Holdco (whether voluntary or involuntary and whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshaling of the assets and liabilities of Holdco or otherwise): (a) all obligations with respect to the Holdco Notes shall be indefeasibly paid in full in cash (including interest accruing on such Holdco Notes after the commencement of a bankruptcy case or proceeding at the contract rate whether or not a claim for such interest is an allowed claim in such case or proceeding) before the TW Parties are entitled to receive any payment on or in respect of the Subordinated Obligations (provided that the TW Parties may receive securities ("Eligible Securities") that are subordinated to at least the same extent as the Subordinated Obligations to (a) the Holdco Notes and (b) any securities issued in exchange for Holdco Notes); and (b) in the event that any payment or distribution of assets of Holdco of any kind or character (other than Eligible Securities) shall be received by the 71 TW Parties in respect of the Subordinated Obligations before all Holdco Notes (including, as applicable, interest accruing on, or original issue discount accreting with respect to, such Holdco Notes after the commencement of a bankruptcy case or proceeding at the contract rate whether or not such interest is an allowed claim in such case or proceeding) are indefeasibly paid in full in cash, such payment or distribution shall be received in trust and shall, to the extent that at such time all Holdco Notes have not been indefeasibly paid in full in cash, be paid over to the holders of the Holdco Notes, for application to the payment of obligations with respect to Holdco Notes until all such obligations shall have been indefeasibly paid in full in cash. The consolidation of Holdco with, or the merger of Holdco into, another entity shall not be deemed a dissolution, winding-up, liquidation or reorganization for purpose of these subordination provisions. 8.3 Subrogation. Subject to the Holdco Notes being paid in full in cash or Cash Equivalents, the TW Parties shall be subrogated to the rights of the holders of the Holdco Notes, or their respective representatives, to receive payments or distributions of assets of Holdco applicable to the Holdco Notes until all amounts owing, if any, in respect of the Subordinated Obligations, shall be paid in full, and for the purpose of such subrogation, no payments or distributions to the holders of the Holdco Notes, or their respective representatives, as the case may be, by or on behalf of Holdco or by or on behalf of the TW Parties, which otherwise would have been made to the TW Parties shall, as between Holdco and its creditors, be deemed to be payment by Holdco to or on account of the holders of the Holdco Notes, or their 72 respective representatives, as the case may be, it being understood that these subordination provisions are intended solely for the purpose of defining the relative rights of the TW Parties, on the one hand, and the holders of the Holdco Notes and their respective representatives, on the other hand. 8.4 Obligation to Pay Unconditional. Except as expressly provided herein, nothing in this Article 8 is intended to or shall (i) impair, as between the Holdco Parties and the TW Parties, the obligation of the Holdco Parties, which is absolute and unconditional, to pay and perform the Required Obligations as and when the same shall become due and payable in accordance with the terms of this Agreement or (ii) affect any rights the TW Parties may have to set-off and apply any and all payments received by the Texas Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries in respect of any Texas Units or Georgia Units, respectively, against any and all of the Required Obligations now or hereafter existing. ARTICLE 9 TERMINATION 9.1 Termination. Unless terminated earlier by the written consent of Holdco, SFEC and the TW Parties, on the date (the "Termination Date") upon which no obligations (including the Required Obligations), whether absolute, accrued, contingent, inchoate or otherwise are owing or outstanding under the Relevant Documents (including the Georgia Guarantee and the Texas Guarantee), or this Agreement, the Holdco Parties may request that this Agreement be terminated, in 73 which event, provided the foregoing condition shall have been satisfied, the TW Parties shall agree to such termination and this Agreement shall be terminated effective on the Termination Date. 9.2 Termination of Obligation. The provisions of this Section 9.2 shall survive any termination of this Agreement until the transactions contemplated under this Section 9.2 are completed. At such time as all Texas Units and all Georgia Units are held by one or more of the TW Parties, the Texas Acquisition Subsidiaries, the Georgia Acquisition Subsidiaries and/or Holdco, the parties shall take all reasonable actions to terminate all obligations (including the Required Obligations), whether absolute, accrued, contingent, inchoate or otherwise under the Relevant Agreements (other than the Zero Coupon Note Indenture, but including the Georgia Guarantee and the Texas Guarantee). 9.3 Actions Upon Termination. Upon the termination of this Agreement, TW-SPV Co. shall, and the TW Parties shall cause TW-SPV Co. to, sell, assign, transfer and convey to Holdco or its designee, all right, title and interest of TWE in and to the SFOG BH Capital Stock, the SFOT IIH Capital Stock, the SFOG AH Capital Stock, the SFOT IH Capital Stock and the GP Holdings Preferred Stock in return for payment of $1.00. In furtherance of the foregoing, TWE shall, upon receipt of such payment, deliver to Holdco, or its designee, such certificates (or other indicia of ownership) representing such capital stock, duly endorsed in blank or accompanied by stock powers (or similar documents of conveyance) duly executed in 74 blank, in form for transfer to Holdco, or its designee and with all appropriate stock transfer tax stamps affixed. ARTICLE 10 MISCELLANEOUS 10.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by telecopier (with a confirmed receipt thereof) or registered or certified mail (postage prepaid, return receipt requested), and on the next business day when sent by overnight courier service, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Holdco Parties, to: Premier Parks Inc. 122 East 42nd Street, Suite 4906 New York, New York 10168 Attention: Kieran E. Burke Telecopier: (212) 599-4694 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New Yrk 10022 Attention: Howard Chatzinoff, Esq. Telecopier: (212) 310-8000 and Weil, Gotshal & Manges LLP 100 Crescent Court, Suite 1300 Dallas, Texas 75201-6950 Attention: Glenn D. West, Esq. 75 Telecopier: (214) 746-7700 (b) if to TWE Parties, to: Time Warner Inc. 75 Rockefeller Plaza New York, New York 10019 Attention: Peter R. Haje, Executive Vice President, General Counsel Telecopier: (212) 956-7281 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Robert B. Schumer, Esq. Telecopier: (212) 757-3990 10.2 Notice Under Georgia and Texas Agreements. The parties hereto will take all action necessary to ensure that each of Holdco and the TW Parties receive all notices received or delivered by any party pursuant to the Georgia Agreements and the Texas Agreements. 10.3 Waiver of Compliance; Consents. Any failure of the Holdco Parties, on the one hand, or the TW Parties, on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by Holdco or TWE, respectively, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires 76 or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 10. 10.4 Amendments. Subject to applicable law, this Agreement may be amended, modified or supplemented only by a written agreement signed by each of the parties hereto with respect to any of the terms contained herein. 10.5 Successors and Assigns; No Third Party Beneficiaries. The provisions of this Agreement (including any provision that is expressly by its terms for the sole benefit of or exclusive to a party) shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns; provided that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the written consent of the other parties; provided further that any Person that through a sale or merger succeeds to all or substantially all of the assets of a party to this Agreement shall be deemed a "permitted" successor and assignee of such party. Nothing contained in this Agreement shall be deemed to confer upon anyone other than the parties hereto (and their permitted successors and assigns) any right to insist upon or to enforce the performance or observance of any of the obligations contained herein. 10.6 Waiver of Subrogation; No Contribution. Except with respect to Excluded Obligations, the Holdco Parties shall not exercise and hereby waive any rights that they may now or hereafter acquire against any TW Party, the Texas Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries that arise from the 77 existence, payment, performance or enforcement of the Required Obligations under this Agreement or any Relevant Agreement, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Person against any TW Party, the Texas Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right. 10.7 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the choice of law principles thereof. 10.8 Judicial Proceedings. (a) EACH OF THE PARTIES HERETO AGREES THAT ANY ACTION, SUIT OR PROCEEDING AGAINST ANY OF THE PARTIES HERETO ARISING UNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR A TRANSACTION CONTEMPLATED HEREBY MAY ONLY BE BROUGHT OR ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN RESPECT OF ANY SUCH ACTION, SUIT OR PROCEEDING. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING BY THE MAILING 78 OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PRE-PAID, RETURN RECEIPT REQUESTED, TO SUCH PARTY AT ITS ADDRESSES PROVIDED FOR NOTICES HEREUNDER. (b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING UNDER OR RELATING IN ANY WAY TO DISAGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY COURT LOCATED IN THE STATE OF NEW YORK AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT A COURT LOCATED IN THE STATE OF NEW YORK IS NOT A CONVENIENT FORUM FOR ANY SUCH ACTION, SUIT OR PROCEEDING. 10.9 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 10.10 Offsetting Payments. The parties hereby agree and acknowledge that all dividends and distributions made in respect of the GP Holdings Preferred Stock and all amounts received by the TW Parties in respect of the GP Holdings Preferred Stock upon any voluntary or involuntary liquidation, dissolution or winding up of GP Holdings shall be applied against any amounts due hereunder. 10.11 Interpretation. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement 79 of the parties and shall not in any way affect the meaning or interpretation of this Agreement. All references to the term "as of the date hereof" shall mean the date of this Agreement. 10.12 Entire Agreement. This Agreement (including the schedules, exhibits, documents or instruments referred to herein) constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, among the parties, or between any of them, with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers on the day and year first above written. [Holdco] By: ----------------------------------------- Name: Title: [INSERT OTHER SIGNATORIES] Exhibit A - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SUBORDINATED INDEMNITY AGREEMENT dated ______________, 1998 among PREMIER PARKS INC. and [GP HOLDINGS], TIME WARNER INC., TIME WARNER ENTERTAINMENT COMPANY, L.P. and TW-SPV CO., and SIX FLAGS ENTERTAINMENT CORPORATION, SIX FLAGS THEME PARKS INC., SFOG II, INC., and SFT HOLDINGS, INC. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ------- ARTICLE 1 DEFINED TERMS................................................................... 6 1.1 Definitions..................................................................... 6 1.2 Other Defined Terms............................................................ 24 ARTICLE 2 PERFORMANCE OF OBLIGATIONS..................................................... 28 2.1 Zero Coupon Notes.............................................................. 28 2.2 Georgia Obligations............................................................ 28 2.3 Texas Obligations.............................................................. 29 2.4 Continuing and Irrevocable Obligations......................................... 29 2.5 Nature of Obligations.......................................................... 29 2.6 Authorization.................................................................. 31 2.7 Certain Agreements and Waivers by Each Holdco Party............................ 33 2.8 Duty of Inquiry................................................................ 34 2.9 Bankruptcy No Discharge........................................................ 35 2.10 Limitation on Obligations...................................................... 36 ARTICLE 3 TRANSFERS OF CAPITAL STOCK..................................................... 36 3.1 Capital Stock of SFOG A Holdings, SFOG B Holdings, SFOT I Holdings, SFOT II Holdings, SFOG and SFT Holdings....................................................................... 36 3.2 Preferred Stock of GP Holdings................................................. 39 3.3 Beneficial Assignment of Interests............................................. 39 3.4 Preferred Stock of Acquisition Companies....................................... 40 3.5 Tax Matters.................................................................... 40 ARTICLE 4 LIQUIDITY PUTS; ACCELERATED PUTS; END-OF-TERM OPTIONS............................................................ 41 4.1 General........................................................................ 41 4.2 Procedures Relating to Liquidity Puts.......................................... 42 4.3 Procedures Relating to Accelerated Puts........................................ 45 4.4 Procedures Relating to End-of-Term Options..................................... 48 4.5 Procedures Relating to An Accelerated End-of-Term Option....................... 50 4.6 Certain Actions Following a Triggering Default................................. 51 4.7 Certain Third Party Claims..................................................... 51 ARTICLE 5 REPRESENTATIONS AND WARRANTIES................................................ 52 5.1 Representations and Warranties of Holdco and GP Holdings....................... 52 5.2 Representations and Warranties of the TW Parties............................... 53 5.3 Representations and Warranties of the Six Flags Parties........................ 54 ARTICLE 6 COVENANTS...................................................................... 56 6.1 Covenants of the Holdco Parties................................................ 56 6.2 Covenants of the TW Parties.................................................... 62
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Page ------- ARTICLE 7 INDEMNIFICATION................................................................ 64 7.1 Obligation of the Holdco Parties to Indemnify.................................. 64 7.2 Obligation of the TW Parties to Indemnify...................................... 64 7.3 Procedures Relating to Indemnification......................................... 65 ARTICLE 8 SUBORDINATION.................................................................. 69 8.1 Subordination Agreement........................................................ 69 8.2 Dissolution, Etc............................................................... 71 8.3 Subrogation.................................................................... 72 8.4 Obligation to Pay Unconditional................................................ 73 ARTICLE 9 TERMINATION.................................................................... 73 9.1 Termination.................................................................... 73 9.2 Termination of Obligation...................................................... 74 9.3 Actions Upon Termination....................................................... 74 ARTICLE 10 MISCELLANEOUS.................................................................. 75 10.1 Notices........................................................................ 75 10.2 Notice Under Georgia and Texas Agreements...................................... 76 10.3 Waiver of Compliance; Consents................................................. 76 10.4 Amendments..................................................................... 77 10.5 Successors and Assigns; No Third Party Beneficiaries........................... 77 10.6 Waiver of Subrogation; No Contribution......................................... 77 10.7 Governing Law.................................................................. 78 10.8 Judicial Proceedings........................................................... 78 10.9 Counterparts; Effectiveness.................................................... 79 10.11 Interpretation................................................................. 80 10.12 Entire Agreement............................................................... 80
Exhibits Exhibit A - Organizational Documents Provisions Exhibit B - GP Holdings Preferred Stock Exhibit C - SF Theme Parks Exhibit D - Beneficial Share Assignment Agreement Schedules Schedule 1 - [Intentionally omitted] Schedule 2 - Georgia Agreements Schedule 3 - Texas Agreements Schedule 5.3.4 - Ownership of Acquisition Companies. ii EX-4.(O) 9 INDENTURE-PREMIER PARKS SR. NOTES DUE 2006 Exhibit 4(o) L&W DRAFT 3/18/98 ================================================================================ PREMIER PARKS INC. $280,000,000 __% SENIOR NOTES DUE 2006 ------------------------------- INDENTURE Dated as of __________, 1998 ------------------------------- ------------------------------- THE BANK OF NEW YORK as Trustee ------------------------------- ================================================================================ CROSS-REFERENCE TABLE* (a) Trust Indenture Act Section Indenture Section 310 (a)(1)..........................................................7.10 (a)(2) .............................................................7.10 (a)(3)..............................................................N.A. (a)(4)..............................................................N.A. (a)(5)..............................................................7.10 (i)(b)..............................................................7.10 (ii)(c).............................................................N.A. 311(a)..............................................................7.11 (b).................................................................7.11 (iii(c).............................................................N.A. 312 (a).............................................................2.05 (b).................................................................11.03 (iv)(c).............................................................11.03 313(a)..............................................................7.06 (b)(1)..............................................................10.03 (b)(2)..............................................................7.07 (v)(c)..............................................................7.06; 11.02 (vi)(d).............................................................7.06 314(a)..............................................................4.03; 11.02 (A)(b)..............................................................10.02 (c)(1)..............................................................11.04 (c)(2)..............................................................11.04 (c)(3)..............................................................N.A. (d).................................................................10.03, 10.04, 10.05 (vii)(e)............................................................11.05 (f).................................................................NA 315 (a).............................................................7.01 (b).................................................................7.05, 11.02 (A)(c)..............................................................7.01 (d).................................................................7.01 (e).................................................................6.11 316 (a)(last sentence)..............................................2.09 (a)(1)(A)...........................................................6.05 (a)(1)(B)...........................................................6.04 (a)(2)..............................................................N.A. (b).................................................................6.07 (B)(c)..............................................................2.12 317 (a)(1)..........................................................6.08 (a)(2)..............................................................6.09 (b).................................................................2.04 318 (a).............................................................11.01 (b).................................................................N.A. (c).................................................................11.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. 2 TABLE OF CONTENTS Page ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1 Section 1.01. Definitions..................................................1 Section 1.02. Other Definitions...........................................16 Section 1.03. ............................................................17 Section 1.04. Rules of Construction.......................................17 ARTICLE 2. THE NOTES........................................................17 Section 2.01. Form and Dating.............................................17 Section 2.02. Execution and Authentication................................18 Section 2.03. Registrar and Paying Agent..................................19 Section 2.04. Paying Agent to Hold Money in Trust.........................19 Section 2.05. Holder Lists................................................19 Section 2.06. Transfer and Exchange.......................................19 Section 2.07. Replacement Notes...........................................22 Section 2.08. Outstanding Notes...........................................22 Section 2.09. Treasury Notes..............................................23 Section 2.10. Temporary Notes.............................................23 Section 2.11. Cancellation................................................23 Section 2.12. Defaulted Interest..........................................23 ARTICLE 3. REDEMPTION AND PREPAYMENT........................................24 Section 3.01. Notices to Trustee..........................................24 Section 3.02. Selection of Notes to Be Redeemed...........................24 Section 3.03. Notice of Redemption........................................24 Section 3.04. Effect of Notice of Redemption..............................25 i Section 3.05. Deposit of Redemption Price.................................25 Section 3.06. Notes Redeemed in Part......................................25 Section 3.07. Optional Redemption.........................................26 Section 3.08. Mandatory Redemption........................................26 Section 3.09. Offer to Purchase by Application of Excess Proceeds.........26 ARTICLE 4. COVENANTS........................................................28 Section 4.01. Payment of Notes............................................28 Section 4.02. Maintenance of Office or Agency.............................28 Section 4.03. Reports.....................................................29 Section 4.04. Compliance Certificate......................................29 Section 4.05. Taxes.......................................................30 Section 4.06. Stay, Extension and Usury Laws..............................30 Section 4.07. Restricted Payments.........................................30 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries................................................32 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..33 Section 4.10. Asset Sales.................................................35 Section 4.11. Transactions with Affiliates................................36 Section 4.12. Liens.......................................................37 Section 4.13. Line of Business............................................37 Section 4.14. Corporate Existence.........................................37 Section 4.15. Offer to Repurchase Upon Change of Control..................37 Section 4.16. Limitation on Sale and Leaseback Transactions...............38 Section 4.17. Limitation on Issuances and Sales of Equity Interests of Restricted Subsidiaries.....................................38 Section 4.18. Payments for Consent........................................39 Section 4.19. Pledge and Escrow Agreement Deposit.........................39 ARTICLE 5. SUCCESSORS.......................................................39 ii Section 5.01. Merger, Consolidation, or Sale of Assets....................39 Section 5.02. Successor Corporation Substituted...........................39 ARTICLE 6. DEFAULTS AND REMEDIES............................................40 Section 6.01. Events of Default...........................................40 Section 6.02. Acceleration................................................41 Section 6.03. Other Remedies..............................................42 Section 6.04. Waiver of Past Defaults.....................................42 Section 6.05. Control by Majority.........................................43 Section 6.06. Limitation on Suits.........................................43 Section 6.07. Rights of Holders of Notes to Receive Payment...............43 Section 6.08. Collection Suit by Trustee..................................43 Section 6.09. Trustee May File Proofs of Claim............................44 Section 6.10. Priorities..................................................44 Section 6.11. Undertaking for Costs.......................................44 ARTICLE 7. TRUSTEE..........................................................45 Section 7.01. Duties of Trustee...........................................45 Section 7.02. Rights of Trustee...........................................46 Section 7.03. Individual Rights of Trustee................................46 Section 7.04. Trustee's Disclaimer........................................46 Section 7.05. Notice of Defaults..........................................46 Section 7.06. Reports by Trustee to Holders of the Notes..................47 Section 7.07. Compensation and Indemnity..................................47 Section 7.08. Replacement of Trustee......................................48 Section 7.09. Successor Trustee by Merger, etc............................49 Section 7.10. Eligibility; Disqualification...............................49 Section 7.11. Preferential Collection of Claims Against Company...........49 iii ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................49 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....49 Section 8.02. Legal Defeasance and Discharge..............................49 Section 8.03. Covenant Defeasance.........................................50 Section 8.04. Conditions to Legal or Covenant Defeasance..................50 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.......................51 Section 8.06. Repayment to Company........................................52 Section 8.07. Reinstatement...............................................52 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................52 Section 9.01. Without Consent of Holders of Notes.........................52 Section 9.02. With Consent of Holders of Notes............................53 Section 9.03. Compliance with Trust Indenture Act.........................54 Section 9.04. Revocation and Effect of Consents...........................54 Section 9.05. Notation on or Exchange of Notes............................55 Section 9.06. Trustee to Sign Amendments, etc.............................55 ARTICLE 10 COLLATERAL AND SECURITY..........................................55 Section 10.01. Pledge, Escrow and Disbursement Agreement..................55 Section 10.02. Recording and Opinions.....................................56 Section 10.03. Release of Collateral......................................56 Section 10.04. Certificates of the Company................................57 Section 10.05. Authorization of Actions to be Taken by the Trustee Under the Pledge and Escrow Agreement............................57 Section 10.06. Authorization of Receipt of Funds by the Trustee Under the Pledge and Escrow Agreement............................57 Section 10.07. Termination of Security Interest...........................58 iv ARTICLE 11. MISCELLANEOUS...................................................58 Section 11.01. Trust Indenture Act Controls...............................58 Section 11.02. Notices....................................................58 Section 11.03. Communication by Holders of Notes with Other Holders of Notes......................................................59 Section 11.04. Certificate and Opinion as to Conditions Precedent.........59 Section 11.05. Statements Required in Certificate or Opinion..............59 Section 11.06. Rules by Trustee and Agents................................60 Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders...........................................60 Section 11.08. Governing Law..............................................60 Section 11.09. No Adverse Interpretation of Other Agreements..............60 Section 11.10. Successors.................................................60 Section 11.11. Severability...............................................60 Section 11.12. Counterpart Originals......................................60 Section 11.13. Table of Contents, Headings, etc...........................61 EXHIBITS Exhibit A FORM OF NOTE Exhibit B FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT v INDENTURE dated as of __________, 1998 between Premier Parks Inc., a Delaware corporation (the "Company"), and The Bank of New York, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the __% Senior Notes due 2006 (the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or becomes a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section 5.01 and not by Section 4.10 hereof), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $10.0 million or (b) for net proceeds in excess of $10.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) the transfer of Equity Interests in any Restricted Subsidiary pursuant to the Subordinated Indemnity Agreement or the Partnership Parks Agreements, (iv) the issuance of Equity Interests by a Restricted Subsidiary to any employee thereof or as consideration for the acquisition of all or substantially all of the assets of, or a majority of the Voting Stock of, any Person (or a business unit or division of such Person), provided that the primary business of such Person (or such unit or division) is a Permitted Business, (v) the substitution of property in accordance with the terms of the Parcel Lease, dated November 7, 1997, between Marine World and Park Management Corp. as the same may be modified or amended from time to time after the date of this Indenture, provided such modification or amendment does not adversely affect the interests of the Holders in any material respect, and (vi) a Restricted Payment that is permitted Section 4.07 hereof. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Beneficial Share Assignment Agreement" means the Beneficial Share Assignment Agreement, dated as of the date of the consummation of the Six Flags Acquisition, between TW-SPV Co. and the Company. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars or foreign currency, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the Credit Facilities or with any commercial bank having capital and surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than thirty days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within one year after the date of acquisition, (vi) securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory, the securities of which state, commonwealth, territory, political subdivision or taxing authority (as the case may be) are rated at least "A" by Standard & Poor's Corporation or "A" by Moody's Investors Service, Inc. and (vii) money 2 market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (vi) of this definition. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35% of the Voting Stock of the Company, or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Common Stock" means the common stock, par value $.05 per share of the Company. "Common Stock Offering" means the offering of 13,000,000 shares of Common Stock and up to an additional 1,950,000 shares of Common Stock to cover over-allotments. "Company" means Premier Parks Inc., and any and all successors thereto. "Company Notes" means the Notes and the Senior Discount Notes. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (ii) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iii) depreciation, amortization (including any depreciation or amortization arising out of purchases by the Company or any Restricted Subsidiary of Equity Interests in the partners of the Co-Venture Partnerships and amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, minus (iv) non-cash items increasing such Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP (other than accrual of income in the ordinary course of business in respect of a future cash payment). Notwithstanding any other provision of this Indenture to the contrary, "Consolidated Cash Flow" of the Company for any period will be deemed to include 100% of the cash distributions to the Company or any of its Restricted Subsidiaries in respect of such period from the Co-Venture Partnerships, directly or indirectly, out of the Consolidated Cash Flow of the Co-Venture Partnerships in respect of such period. "Consolidated Indebtedness" means, with respect to any Person as of any date of determination, the sum, without duplication, of (i) the total amount of Indebtedness and Attributable Debt of such Person and its Restricted Subsidiaries, plus (ii) the total amount of Indebtedness and Attributable Debt of any other Person, to the extent that the same has been guaranteed by the referent Person or one or more of its Restricted Subsidiaries, plus (iii) the aggregate liquidation value of all 3 Disqualified Stock of such Person and all preferred stock of Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization or original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness or Attributable Debt of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such guarantee or Lien is called upon). The term "Consolidated Interest Expense" shall not include the consolidated interest expense of any Person with respect to (i) any obligations in respect of the SFEC Zero Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is in full force and effect and the trustee under the indenture governing the New SFEC Notes maintains a valid and perfected security interest in cash or Government Securities in an amount at least equal to the outstanding principal amount of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or (y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and prior to any deduction in respect of dividends on any series of preferred stock of such Person, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (iii) the cumulative effect of a change in accounting principles shall be excluded. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity (including stated capital, additional paid-in capital and retained earnings) of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (x) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the date of this Indenture in the book value of any asset owned by such Person or a consolidated Subsidiary of such Person, (y) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in each case, Permitted Investments), and (z) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP. 4 "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Co-Venture Partnerships" means (i) Six Flags Over Georgia, Ltd., a Georgia Limited Partnership, (ii) Texas Flags, Ltd., a Texas Limited Partnership and (iii) Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership. "Credit Facilities" means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Premier Credit Facility and the Six Flags Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. "Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Debt to Cash Flow Ratio" means, as of any date of determination, the ratio of (a) the Consolidated Indebtedness of the Company as of such date to (b) the Consolidated Cash Flow of the Company for the four most recent full fiscal quarters ending immediately prior to such date for which financial statements have been filed with the SEC, determined on a pro forma basis after giving effect to all acquisitions or Asset Sales made by the Company and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four- quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (ii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A hereto except that such Note 5 shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Disqualified Stock" means any Capital Stock (other than the Seller Preferred Stock) that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Company Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Escrow Account" means the escrow account for the initial deposit of approximately $76.3 million dollars of the net proceeds from the sale of the Notes under the Pledge and Escrow Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Indebtedness" means up to $______ million in aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Premier Credit Facility and the Six Flags Credit Facility) in existence on the date of this Indenture, until such amounts are repaid. "GAAP" means generally accepted accounting principles 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 have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Global Note" means the Global Note in the form of Exhibit A hereto issued in accordance with Section 2.01 hereof. "Global Note Legend" means the legend set forth in Section 2.06(f), which is required to be placed on the Global Note issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged. 6 "guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Holder" means a Person in whose name a Note is registered. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. The term "Indebtedness" shall not include (i) any obligations in respect of the SFEC Zero Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is in full force and effect and the trustee under the indenture governing the New SFEC Notes maintains a valid and perfected security interest in cash or Government Securities in an amount sufficient to pay the aggregate principal amount at maturity of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or (y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees and any deposit or advance made pursuant to any contract entered into in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company (other than pursuant to the terms of the Partnership Parks Agreements or the Subordinated Indemnity Agreement) such that, after giving effect to any such sale or disposition, such Person is no 7 longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07 "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Mandatorily Convertible Preferred Stock" means the Company's ___% Mandatorily Convertible Preferred Stock. "Marine World" means the Marine World Joint Powers Authority or any successor thereto. "Marine World Agreements" mean (i) the Parcel Lease, dated November 7, 1997, between Marine World and Park Management Corp. ("PMC"), (ii) the Reciprocal Easement Agreement, dated November 7, 1997, between Marine World and PMC, (iii) the Revenue Sharing Agreement, dated November 7, 1997, among Marine World, PMC and the Redevelopment Agency of the City of Vallejo (the "Agency"), (iv) the Purchase Option Agreement, dated as of August 29, 1997, among Marine World, the Agency, the City of Vallejo and PMC and (v) the 1997 Management Agreement, dated as of February 1, 1997, between Marine World and PMC, as amended, in each case, as the same may be modified or amended from time to time after the date of this Indenture, provided such modification or amendment does not adversely affect the interests of the Holders in any material respects. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) and (ii) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a 8 Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New SFEC Notes" means SFEC's ___ % Senior Notes due 2006. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Notes" has the meaning assigned to it in the preamble to this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offerings" means the offerings of the Notes, Common Stock, Senior Discount Notes and Mandatorily Convertible Preferred Stock by the Company and the offering of the New SFEC Notes by SFEC all consummated on the date hereof. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means a Person who has an account with the Depositary. "Partnership Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., Six Flags Theme Parks Inc. and Six Flags Entertainment Corporation and the Related Agreements (as defined therein), (ii) Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., Six Flags Theme Parks Inc. and Six Flags Entertainment Corporation and the Related Agreements (as defined therein), and (iii) the 9 Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time after the date of this Indenture provided such modification or amendment does not adversely affect the interests of the Holders in any material respect. "Permitted Business" means any business related, ancillary or complementary to the businesses of the Company and its Restricted Subsidiaries on the date of this Indenture. "Permitted Distributions" means (i) the purchase, redemption, retirement or other acquisition by the Company or any Restricted Subsidiary of the Company of partnership interests in the Co-Venture Partnerships or the limited partners thereof, or their successors, in accordance with and in the manner required or permitted by the terms of the Partnership Parks Agreements (ii) the payment of any other obligation under the terms of the Partnership Parks Agreements or the Subordinated Indemnity Agreement and (iii) the payment of dividends on the Seller Preferred Stock and the Mandatorily Convertible Preferred Stock in accordance with the terms thereof as in effect on the date of this Indenture. "Permitted Investments" means an Investment by the Company or any Restricted Subsidiary in (i) cash or Cash Equivalents, (ii) the Company, a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Permitted Business; (iii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets (or the assets of any business unit or division of such Person) to, the Company or a Restricted Subsidiary; provided, however, that such Person's (or such unit's or division's) primary business is a Permitted Business; (iv) another Person if the aggregate amount of all Investments in all such other Persons does not exceed $25.0 million at any one time outstanding (with each Investment being valued as of the date made and without giving effect to subsequent changes in value); provided, however, that such Person's primary business is a Permitted Business; (v) promissory notes received as consideration for an Asset Sale which are secured by a Lien on the asset subject to such Asset Sale; provided that the aggregate amount of all such promissory notes at any one time outstanding does not exceed $5.0 million; (vi) non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10; (vii) assets acquired solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (viii) receivables owing to the Company or any Restricted Subsidiary, if created or acquired in the ordinary course of business; (ix) payroll, travel and similar advances that are made in the ordinary course of business; (x) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; (xi) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments; and (xii) other Investments in any Person at any time outstanding (each such Investment being measured on the date each such Investment was made and without giving effect to subsequent changes in value) not to exceed 50% of the aggregate amount of net cash proceeds received by the Company from the Common Stock Offering in excess of $700.0 million; provided, however, that any proceeds that are used as a basis for a Restricted Payment under clause (ii) of the second paragraph of Section 4.07 or otherwise will be disregarded for purposes of this clause (xii). "Permitted Liens" means (a) Liens to secure Indebtedness of a Restricted Subsidiary of the Company that was permitted to be incurred under this Indenture; (b) Liens existing on the Issue Date; (c) Liens on property or shares of Capital Stock of another Person at the time such other Person becomes 10 a Restricted Subsidiary of such Person; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming such a Restricted Subsidiary; provided further, however, that such Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries; (d) Liens on property at the time such Person or any of its Restricted Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Restricted Subsidiary of such Person; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries; (e) Liens securing Indebtedness or other obligations of a Restricted Subsidiary of such Person owing to such Person or a Restricted Subsidiary of such Person; (f) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same type of property securing such Hedging Obligations; (g) Liens to secure any Permitted Refinancing Indebtedness; provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property) and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness refinanced at the time the original Lien became a Permitted Lien and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement; (h)(i) mortgages, liens, security interests, restrictions or encumbrances that have been placed by any developer, landlord or other third party on property over which the Company or any Restricted Subsidiary of the Company has easement rights or on any real property leased by the Company or any Restricted Subsidiary of the Company and subordination or similar agreements relating thereto and (ii) any condemnation or eminent domain proceedings affecting any real property; (i) pledges or deposits by such Person under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (j) Liens imposed by law, such as carriers', warehousemen's and mechanic's Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; (k) Liens for property taxes not yet due or payable or subject to penalties for non-payment or which are being contested in good faith and by appropriate proceedings; (l) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially impair the use of such properties in the operation of the business of such Person; (m) Liens securing Purchase Money Indebtedness; provided, however, that (i) the Indebtedness secured by such Liens is otherwise permitted to be incurred under this Indenture, (ii) the principal amount of any Indebtedness secured by any such Lien does not exceed the cost of assets or property so acquired or constructed and (iii) the amount of Indebtedness secured by any such Lien is not subsequently increased; (n) Liens arising out of the transactions contemplated by the Partnership Parks Agreements, the Marine World Agreements, the Subordinated Indemnity Agreement or the Six Flags Agreement; and (o) Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $20.0 million at any one time outstanding. 11 "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses, including premiums, incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Company Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Pledge and Escrow Agreement" means the Pledge, Escrow and Disbursement Agreement, dated as of the date of this Indenture, by and between the Company and the Trustee governing the disbursement of funds from the Escrow Account, as amended from time to time in accordance with this Indenture. "Pledged Collateral" means the Collateral (as defined in the Pledge and Escrow Agreement) under the Pledge and Escrow Agreement. "Premier Credit Facility" means that certain $300.0 million senior secured credit facility between ________ and Premier Operations dated as of _____, 1998. "Premier Operations" means Premier Parks Operations Inc., a wholly owned subsidiary of the Company. "Public Equity Offering" means an underwritten primary public offering of common stock of the Company pursuant to an effective registration statement under the Securities Act. "Purchase Money Indebtedness" means Indebtedness (i) consisting of the deferred purchase price of property, conditional sale obligations, obligation under any title retention agreement and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (ii) incurred to finance the acquisition by the Company or a Restricted Subsidiary of the Company of such asset, including additions and improvements; provided, however, that any Lien arising in connection with any such Indebtedness shall be limited to the specified asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property on which such asset is attached; and provided further, that 12 such Indebtedness is incurred within 180 days after such acquisition, addition or improvement by the Company or Restricted Subsidiary of such asset. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Cash Escrow Agreement" means the Pledge, Escrow and Disbursement Agreement, dated as of the date of the Senior Discount Note Indenture, by and between the Company and the Senior Discount Note Trustee governing the disbursement of funds from the restricted cash account thereto, as amended from time to time in accordance with the Senior Discount Note Indenture. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Seller Preferred Stock" means the Company's Convertible Redeemable Preferred Stock issued to the sellers of SFEC common stock pursuant to the Six Flags Agreement. "Senior Discount Note Indenture" means that certain indenture, dated as of the date hereof, between the Company and The Bank of New York, as trustee, as amended or supplemented from time to time, relating to the Senior Discount Notes. "Senior Discount Note Trustee" means the trustee under the Senior Discount Notes until a successor replaces it in accordance with the applicable provisions of the Senior Discount Note Indenture and thereafter means the successor serving hereunder. "Senior Discount Notes" means the Company's ___% Senior Discount Notes due 2008 issued pursuant to the Senior Discount Note Indenture. "SFEC" means Six Flags Entertainment Corporation, a wholly owned subsidiary of the Company. "SFEC Pledge and Escrow Agreement" means the Pledge, Escrow and Disbursement Agreement dated as of the date hereof, by and between SFEC and The Bank of New York, as trustee, as amended from time to time in accordance with the indenture governing the New SFEC Notes. "SFEC Zero Coupon Senior Notes" means SFEC's Zero Coupon Senior Notes due 1999. "SFTP" means Six Flags Theme Parks Inc., a wholly owned subsidiary of SFEC. 13 "Six Flags Acquisition" means the acquisition by the Company by merger of all of the capital stock of SFEC from its current stockholders pursuant to the Six Flags Agreement. "Six Flags Agreement" means that certain Agreement and Plan of Merger dated as of February 9, 1998, by and among the Company, Premier Parks Holdings Corporation, a Delaware Corporation, Premier Parks Merger Corporation, a Delaware Corporation, a certain group of sellers listed therein and SFEC. "Six Flags Credit Facility" means that $472.0 million senior secured credit facility between SFTP and _____ dated as of ______, 1998. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Specified Amount" means, as of any date, (i) the product of (a) the Consolidated Cash Flow of the Company for the most recently ended four-quarter period for which financial statements have been filed with the SEC determined on a pro forma basis after giving effect to all acquisitions or Asset Sales made by the Company and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period, times (b) 0.75. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Strategic Equity Investment" means a cash contribution to the common equity capital of the Company or a purchase from the Company of common Equity Interests (other than Disqualified Stock), in either case by or from a Strategic Equity Investor and for aggregate cash consideration of at least $25.0 million. "Strategic Equity Investor" means, as of any date, any Person (other than an Affiliate of the Company) engaged in a Permitted Business which, as of the day immediately before such date, had a Total Equity Market Capitalization of at least $1.0 billion. "Subordinated Indemnity Agreement" means the Subordinated Indemnity Agreement, dated as of the date of the consummation of the Six Flags Acquisition, among the Company, SFEC and its subsidiaries, Time Warner Inc., Time Warner Entertainment Company, L.P. and TW-SPV Co. , as the same may be modified or amended from time to time after the date hereof, provided such modification or amendment does not adversely affect the interests of the Holders in any material fashion. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% (49% in the case of Walibi, S.A.) of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination 14 thereof); provided that, notwithstanding the foregoing, each of SFOG A Holdings, SFOG B Holdings, SFOT I Holdings and SFOT II Holdings shall be deemed to be a Subsidiary of the Company for all purposes under this Indenture so long as (x) the Subordinated Indemnity Agreement and the Beneficial Share Assignment Agreement shall each be in full force and effect and no default or event of default shall have occurred thereunder, and (ii) any partnership or limited liability company (a) the sole general partner or the managing general partner (or equivalent) of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Total Equity Market Capitalization" of any Person means, as of any day of determination, the sum of (i) the product of (A) the aggregate number of outstanding primary shares of common stock of such Person on such day (which shall not include any options or warrants on, or securities convertible or exchangeable into, shares of common stock of such Person) multiplied by (B) the average closing price of such common stock listed on a national securities exchange or the Nasdaq National Market System over the 20 consecutive business days immediately preceding such day, plus (ii) the liquidation value of any outstanding shares of preferred stock of such Person on such day. "Trustee" means the party named as such in the preamble hereto until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Subsidiary" means (i) any Subsidiary (other than Premier Operations or SFTP or any successor to either of them) that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustees by filing with the Trustees a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any 15 outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote by the holder thereof in the election of the Board of Directors (or comparable body) of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person or by such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section "Affiliate Transaction"..............................4.11 "Asset Sale".........................................4.10 "Asset Sale Offer"...................................3.09 "Authentication Order"...............................2.02 "Bankruptcy Law".....................................4.01 "Basket Period"......................................4.07 "Change of Control Offer"............................4.15 "Change of Control Payment"..........................4.15 "Change of Control Payment Date" ....................4.15 "Covenant Defeasance"................................8.03 "Event of Default"...................................6.01 "Excess Proceeds"....................................4.10 "incur"..............................................4.09 "Legal Defeasance" ..................................8.02 "Offer Amount".......................................3.09 "Offer Period".......................................3.09 "Paying Agent".......................................2.03 "Permitted Debt".....................................4.09 "Purchase Date"......................................3.09 "Registrar"..........................................2.03 "Restricted Payments"................................4.07 16 SECTION 1.03. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES SECTION 2.01. FORM AND DATING. (a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. 17 The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Note. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any 18 Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Note. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Note. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA ss. 312(a). SECTION 2.06. TRANSFER AND EXCHANGE. (a) Transfer and Exchange of the Global Note. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. A Global Note will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice in writing that the Depositary it is unwilling or unable to continue to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company in its sole discretion determines that the Global Note (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. A Global Note also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and 19 delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Note. The transfer and exchange of beneficial interests in the Global Note shall be effected through the Depositary, in accordance with the provisions of this Indenture and the rules and procedures of the Depositary. Transfers of beneficial interests in the Global Note also shall require compliance with subparagraph (i) below: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in a Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (c) Transfer or Exchange of Beneficial Interests in the Global Note for Definitive Notes. If any holder of a beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in the Global Note. A Holder of a Definitive Note may exchange such Note for a beneficial interest in a Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Definitive Note and increase or cause to be increased the aggregate principal amount of the Global Note. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). A Holder of Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of a Definitive Note. (f) Global Note Legend. The following legend shall appear on the face of the Global Note issued under this Indenture in substantially the following form, unless specifically stated otherwise in the applicable provisions of this Indenture: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE 20 BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (g) Cancellation and/or Adjustment of the Global Note. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (h) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate the Global Note and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) The Global Note and Definitive Notes issued upon any registration of transfer or exchange of a Global Note or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Note or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for 21 redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (c) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate the Global Note and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. SECTION 2.07. REPLACEMENT NOTES If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on 22 and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. SECTION 2.10. TEMPORARY NOTES Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. 23 ARTICLE 3. REDEMPTION AND PREPAYMENT SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate; provided that, subject to the limitations described above, the Company may, at its option, elect to redeem either Senior Discount Notes, Notes, or both Senior Discount Notes and Notes; and provided further that no Company Notes of $1,000 or less shall be redeemed in part. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.03. NOTICE OF REDEMPTION Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; 24 (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. 25 SECTION 3.07. OPTIONAL REDEMPTION. (a) Except as set forth in clause (b) of this Section 3.07, the Company shall not have the option to redeem the Notes pursuant to this Section 3.07 prior to __________, 2002. Thereafter, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on ___________ of the years indicated below: Year Percentage 2002........................................ _______% 2003........................................ _______ 2004........................................ _______ 2005 and thereafter......................... 100.000% (b) Notwithstanding the foregoing, during the first 36 months after the date of original issuance of the Notes, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued under this Indenture at a redemption price of ___% of the principal amount thereof on the redemption date with the net cash proceeds of one or more Public Equity Offerings and/or the net cash proceeds of a Strategic Equity Investment; provided that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after the occurrence of each such redemption (excluding the Notes held by the Company and its Subsidiaries); and provided, further, that any such redemption shall occur within 60 days of the date of the closing of each such Public Equity Offering and/or Strategic Equity Investment. (c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. SECTION 3.08. MANDATORY REDEMPTION. Except as set forth in Sections 4.10 and 4.15, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. 26 If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrete or accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes 27 tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4. COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to 28 the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. SECTION 4.03. REPORTS. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case, within the time periods specified in the SEC's rules and regulations. In addition, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA ss. 314(a). SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and the Pledge and Escrow Agreement, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and the Pledge and Escrow Agreement and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture or the Pledge and Escrow Agreement (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for 29 certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.05. TAXES. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.07. RESTRICTED PAYMENTS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of any Equity Interests of the Company (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of any Equity Interests of the Company in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company that is subordinated to the Company Notes, except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and 30 (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash Flow test set forth in the first paragraph of Section 4.09; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments declared or made after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii) and (iii) of the next succeeding paragraph) shall not exceed, at the date of determination, the sum, without duplication, of (i) an amount equal to the Company's Consolidated Cash Flow for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Company's most recently ended full fiscal quarter for which financial statements have been filed with the SEC (the "Basket Period") less the product of 1.4 times the Company's Consolidated Interest Expense for the Basket Period, plus (ii) 100% of the aggregate net cash proceeds received by the Company after the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale after the date of this Indenture of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than (w) Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company, (x) Equity Interests sold in the Offerings and (y) any sale of Equity Interests of the Company the net cash proceeds of which are applied pursuant to clause (ii) of the immediately succeeding paragraph), plus (iii) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of this Indenture, the fair market value of the Company's or its Restricted Subsidiary's, as the case may be, Investment in such Subsidiary as of the date of such redesignation. The foregoing provisions shall not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale including in the Offerings (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from (a) clause (c)(ii) of the preceding paragraph and (b) clause (xii) of the definition of "Permitted Investments;" (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), the purchase, redemption, retirement or other acquisition by the Company or any Restricted Subsidiary of the Company of partnership interests held by the partners in the limited partners of the Co-Venture Partnerships, the co-general partner of the Co-Venture Partnerships or, in each case, their successors, in accordance with and in the manner required or permitted by the terms of the Partnership Parks Agreements; (v) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), any transactions pursuant to or contemplated by, and payments made in connection with, and in accordance with the terms of, the Partnership Parks Agreements and the Marine World Agreements; (vi) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), any transactions pursuant to or contemplated by, and payments made in connection with, and in accordance with the terms of, the Subordinated Indemnity Agreement; (vii) so long as no Event of Default or Default 31 shall have occurred and be continuing (or would result therefrom), the payment of dividends on the Seller Preferred Stock and the Mandatorily Convertible Preferred Stock in accordance with the terms thereof as in effect on the date of this Indenture; (viii) in the event the Company issues common stock in exchange for or upon conversion of Seller Preferred Stock or Mandatorily Convertible Preferred Stock, cash payments made in lieu of the issuance of fractional shares of common stock, not to exceed $250,000 in the aggregate in any fiscal year; and (ix) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company from employees, former employees, directors or former directors of the Company or any of its Restricted Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors); provided, however, that the aggregate amount of such repurchases shall not exceed $5.0 million in any twelve-month period. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default; provided that in no event shall the business currently operated by Premier Operations or SFTP be transferred to or held by an Unrestricted Subsidiary. For purposes of making such determination, all outstanding Investments held by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined by the Board of Directors of the Company whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $10.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of this Indenture, (b) the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement, (c) the terms of any Indebtedness permitted by this Indenture to be incurred by any Restricted Subsidiary of the Company, (d) this Indenture and the Company Notes, (e) applicable law, (f) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any 32 of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred, (g) customary non-assignment provisions in leases, licenses or other contracts entered into in the ordinary course of business, (h) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (i) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (j) obligations otherwise permitted to be incurred pursuant to the provisions of Section 4.12 that limits the right of the obligee to dispose of the assets securing such obligations, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business and (l) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Subsidiaries may incur Indebtedness or issue shares of preferred stock if the Company's Debt to Cash Flow Ratio at the time of incurrence of such Indebtedness or the issuance of such Disqualified Stock or such preferred stock, as the case may be, after giving pro forma effect to such incurrence or issuance as of such date and to the use of the proceeds therefrom as if the same had occurred at the beginning of the most recently ended four full fiscal quarter period of the Company for which financial statements have been filed with the SEC, would have been no greater than (a) 6.0 to 1, if such incurrence or issuance is on or prior to March 31, 1999, (b) 5.75 to 1, if such incurrence or issuance is on or prior to March 31, 2000 and after March 31, 1999, and (c) 5.5 to 1, if such incurrence or issuance is after March 31, 2000. The Company shall not incur any Indebtedness that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the Company Notes on substantially identical terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured. The provisions of the first paragraph of this Section 4.09 will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company and its Restricted Subsidiaries of additional term Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $275.0 million less the aggregate amount of all mandatory or scheduled repayments of the principal of any such additional term Indebtedness (other than repayments that are immediately reborrowed) that have actually been made since the date of this Indenture; 33 (ii) the incurrence by the Company and its Restricted Subsidiaries of additional revolving credit Indebtedness and letters of credit pursuant to Credit Facilities in an aggregate principal amount (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) at any one time outstanding not to exceed the Specified Amount as of such date of incurrence; provided that, that the aggregate principal amount of all Indebtedness incurred pursuant to this clause (ii) is reduced to an outstanding balance of $1.0 million or less for at least 30 consecutive days in each fiscal year; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company and SFEC of Indebtedness represented by the Company Notes and the New SFEC Notes; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed $25.0 million at any time outstanding; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness and Indebtedness incurred pursuant to clauses (i) and (ii) above) that was permitted by this Indenture to be incurred; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on any such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Company Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of (a) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be incurred and (b) Currency Agreements that do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; (ix) Indebtedness in respect of performance bonds, letters of credits, surety or appeal bonds, prior to any drawing thereunder, for or in connection with pledges, deposits or payments made or given in the ordinary course of business; 34 (x) the guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09 (including, without limiting the generality of the forgoing, the guarantee by any Restricted Subsidiary of the Company of Existing Indebtedness and the guarantee by the Company of the New SFEC Notes); (xi) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (xi); and (xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xii), not to exceed $50.0 million. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xii) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 4.09 and such item of Indebtedness will be treated as having been incurred pursuant to one or more of such clauses and/or pursuant to the first paragraph hereof, as the Company shall specify. In connection with the Six Flags Acquisition and the Offerings occurring on the date of this Indenture, the Company shall be permitted to incur a portion of the Indebtedness to be incurred on that date pursuant to the Debt to Cash Flow Ratio set forth in the first paragraph of this Section 4.09 to the extent permitted by such Debt to Cash Flow Ratio calculated without regard to any Permitted Debt incurred on such date. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on preferred stock in the form of additional shares of the same class of preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Consolidated Indebtedness of the Company as accrued. SECTION 4.10. ASSET SALES The Company shall not, and shall not permit any of its Restricted Subsidiaries to consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustees) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash; provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinate to the Company Notes) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability or, in the case of the sale of Capital Stock, that are assumed by the transferee by operation of law and (y) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are promptly (subject to ordinary settlement periods) converted by the Company or such Restricted 35 Subsidiary into cash (to the extent of the cash received), shall be deemed to be cash for purposes of this provision. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company or the applicable Restricted Subsidiary may apply such Net Proceeds (a) to repay or repurchase Indebtedness of a Restricted Subsidiary of the Company (and to correspondingly reduce commitments with respect thereto in the case of revolving credit borrowings), (b) to the acquisition of all or substantially all of the assets of, or a majority of the Voting Stock of, another Person (or business unit or division of such Person); provided, that the primary business of such Person (or unit or division) is a Permitted Business, (c) to fund obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements or the Subordinated Indemnity Agreement, (d) to the acquisition of Capital Stock of a Restricted Subsidiary of the Company held by Persons other than the Company or any Restricted Subsidiary, (e) to the making of a capital expenditure or (f) to the acquisition of other long-term assets that are used or useful in a Permitted Business. Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company will be required to make an offer to all Holders of Notes and all holders of other pari passu Indebtedness of the Company containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other pari passu Indebtedness of the Company that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of repurchase, in accordance with the procedures set forth in this Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount at maturity or accreted value (as applicable) of Company Notes and such other Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Company Notes and such other Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. SECTION 4.11. TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $1.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view 36 issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business, or any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment or indemnification arrangements, stock options and stock ownership plans approved by the Board of Directors, or the grant of stock options or similar rights to employees and directors of the Company pursuant to plans approved by the Board of Directors, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not otherwise employees of the Company or its Restricted Subsidiaries, (iv) loans or advances to employees in the ordinary course of business, (v) Restricted Payments that are permitted by Section 4.07, (vi) transactions pursuant to or contemplated by, and in accordance with, the terms of the Subordinated Indemnity Agreement, (vii) transactions pursuant to or contemplated by and payments in connection with, and, in each case, in accordance with, the terms of the Partnership Parks Agreements and (viii) transactions pursuant to or contemplated by, and in accordance with, the Marine World Agreements. SECTION 4.12. LIENS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien securing trade payables, Attributable Debt or Indebtedness on any asset now owned or hereafter acquired, except Permitted Liens. SECTION 4.13. LINE OF BUSINESS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. SECTION 4.14. CORPORATE EXISTENCE. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, the Company shall make an offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase. Within 30 days following any Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase 37 Notes pursuant to the procedures required by this Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes as a result of a Change of Control. (b) On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or a Restricted Subsidiary of the Company may enter into a sale and leaseback transaction if (i) the Company could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the Debt to Cash Flow test set forth in the first paragraph of Section 4.09 or pursuant to clause (vi) of the second paragraph of Section 4.09 and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12, (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value (as determined in good faith by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee) of the property that is the subject of such sale and leaseback transaction and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and the Company or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, Section 4.10 hereof. SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS OF RESTRICTED SUBSIDIARIES. The Company (i) shall not, and shall not permit any Restricted Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary of the Company to any Person (other than the Company or a Restricted Subsidiary of the Company and other than transactions contemplated by the Partnership Parks Agreements and the Subordinated Indemnity Agreement), unless (a)(1) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Restricted Subsidiary or (2) after giving effect thereto, such Restricted Subsidiary will still constitute a Restricted Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with Section 4.10 hereof, and (ii) will not permit any Restricted Subsidiary of the Company to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Company or a Wholly Owned Restricted Subsidiary of the Company if, after giving effect thereto, such Restricted Subsidiary will not be a direct or indirect Subsidiary of the Company. 38 SECTION 4.18. PAYMENTS FOR CONSENT. Neither the Company nor any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.19. PLEDGE AND ESCROW AGREEMENT DEPOSIT Upon consummation of the initial sale of the Notes offered hereby on the date hereof, the Company will deposit $76.3 million of the net proceeds from the sale of the Notes, in the Escrow Account with the Trustee. The Escrow Account shall be governed by the terms of the Pledge and Escrow Agreement attached as Exhibit B hereto. ARTICLE 5. SUCCESSORS SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Company Notes, this Indenture, the Senior Discount Note Indenture, the Restricted Cash Escrow Agreement and the Pledge and Escrow Agreement pursuant to supplemental indentures in forms reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, both at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash Flow test set forth in the first paragraph of Section 4.09 hereof. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made 39 shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (a) the Company defaults in the payment when due of interest on the Notes and such default continues for a period of 30 days except, if prior to ________, 2001, the Company fails to pay interest on the Notes within two days of when interest is due, that would constitute an immediate Event of Default; (b) the Company defaults in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company fails to comply (i) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or 4.19 hereof or (ii) with any of the provisions of Article Four or Section 5.01 hereof for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class; (d) the Company fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture, the Notes or the Pledge and Escrow Agreement for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class; (e) the Company or any Restricted Subsidiary fails to pay Indebtedness within any applicable grace period after final maturity or the acceleration of any Indebtedness by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated at any time exceeds $10.0 million; (f) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Restricted Subsidiaries and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $10.0 million; (g) the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, 40 (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a Custodian of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; or (i) the Company shall materially breach any representation, warranty or agreement set forth in the Pledge and Escrow Agreement, or a material default by the Company in the performance of any covenant set forth in the Pledge and Escrow Agreement, or repudiation by the Company of its obligations under the Pledge and Escrow Agreement, or the Pledge and Escrow Agreement shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect. SECTION 6.02. ACCELERATION. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any 41 judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. If an Event of Default occurs on or after ____________, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to __________, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to such date, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable in an amount, for each of the years beginning on ______ of the years set forth below, as set forth below (expressed as a percentage of the amount that would otherwise be due but for the provisions of this paragraph, plus accrued interest, if any, to the date of payment): Year Percentage ---- ---------- 1998............................................... _______% 1999............................................... _______% 2000............................................... _______% 2001............................................... _______% SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. 42 SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 43 SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article or the Pledge and Escrow Agreement, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to 44 Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 45 SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 46 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. 47 When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. 48 SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in 49 connection therewith and (d) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; 50 (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article Eight concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that on the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. 51 Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture, the Pledge and Escrow Agreement or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; 52 (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's obligations to the Holders of the Notes by a successor to the Company pursuant to Article 5 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Sections 3.09, 4.10 and 4.15 hereof), the Pledge and Escrow Agreement and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Without the consent of at least 75% in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Notes), no waiver or amendment to either this Indenture or the Pledge and Escrow Agreement may make any change in the provisions of Section 4.19 or Article 10 hereof or the Pledge and Escrow Agreement that adversely affects the rights of any Holder of Notes. Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. 53 It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 and 4.15 hereof); (g) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; or (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note 54 or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10 COLLATERAL AND SECURITY SECTION 10.01. PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT. The due and punctual payment of the principal of and interest, if any, on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest (to the extent permitted by law), if any, on the Notes and performance of all other obligations of the Company to the Holders of Notes or the Trustee under this Indenture and the Notes, according to the terms hereunder or thereunder, shall be secured as provided in the Pledge and Escrow Agreement which the Company has entered into simultaneously with the execution of this Indenture and which is attached as Exhibit B hereto. Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Pledge and Escrow Agreement (including, without limitation, the provisions providing for foreclosure and release of Escrow Funds) as the same may be in effect or may be amended from time to time in accordance with its terms and authorizes and directs the Trustee to enter into the Pledge and Escrow Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith. The Company shall deliver to the Trustee copies of all documents pursuant to the Pledge and Escrow Agreement, and shall do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Pledge and Escrow Agreement, to assure and confirm to the Trustee the security interest in the Escrow Funds contemplated hereby, by the Pledge 55 and Escrow Agreement or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Company shall take, or shall cause its Subsidiaries to take, upon request of the Trustee, any and all actions reasonably required to cause the Pledge and Escrow Agreement to create and maintain, as security for the Obligations of the Company hereunder, a valid and enforceable perfected first priority Lien in and on all the Pledged Collateral, in favor of the Trustee for the benefit of the Holders of Notes, superior to and prior to the rights of all third Persons and subject to no other Liens than Permitted Liens. SECTION 10.02. RECORDING AND OPINIONS. (a) The Company shall furnish to the Trustee simultaneously with the execution and delivery of this Indenture an Opinion of Counsel either (i) stating that in the opinion of such counsel all action has been taken with respect to the recording, registering and filing of this Indenture, financing statements or other instruments necessary to make effective the Lien intended to be created by the Pledge and Escrow Agreement, and reciting with respect to the security interests in the Pledged Collateral, the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien effective. (b) The Company shall furnish to the Trustee on May 1 in each year beginning with May 1, 1998, an Opinion of Counsel, dated as of such date, either (i) (A) stating that, in the opinion of such counsel, action has been taken with respect to the recording, registering, filing, re-recording, re-registering and refiling of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of the Pledge and Escrow Agreement and reciting with respect to the security interests in the Pledged Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given, (B) stating that, based on relevant laws as in effect on the date of such Opinion of Counsel, all financing statements and continuation statements have been executed and filed that are necessary as of such date and during the succeeding 12 months fully to preserve and protect, to the extent such protection and preservation are possible by filing, the rights of the Holders of Notes and the Trustee hereunder and under the Pledge and Escrow Agreement with respect to the security interests in the Pledged Collateral, or (ii) stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien and assignment. (c) The Company shall otherwise comply with the provisions of TIA ss.314(b). SECTION 10.03. RELEASE OF COLLATERAL. (a) Subject to subsections (b), (c) and (d) of this Section 10.03, Pledged Collateral may be released from the Lien and security interest created by the Pledge and Escrow Agreement at any time or from time to time in accordance with the provisions of the Pledge and Escrow Agreement or as provided hereby. (b) No Pledged Collateral shall be released from the Lien and security interest created by the Pledge and Escrow Agreement pursuant to the provisions of the Pledge and Escrow Agreement unless there shall have been delivered to the Trustee the certificate required by this Section 10.03. (c) At any time when a Default or Event of Default shall have occurred and be continuing and the maturity of the Notes shall have been accelerated (whether by declaration or otherwise) and the 56 Trustee has knowledge of such Default or Event of Default, no release of Pledged Collateral pursuant to the provisions of the Pledge and Escrow Agreement shall be effective as against the Holders of Notes. (d) The release of any Pledged Collateral from the terms of this Indenture and the Pledge and Escrow Agreement shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Pledged Collateral is released pursuant to the terms of the Pledge and Escrow Agreement. To the extent applicable, the Company shall cause TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to the release of property or securities from the Lien and security interest of the Pledge and Escrow Agreement and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Pledge and Escrow Agreement, to be complied with. Any certificate or opinion required by TIA ss. 314(d) may be made by an Officer of the Company except in cases where TIA ss. 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected or approved by the Trustee in the exercise of reasonable care. SECTION 10.04. CERTIFICATES OF THE COMPANY. (a) The Company shall furnish to the Trustee, prior to each proposed release of Pledged Collateral pursuant to the Pledge and Escrow Agreement, (i) all documents required by TIA ss. 314(d) and (ii) an Opinion of Counsel, which may be rendered by internal counsel to the Company, to the effect that such accompanying documents constitute all documents required by TIA ss. 314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and such Opinion of Counsel. SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE PLEDGE AND ESCROW AGREEMENT. Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee may, in its sole discretion and without the consent of the Holders of Notes, take, on behalf of the Holders of Notes, all actions it deems necessary or appropriate in order to (a) enforce any of the terms of the Pledge and Escrow Agreement and (b) collect and receive any and all amounts payable in respect of the Obligations of the Company hereunder. The Trustee shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Pledged Collateral by any acts that may be unlawful or in violation of the Pledge and Escrow Agreement or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Pledged Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders of Notes or of the Trustee). SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE PLEDGE AND ESCROW AGREEMENT. The Trustee is authorized to receive any funds for the benefit of the Holders of Notes distributed under the Pledge and Escrow Agreement, and to make further distributions of such funds to the Holders of Notes according to the provisions of this Indenture. 57 SECTION 10.07. TERMINATION OF SECURITY INTEREST. Upon the payment in full of all Obligations of the Company under this Indenture and the Notes, or upon Legal Defeasance, the Trustee shall release the Liens pursuant to this Indenture and the Pledge and Escrow Agreement. ARTICLE 11. MISCELLANEOUS SECTION 11.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall control. SECTION 11.02. NOTICES. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address If to the Company: Premier Parks Inc. 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Chief Financial Officer Facsimile number: (405) ___________ Telephone number: (405) 475-2500 With a copy to: James M. Coughlin, Esq. Baer Marks & Upham LLP 805 Third Avenue New York, New York 10022 Facsimile number: (212) 702-5810 Telephone number: (212) 702-5700 If to the Trustee: The Bank of New York __________________________________ __________________________________ Facsimile number: ________________ Attention: _______________________ The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. 58 All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 59 (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 11.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or the Pledge and Escrow Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SECTION 11.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.10. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.11. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 60 SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 61 SIGNATURES Dated as of ____________, 1998 PREMIER PARKS INC. BY: _________________________________ Name: Title: Attest: _________________________ Name: Title: THE BANK OF NEW YORK BY: _________________________________ Name: Title: Attest: _________________________ Authorized Signatory Date: 62 EXHIBIT A (Face of Note) ================================================================================ (a) CUSIP _________________ __% Senior Discount Notes due 2006 No. ___ $ ____________ PREMIER PARKS INC. promises to pay to _____________________________________________________________ or registered assigns, the principal sum of _____________________________________________________ Dollars on ____________, 2006. Interest Payment Dates: ____________, and ____________ Record Dates: ____________, and ____________ DATED: ____________, 1998 PREMIER PARKS INC. BY: _________________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: The Bank of New York, as Trustee By: ______________________________ ================================================================================ A-1 (Back of Note) ___% Senior Notes due 2006 THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTES OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Premier Parks Inc., a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at ___% per annum from _____________, 1998 until maturity. The Company will pay interest semi-annually on _____________ and _____________ of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be _____________, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the _____________ or _____________ next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium on, the Global Note and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. A-2 3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE AND PLEDGE AND ESCROW AGREEMENT. The Company issued the Notes under an Indenture dated as of _____________, 1998 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. The Notes are obligations of the Company limited to $ _____________ million in aggregate principal amount. The Notes are secured by a pledge of Government Securities pursuant to the Pledge and Escrow Agreement referred to in the Indenture. 5. OPTIONAL REDEMPTION. (a) Except as set forth in subparagraph (b) of this Paragraph 5, the Company shall not have the option to redeem the Notes prior to _____________, 2002. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on _____________ of the years indicated below: Year Percentage - ---- ---------- 2002..................................... _______% 2003..................................... _______% 2004..................................... _______% 2005 and thereafter...................... 100.000% (b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, during the first 36 months after the date of original issuance of the Notes, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued under the Indenture at a redemption price of ____% of the principal amount thereof on the redemption date with the net cash proceeds of one or more Public Equity Offerings and/or the net cash proceeds of a Strategic Equity Investment; provided that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after the occurrence of each such redemption (excluding the Notes held by the Company and its Subsidiaries); and provided, further, that any such redemption shall occur within 60 days of the date of the closing of each such Public Equity Offering and/or Strategic Equity Investment. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. A-3 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase (the "Change of Control Payment") , the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, when the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Pledge and Escrow Agreement or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes voting as a single class, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class. However, without the consent of at least 75% in principal A-4 amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Notes), no waiver or amendment to either the Indenture or the Pledge and Escrow Agreement may make any change in the provisions of Section 4.19 or Article 10 of the Indenture or the Pledge and Escrow Agreement that adversely affects the rights of any Holder of Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes, except, if prior to _____, 2001, default for two days in payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable, upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by the Company to comply (A) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or 4.19 of the Indenture and (B) with any of the provisions of Article Four or Section 5.01 of the Indenture for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class; (iv) failure by the Company for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding voting as a single class to comply with certain other agreements in the Indenture, the Notes or the Pledge and Escrow Agreement; (v) default under certain other agreements relating to Indebtedness of the Company which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries; and (viii) the breach of certain representations, warranties or agreements set forth in the Pledge and Escrow Agreement, or a material default by the Company in the performance of any covenant set forth in the Pledge and Escrow Agreement, or repudiation by the Company of its obligations under the Pledge and Escrow Agreement, or the Pledge and Escrow Agreement shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. A-5 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN NET (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Premier Parks Inc. 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Corporate Secretary A-6 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - ------------------------------------------------------------------------------ (Insert assignee's soc. sec. or tax I.D. no.) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ (Print or type assignee's name, address and zip code) and irrevocably appoint ------------------------------------------------------ to transfer this Note on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------------------------ Date: _____________________ Your Signature: ______________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. A-7 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $________ Date: _____________ Your Signature:________________________ (Sign exactly as your name appears on the Note) Tax Identification No:__________________ Signature Guarantee. A-8 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Amount of Amount of of decrease in increase in this Global Note Signature of Principal Amount Principal Amount following such authorized officer of of of decrease (or Trustee or Note Date of Exchange this Global Note this Global Note increase) Custodian - ---------------- ---------------- ---------------- ---------------- ---------------------
A-9 EXHIBIT B FORM OF PLEDGE AND ESCROW AGREEMENT B-1 L&W DRAFT 3/18/98 ================================================================================ - -------------------------------------------------------------------------------- SENIOR DISCOUNT NOTES PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT by and between PREMIER PARKS INC. and THE BANK OF NEW YORK as Trustee - -------------------------------------------------------------------------------- ================================================================================ THIS PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"), dated as of __________, 1998, is by and between PREMIER PARKS INC. (the "Company") and The Bank of New York, as trustee under the Indenture referred to below (the "Trustee"). RECITALS A. The Senior Discount Notes. Pursuant to that certain Indenture (the "Indenture"), dated as of ______________, 1998, by and between the Company and the Trustee, the Company will issue $_______________ in aggregate principal amount at maturity of ___% Senior Discount Notes due 2008 (collectively, the "Senior Discount Notes"). Immediately after receipt of payment for the Senior Discount Notes (the "Deposit Time"), the Company will deposit $75,000,000.00 (together with such other funds as may be received by the Company or any of its Restricted Subsidiaries in the future and that are required to be deposited into the Restricted Cash Account pursuant to Section 5(d) below, "Escrow Funds"), into a segregated cash collateral trust account with the Trustee at its office at ____________, New York, New York, in the name of The Bank of New York, as Trustee, "Restricted Cash Account for Senior Discount Notes" (such account is herein referred to as the "Restricted Cash Account"). The Restricted Cash Account and all balances and investments from time to time therein shall be under the sole control and dominion of the Trustee, for the benefit of the Trustee and the ratable benefit of the Holders of the Senior Discount Notes. B. Purpose. The parties hereto desire to set forth their agreement with regard to the administration of the Restricted Cash Account, the creation of a security interest in the Collateral (as defined herein) and the conditions upon which funds will be released from the Restricted Cash Account. C. Definitions. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Security Interest. (a) Pledge and Assignment of Collateral. The Company hereby irrevocably pledges, assigns and sets over to the Trustee, and grants to the Trustee, for the benefit of the Trustee and the ratable benefit of the Holders of the Senior Discount Notes, a first priority continuing security interest in all of the Company's right, title and interest in and to all of the following, whether now owned or existing or hereafter acquired or created (collectively, the "Collateral"): (i) all funds from time to time held in the Restricted Cash Account, including, without limitation, the Escrow Funds and all certificates and instruments, if any, from time to time representing or evidencing the Restricted Cash Account or the Escrow Funds; (ii) all investments of funds in the Restricted Cash Account, which all shall constitute Government Securities, and whether held by or registered in the name of the Trustee or otherwise and all certificates and instruments, if any, from time to time representing or evidencing any such Government Securities; (iii) all notes, certificates of deposit, deposit accounts, checks and other instruments evidencing such Government Securities from time to time hereafter delivered to or otherwise possessed by the Trustee, for or on behalf of the Company, in substitution for or in addition to any or all of the then existing Collateral; (iv) all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Collateral; and (v) all proceeds of any of the foregoing, including, without limitation, cash proceeds. (b) Secured Obligations. This Agreement secures the due and punctual payment and performance of all Obligations of the Company, whether now or hereafter existing, under the Senior Discount Notes and the Indenture including, without limitation, interest and premium, if any, accrued on the Senior Discount Notes after the commencement of a bankruptcy, reorganization or similar proceeding involving the Company to the extent permitted by applicable law (collectively, the "Secured Obligations"). (c) Delivery of Collateral. All certificates or instruments, if any, representing or evidencing the Collateral shall be held by or on behalf of the Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance reasonably satisfactory to the Trustee. All securities in uncertificated or book-entry form and all security entitlements, if any, in each case representing or evidencing the Collateral shall be registered in the name of the Trustee (or any of its nominees) as the registered owner thereof by book-entry or as otherwise appropriate so as to properly identify the interest of the Trustee therein. In addition, the Trustee shall have the right, at any time following the occurrence of an Event of Default, to transfer to or to register in the name of the Trustee or any of its nominees any or all other Collateral. Except as otherwise provided herein, all Collateral shall be deposited and held in the Restricted Cash Account. The Trustee shall have the right at any time to exchange certificates or instruments representing or evidencing all or any portion of the Collateral for certificates or instruments of smaller or larger denominations in the same aggregate amount. 2 (d) Further Assurances. Prior to, contemporaneously herewith, and at any time and from time to time hereafter, the Company will, at the Company's expense, execute and deliver to the Trustee such other instruments and documents, and take all further action as it deems necessary or advisable or as the Trustee may reasonably request including an Opinion of Counsel, upon which the Trustee may conclusively rely, to confirm or perfect the security interest of the Trustee granted or purported to be granted hereby or to enable the Trustee to exercise and enforce its rights and remedies hereunder with respect to any Collateral and the Company will take all necessary action to preserve and protect the security interest created hereby as a first priority, perfected Lien and encumbrance upon the Collateral. The Company will pay all costs incurred in connection with any of the foregoing. (e) Establishing and Maintaining Accounts. So long as this Agreement is in full force and effect: (i) the Company shall establish and maintain the Restricted Cash Account with the Trustee in New York, New York. The Collateral shall at all times be subject to the sole dominion and control of the Trustee, which shall hold the Collateral and administer the Restricted Cash Account subject to the terms and conditions of this Agreement. The Company shall have no right of withdrawal from the Restricted Cash Account nor any other right or power with respect to the Collateral, except as expressly provided herein; and (ii) it shall be a term and condition of the Restricted Cash Account, notwithstanding any term or condition to the contrary in any other agreement relating to the Restricted Cash Account and except as otherwise provided by the provisions of Article 3 of this Agreement, that no amount in the Restricted Cash Account (including, without limitation, interest on or other proceeds of the Restricted Cash Account or on any Government Securities held therein) shall be paid or released to or for the account of, or withdrawn by or for the account of, the Company or any other person or entity other than the Trustee or its designated agent. (f) Transfers and Other Liens. Until termination of this Agreement pursuant to Section 8, the Company agrees that it will not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral, except for the security interest under this Agreement. (g) Trustee Appointed Attorney-in-Fact. In addition to all of the powers granted to the Trustee pursuant to Article 7 of the Indenture, the Company hereby irrevocably appoints the Trustee as the Company's attorney-in-fact, coupled with an interest, with full authority in the place and stead of the Company and in the name of the Company or otherwise, from time to time in the Trustee's discretion to take any action and to execute any instrument which the Trustee may deem necessary or advisable to accomplish the purposes of this 3 Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the Company representing any interest payment, dividend or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and the expenses of the Trustee incurred in connection therewith shall be payable by the Company. (h) Trustee May Perform. Without limiting the authority granted under Section 1(g) and except with respect to the failure of the Company to deliver investment instructions, which shall be governed by Section 2(b) hereof, if the Company fails to perform any agreement contained herein, the Trustee may, but shall not be obligated to, itself perform, or cause performance of, such agreement, and the expenses of the Trustee incurred in connection therewith shall be payable by the Company. In the event that the Trustee performs pursuant to this Section 1(h), the Company shall indemnify the Trustee in the manner provided in Section 7.07 of the Indenture. 2. Investment and Liquidation of Funds in Restricted Cash Account. Funds deposited in the Restricted Cash Account shall be invested and reinvested by the Trustee on the following terms and conditions: (a) Investments. The Company shall immediately deposit all Escrow Funds into the Restricted Cash Account. Funds deposited in the Restricted Cash Account may, subject to the provisions of Articles 2 and 3 of this Agreement, be invested and reinvested in the name of and by the Trustee, at the written direction of the Company, in direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged ("Government Securities"). (b) Investment Instructions. If the Company fails to give written investment instructions to the Trustee by 12:00 noon (New York time) on any Business Day on which there is uninvested cash and/or maturing Government Securities in the Restricted Cash Account, the Trustee is hereby unconditionally instructed and authorized and directed to invest any such cash or the proceeds of any maturing Government Securities in the Restricted Cash Account in Government Securities maturing on the next Business Day. The Company's failure to give such investment instructions shall not constitute a default or an event of default hereunder. (c) Interest. All interest earned on funds invested in Government Securities shall be held in the Restricted Cash Account and reinvested in accordance with the terms hereof and will be subject to the security interest granted hereunder to the Trustee. (d) Limitation of Trustee's Liability. In no event shall the Trustee have any liability to the Company or any other Person for investing the funds from time to time in the Restricted Cash Account in accordance with the provisions of this Article 2, regardless of whether greater income or a higher yield could have been obtained had the Trustee invested such funds in different Government Securities, or for any loss (including breakage costs or loss of principal) associated with the sale or liquidation of Government Securities in accordance with the 4 terms of this Agreement, in each case other than with respect to gross negligence or willful misconduct of the Trustee. (e) Liquidation of Funds. In liquidating any Government Securities in accordance with Article 3 of this Agreement, the Company may, so long as no Event of Default has occurred and is continuing, direct the Trustee as to which Government Securities shall be liquidated. 3. Release of Collateral Funds for Permitted Distributions. So long as no Event of Default shall have occurred and be continuing, if the Company delivers to the Trustee a duly completed and executed Permitted Distributions Certificate substantially in the form of Exhibit A hereto, the Trustee shall, within five (5) Business Days after its receipt of such Permitted Distributions Certificate, liquidate such amount of Government Securities in the Restricted Cash Account as may be necessary to obtain in cash the amount requested in such Permitted Distributions Certificate. The Permitted Distributions Certificate shall be accompanied by a supporting budget or other supporting documentation reasonably satisfactory to the Trustee detailing the Company's expected Permitted Distributions (as defined herein) for the immediately succeeding three (3) months. Upon receipt of the foregoing, unless a Trust Officer of the Trustee has actual knowledge that any statement in such Permitted Distributions Certificate is untrue (and provided that, after application of the funds requested in the applicable Permitted Distributions Certificate, the Company would be in compliance with Section 4(d) hereof), the Trustee shall transfer the amount set forth in such Permitted Distributions Certificate in immediately available funds in accordance with the terms of such Permitted Distributions Certificate. 4. Representations and Warranties. The Company hereby represents and warrants to the Trustee and the Holders of the Senior Discount Notes that: (a) The execution, delivery and performance by the Company of this Agreement are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any assets of the Company, except for the security interests granted under this Agreement. (b) The Company is the record and beneficial owner of the Collateral, free and clear of any Lien or claims of any person or entity (except for the security interests granted under this Agreement). No financing statement covering the Collateral is on file in any public office other than the financing statements filed pursuant to this Agreement. (c) This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally or general principles of equity and commercial reasonableness. 5 (d) The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in and to the Collateral, securing the payment of the Secured Obligations for the benefit of the Trustee and the ratable benefit of the Holders of Senior Discount Notes, enforceable as such against all creditors of the Company and any persons purporting to purchase any of the Collateral from the Company other than as permitted by the Indenture. (e) Except as set forth in Section 4(d) above, no consent of any other Person and no consent, authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (1) for the pledge by the Company of the Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Company or (2) for the exercise by the Trustee of the rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement. (f) No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Company, threatened by or against the Company with respect to this Agreement or any of the transactions contemplated hereby. (g) The pledge of the Collateral pursuant to this Agreement is not prohibited by any applicable law or governmental regulation, release, interpretation or opinion of the Board of Governors of the Federal Reserve System or other regulatory agency (including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System). 5. Covenants. The Company covenants and agrees with the Trustee and the Holders of Senior Discount Notes from and after the date of this Agreement until the Termination Date as follows: (a) The Company (i) will not (A) sell or otherwise dispose of, or grant any option or warrant with respect to, any of the Collateral or (B) create or permit to exist any Lien upon or with respect to any of the Collateral (except for the Lien created pursuant to this Agreement) and (ii) except as otherwise provided in this Agreement, at all times will be the sole beneficial owner of the Collateral. (b) The Company will not (a) enter into any agreement or understanding that purports to or may restrict or inhibit the Trustee's rights or remedies hereunder, including, without limitation, the Trustee's right to sell or otherwise dispose of the Collateral in accordance with the terms of this Agreement or (b) fail to pay or discharge any tax, assessment or levy of any nature not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment with regard to the Collateral. (c) The Company will use the Escrow Funds released hereunder only for Permitted Distributions as set forth in each Permitted Distributions Certificate. As used in this Agreement, the term "Permitted Distributions" means (i) the purchase, redemption, retirement or 6 other acquisition by the Company or any Restricted Subsidiary of the Company of partnership interests in the Co-Venture Partnerships or the limited partners thereof, or their successors, in accordance with and in the manner required or permitted by the terms of the Partnership Parks Agreements, (ii) the payment of any other obligation under the terms of the Partnership Parks Agreements or the Subordinated Indemnity Agreement and (iii) the payment of dividends on the Seller Preferred Stock and the Mandatorily Convertible Preferred Stock in accordance with the terms thereof as in effect on the date hereof. (d) Until _______, 2003, the Company, shall, in accordance with the terms of the Indenture, deposit into the Restricted Cash Account all cash actually dividended or otherwise distributed to or received by the Company or any of its Restricted Subsidiaries in respect of any general or limited partnership interests held in the Co-Venture Partnerships; provided that, in no event, shall the Company be required to deposit in the Restricted Cash Account any funds if, after giving effect thereto, the aggregate amount of cash and Government Securities (valued at their accreted value or principal amount, as appropriate) then held in the Restricted Cash Account would exceed $75.0 million. 6. Remedies upon Default. If any Event of Default shall have occurred and be continuing: (a) The Trustee may, without notice to the Company and at any time or from time to time, liquidate all Government Securities and transfer all funds in the Restricted Cash Account to the Paying Agent to apply such funds in accordance with Section 2.04 of the Indenture. (b) The Trustee may also exercise in respect of the Collateral, in addition to the other rights and remedies provided for herein or in the Indenture or otherwise available to it, all the rights and remedies of a secured party after a default under the Uniform Commercial Code in effect at that time in the State of New York (the "Code") (whether or not the Code applies to the affected Collateral). (c) Any cash held by the Trustee as Collateral and all proceeds received by the Trustee in respect of any sale or liquidation of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Trustee, be held by the Trustee as collateral for, and/or then or at any time thereafter be applied (after payment of any costs and expenses incurred in connection with any sale, liquidation or disposition of or realization upon the Collateral and the payment of any amounts payable to the Trustee) in whole or in part by the Trustee for the ratable benefit of the Holders of the Senior Discount Notes against all or any part of the Secured Obligations in such order as the Trustee shall elect. Any surplus of such cash or cash proceeds held by the Trustee and remaining after payment in full of all the Secured Obligations and the costs and expenses incurred by and amounts payable to the Trustee hereunder or under the Indenture shall be paid over to the Company or to whomsoever shall be lawfully entitled to receive such surplus. 7 For the avoidance of doubt, if any Event of Default shall have occurred and be continuing, the Trustee shall not release any Collateral to, or at the direction of, the Company. 7. Indemnity and Authority of the Trustee. The Company shall indemnify the Trustee against any and all loses, liabilities or expenses incurred by it arising out of or in connection with the acceptance of administration of its duties under this Agreement, including the costs and expenses of enforcing this Agreement against the Company (including this Section 7) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7 shall survive the satisfaction and discharge of this Agreement. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) of the Indenture occurs, the expenses and compensation for the services (including the fees and expenses of its agent and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee may conclusively rely upon any Officer's Certificate or Opinion of Counsel it receives pursuant to Section 7.02 of the Indenture. 8. Termination. (a) This Agreement shall create a continuing security interest in and to the Collateral and such security interest shall, unless otherwise provided in the Indenture or in this Agreement, remain in full force and effect until ___________, 2003, provided that no Default or Event of Default shall have then occurred and be continuing (the "Termination Date"). This Agreement shall be binding upon the Company, its successors and assigns, and shall inure, together with the rights and remedies of the Trustee hereunder, to the benefit of the Trustee, the Holders of Senior Discount Notes and their respective successors, transferees and assigns. (b) Subject to the provisions of Section 9(c) hereof, this Agreement shall terminate upon the Termination Date. At such time, the Trustee shall, at the written request of the Company, reassign and redeliver to the Company all of the Collateral hereunder that has not been sold, disposed of, retained or applied by the Trustee in accordance with the terms of this Agreement and the Indenture. Such reassignment and redelivery shall be without warranty 8 (either express or implied) by or recourse to the Trustee, except as to the absence of any prior assignments by or encumbrances created by the Trustee on its interest in the Collateral, and shall be at the expense of the Company. 9. Miscellaneous. (a) Waiver. Either party hereto may specifically waive any breach of this Agreement by any other party, but no such waiver shall be deemed to have been given unless such waiver is in writing, signed by the waiving party, and specifically designates the breach waived, nor shall any such waiver constitute a continuing waiver of similar or other breaches. (b) Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. (c) Survival of Provisions. All representations, warranties and covenants of the Company contained herein shall survive the execution and delivery of this Agreement, and shall terminate only upon the termination of this Agreement; provided, however that the Company's obligations pursuant to Section 7 hereof shall survive the termination of this Agreement (including any termination under applicable bankruptcy laws) or the resignation or removal of the Trustee. (d) Assignment. This Agreement shall inure to and be binding upon the parties and their respective successors and permitted assigns; provided, however, that the Company may not assign its rights or obligations hereunder without the express prior written consent of the Trustee, acting at the direction of the Holders as provided in the Indenture. (e) Entire Agreement; Amendments. This Agreement and the Indenture contain the entire agreement among the parties with respect to the subject matter hereof and supersede any and all prior agreements, understandings and commitments with respect thereto, whether oral or written; provided, however, that this Agreement is executed and accepted by the Trustee subject to all terms and conditions of its acceptance of the trust under the Indenture, as fully as if said terms and conditions were set forth at length herein. This Agreement may be amended only by a writing signed by duly authorized representatives of both parties. The Trustee may execute an amendment to this Agreement only if the requisite consent of the Holders of the Senior Discount Notes required by Section 9.02 of the Indenture has been obtained, unless no such consent is required by such Section 9.02 of the Indenture. (f) Notices. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail (registered or certified return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: 9 If to the Company: Premier Parks Inc. 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Chief Financial Officer Facsimile number: (405) ________ Telephone number: (405) 475-2500 With a copy to: James M. Coughlin, Esq. Baer Marks & Upham LLP 805 Third Avenue New York, New York 10022 Facsimile number: (212) 702-5810 Telephone number: (212) 702-5700 If to the Trustee: The Bank of New York ___________________ ___________________ Attention: ___________________ Facsimile number: (212) ___________ Telephone number: (212) ___________ The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other that those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. (g) Expenses. The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Agreement and services hereunder as the Company and the Trustee have separately agreed. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. 10 (h) Security Interest Absolute. All rights of the Trustee and the Holders of Senior Discount Notes and security interests hereunder, and all obligations of the Company hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Indenture or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Indenture; (c) any exchange, surrender, release or non-perfection of any Liens on any other collateral for all or any of the Secured Obligations; or (d) to the extent permitted by applicable law, any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Company in respect of the Secured Obligations or of this Agreement. (i) Counterpart Originals. The parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them represent the same agreement. (j) Limitation by Law. All rights, remedies and powers provided herein may be exercised only to the extent that they will not render this Agreement not entitled to be recorded, registered or filed under provisions of any applicable law. (k) Rights of Holders of Senior Discount Notes. No Holder of Senior Discount Notes shall have any independent rights hereunder other than those rights granted to individual Holders of Senior Discount Notes pursuant to Section 6.07 of the Indenture; provided that nothing in this subsection shall limit any rights granted to the Trustee under the Senior Discount Notes or the Indenture. (l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES. (i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF SENIOR DISCOUNT NOTES IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. (ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR DISCOUNT NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT 11 OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS CLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS. (iii) THE COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. (iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE NOR ANY HOLDER OF SENIOR DISCOUNT NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF SENIOR DISCOUNT NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDER OF SENIOR DISCOUNT NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. (v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF SENIOR DISCOUNT NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND 12 OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF SENIOR DISCOUNT NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF SENIOR DISCOUNT NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS OF SENIOR DISCOUNT NOTES ON THE OTHER HAND. [SIGNATURE PAGE FOLLOWS] 13 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Pledge, Escrow and Disbursement Agreement as of the day first written above. COMPANY: PREMIER PARKS INC. By: __________________________________ Name: Title: TRUSTEE: THE BANK OF NEW YORK By: __________________________________ Name: Title: EXHIBIT A [Form of] Permitted Distributions Certificate PREMIER PARKS INC. Date:__________________ The undersigned executive officers of Premier Parks Inc., a Delaware corporation (the "Company"), hereby certify, pursuant to Section 3(a) of the Pledge, Escrow and Disbursement Agreement, dated as of ___________, 1998 (the "Escrow Agreement"), by and between the Company and The Bank of New York, as trustee (the "Trustee"), under the Indenture dated as of __________, 1998 (the "Indenture"), between the Company and the Trustee, that: 1. This request for release of funds has been duly authorized by all necessary corporate action and does not contravene, or constitute a default under, any provision of applicable law or regulation or the certificate of incorporation of the Company or of the Escrow Agreement, the Indenture or any other agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any assets of the Company; 2. The Company will use the Necessary Funds (as defined below) for the following Permitted Distributions (as defined in the Escrow Agreement) within two Business Days of receipt thereof: 3. Attached hereto is supporting documentation detailing the Company's expected Permitted Distributions for the immediately succeeding three (3) months; and 4. To date, the Company has received $____________ from the Restricted Cash Account. 5. No Event of Default has occurred and is continuing under the Indenture. The Company hereby requests the Trustee to liquidate $_________ worth of Government Securities in the Restricted Cash Account by not later than 12:00 noon (New York time) on _________ __, _____ and to transfer $________ (the "Necessary Funds") in immediately available funds to _________ at _________. B-1 Capitalized terms used herein without definition shall have the meanings set forth in the Indenture. By: __________________________________ Name: ________________________________ Title: _______________________________ By: __________________________________ Name: ________________________________ Title: _______________________________ B-2 EX-4.(P) 10 INDENTURE-PREMIER PARKS SR. DISC. NOTES DUE 2008 Exhibit 4(p) L&W DRAFT 3/18/98 ================================================================================ PREMIER PARKS INC. $ __% SENIOR DISCOUNT NOTES DUE 2008 ------------------------------- INDENTURE Dated as of __________, 1998 ------------------------------- ------------------------------- THE BANK OF NEW YORK as Trustee ------------------------------- ================================================================================ CROSS-REFERENCE TABLE* (a) Trust Indenture Act Section Indenture Section 310 (a)(1)..........................................................7.10 (a)(2) .............................................................7.10 (a)(3)..............................................................N.A. (a)(4)..............................................................N.A. (a)(5)..............................................................7.10 (i)(b)..............................................................7.10 (ii)(c).............................................................N.A. 311(a)..............................................................7.11 (b).................................................................7.11 (iii(c).............................................................N.A. 312 (a).............................................................2.05 (b).................................................................11.03 (iv)(c).............................................................11.03 313(a)..............................................................7.06 (b)(1)..............................................................10.03 (b)(2)..............................................................7.07 (v)(c)..............................................................7.06; 11.02 (vi)(d).............................................................7.06 314(a)..............................................................4.03; 11.02 (A)(b)..............................................................10.02 (c)(1)..............................................................11.04 (c)(2)..............................................................11.04 (c)(3)..............................................................N.A. (d).................................................................10.03, 10.04, 10.05 (vii)(e)............................................................11.05 (f).................................................................NA 315 (a).............................................................7.01 (b).................................................................7.05, 11.02 (A)(c)..............................................................7.01 (d).................................................................7.01 (e).................................................................6.11 316 (a)(last sentence)..............................................2.09 (a)(1)(A)...........................................................6.05 (a)(1)(B)...........................................................6.04 (a)(2)..............................................................N.A. (b).................................................................6.07 (B)(c)..............................................................2.12 317 (a)(1)..........................................................6.08 (a)(2)..............................................................6.09 (b).................................................................2.04 318 (a).............................................................11.01 (b).................................................................N.A. (c).................................................................11.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. 2 TABLE OF CONTENTS Page ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1 Section 1.01. Definitions..................................................1 Section 1.02. Other Definitions...........................................16 Section 1.03..............................................................17 Section 1.04. Rules of Construction.......................................17 ARTICLE 2. THE NOTES........................................................18 Section 2.01. Form and Dating.............................................18 Section 2.02. Execution and Authentication................................18 Section 2.03. Registrar and Paying Agent..................................19 Section 2.04. Paying Agent to Hold Money in Trust.........................19 Section 2.05. Holder Lists................................................19 Section 2.06. Transfer and Exchange.......................................19 Section 2.07. Replacement Notes...........................................22 Section 2.08. Outstanding Notes...........................................22 Section 2.09. Treasury Notes..............................................23 Section 2.10. Temporary Notes.............................................23 Section 2.11. Cancellation................................................23 Section 2.12. Defaulted Interest..........................................23 ARTICLE 3. REDEMPTION AND PREPAYMENT........................................24 Section 3.01. Notices to Trustee..........................................24 Section 3.02. Selection of Notes to Be Redeemed...........................24 Section 3.03. Notice of Redemption........................................24 Section 3.04. Effect of Notice of Redemption..............................25 i Section 3.05. Deposit of Redemption Price.................................25 Section 3.06. Notes Redeemed in Part......................................26 Section 3.07. Optional Redemption.........................................26 Section 3.08. Mandatory Redemption........................................26 Section 3.09. Offer to Purchase by Application of Excess Proceeds.........26 ARTICLE 4. COVENANTS........................................................28 Section 4.01. Payment of Notes............................................28 Section 4.02. Maintenance of Office or Agency.............................28 Section 4.03. Reports.....................................................29 Section 4.04. Compliance Certificate......................................29 Section 4.05. Taxes.......................................................30 Section 4.06. Stay, Extension and Usury Laws..............................30 Section 4.07. Restricted Payments.........................................30 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries................................................32 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..33 Section 4.10. Asset Sales.................................................35 Section 4.11. Transactions with Affiliates................................36 Section 4.12. Liens.......................................................37 Section 4.13. Line of Business............................................37 Section 4.14. Corporate Existence.........................................37 Section 4.15. Offer to Repurchase Upon Change of Control..................38 Section 4.16. Limitation on Sale and Leaseback Transactions...............38 Section 4.17. Limitation on Issuances and Sales of Equity Interests of Restricted Subsidiaries.....................................38 Section 4.18. Payments for Consent........................................39 Section 4.19. Restricted Cash Escrow Agreement............................39 ii ARTICLE 5. SUCCESSORS.......................................................39 Section 5.01. Merger, Consolidation, or Sale of Assets....................39 Section 5.02. Successor Corporation Substituted...........................40 ARTICLE 6. DEFAULTS AND REMEDIES............................................40 Section 6.01. Events of Default...........................................40 Section 6.02. Acceleration................................................42 Section 6.03. Other Remedies..............................................42 Section 6.04. Waiver of Past Defaults.....................................43 Section 6.05. Control by Majority.........................................43 Section 6.06. Limitation on Suits.........................................43 Section 6.07. Rights of Holders of Notes to Receive Payment...............43 Section 6.08. Collection Suit by Trustee..................................44 Section 6.09. Trustee May File Proofs of Claim............................44 Section 6.10. Priorities..................................................44 Section 6.11. Undertaking for Costs.......................................45 ARTICLE 7. TRUSTEE..........................................................45 Section 7.01. Duties of Trustee...........................................45 Section 7.02. Rights of Trustee...........................................46 Section 7.03. Individual Rights of Trustee................................46 Section 7.04. Trustee's Disclaimer........................................46 Section 7.05. Notice of Defaults..........................................47 Section 7.06. Reports by Trustee to Holders of the Notes..................47 Section 7.07. Compensation and Indemnity..................................47 Section 7.08. Replacement of Trustee......................................48 Section 7.09. Successor Trustee by Merger, etc............................49 Section 7.10. Eligibility; Disqualification...............................49 iii Section 7.11. Preferential Collection of Claims Against Company...........49 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................49 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....49 Section 8.02. Legal Defeasance and Discharge..............................49 Section 8.03. Covenant Defeasance.........................................50 Section 8.04. Conditions to Legal or Covenant Defeasance..................50 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.......................51 Section 8.06. Repayment to Company........................................52 Section 8.07. Reinstatement...............................................52 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................53 Section 9.01. Without Consent of Holders of Notes.........................53 Section 9.02. With Consent of Holders of Notes............................53 Section 9.03. Compliance with Trust Indenture Act.........................55 Section 9.04. Revocation and Effect of Consents...........................55 Section 9.05. Notation on or Exchange of Notes............................55 Section 9.06. Trustee to Sign Amendments, etc.............................55 ARTICLE 10 COLLATERAL AND SECURITY..........................................55 Section 10.01. Pledge, Escrow and Disbursement Agreement..................55 Section 10.02. Recording and Opinions.....................................56 Section 10.03. Release of Collateral......................................57 Section 10.04. Certificates of the Company................................57 Section 10.05. Authorization of Actions to Be Taken by the Trustee Under the Restricted Cash Escrow Agreement.......................57 Section 10.06. Authorization of Receipt of Funds by the Trustee Under the Restricted Cash Escrow Agreement......................58 Section 10.07. Termination of Security Interest..........................58 iv ARTICLE 11. MISCELLANEOUS...................................................58 Section 11.01. Trust Indenture Act Controls...............................58 Section 11.02. Notices....................................................58 Section 11.03. Communication by Holders of Notes with Other Holders of Notes...................................................59 Section 11.04. Certificate and Opinion as to Conditions Precedent.........59 Section 11.05. Statements Required in Certificate or Opinion..............60 Section 11.06. Rules by Trustee and Agents................................60 Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders...........................................60 Section 11.08. Governing Law..............................................60 Section 11.09. No Adverse Interpretation of Other Agreements..............61 Section 11.10. Successors.................................................61 Section 11.11. Severability...............................................61 Section 11.12. Counterpart Originals......................................61 Section 11.13. Table of Contents, Headings, etc...........................61 EXHIBITS Exhibit A FORM OF NOTE Exhibit B FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT v INDENTURE dated as of __________, 1998 between Premier Parks Inc., a Delaware corporation (the "Company"), and The Bank of New York, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the __% Senior Discount Notes due 2008 (the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Accreted Value" means, as of any date of determination prior to_______, 2003, with respect to any Note, the sum of (a) the initial offering price (which shall be calculated by discounting the aggregate principal amount at maturity of such Note at a rate of ___% per annum, compounded semi-annually on each ________ and _______ from _______, 2003 to the date of issuance) of such Note and (b) the portion of the excess of the principal amount of such Note over such initial offering price that shall have been accreted thereon through such date, such amount to be so accreted on a daily basis at __% per annum of the initial offering price of such Note, compounded semi-annually on each _____ and _________ from the date of issuance of the Notes through the date of determination, computed on the basis of a 360-day year of twelve 30-day months; provided that, on and after ______, 2003, the Accreted Value of each Note shall be equal to the principal amount at maturity of such Note. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or becomes a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section 5.01 and not by Section 4.10 hereof), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $10.0 million or (b) for net proceeds in excess of $10.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) the transfer of Equity Interests in any Restricted Subsidiary pursuant to the Subordinated Indemnity Agreement or the Partnership Parks Agreements, (iv) the issuance of Equity Interests by a Restricted Subsidiary to any employee thereof or as consideration for the acquisition of all or substantially all of the assets of, or a majority of the Voting Stock of, any Person (or a business unit or division of such Person), provided that the primary business of such Person (or such unit or division) is a Permitted Business, (v) the substitution of property in accordance with the terms of the Parcel Lease, dated November 7, 1997, between Marine World and Park Management Corp. as the same may be modified or amended from time to time after the date of this Indenture, provided such modification or amendment does not adversely affect the interests of the Holders in any material respect, and (vi) a Restricted Payment that is permitted Section 4.07 hereof. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Beneficial Share Assignment Agreement" means the Beneficial Share Assignment Agreement, dated as of the date of the consummation of the Six Flags Acquisition, between TW-SPV Co. and the Company. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars or foreign currency, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case 2 with any lender party to the Credit Facilities or with any commercial bank having capital and surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than thirty days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within one year after the date of acquisition, (vi) securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory, the securities of which state, commonwealth, territory, political subdivision or taxing authority (as the case may be) are rated at least "A" by Standard & Poor's Corporation or "A" by Moody's Investors Service, Inc. and (vii) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (vi) of this definition. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35% of the Voting Stock of the Company, or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Common Stock" means the common stock, par value $.05 per share of the Company. "Common Stock Offering" means the offering of 13,000,000 shares of Common Stock and up to an additional 1,950,000 shares of Common Stock to cover over-allotments. "Company" means Premier Parks Inc., and any and all successors thereto. "Company Notes" means the Notes and the Senior Notes. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (ii) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iii) depreciation, amortization (including any depreciation or amortization arising out of purchases by the Company or any Restricted Subsidiary of Equity Interests in the partners of the Co-Venture Partnerships and amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, minus (iv) non-cash items increasing such Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP (other than 3 accrual of income in the ordinary course of business in respect of a future cash payment). Notwithstanding any other provision of this Indenture to the contrary, "Consolidated Cash Flow" of the Company for any period will be deemed to include 100% of the cash distributions to the Company or any of its Restricted Subsidiaries in respect of such period from the Co-Venture Partnerships, directly or indirectly, out of the Consolidated Cash Flow of the Co-Venture Partnerships in respect of such period. "Consolidated Indebtedness" means, with respect to any Person as of any date of determination, the sum, without duplication, of (i) the total amount of Indebtedness and Attributable Debt of such Person and its Restricted Subsidiaries, plus (ii) the total amount of Indebtedness and Attributable Debt of any other Person, to the extent that the same has been guaranteed by the referent Person or one or more of its Restricted Subsidiaries, plus (iii) the aggregate liquidation value of all Disqualified Stock of such Person and all preferred stock of Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization or original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness or Attributable Debt of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such guarantee or Lien is called upon). The term "Consolidated Interest Expense" shall not include the consolidated interest expense of any Person with respect to (i) any obligations in respect of the SFEC Zero Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is in full force and effect and the trustee under the indenture governing the New SFEC Notes maintains a valid and perfected security interest in cash or Government Securities in an amount at least equal to the outstanding principal amount of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or (y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and prior to any deduction in respect of dividends on any series of preferred stock of such Person, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (iii) the cumulative effect of a change in accounting principles shall be excluded. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity (including stated capital, additional paid-in capital and retained earnings) of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of 4 preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (x) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the date of this Indenture in the book value of any asset owned by such Person or a consolidated Subsidiary of such Person, (y) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in each case, Permitted Investments), and (z) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Co-Venture Partnerships" means (i) Six Flags Over Georgia, Ltd., a Georgia Limited Partnership, (ii) Texas Flags, Ltd., a Texas Limited Partnership and (iii) Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership. "Credit Facilities" means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Premier Credit Facility and the Six Flags Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. "Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Debt to Cash Flow Ratio" means, as of any date of determination, the ratio of (a) the Consolidated Indebtedness of the Company as of such date to (b) the Consolidated Cash Flow of the Company for the four most recent full fiscal quarters ending immediately prior to such date for which financial statements have been filed with the SEC, determined on a pro forma basis after giving effect to all acquisitions or Asset Sales made by the Company and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date 5 shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (ii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Disqualified Stock" means any Capital Stock (other than the Seller Preferred Stock) that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Company Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Escrow Account" means the escrow account for the initial deposit of approximately $76.3 million dollars of the net proceeds from the sale of the Senior Notes under the Pledge and Escrow Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Indebtedness" means up to $______ million in aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Premier Credit Facility and the Six Flags Credit Facility) in existence on the date of this Indenture, until such amounts are repaid. "GAAP" means generally accepted accounting principles 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 6 other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Global Note" means the Global Note in the form of Exhibit A hereto issued in accordance with Section 2.01 hereof. "Global Note Legend" means the legend set forth in Section 2.06(f), which is required to be placed on the Global Note issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged. "guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Holder" means a Person in whose name a Note is registered. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. The term "Indebtedness" shall not include (i) any obligations in respect of the SFEC Zero Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is in full force and effect and the trustee under the indenture governing the New SFEC Notes maintains a valid and perfected security interest in cash or Government Securities in an amount sufficient to pay the aggregate principal amount at maturity of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or (y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement. "Indenture" means this Indenture, as amended or supplemented from time to time. 7 "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees and any deposit or advance made pursuant to any contract entered into in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company (other than pursuant to the terms of the Partnership Parks Agreements or the Subordinated Indemnity Agreement) such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07 "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Mandatorily Convertible Preferred Stock" means the Company's ___% Mandatorily Convertible Preferred Stock. "Marine World" means the Marine World Joint Powers Authority or any successor thereto. "Marine World Agreements" mean (i) the Parcel Lease, dated November 7, 1997, between Marine World and Park Management Corp. ("PMC"), (ii) the Reciprocal Easement Agreement, dated November 7, 1997, between Marine World and PMC, (iii) the Revenue Sharing Agreement, dated November 7, 1997, among Marine World, PMC and the Redevelopment Agency of the City of Vallejo (the "Agency"), (iv) the Purchase Option Agreement, dated as of August 29, 1997, among Marine World, the Agency, the City of Vallejo and PMC and (v) the 1997 Management Agreement, dated as of February 1, 1997, between Marine World and PMC, as amended, in each case, as the same may be modified or amended from time to time after the date of this Indenture, provided such modification or amendment does not adversely affect the interests of the Holders in any material respects. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, 8 excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) and (ii) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New SFEC Notes" means SFEC's ___ % Senior Notes due 2006. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Notes" has the meaning assigned to it in the preamble to this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offerings" means the offerings of the Notes, Common Stock, Senior Notes and Mandatorily Convertible Preferred Stock by the Company and the offering of the New SFEC Notes by SFEC all consummated on the date hereof. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. 9 "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means a Person who has an account with the Depositary. "Partnership Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., Six Flags Theme Parks Inc. and Six Flags Entertainment Corporation and the Related Agreements (as defined therein), (ii) Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., Six Flags Theme Parks Inc. and Six Flags Entertainment Corporation and the Related Agreements (as defined therein), and (iii) the Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time after the date of this Indenture provided such modification or amendment does not adversely affect the interests of the Holders in any material respect. "Permitted Business" means any business related, ancillary or complementary to the businesses of the Company and its Restricted Subsidiaries on the date of this Indenture. "Permitted Distributions" means (i) the purchase, redemption, retirement or other acquisition by the Company or any Restricted Subsidiary of the Company of partnership interests in the Co-Venture Partnerships or the limited partners thereof, or their successors, in accordance with and in the manner required or permitted by the terms of the Partnership Parks Agreements (ii) the payment of any other obligation under the terms of the Partnership Parks Agreements or the Subordinated Indemnity Agreement and (iii) the payment of dividends on the Seller Preferred Stock and the Mandatorily Convertible Preferred Stock in accordance with the terms thereof as in effect on the date of this Indenture. "Permitted Investments" means an Investment by the Company or any Restricted Subsidiary in (i) cash or Cash Equivalents, (ii) the Company, a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Permitted Business; (iii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets (or the assets of any business unit or division of such Person) to, the Company or a Restricted Subsidiary; provided, however, that such Person's (or such unit's or division's) primary business is a Permitted Business; (iv) another Person if the aggregate amount of all Investments in all such other Persons does not exceed $25.0 million at any one time outstanding (with each Investment being valued as of the date made and without giving effect to subsequent changes in value); provided, however, that such Person's primary business is a Permitted Business; (v) promissory notes received as consideration for an Asset Sale which are secured by a Lien on the asset subject to such Asset Sale; provided that the aggregate amount of all such promissory notes at any one time outstanding does not exceed $5.0 million; (vi) non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10; (vii) assets acquired solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (viii) receivables owing to the Company or any 10 Restricted Subsidiary, if created or acquired in the ordinary course of business; (ix) payroll, travel and similar advances that are made in the ordinary course of business; (x) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; (xi) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments; and (xii) other Investments in any Person at any time outstanding (each such Investment being measured on the date each such Investment was made and without giving effect to subsequent changes in value) not to exceed 50% of the aggregate amount of net cash proceeds received by the Company from the Common Stock Offering in excess of $700.0 million; provided, however, that any proceeds that are used as a basis for a Restricted Payment under clause (ii) of the second paragraph of Section 4.07 or otherwise will be disregarded for purposes of this clause (xii). "Permitted Liens" means (a) Liens to secure Indebtedness of a Restricted Subsidiary of the Company that was permitted to be incurred under this Indenture; (b) Liens existing on the Issue Date; (c) Liens on property or shares of Capital Stock of another Person at the time such other Person becomes a Restricted Subsidiary of such Person; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming such a Restricted Subsidiary; provided further, however, that such Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries; (d) Liens on property at the time such Person or any of its Restricted Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Restricted Subsidiary of such Person; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries; (e) Liens securing Indebtedness or other obligations of a Restricted Subsidiary of such Person owing to such Person or a Restricted Subsidiary of such Person; (f) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same type of property securing such Hedging Obligations; (g) Liens to secure any Permitted Refinancing Indebtedness; provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property) and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness refinanced at the time the original Lien became a Permitted Lien and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement; (h)(i) mortgages, liens, security interests, restrictions or encumbrances that have been placed by any developer, landlord or other third party on property over which the Company or any Restricted Subsidiary of the Company has easement rights or on any real property leased by the Company or any Restricted Subsidiary of the Company and subordination or similar agreements relating thereto and (ii) any condemnation or eminent domain proceedings affecting any real property; (i) pledges or deposits by such Person under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (j) Liens imposed by law, such as carriers', warehousemen's and mechanic's Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; (k) Liens for property taxes not yet due or payable or subject to penalties for non-payment or which are being contested in good faith and 11 by appropriate proceedings; (l) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially impair the use of such properties in the operation of the business of such Person; (m) Liens securing Purchase Money Indebtedness; provided, however, that (i) the Indebtedness secured by such Liens is otherwise permitted to be incurred under this Indenture, (ii) the principal amount of any Indebtedness secured by any such Lien does not exceed the cost of assets or property so acquired or constructed and (iii) the amount of Indebtedness secured by any such Lien is not subsequently increased; (n) Liens arising out of the transactions contemplated by the Partnership Parks Agreements, the Marine World Agreements, the Subordinated Indemnity Agreement or the Six Flags Agreement; and (o) Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $20.0 million at any one time outstanding. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses, including premiums, incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Company Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Senior Notes on terms at least as favorable to the Holders of Senior Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Pledge and Escrow Agreement" means the Pledge, Escrow and Disbursement Agreement, dated as of the date of this Indenture, by and between the Company and the Senior Note Trustee governing the disbursement of funds from the Escrow Account, as amended from time to time in accordance with the Senior Note Indenture. "Pledged Collateral" means the Collateral (as defined in the Restricted Cash Escrow Agreement) under the Restricted Cash Escrow Agreement. "Premier Credit Facility" means that certain $300.0 million senior secured credit facility between ________ and Premier Operations dated as of _____, 1998. 12 "Premier Operations" means Premier Parks Operations Inc., a wholly owned subsidiary of the Company. "Public Equity Offering" means an underwritten primary public offering of common stock of the Company pursuant to an effective registration statement under the Securities Act. "Purchase Money Indebtedness" means Indebtedness (i) consisting of the deferred purchase price of property, conditional sale obligations, obligation under any title retention agreement and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (ii) incurred to finance the acquisition by the Company or a Restricted Subsidiary of the Company of such asset, including additions and improvements; provided, however, that any Lien arising in connection with any such Indebtedness shall be limited to the specified asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property on which such asset is attached; and provided further, that such Indebtedness is incurred within 180 days after such acquisition, addition or improvement by the Company or Restricted Subsidiary of such asset. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Cash Escrow Agreement" means the Pledge, Escrow and Disbursement Agreement, dated as of the date of this Indenture, by and between the Company and the Trustee governing the disbursement of funds from the Restricted Cash Account, as amended from time to time in accordance with this Indenture. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Seller Preferred Stock" means the Company's Convertible Redeemable Preferred Stock issued to the sellers of SFEC common stock pursuant to the Six Flags Agreement. "Senior Note Indenture" means that certain indenture, dated as of the date hereof, between the Company and The Bank of New York, as trustee, as amended or supplemented from time to time, relating to the Senior Notes. "Senior Note Trustee" means the trustee under the Senior Notes until a successor replaces it in accordance with the applicable provisions of the Senior Note Indenture and thereafter means the successor serving hereunder. "Senior Notes" means the Company's ___% Senior Notes due 2006 issued pursuant to the Senior Note Indenture. 13 "SFEC" means Six Flags Entertainment Corporation, a wholly owned subsidiary of the Company. "SFEC Pledge and Escrow Agreement" means the Pledge, Escrow and Disbursement Agreement dated as of the date hereof, by and between SFEC and The Bank of New York, as trustee, as amended from time to time in accordance with the indenture governing the New SFEC Notes. "SFEC Zero Coupon Senior Notes" means SFEC's Zero Coupon Senior Notes due 1999. "SFTP" means Six Flags Theme Parks Inc., a wholly owned subsidiary of SFEC. "Six Flags Acquisition" means the acquisition by the Company by merger of all of the capital stock of SFEC from its current stockholders pursuant to the Six Flags Agreement. "Six Flags Agreement" means that certain Agreement and Plan of Merger dated as of February 9, 1998, by and among the Company, Premier Parks Holdings Corporation, a Delaware Corporation, Premier Parks Merger Corporation, a Delaware Corporation, a certain group of sellers listed therein and SFEC. "Six Flags Credit Facility" means that $472.0 million senior secured credit facility between SFTP and _____ dated as of ______, 1998. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Specified Amount" means, as of any date, (i) the product of (a) the Consolidated Cash Flow of the Company for the most recently ended four-quarter period for which financial statements have been filed with the SEC determined on a pro forma basis after giving effect to all acquisitions or Asset Sales made by the Company and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period, times (b) 0.75. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Strategic Equity Investment" means a cash contribution to the common equity capital of the Company or a purchase from the Company of common Equity Interests (other than Disqualified Stock), in either case by or from a Strategic Equity Investor and for aggregate cash consideration of at least $25.0 million. "Strategic Equity Investor" means, as of any date, any Person (other than an Affiliate of the Company) engaged in a Permitted Business which, as of the day immediately before such date, had a Total Equity Market Capitalization of at least $1.0 billion. 14 "Subordinated Indemnity Agreement" means the Subordinated Indemnity Agreement, dated as of the date of the consummation of the Six Flags Acquisition, among the Company, SFEC and its subsidiaries, Time Warner Inc., Time Warner Entertainment Company, L.P. and TW-SPV Co. , as the same may be modified or amended from time to time after the date hereof, provided such modification or amendment does not adversely affect the interests of the Holders in any material fashion. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% (49% in the case of Walibi, S.A.) of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); provided that, notwithstanding the foregoing, each of SFOG A Holdings, SFOG B Holdings, SFOT I Holdings and SFOT II Holdings shall be deemed to be a Subsidiary of the Company for all purposes under this Indenture so long as (x) the Subordinated Indemnity Agreement and the Beneficial Share Assignment Agreement shall each be in full force and effect and no default or event of default shall have occurred thereunder, and (ii) any partnership or limited liability company (a) the sole general partner or the managing general partner (or equivalent) of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Total Equity Market Capitalization" of any Person means, as of any day of determination, the sum of (i) the product of (A) the aggregate number of outstanding primary shares of common stock of such Person on such day (which shall not include any options or warrants on, or securities convertible or exchangeable into, shares of common stock of such Person) multiplied by (B) the average closing price of such common stock listed on a national securities exchange or the Nasdaq National Market System over the 20 consecutive business days immediately preceding such day, plus (ii) the liquidation value of any outstanding shares of preferred stock of such Person on such day. "Trustee" means the party named as such in the preamble hereto until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Subsidiary" means (i) any Subsidiary (other than Premier Operations or SFTP or any successor to either of them) that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer 15 of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustees by filing with the Trustees a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote by the holder thereof in the election of the Board of Directors (or comparable body) of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person or by such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section "Affiliate Transaction"..............................4.11 "Asset Sale".........................................4.10 "Asset Sale Offer"...................................3.09 "Authentication Order"...............................2.02 "Bankruptcy Law".....................................4.01 "Basket Period"......................................4.07 "Change of Control Offer"............................4.15 "Change of Control Payment"..........................4.15 "Change of Control Payment Date" ....................4.15 "Covenant Defeasance"................................8.03 "Event of Default"...................................6.01 16 "Excess Proceeds"....................................4.10 "incur"..............................................4.09 "Legal Defeasance" ..................................8.02 "Offer Amount".......................................3.09 "Offer Period".......................................3.09 "Paying Agent".......................................2.03 "Permitted Debt".....................................4.09 "Purchase Date"......................................3.09 "Registrar"..........................................2.03 "Restricted Cash Account"............................4.19 "Restricted Payments"................................4.07 SECTION 1.03. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and 17 (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES SECTION 2.01. FORM AND DATING. (a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Note. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount at maturity of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount at maturity of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount at maturity of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount at maturity stated in paragraph 4 of the Notes. The aggregate principal amount at maturity of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. 18 The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Note. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Note. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA ss. 312(a). SECTION 2.06. TRANSFER AND EXCHANGE. (a) Transfer and Exchange of the Global Note. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. A Global Note will be exchanged by the 19 Company for Definitive Notes if (i) the Company delivers to the Trustee notice in writing that the Depositary it is unwilling or unable to continue to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company in its sole discretion determines that the Global Note (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. A Global Note also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Note. The transfer and exchange of beneficial interests in the Global Note shall be effected through the Depositary, in accordance with the provisions of this Indenture and the rules and procedures of the Depositary. Transfers of beneficial interests in the Global Note also shall require compliance with subparagraph (i) below: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in a Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (c) Transfer or Exchange of Beneficial Interests in the Global Note for Definitive Notes. If any holder of a beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then the Trustee shall cause the aggregate principal amount at maturity of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in the Global Note. A Holder of a Definitive Note may exchange such Note for a beneficial interest in a Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Definitive Note and increase or cause to be increased the aggregate principal amount at maturity of the Global Note. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required 20 pursuant to the following provisions of this Section 2.06(e). A Holder of Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of a Definitive Note. (f) Global Note Legend. The following legend shall appear on the face of the Global Note issued under this Indenture in substantially the following form, unless specifically stated otherwise in the applicable provisions of this Indenture: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (g) Cancellation and/or Adjustment of the Global Note. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (h) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate the Global Note and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. 21 (iv) The Global Note and Definitive Notes issued upon any registration of transfer or exchange of a Global Note or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Note or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (c) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate the Global Note and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. SECTION 2.07. REPLACEMENT NOTES If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. 22 If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. SECTION 2.10. TEMPORARY NOTES Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. 23 At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. REDEMPTION AND PREPAYMENT SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate; provided that, subject to the limitations described above, the Company may, at its option, elect to redeem either Senior Notes, Notes, or both Senior Notes and Notes; and provided further that no Company Notes of $1,000 or less shall be redeemed in part. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.03. NOTICE OF REDEMPTION Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; 24 (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. 25 SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.07. OPTIONAL REDEMPTION. (a) Except as set forth in clause (b) of this Section 3.07, the Company shall not have the option to redeem the Notes pursuant to this Section 3.07 prior to __________, 2003. Thereafter, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on ___________ of the years indicated below: Year Percentage 2003........................................ _______% 2004........................................ _______ 2005........................................ _______ 2006 and thereafter......................... 100.000% (b) Notwithstanding the foregoing, during the first 36 months after the date of original issuance of the Notes, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount at maturity of Notes originally issued under this Indenture at a redemption price of ___% of the Accreted Value thereof on the redemption date with the net cash proceeds of one or more Public Equity Offerings and/or the net cash proceeds of a Strategic Equity Investment; provided that at least 65% of the aggregate principal amount at maturity of Notes originally issued remains outstanding immediately after the occurrence of each such redemption (excluding the Notes held by the Company and its Subsidiaries); and provided, further, that any such redemption shall occur within 60 days of the date of the closing of each such Public Equity Offering and/or Strategic Equity Investment. (c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. SECTION 3.08. MANDATORY REDEMPTION. Except as set forth in Sections 4.10 and 4.15, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the 26 "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrete or accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount at maturity of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and 27 (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4. COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required 28 office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. SECTION 4.03. REPORTS. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case, within the time periods specified in the SEC's rules and regulations. In addition, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA ss. 314(a). SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and the Restricted Cash Escrow Agreement, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and the Restricted Cash Escrow Agreement and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture or the Restricted Cash Escrow Agreement (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which 29 payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.05. TAXES. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.07. RESTRICTED PAYMENTS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of any Equity Interests of the Company (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of any Equity Interests of the Company in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company that is subordinated to the 30 Company Notes, except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash Flow test set forth in the first paragraph of Section 4.09; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments declared or made after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii) and (iii) of the next succeeding paragraph) shall not exceed, at the date of determination, the sum, without duplication, of (i) an amount equal to the Company's Consolidated Cash Flow for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Company's most recently ended full fiscal quarter for which financial statements have been filed with the SEC (the "Basket Period") less the product of 1.4 times the Company's Consolidated Interest Expense for the Basket Period, plus (ii) 100% of the aggregate net cash proceeds received by the Company after the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale after the date of this Indenture of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than (w) Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company, (x) Equity Interests sold in the Offerings and (y) any sale of Equity Interests of the Company the net cash proceeds of which are applied pursuant to clause (ii) of the immediately succeeding paragraph), plus (iii) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of this Indenture, the fair market value of the Company's or its Restricted Subsidiary's, as the case may be, Investment in such Subsidiary as of the date of such redesignation. The foregoing provisions shall not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale including in the Offerings (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from (a) clause (c)(ii) of the preceding paragraph and (b) clause (xii) of the definition of "Permitted Investments;" (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), the purchase, redemption, retirement or other acquisition by the Company or any Restricted Subsidiary of the Company of partnership interests held by the partners in the limited partners of the Co-Venture Partnerships, the 31 co-general partner of the Co-Venture Partnerships or, in each case, their successors, in accordance with and in the manner required or permitted by the terms of the Partnership Parks Agreements; (v) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), any transactions pursuant to or contemplated by, and payments made in connection with, and in accordance with the terms of, the Partnership Parks Agreements and the Marine World Agreements; (vi) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), any transactions pursuant to or contemplated by, and payments made in connection with, and in accordance with the terms of, the Subordinated Indemnity Agreement; (vii) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), the payment of dividends on the Seller Preferred Stock and the Mandatorily Convertible Preferred Stock in accordance with the terms thereof as in effect on the date of this Indenture; (viii) in the event the Company issues common stock in exchange for or upon conversion of Seller Preferred Stock or Mandatorily Convertible Preferred Stock, cash payments made in lieu of the issuance of fractional shares of common stock, not to exceed $250,000 in the aggregate in any fiscal year; and (ix) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company from employees, former employees, directors or former directors of the Company or any of its Restricted Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors); provided, however, that the aggregate amount of such repurchases shall not exceed $5.0 million in any twelve-month period. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default; provided that in no event shall the business currently operated by Premier Operations or SFTP be transferred to or held by an Unrestricted Subsidiary. For purposes of making such determination, all outstanding Investments held by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined by the Board of Directors of the Company whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $10.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness 32 owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of this Indenture, (b) the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement, (c) the terms of any Indebtedness permitted by this Indenture to be incurred by any Restricted Subsidiary of the Company, (d) this Indenture and the Company Notes, (e) applicable law, (f) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred, (g) customary non-assignment provisions in leases, licenses or other contracts entered into in the ordinary course of business, (h) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (i) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (j) obligations otherwise permitted to be incurred pursuant to the provisions of Section 4.12 that limits the right of the obligee to dispose of the assets securing such obligations, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business and (l) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Subsidiaries may incur Indebtedness or issue shares of preferred stock if the Company's Debt to Cash Flow Ratio at the time of incurrence of such Indebtedness or the issuance of such Disqualified Stock or such preferred stock, as the case may be, after giving pro forma effect to such incurrence or issuance as of such date and to the use of the proceeds therefrom as if the same had occurred at the beginning of the most recently ended four full fiscal quarter period of the Company for which financial statements have been filed with the SEC, would have been no greater than (a) 6.0 to 1, if such incurrence or issuance is on or prior to March 31, 1999, (b) 5.75 to 1, if such incurrence or issuance is on or prior to March 31, 2000 and after March 31, 1999, and (c) 5.5 to 1, if such incurrence or issuance is after March 31, 2000. The Company shall not incur any Indebtedness that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the Company Notes on substantially identical terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured. The provisions of the first paragraph of this Section 4.09 will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): 33 (i) the incurrence by the Company and its Restricted Subsidiaries of additional term Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $275.0 million less the aggregate amount of all mandatory or scheduled repayments of the principal of any such additional term Indebtedness (other than repayments that are immediately reborrowed) that have actually been made since the date of this Indenture; (ii) the incurrence by the Company and its Restricted Subsidiaries of additional revolving credit Indebtedness and letters of credit pursuant to Credit Facilities in an aggregate principal amount (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) at any one time outstanding not to exceed the Specified Amount as of such date of incurrence; provided that, that the aggregate principal amount of all Indebtedness incurred pursuant to this clause (ii) is reduced to an outstanding balance of $1.0 million or less for at least 30 consecutive days in each fiscal year; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company and SFEC of Indebtedness represented by the Company Notes and the New SFEC Notes; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed $25.0 million at any time outstanding; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness and Indebtedness incurred pursuant to clauses (i) and (ii) above) that was permitted by this Indenture to be incurred; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on any such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Company Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of (a) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be incurred and (b) Currency Agreements that do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding at any time other than as a result of fluctuations in foreign currency 34 exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; (ix) Indebtedness in respect of performance bonds, letters of credits, surety or appeal bonds, prior to any drawing thereunder, for or in connection with pledges, deposits or payments made or given in the ordinary course of business; (x) the guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09 (including, without limiting the generality of the forgoing, the guarantee by any Restricted Subsidiary of the Company of Existing Indebtedness and the guarantee by the Company of the New SFEC Notes); (xi) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (xi); and (xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xii), not to exceed $50.0 million. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xii) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 4.09 and such item of Indebtedness will be treated as having been incurred pursuant to one or more of such clauses and/or pursuant to the first paragraph hereof, as the Company shall specify. In connection with the Six Flags Acquisition and the Offerings occurring on the date of this Indenture, the Company shall be permitted to incur a portion of the Indebtedness to be incurred on that date pursuant to the Debt to Cash Flow Ratio set forth in the first paragraph of this Section 4.09 to the extent permitted by such Debt to Cash Flow Ratio calculated without regard to any Permitted Debt incurred on such date. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on preferred stock in the form of additional shares of the same class of preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Consolidated Indebtedness of the Company as accrued. SECTION 4.10. ASSET SALES The Company shall not, and shall not permit any of its Restricted Subsidiaries to consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustees) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash; provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted 35 Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinate to the Company Notes) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability or, in the case of the sale of Capital Stock, that are assumed by the transferee by operation of law and (y) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are promptly (subject to ordinary settlement periods) converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received), shall be deemed to be cash for purposes of this provision. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company or the applicable Restricted Subsidiary may apply such Net Proceeds (a) to repay or repurchase Indebtedness of a Restricted Subsidiary of the Company (and to correspondingly reduce commitments with respect thereto in the case of revolving credit borrowings), (b) to the acquisition of all or substantially all of the assets of, or a majority of the Voting Stock of, another Person (or business unit or division of such Person); provided, that the primary business of such Person (or unit or division) is a Permitted Business, (c) to fund obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements or the Subordinated Indemnity Agreement, (d) to the acquisition of Capital Stock of a Restricted Subsidiary of the Company held by Persons other than the Company or any Restricted Subsidiary, (e) to the making of a capital expenditure or (f) to the acquisition of other long-term assets that are used or useful in a Permitted Business. Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company will be required to make an offer to all Holders of Notes and all holders of other pari passu Indebtedness of the Company containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other pari passu Indebtedness of the Company that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of repurchase or, if prior to __________, 2003, at a purchase price equal to 100% of the of the Accreted Value thereof to the date of repurchase, in accordance with the procedures set forth in this Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount at maturity or Accreted Value (as applicable) of Company Notes and such other Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Company Notes and such other Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. SECTION 4.11. TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been 36 obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $1.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business, or any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment or indemnification arrangements, stock options and stock ownership plans approved by the Board of Directors, or the grant of stock options or similar rights to employees and directors of the Company pursuant to plans approved by the Board of Directors, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not otherwise employees of the Company or its Restricted Subsidiaries, (iv) loans or advances to employees in the ordinary course of business, (v) Restricted Payments that are permitted by Section 4.07, (vi) transactions pursuant to or contemplated by, and in accordance with, the terms of the Subordinated Indemnity Agreement, (vii) transactions pursuant to or contemplated by and payments in connection with, and, in each case, in accordance with, the terms of the Partnership Parks Agreements and (viii) transactions pursuant to or contemplated by, and in accordance with, the Marine World Agreements. SECTION 4.12. LIENS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien securing trade payables, Attributable Debt or Indebtedness on any asset now owned or hereafter acquired, except Permitted Liens. SECTION 4.13. LINE OF BUSINESS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. SECTION 4.14. CORPORATE EXISTENCE. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. 37 SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, the Company shall make an offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase or, in the case of repurchases of Notes prior to ________, 2003, at a purchase price equal to 101% of the Accreted Value thereof as of the date of repurchase. Within 30 days following any Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes pursuant to the procedures required by this Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes as a result of a Change of Control. (b) On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount at maturity of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or a Restricted Subsidiary of the Company may enter into a sale and leaseback transaction if (i) the Company could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the Debt to Cash Flow test set forth in the first paragraph of Section 4.09 or pursuant to clause (vi) of the second paragraph of Section 4.09 and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12, (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value (as determined in good faith by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee) of the property that is the subject of such sale and leaseback transaction and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and the Company or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, Section 4.10 hereof. SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS OF RESTRICTED SUBSIDIARIES. The Company (i) shall not, and shall not permit any Restricted Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary of the Company to any Person (other than the Company or a Restricted Subsidiary of the Company and other than transactions contemplated by the Partnership Parks Agreements and the 38 Subordinated Indemnity Agreement), unless (a)(1) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Restricted Subsidiary or (2) after giving effect thereto, such Restricted Subsidiary will still constitute a Restricted Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with Section 4.10 hereof, and (ii) will not permit any Restricted Subsidiary of the Company to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Company or a Wholly Owned Restricted Subsidiary of the Company if, after giving effect thereto, such Restricted Subsidiary will not be a direct or indirect Subsidiary of the Company. SECTION 4.18. PAYMENTS FOR CONSENT. Neither the Company nor any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.19. RESTRICTED CASH ESCROW AGREEMENT DEPOSIT. Upon consummation of the initial sale of the Notes offered hereby on the date hereof, the Company will deposit $75.0 million of the net proceeds of the Offerings in an account (the "Restricted Cash Account") with the Trustee. The Restricted Cash Account shall be governed by the terms of the Restricted Cash Escrow Agreement attached as Exhibit B hereto. The Company shall, until _______, 2003, cause all cash actually dividended or otherwise distributed to or received by the Company or any of its Restricted Subsidiaries in respect of any general or limited partnership interests held in the Co-Venture Partnerships to be deposited in the Restricted Cash Account; provided that, in no event, shall the Company be required to deposit in the Restricted Cash Account any funds if, after giving effect thereto, the aggregate amount of cash and Government Securities (valued at their accreted value or principal amount, as appropriate) then held in the Restricted Cash Account would exceed $75.0 million. ARTICLE 5. SUCCESSORS SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Company Notes, this Indenture, the Senior Note Indenture, the Pledge and Escrow Agreement and the Restricted Cash Escrow Agreement pursuant to supplemental indentures in forms reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case 39 of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, both at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash Flow test set forth in the first paragraph of Section 4.09 hereof. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (a) the Company defaults in the payment when due of interest on the Notes and such default continues for a period of 30 days; (b) the Company defaults in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company fails to comply (i) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or 4.19 hereof or (ii) with any of the provisions of Article Four or Section 5.01 hereof for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount at maturity of the Notes then outstanding voting as a single class; (d) the Company fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture, the Notes or the Restricted Cash Escrow Agreement for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount at maturity of the Notes then outstanding voting as a single class; (e) the Company or any Restricted Subsidiary fails to pay Indebtedness within any applicable grace period after final maturity or the acceleration of any Indebtedness by the holders thereof 40 because of a default and the total amount of such Indebtedness unpaid or accelerated at any time exceeds $10.0 million; (f) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Restricted Subsidiaries and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $10.0 million; (g) the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a Custodian of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; or (i) the Company shall materially breach any representation, warranty or agreement set forth in the Restricted Cash Escrow Agreement, or a material default by the Company in the performance of any covenant set forth in the Restricted Cash Escrow Agreement, or repudiation by the Company of its obligations under the Restricted Cash Escrow Agreement, or the Restricted Cash Escrow Agreement shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect. 41 SECTION 6.02. ACCELERATION. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount at maturity of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. If an Event of Default occurs on or after ____________, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to __________, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to such date, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable in an amount, for each of the years beginning on ______ of the years set forth below, as set forth below (expressed as a percentage of the Accreted Value to the date of payment that would otherwise be due but for the provisions of this sentence): Year Percentage ---- ---------- 1998..............................................._______% 1999..............................................._______% 2000..............................................._______% 2001..............................................._______% 2002..............................................._______% SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. 42 SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount at maturity of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount at maturity of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. 43 SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article or the Restricted Cash Escrow Agreement, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. 44 SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. 45 (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any 46 provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. 47 The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount at maturity of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount at maturity of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount at maturity of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 48 A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" 49 only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming 50 that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article Eight concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that on the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and 51 to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. 52 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture, the Restricted Cash Escrow Agreement or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's obligations to the Holders of the Notes by a successor to the Company pursuant to Article 5 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Sections 3.09, 4.10 and 4.15 hereof), the Restricted Cash Escrow Agreement and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount at maturity of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount at maturity of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Without the consent of at least 75% in principal amount at maturity of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Notes), no waiver or amendment to either this Indenture or the Restricted Cash Escrow Agreement may make any change in the provisions of Section 4.19 or Article 10 hereof or the Restricted Cash Escrow Agreement that 53 adversely affects the rights of any Holder of Notes. Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount at maturity of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount at maturity of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 and 4.15 hereof); (g) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; or 54 (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10 COLLATERAL AND SECURITY SECTION 10.01. PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT. The due and punctual payment of the principal of and interest, if any, on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest (to the extent permitted by law), if any, on the Notes and performance of all other obligations of the Company to the Holders of Notes or the Trustee under this Indenture and the Notes, according to the 55 terms hereunder or thereunder, shall be secured as provided in the Restricted Cash Escrow Agreement which the Company has entered into simultaneously with the execution of this Indenture and which is attached as Exhibit B hereto. Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Restricted Cash Escrow Agreement (including, without limitation, the provisions providing for foreclosure and release of Escrow Funds) as the same may be in effect or may be amended from time to time in accordance with its terms and authorizes and directs the Trustee to enter into the Restricted Cash Escrow Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith. The Company shall deliver to the Trustee copies of all documents pursuant to the Restricted Cash Escrow Agreement, and shall do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Restricted Cash Escrow Agreement, to assure and confirm to the Trustee the security interest in the Escrow Funds contemplated hereby, by the Restricted Cash Escrow Agreement or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Company shall take, or shall cause its Subsidiaries to take, upon request of the Trustee, any and all actions reasonably required to cause the Restricted Cash Escrow Agreement to create and maintain, as security for the Obligations of the Company hereunder, a valid and enforceable perfected first priority Lien in and on all the Pledged Collateral, in favor of the Trustee for the benefit of the Holders of Notes, superior to and prior to the rights of all third Persons and subject to no other Liens than Permitted Liens. SECTION 10.02. RECORDING AND OPINIONS. (a) The Company shall furnish to the Trustee simultaneously with the execution and delivery of this Indenture an Opinion of Counsel either (i) stating that in the opinion of such counsel all action has been taken with respect to the recording, registering and filing of this Indenture, financing statements or other instruments necessary to make effective the Lien intended to be created by the Restricted Cash Escrow Agreement, and reciting with respect to the security interests in the Pledged Collateral, the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien effective. (b) The Company shall furnish to the Trustee on May 1 in each year beginning with May 1, 1998, an Opinion of Counsel, dated as of such date, either (i) (A) stating that, in the opinion of such counsel, action has been taken with respect to the recording, registering, filing, re-recording, re-registering and refiling of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of the Restricted Cash Escrow Agreement and reciting with respect to the security interests in the Pledged Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given, (B) stating that, based on relevant laws as in effect on the date of such Opinion of Counsel, all financing statements and continuation statements have been executed and filed that are necessary as of such date and during the succeeding 12 months fully to preserve and protect, to the extent such protection and preservation are possible by filing, the rights of the Holders of Notes and the Trustee hereunder and under the Restricted Cash Escrow Agreement with respect to the security interests in the Pledged Collateral, or (ii) stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien and assignment. (c) The Company shall otherwise comply with the provisions of TIA ss.314(b). 56 SECTION 10.03. RELEASE OF COLLATERAL. (a) Subject to subsections (b), (c) and (d) of this Section 10.03, Pledged Collateral may be released from the Lien and security interest created by the Restricted Cash Escrow Agreement at any time or from time to time in accordance with the provisions of the Restricted Cash Escrow Agreement or as provided hereby. (b) No Pledged Collateral shall be released from the Lien and security interest created by the Restricted Cash Escrow Agreement pursuant to the provisions of the Restricted Cash Escrow Agreement unless there shall have been delivered to the Trustee the certificate required by this Section 10.03. (c) At any time when a Default or Event of Default shall have occurred and be continuing and the maturity of the Notes shall have been accelerated (whether by declaration or otherwise) and the Trustee has knowledge of such Default or Event of Default, no release of Pledged Collateral pursuant to the provisions of the Restricted Cash Escrow Agreement shall be effective as against the Holders of Notes. (d) The release of any Pledged Collateral from the terms of this Indenture and the Restricted Cash Escrow Agreement shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Pledged Collateral is released pursuant to the terms of the Restricted Cash Escrow Agreement. To the extent applicable, the Company shall cause TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to the release of property or securities from the Lien and security interest of the Restricted Cash Escrow Agreement and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Restricted Cash Escrow Agreement, to be complied with. Any certificate or opinion required by TIA ss. 314(d) may be made by an Officer of the Company except in cases where TIA ss. 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected or approved by the Trustee in the exercise of reasonable care. SECTION 10.04. CERTIFICATES OF THE COMPANY. (a) The Company shall furnish to the Trustee, prior to each proposed release of Pledged Collateral pursuant to the Restricted Cash Escrow Agreement, (i) all documents required by TIA ss. 314(d) and (ii) an Opinion of Counsel, which may be rendered by internal counsel to the Company, to the effect that such accompanying documents constitute all documents required by TIA ss. 314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and such Opinion of Counsel. SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE RESTRICTED CASH ESCROW AGREEMENT. Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee may, in its sole discretion and without the consent of the Holders of Notes, take, on behalf of the Holders of Notes, all actions it deems necessary or appropriate in order to (a) enforce any of the terms of the Restricted Cash Escrow Agreement and (b) collect and receive any and all amounts payable in respect of the Obligations of the Company hereunder. The Trustee shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Pledged Collateral by any acts that may be unlawful or in violation of the Restricted Cash Escrow Agreement or this Indenture, and 57 such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Pledged Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders of Notes or of the Trustee). SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE RESTRICTED CASH ESCROW AGREEMENT. The Trustee is authorized to receive any funds for the benefit of the Holders of Notes distributed under the Restricted Cash Escrow Agreement, and to make further distributions of such funds to the Holders of Notes according to the provisions of this Indenture. SECTION 10.07. TERMINATION OF SECURITY INTEREST. Upon the payment in full of all Obligations of the Company under this Indenture and the Notes, or upon Legal Defeasance, the Trustee shall release the Liens pursuant to this Indenture and the Restricted Cash Escrow Agreement. ARTICLE 11. MISCELLANEOUS SECTION 11.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall control. SECTION 11.02. NOTICES. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address If to the Company: Premier Parks Inc. 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Chief Financial Officer Facsimile number: (405) ___________ Telephone number: (405) 475-2500 58 With a copy to: James M. Coughlin, Esq. Baer Marks & Upham LLP 805 Third Avenue New York, New York 10022 Facsimile number: (212) 702-5810 Telephone number: (212) 702-5700 If to the Trustee: The Bank of New York ________________________________ ________________________________ Facsimile number: ______________ Attention: _____________________ The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: 59 (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 11.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or the Restricted Cash Escrow Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SECTION 11.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 60 SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.10. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.11. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 61 SIGNATURES Dated as of ____________, 1998 PREMIER PARKS INC. BY: _________________________________ Name: Title: Attest: _________________________ Name: Title: THE BANK OF NEW YORK BY: _________________________________ Name: Title: Attest: _________________________ Authorized Signatory Date: 62 EXHIBIT A (Face of Note) ================================================================================ (a) CUSIP _________________ __% Senior Discount Notes due 2008 No. ___ $ ____________ PREMIER PARKS INC. promises to pay to _____________________________________________________________ or registered assigns, the principal sum of _____________________________________________________ Dollars on ____________, 2008. Interest Payment Dates: ____________, and ____________ Record Dates: ____________, and ____________ DATED: ____________, 1998 PREMIER PARKS INC. BY: _________________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: The Bank of New York, as Trustee By: ______________________________ ================================================================================ A-1 (Back of Note) ___% Senior Discount Notes due 2008 THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTES OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Premier Parks Inc., a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at % per annum from _______________, 2003 until maturity. The Company will pay interest semi-annually on _______________ and _______________ of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be _______________, 2003. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the _______________ or _______________ next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium on, the Global Note and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. A-2 3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE AND RESTRICTED CASH ESCROW AGREEMENT. The Company issued the Notes under an Indenture dated as of _______________, 1998 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. The Notes are obligations of the Company limited to $_______________ million in aggregate principal amount at maturity. The Notes are secured by a pledge of Government Securities pursuant to the Restricted Cash Escrow Agreement referred to in the Indenture. 5. OPTIONAL REDEMPTION. (a) Except as set forth in subparagraph (b) of this Paragraph 5, the Company shall not have the option to redeem the Notes prior to _______________, 2003. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on _______________ of the years indicated below: Year Percentage - ---- ---------- 2003..................................... _______% 2004..................................... _______% 2005..................................... _______% 2006 and thereafter...................... 100.000% (b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, during the first 36 months after the date of original issuance of the Notes, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount at maturity of Notes originally issued under the Indenture at a redemption price of ____% of the Accreted Value thereof on the redemption date with the net cash proceeds of one or more Public Equity Offerings and/or the net cash proceeds of a Strategic Equity Investment; provided that at least 65% of the aggregate principal amount of maturity of Notes originally issued remains outstanding immediately after the occurrence of each such redemption (excluding the Notes held by the Company and its Subsidiaries); and provided, further, that any such redemption shall occur within 60 days of the date of the closing of each such Public Equity Offering and/or Strategic Equity Investment. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. A-3 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% of the Accreted Value thereof on the date of purchase if prior to _____________, 2003 or 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase if on or after _____________, 2003 (in either case, the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, when the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the Accreted Value thereof on the date fixed for the closing of such offer if prior to _____________, 2003 or 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date fixed for the closing of such offer is on or after _________, 2003, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the Accreted Value of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Restricted Cash Escrow Agreement or the Notes may be amended or supplemented with A-4 the consent of the Holders of at least a majority in principal amount at maturity of the then outstanding Notes voting as a single class, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount at maturity of the then outstanding Notes voting as a single class.). However, without the consent of at least 75% in principal amount at maturity of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Notes), no waiver or amendment to either the Indenture or the Restricted Cash Escrow Agreement may make any change in the provisions of Section 4.19 or Article 10 of the Indenture or the Restricted Cash Escrow Agreement that adversely affects the rights of any Holder of Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by the Company to comply (A) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or 4.19 of the Indenture and (B) with any of the provisions of Article Four or Section 5.01 of the Indenture for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount at maturity of the Notes then outstanding voting as a single class; (iv) failure by the Company for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding voting as a single class to comply with certain other agreements in the Indenture, the Notes or the Restricted Cash Escrow Agreement; (v) default under certain other agreements relating to Indebtedness of the Company which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries; and (viii) the breach of certain representations, warranties or agreements set forth in the Restricted Cash Escrow Agreement, or a material default by the Company in the performance of any covenant set forth in the Restricted Cash Escrow Agreement, or repudiation by the Company of its obligations under the Restricted Cash Escrow Agreement, or the Restricted Cash Escrow Agreement shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount at maturity of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount at maturity of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount at maturity of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company A-5 is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN NET (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Premier Parks Inc. 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Corporate Secretary A-6 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - ------------------------------------------------------------------------------ (Insert assignee's soc. sec. or tax I.D. no.) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ (Print or type assignee's name, address and zip code) and irrevocably appoint ------------------------------------------------------ to transfer this Note on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------------------------ Date: _____________________ Your Signature: ______________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. A-7 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $________ Date: _____________ Your Signature:________________________ (Sign exactly as your name appears on the Note) Tax Identification No:__________________ Signature Guarantee. A-8 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Amount of Amount of at maturity of decrease in increase in this Global Note Signature of Principal Amount Principal Amount following such authorized officer of at maturity of at maturity of decrease (or Trustee or Note Date of Exchange this Global Note this Global Note increase) Custodian - ---------------- ---------------- ---------------- ---------------- ---------------------
A-9 EXHIBIT B FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT B-1 L&W DRAFT 3/18/98 ================================================================================ SENIOR NOTES PLEDGE AND ESCROW AGREEMENT by and between PREMIER PARKS INC. and THE BANK OF NEW YORK as Trustee ================================================================================ THIS PLEDGE AND ESCROW AGREEMENT (this "Agreement"), dated as of __________, 1998, is by and between PREMIER PARKS INC. (the "Company") and The Bank of New York, as trustee under the Indenture referred to below (the "Trustee"). RECITALS A. The Senior Notes. Pursuant to that certain Indenture (the "Indenture"), dated as of ______________, 1998, by and between the Company and the Trustee, the Company will issue $280,000,000 in aggregate principal amount of ___% Senior Notes due 2006 (collectively, the "Senior Notes"). Immediately after receipt of payment for the Senior Notes (the "Deposit Time"), the Company will deposit $76,300,000.00 (the "Escrow Funds"), into a segregated cash collateral trust account with the Trustee at its office at ____________, New York, New York, in the name of The Bank of New York, as Trustee, "Escrow Account for Senior Notes" (such account is herein referred to as the "Escrow Account"). The Escrow Account and all balances and investments from time to time therein shall be under the sole control and dominion of the Trustee, for the benefit of the Trustee and the ratable benefit of the Holders of the Senior Notes. B. Purpose. The parties hereto desire to set forth their agreement with regard to the administration of the Escrow Account, the creation of a security interest in the Collateral (as defined herein) and the conditions upon which funds will be released from the Escrow Account. C. Definitions. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Security Interest. (a) Pledge and Assignment of Collateral. The Company hereby irrevocably pledges, assigns and sets over to the Trustee, and grants to the Trustee, for the benefit of the Trustee and the ratable benefit of the Holders of the Senior Notes, a first priority continuing security interest in all of the Company's right, title and interest in and to all of the following, whether now owned or existing or hereafter acquired or created (collectively, the "Collateral"): (i) all funds from time to time held in the Escrow Account, including, without limitation, the Escrow Funds and all certificates and instruments, if any, from time to time representing or evidencing the Escrow Account or the Escrow Funds; (ii) all investments of funds in the Escrow Account, which all shall constitute Government Securities, and whether held by or registered in the name 2 of the Trustee or otherwise and all certificates and instruments, if any, from time to time representing or evidencing any such Government Securities; (iii) all notes, certificates of deposit, deposit accounts, checks and other instruments evidencing such Government Securities from time to time hereafter delivered to or otherwise possessed by the Trustee, for or on behalf of the Company, in substitution for or in addition to any or all of the then existing Collateral; (iv) all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Collateral; and (v) all proceeds of any of the foregoing, including, without limitation, cash proceeds. (b) Secured Obligations. This Agreement secures the due and punctual payment and performance of all Obligations of the Company, whether now or hereafter existing, under the Senior Notes and the Indenture including, without limitation, interest and premium, if any, accrued on the Senior Notes after the commencement of a bankruptcy, reorganization or similar proceeding involving the Company to the extent permitted by applicable law (collectively, the "Secured Obligations"). (c) Delivery of Collateral. All certificates or instruments, if any, representing or evidencing the Collateral shall be held by or on behalf of the Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance reasonably satisfactory to the Trustee. All securities in uncertificated or book-entry form and all security entitlements, if any, in each case representing or evidencing the Collateral shall be registered in the name of the Trustee (or any of its nominees) as the registered owner thereof by book-entry or as otherwise appropriate so as to properly identify the interest of the Trustee therein. In addition, the Trustee shall have the right, at any time following the occurrence of an Event of Default, to transfer to or to register in the name of the Trustee or any of its nominees any or all other Collateral. Except as otherwise provided herein, all Collateral shall be deposited and held in the Escrow Account. The Trustee shall have the right at any time to exchange certificates or instruments representing or evidencing all or any portion of the Collateral for certificates or instruments of smaller or larger denominations in the same aggregate amount. (d) Further Assurances. Prior to, contemporaneously herewith, and at any time and from time to time hereafter, the Company will, at the Company's expense, execute and deliver to the Trustee such other instruments and documents, and take all further action as it deems necessary or advisable or as the Trustee may reasonably request including an Opinion of Counsel, upon which the Trustee may conclusively rely, to confirm or perfect the security interest of the Trustee granted or purported to be granted hereby or to enable the Trustee to exercise and enforce its rights and remedies hereunder with respect to any Collateral and the 3 Company will take all necessary action to preserve and protect the security interest created hereby as a first priority, perfected Lien and encumbrance upon the Collateral. The Company will pay all costs incurred in connection with any of the foregoing. (e) Establishing and Maintaining Accounts. So long as this Agreement is in full force and effect: (i) the Company shall establish and maintain the Escrow Account with the Trustee in New York, New York. The Collateral shall at all times be subject to the sole dominion and control of the Trustee, which shall hold the Collateral and administer the Escrow Account subject to the terms and conditions of this Agreement. The Company shall have no right of withdrawal from the Escrow Account nor any other right or power with respect to the Collateral, except as expressly provided herein; and (ii) it shall be a term and condition of the Escrow Account, notwithstanding any term or condition to the contrary in any other agreement relating to the Escrow Account and except as otherwise provided by the provisions of Article 3 of this Agreement, that no amount in the Escrow Account (including, without limitation, interest on or other proceeds of the Escrow Account or on any Government Securities held therein) shall be paid or released to or for the account of, or withdrawn by or for the account of, the Company or any other person or entity other than the Trustee or its designated agent. (f) Transfers and Other Liens. Until termination of this Agreement pursuant to Section 8, the Company agrees that it will not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral, except for the security interest under this Agreement. (g) Trustee Appointed Attorney-in-Fact. In addition to all of the powers granted to the Trustee pursuant to Article 7 of the Indenture, the Company hereby irrevocably appoints the Trustee as the Company's attorney-in-fact, coupled with an interest, with full authority in the place and stead of the Company and in the name of the Company or otherwise, from time to time in the Trustee's discretion to take any action and to execute any instrument which the Trustee may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the Company representing any interest payment, dividend or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and the expenses of the Trustee incurred in connection therewith shall be payable by the Company. (h) Trustee May Perform. Without limiting the authority granted under Section 1(g) and except with respect to the failure of the Company to deliver investment instructions, which shall be governed by Section 2(b) hereof, if the Company fails to perform any agreement contained herein, the Trustee may, but shall not be obligated to, itself perform, or 4 cause performance of, such agreement, and the expenses of the Trustee incurred in connection therewith shall be payable by the Company. In the event that the Trustee performs pursuant to this Section 1(h), the Company shall indemnify the Trustee in the manner provided in Section 7.07 of the Indenture. 2. Investment and Liquidation of Funds in Escrow Account. Funds deposited in the Escrow Account shall be invested and reinvested by the Trustee on the following terms and conditions: (a) Investments. The Company shall immediately deposit all Escrow Funds into the Escrow Account. Funds deposited in the Escrow Account may, subject to the provisions of Articles 2 and 3 of this Agreement, be invested and reinvested in the name of and by the Trustee, at the written direction of the Company, in direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged ("Government Securities"); provided, however, that the maturity dates of the Government Securities in which the Escrow Account are invested and reinvested shall be structured so as to ensure that sufficient funds are available to make the payments of interest on the Senior Notes that are due on each of [list dates of first six interest payments] (the "Scheduled Interest Payments"). (b) Investment Instructions. If the Company fails to give written investment instructions to the Trustee by 12:00 noon (New York time) on any Business Day on which there is uninvested cash and/or maturing Government Securities in the Escrow Account, the Trustee is hereby unconditionally instructed and authorized and directed to invest any such cash or the proceeds of any maturing Government Securities in the Escrow Account in Government Securities maturing on the next Business Day. The Company's failure to give such investment instructions shall not constitute a default or an event of default hereunder. (c) Interest. All interest earned on funds invested in Government Securities shall be held in the Escrow Account and reinvested in accordance with the terms hereof and will be subject to the security interest granted hereunder to the Trustee. (d) Limitation of Trustee's Liability. In no event shall the Trustee have any liability to the Company or any other Person for investing the funds from time to time in the Escrow Account in accordance with the provisions of this Article 2, regardless of whether greater income or a higher yield could have been obtained had the Trustee invested such funds in different Government Securities, or for any loss (including breakage costs or loss of principal) associated with the sale or liquidation of Government Securities in accordance with the terms of this Agreement, in each case other than with respect to gross negligence or willful misconduct of the Trustee. 5 (e) Liquidation of Funds. In liquidating any Government Securities in accordance with Article 3 of this Agreement, the Company may, so long as no Event of Default has occurred and is continuing, direct the Trustee as to which Government Securities shall be liquidated. 3. Interest Payments. Pursuant to Section 1 of the Senior Notes, the Company is obligated to make payments of interest on the Senior Notes on the dates and at the rates specified in the Senior Notes. Payment of the Scheduled Interest Payments due on the Senior Notes may be made (i) from amounts held in the Escrow Account in accordance with the procedures set forth in subsection (a) below or (ii) from other sources of funds available to the Company, as anticipated in subsection (b) below, or from any combination of (i) and (ii) above; provided that nothing herein shall be construed as limiting the Company's obligation to make all interest payments due on the Senior Notes at the times and in the amounts required by the Senior Notes, which obligation shall be absolute and unconditional. (a) Payment of Interest. Not later than five (5) Business Days prior to the date of any of the Scheduled Interest Payments, the Company shall, pursuant to a duly completed and executed Certificate of Release in the form of Exhibit A hereto, direct the Trustee to transfer from the Escrow Account to the Paying Agent funds necessary to provide for payment in full (or, if the Company intends to make a portion of such interest payment with funds in the Escrow Account and the remainder of such interest payment with funds other than those in the Escrow Account, such portion) of the next Scheduled Interest Payment on the Senior Notes. If the Company does not intend to utilize the funds in the Escrow Account to make any such interest payment in full, then the Company shall comply with Section 3(b) below. Upon receipt of such Certificate of Release, the Trustee will transfer to the Paying Agent for payment to the Holders of Senior Notes the amount set forth in the applicable Certificate of Release. (b) Release of Funds to the Company Due to Direct Payment of Interest by the Company. If the Company makes any of the Scheduled Interest Payments or a portion of any of the Scheduled Interest Payments from a source of funds other than the Escrow Account ("Company Funds"), the Company may, after payment in full of such Scheduled Interest Payment, direct the Trustee, so long as no Event of Default has occurred and is continuing pursuant to a duly completed and executed Certificate of Release in the form of Exhibit B hereto, to release to the Company or at the direction of the Company an amount of funds from the Escrow Account less than or equal to the amount of Company Funds so expended. Upon receipt of such Certificate of Release, the Trustee shall pay over to the Company the requested amount. (c) Release of Funds to Company Due to Overfunding. If at any time the amount of Collateral in the Escrow Account exceeds 125% of the amount sufficient, in the written opinion of a nationally recognized firm of independent public accountants selected by the Company and furnished to the Trustee, to provide for payment in full of all then remaining Scheduled Interest Payments due on the Senior Notes, the Company may, so long as no Event of Default has occurred and is continuing, pursuant to a duly completed and executed Certificate of Release in the form of Exhibit B hereto, direct the Trustee to release any such overfunding to it. 6 (d) No Duplicate Payments. With respect to the conditions permitting the release to the Company of any funds in the Escrow Account pursuant to Sections 3(b) or 3(c) above, the Company shall not request, and the Trustee shall not make, any full or partial duplicate payment thereunder. (e) Termination of Security Interest. Upon payment in full of the Scheduled Interest Payments, the security interest evidenced by this Agreement in any Collateral remaining in the Escrow Account will terminate and be of no further force and effect. Furthermore, upon the release of any Collateral from the Escrow Account in accordance with the terms of this Agreement, whether upon release of such Collateral to Holders as payment of interest on the Senior Notes, to the Company pursuant to Sections 3(b) or 3(c) or otherwise, the security interest evidenced by this Agreement in such Collateral so released will terminate and be of no further force and effect. 4. Representations and Warranties. The Company hereby represents and warrants to the Trustee and the Holders of the Senior Notes that: (a) The execution, delivery and performance by the Company of this Agreement are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any assets of the Company, except for the security interests granted under this Agreement. (b) The Company is the record and beneficial owner of the Collateral, free and clear of any Lien or claims of any person or entity (except for the security interests granted under this Agreement). No financing statement covering the Collateral is on file in any public office other than the financing statements filed pursuant to this Agreement. (c) This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally or general principles of equity and commercial reasonableness. (d) The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in and to the Collateral, securing the payment of the Secured Obligations for the benefit of the Trustee and the ratable benefit of the Holders of Senior Notes, enforceable as such against all creditors of the Company and any persons purporting to purchase any of the Collateral from the Company other than as permitted by the Indenture. (e) Except as set forth in Section 4(d) above, no consent of any other Person and no consent, authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (1) for the pledge by the Company 7 of the Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Company or (2) for the exercise by the Trustee of the rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement. (f) No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Company, threatened by or against the Company with respect to this Agreement or any of the transactions contemplated hereby. (g) The pledge of the Collateral pursuant to this Agreement is not prohibited by any applicable law or governmental regulation, release, interpretation or opinion of the Board of Governors of the Federal Reserve System or other regulatory agency (including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System). 5. Covenants. The Company covenants and agrees with the Trustee and the Holders of Senior Notes from and after the date of this Agreement until the Termination Date as follows: (a) The Company (i) will not (A) sell or otherwise dispose of, or grant any option or warrant with respect to, any of the Collateral or (B) create or permit to exist any Lien upon or with respect to any of the Collateral (except for the Lien created pursuant to this Agreement) and (ii) except as otherwise provided in this Agreement, at all times will be the sole beneficial owner of the Collateral. (b) The Company will not (a) enter into any agreement or understanding that purports to or may restrict or inhibit the Trustee's rights or remedies hereunder, including, without limitation, the Trustee's right to sell or otherwise dispose of the Collateral in accordance with the terms of this Agreement or (b) fail to pay or discharge any tax, assessment or levy of any nature not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment with regard to the Collateral. 6. Remedies upon Default. If any Event of Default shall have occurred and be continuing: (a) The Trustee may, without notice to the Company and at any time or from time to time, liquidate all Government Securities and transfer all funds in the Escrow Account to the Paying Agent to apply such funds in accordance with Section 2.04 of the Indenture. (b) The Trustee may also exercise in respect of the Collateral, in addition to the other rights and remedies provided for herein or in the Indenture or otherwise available to it, all the rights and remedies of a secured party after a default under the Uniform Commercial Code in effect at that time in the State of New York (the "Code") (whether or not the Code applies to the affected Collateral). (c) Any cash held by the Trustee as Collateral and all proceeds received by the Trustee in respect of any sale or liquidation of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Trustee, be held by the Trustee as 8 collateral for, and/or then or at any time thereafter be applied (after payment of any costs and expenses incurred in connection with any sale, liquidation or disposition of or realization upon the Collateral and the payment of any amounts payable to the Trustee) in whole or in part by the Trustee for the ratable benefit of the Holders of the Senior Notes against all or any part of the Secured Obligations in such order as the Trustee shall elect. Any surplus of such cash or cash proceeds held by the Trustee and remaining after payment in full of all the Secured Obligations and the costs and expenses incurred by and amounts payable to the Trustee hereunder or under the Indenture shall be paid over to the Company or to whomsoever shall be lawfully entitled to receive such surplus. For the avoidance of doubt, if any Event of Default shall have occurred and be continuing, the Trustee shall not release any Collateral to, or at the direction of, the Company. 7. Indemnity and Authority of the Trustee. The Company shall indemnify the Trustee against any and all loses, liabilities or expenses incurred by it arising out of or in connection with the acceptance of administration of its duties under this Agreement, including the costs and expenses of enforcing this Agreement against the Company (including this Section 7) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7 shall survive the satisfaction and discharge of this Agreement. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) of the Indenture occurs, the expenses and compensation for the services (including the fees and expenses of its agent and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee may conclusively rely upon any Officer's Certificate or Opinion of Counsel it receives pursuant to Section 7.02 of the Indenture. 8. Termination. (a) This Agreement shall create a continuing security interest in and to the Collateral and such security interest shall, unless otherwise provided in the Indenture or in this Agreement, remain in full force and effect until ___________, 2001, provided that the provisions of Section 3(e) have been satisfied (the "Termination Date"). This Agreement shall be binding 9 upon the Company, its successors and assigns, and shall inure, together with the rights and remedies of the Trustee hereunder, to the benefit of the Trustee, the Holders of Senior Notes and their respective successors, transferees and assigns. (b) Subject to the provisions of Section 9(c) hereof, this Agreement shall terminate upon the Termination Date. At such time, the Trustee shall, at the written request of the Company, reassign and redeliver to the Company all of the Collateral hereunder that has not been sold, disposed of, retained or applied by the Trustee in accordance with the terms of this Agreement and the Indenture. Such reassignment and redelivery shall be without warranty (either express or implied) by or recourse to the Trustee, except as to the absence of any prior assignments by or encumbrances created by the Trustee on its interest in the Collateral, and shall be at the expense of the Company. 9. Miscellaneous. (a) Waiver. Either party hereto may specifically waive any breach of this Agreement by any other party, but no such waiver shall be deemed to have been given unless such waiver is in writing, signed by the waiving party, and specifically designates the breach waived, nor shall any such waiver constitute a continuing waiver of similar or other breaches. (b) Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. (c) Survival of Provisions. All representations, warranties and covenants of the Company contained herein shall survive the execution and delivery of this Agreement, and shall terminate only upon the termination of this Agreement; provided, however that the Company's obligations pursuant to Section 7 hereof shall survive the termination of this Agreement (including any termination under applicable bankruptcy laws) or the resignation or removal of the Trustee. (d) Assignment. This Agreement shall inure to and be binding upon the parties and their respective successors and permitted assigns; provided, however, that the Company may not assign its rights or obligations hereunder without the express prior written consent of the Trustee, acting at the direction of the Holders as provided in the Indenture. (e) Entire Agreement; Amendments. This Agreement and the Indenture contain the entire agreement among the parties with respect to the subject matter hereof and supersede any and all prior agreements, understandings and commitments with respect thereto, whether oral or written; provided, however, that this Agreement is executed and accepted by the Trustee subject to all terms and conditions of its acceptance of the trust under the Indenture, as fully as if said terms and conditions were set forth at length herein. This Agreement may be amended only by a writing signed by duly authorized representatives of both parties. The Trustee may execute an amendment to this Agreement only if the requisite consent of the Holders of the Senior Notes required by Section 9.02 of the Indenture has been obtained, unless no such consent is required by such Section 9.02 of the Indenture. 10 (f) Notices. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail (registered or certified return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company: Premier Parks Inc. 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Chief Financial Officer Facsimile number: (405) ________ Telephone number: (405) 475-2500 With a copy to: James M. Coughlin, Esq. Baer Marks & Upham LLP 805 Third Avenue New York, New York 10022 Facsimile number: (212) 702-5810 Telephone number: (212) 702-5700 If to the Trustee: The Bank of New York ___________________ ___________________ Attention: ___________________ Facsimile number: (212) ___________ Telephone number: (212) ___________ The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other that those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. (g) Expenses. The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Agreement and services hereunder as the Company and the Trustee have separately agreed. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made 11 by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. (h) Security Interest Absolute. All rights of the Trustee and the Holders of Senior Notes and security interests hereunder, and all obligations of the Company hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Indenture or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Indenture; (c) any exchange, surrender, release or non-perfection of any Liens on any other collateral for all or any of the Secured Obligations; or (d) to the extent permitted by applicable law, any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Company in respect of the Secured Obligations or of this Agreement. (i) Counterpart Originals. The parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them represent the same agreement. (j) Limitation by Law. All rights, remedies and powers provided herein may be exercised only to the extent that they will not render this Agreement not entitled to be recorded, registered or filed under provisions of any applicable law. (k) Rights of Holders of Senior Notes. No Holder of Senior Notes shall have any independent rights hereunder other than those rights granted to individual Holders of Senior Notes pursuant to Section 6.07 of the Indenture; provided that nothing in this subsection shall limit any rights granted to the Trustee under the Senior Notes or the Indenture. (l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES. (i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF SENIOR NOTES IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. (ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER 12 THE COMPANY OR ITS PROPERTY, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS CLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS. (iii) THE COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. (iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE NOR ANY HOLDER OF SENIOR NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. (v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE 13 SECURED OBLIGATIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS OF SENIOR NOTES ON THE OTHER HAND. [SIGNATURE PAGE FOLLOWS] 14 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Pledge, Escrow and Disbursement Agreement as of the day first written above. COMPANY: PREMIER PARKS INC. By: ___________________________ Name: Title: TRUSTEE: THE BANK OF NEW YORK By: ___________________________ Name: Title: EXHIBIT A [Form of] Certificate of Release of Funds in Escrow Account to Paying Agent PREMIER PARKS INC. Date:_____________ The undersigned executive officers of Premier Parks Inc., a Delaware corporation (the "Company"), hereby certify, pursuant to Section 3(a) of the Pledge and Escrow Agreement, dated as of ___________________, 1998 (the "Escrow Agreement"), by and between the Company and The Bank of New York, as trustee (the "Trustee"), under the Indenture dated as of ___________________, 1998 (the "Indenture"), between the Company and the Trustee, that: 1. This request for release of funds has been duly authorized by all necessary corporate action and does not contravene, or constitute a default under, any provision of applicable law or regulation or the certificate of incorporation of the Company or of the Escrow Agreement, the Indenture or any other agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any assets of the Company; and 2. The funds released pursuant hereto shall be applied by the Paying Agent toward payment of interest due on the Senior Notes on ________, ____ and for no other purpose. The Company hereby requests the Trustee to liquidate $_________ worth of Government Securities in the Escrow Account by not later than 12:00 noon (New York time) on _________ __, _____ and to transfer $________ in immediately available funds to the Paying Agent. Capitalized terms used herein without definition shall have the meanings set forth in the Indenture. By: ___________________________ Name: _________________________ Title: ________________________ A-1 By: ___________________________ Name: _________________________ Title: ________________________ A-2 EXHIBIT B [Form of] Certificate of Release of Funds in Escrow Account to Company PREMIER PARKS INC. Date:_____________ The undersigned executive officers of Premier Parks Inc., a Delaware corporation (the "Company"), hereby certify, pursuant to Section [3(b)][3(c)] of the Pledge and Escrow Agreement, dated as of _________________, 1998 (the "Escrow Agreement"), by and between the Company and The Bank of New York, as trustee (the "Trustee"), under the Indenture dated as of __________________, 1998 (the "Indenture"), between the Company and the Trustee, that: 1. This request for release of funds has been duly authorized by all necessary corporate action and does not contravene, or constitute a default under, any provision of applicable law or regulation or the certificate of incorporation of the Company or of the Escrow Agreement, the Indenture or any other agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any assets of the Company; and 2. [The amount of funds requested to be released pursuant hereto is no greater than the amount of funds previously used by the Company from sources other than the Escrow Account to make the payment of interest due on the Senior Notes on ________ (and not previously released to the Company from the Escrow Account), which interest payment has been paid in full.] [After giving effect to the release of funds from the Escrow Account as provided below, the amount of funds and Government Securities remaining in the Escrow Account will be at least 125% of the amount sufficient to pay in full the remainder of the Scheduled Interest Payments on the Senior Notes not already paid in full, as confirmed in the attached written opinion of __________, a nationally recognized firm of independent public accountants.] 3. No Event of Default has occurred and is continuing under the Indenture. The Company hereby requests the Trustee to liquidate $_________ worth of Government Securities in the Escrow Account by not later than 12:00 noon (New York time) on _________, and to transfer $________ in immediately available funds to the Company. B-1 Capitalized terms used herein without definition shall have the meanings set forth in the Indenture. By: ___________________________ Name: _________________________ Title: ________________________ By: ___________________________ Name: _________________________ Title: ________________________ B-2 EX-4.(Q) 11 INDENTURE-SFEC SR. NOTES DUE 2006 Exhibit 4(q) L&W DRAFT 3/18/98 ================================================================================ SIX FLAGS ENTERTAINMENT CORPORATION $170,000,000 __% SENIOR NOTES DUE 2006 ------------------------------- INDENTURE Dated as of __________, 1998 ------------------------------- ------------------------------ THE BANK OF NEW YORK as Trustee ------------------------------- ================================================================================ CROSS-REFERENCE TABLE* (a) Trust Indenture Act Section Indenture Section 310(a)(1)...........................................................7.10 (a)(2) ..........................................................7.10 (a)(3)...........................................................N.A. (a)(4)...........................................................N.A. (a)(5)...........................................................7.10 (i)(b)...........................................................7.10 (ii)(c)..........................................................N.A. 311(a)..............................................................7.11 (b)..............................................................7.11 (iii)(c).........................................................N.A. 312(a)..............................................................2.05 (b)..............................................................11.03 (iv)(c)..........................................................11.03 313(a)...........................................................7.06 (b)(1)...........................................................10.03 (b)(2)...........................................................7.07 (v)(c)...........................................................7.06; 11.02 (vi)(d)..........................................................7.06 314(a)..............................................................4.03; 11.02 (A)(b)...........................................................10.02 (c)(1)...........................................................11.04 (c)(2)...........................................................11.04 (c)(3)...........................................................N.A. (d)..............................................................10.03, 10.04, 10.05 (vii)(e).........................................................11.05 (f)..............................................................NA 315(a)..............................................................7.01 (b)..............................................................7.05, 11.02 (A)(c)...........................................................7.01 (d)..............................................................7.01 (e)..............................................................6.11 316(a)(last sentence)...............................................2.09 (a)(1)(A)........................................................6.05 (a)(1)(B)........................................................6.04 (a)(2)...........................................................N.A. (b)..............................................................6.07 (B)(c)...........................................................2.12 317(a)(1)...........................................................6.08 (a)(2)...........................................................6.09 (b)..............................................................2.04 318(a)..............................................................11.01 (b)..............................................................N.A. (c)..............................................................11.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. 2 TABLE OF CONTENTS Page ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1 Section 1.01. Definitions..................................................1 Section 1.02. Other Definitions...........................................16 Section 1.03..............................................................16 Section 1.04. Rules of Construction.......................................17 ARTICLE 2. THE NOTES........................................................17 Section 2.01. Form and Dating.............................................17 Section 2.02. Execution and Authentication................................18 Section 2.03. Registrar and Paying Agent..................................18 Section 2.04. Paying Agent to Hold Money in Trust.........................18 Section 2.05. Holder Lists................................................19 Section 2.06. Transfer and Exchange.......................................19 Section 2.07. Replacement Notes...........................................21 Section 2.08. Outstanding Notes...........................................22 Section 2.09. Treasury Notes..............................................22 Section 2.10. Temporary Notes.............................................22 Section 2.11. Cancellation................................................22 Section 2.12. Defaulted Interest..........................................23 ARTICLE 3. REDEMPTION AND PREPAYMENT........................................23 Section 3.01. Notices to Trustee..........................................23 Section 3.02. Selection of Notes to Be Redeemed...........................23 Section 3.03. Notice of Redemption........................................24 Section 3.04. Effect of Notice of Redemption..............................24 Section 3.05. Deposit of Redemption Price.................................24 Section 3.06. Notes Redeemed in Part......................................25 Section 3.07. Optional Redemption.........................................25 Section 3.08. Mandatory Redemption........................................26 Section 3.09. Offer to Purchase by Application of Excess Proceeds.........26 ARTICLE 4. COVENANTS........................................................27 Section 4.01. Payment of Notes...........................................27 i Section 4.02. Maintenance of Office or Agency.............................28 Section 4.03. Reports.....................................................28 Section 4.04. Compliance Certificate......................................28 Section 4.05. Taxes.......................................................29 Section 4.06. Stay, Extension and Usury Laws..............................29 Section 4.07. Restricted Payments.........................................29 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries................................................32 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..33 Section 4.10. Asset Sales.................................................35 Section 4.11. Transactions with Affiliates................................36 Section 4.12. Liens.......................................................37 Section 4.13. Line of Business............................................37 Section 4.14. Corporate Existence.........................................37 Section 4.15. Offer to Repurchase Upon Change of Control..................37 Section 4.16. Limitation on Sale and Leaseback Transactions...............38 Section 4.17. Limitation on Issuances and Sales of Equity Interests of Restricted Subsidiaries.....................................38 Section 4.18. Payments for Consent........................................38 Section 4.19. Pledge and Escrow Agreement Deposit.........................38 ARTICLE 5. SUCCESSORS.......................................................39 Section 5.01. Merger, Consolidation, or Sale of Assets....................39 Section 5.02. Successor Corporation Substituted...........................39 ARTICLE 6. DEFAULTS AND REMEDIES............................................39 Section 6.01. Events of Default...........................................39 Section 6.02. Acceleration................................................41 Section 6.03. Other Remedies..............................................42 Section 6.04. Waiver of Past Defaults.....................................42 Section 6.05. Control by Majority.........................................42 Section 6.06. Limitation on Suits.........................................42 Section 6.07. Rights of Holders of Notes to Receive Payment...............43 Section 6.08. Collection Suit by Trustee..................................43 Section 6.09. Trustee May File Proofs of Claim............................43 Section 6.10. Priorities..................................................44 Section 6.11. Undertaking for Costs.......................................44 ARTICLE 7. TRUSTEE..........................................................44 ii Section 7.01. Duties of Trustee...........................................44 Section 7.02. Rights of Trustee...........................................45 Section 7.03. Individual Rights of Trustee................................46 Section 7.04. Trustee's Disclaimer........................................46 Section 7.05. Notice of Defaults..........................................46 Section 7.06. Reports by Trustee to Holders of the Notes..................46 Section 7.07. Compensation and Indemnity..................................47 Section 7.08. Replacement of Trustee......................................47 Section 7.09. Successor Trustee by Merger, etc............................48 Section 7.10. Eligibility; Disqualification...............................48 Section 7.11. Preferential Collection of Claims Against Company...........49 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................49 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....49 Section 8.02. Legal Defeasance and Discharge..............................49 Section 8.03. Covenant Defeasance.........................................49 Section 8.04. Conditions to Legal or Covenant Defeasance..................50 Section 8.05. Deposited Money and Government Securities to be Held in ` Trust; Other Miscellaneous Provisions.......................51 Section 8.06. Repayment to Company........................................51 Section 8.07. Reinstatement...............................................52 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................52 Section 9.01. Without Consent of Holders of Notes.........................52 Section 9.02. With Consent of Holders of Notes............................53 Section 9.03. Compliance with Trust Indenture Act.........................54 Section 9.04. Revocation and Effect of Consents...........................54 Section 9.05. Notation on or Exchange of Notes............................54 Section 9.06. Trustee to Sign Amendments, etc.............................55 ARTICLE 10 COLLATERAL AND SECURITY..........................................55 Section 10.01. Pledge, Escrow and Disbursement Agreement..................55 Section 10.02. Recording and Opinions.....................................55 Section 10.03. Release of Collateral......................................56 Section 10.04. Certificates of the Company................................57 Section 10.05. Authorization of Actions to Be Taken by the Trustee Under the Pledge and Escrow Agreement............................57 Section 10.06. Authorization of Receipt of Funds by the Trustee Under the Pledge and Escrow Agreement................................57 Section 10.07. Termination of Security Interest...........................57 iii ARTICLE 11. NOTE GUARANTEES.................................................57 Section 11.01. Guarantee..................................................57 Section 11.02. Subordination of Note Guarantee............................58 Section 11.03. Limitation on Guarantor Liability..........................58 Section 11.04. Execution and Delivery of Note Guarantee...................59 Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.........59 Section 11.06. Releases Following Sale of Assets..........................60 ARTICLE 12. MISCELLANEOUS...................................................60 Section 12.01. Trust Indenture Act Controls...............................60 Section 12.02. Notices....................................................60 Section 12.03. Communication by Holders of Notes with Other Holders of Notes......................................................61 Section 12.04. Certificate and Opinion as to Conditions Precedent.........61 Section 12.05. Statements Required in Certificate or Opinion..............62 Section 12.06. Rules by Trustee and Agents................................62 Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders.................................62 Section 12.08. Governing Law..............................................62 Section 12.09. No Adverse Interpretation of Other Agreements..............63 Section 12.10. Successors.................................................63 Section 12.11. Severability...............................................63 Section 12.12. Counterpart Originals......................................63 Section 12.13. Table of Contents, Headings, etc...........................63 EXHIBITS Exhibit A FORM OF NOTE Exhibit B FORM OF NOTATION OF GUARANTEE Exhibit C FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT iv INDENTURE dated as of __________, 1998 between Premier Parks Inc., a Delaware corporation (the "Company"), and The Bank of New York, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the __% Senior Notes due 2006 (the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or becomes a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section 5.01 and not by Section 4.10 hereof), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $5.0 million or (b) for net proceeds in excess of $5.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) the transfer of Equity Interests in any Restricted Subsidiary pursuant to the Subordinated Indemnity Agreement or the Partnership Parks Agreements, (iv) the issuance of Equity Interests by a Restricted Subsidiary to any employee thereof or as consideration for the acquisition of all or substantially all of the assets of, or a majority of the Voting Stock of, any Person (or a business unit or division of such Person) provided that the primary business of such Person (or such unit or division) is a Permitted Business and (v) a Restricted Payment that is permitted Section 4.07 hereof. "Asset Value" of any asset, as of the date of determination thereof, means the greater of the depreciated book value (as of the end of the fiscal quarter ended immediately prior to such date of determination as to which financial statements are available) and the appraised value of such asset; provided, however, that any such appraisal (i) shall not have been made more than two years prior to such date of determination and (ii) shall have been made by a qualified, independent and nationally recognized appraiser. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars or foreign currency, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the Credit Facilities or with any commercial bank having capital and surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than thirty days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within one year after the date of acquisition, (vi) securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory, the securities of which state, commonwealth, territory, political subdivision or taxing authority (as the case may be) are rated at least "A" by Standard & Poor's Corporation or "A" by Moody's Investors Service, Inc. and (vii) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (vi) of this definition. 2 "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or Premier and its Subsidiaries, taken as a whole, to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than, in case of the Company, to Premier or a Wholly Owned Subsidiary of Premier, (ii) the adoption of a plan relating to the liquidation or dissolution of the Company or Premier, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35% of the Voting Stock of Premier, (iv) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that Premier ceases to be the direct or indirect owner of less than 75% of the voting power of the outstanding Equity Interests of the Company or (v) the first day on which a majority of the members of the Board of Directors of the Company or Premier are not Continuing Directors. "Company" means Six Flags Entertainment Corporation, and any and all successors thereto. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (ii) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iii) depreciation, amortization (including any depreciation or amortization arising out of purchases by the Company or any Restricted Subsidiary of Equity Interests in the partners of the Co-Venture Partnerships and amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, minus (iv) non-cash items increasing such Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP (other than accrual of income in the ordinary course of business in respect of a future cash payment). Notwithstanding any other provision of this Indenture to the contrary, "Consolidated Cash Flow" of the Company for any period will be deemed to include 100% of the cash distributions to the Company or any of its Restricted Subsidiaries in respect of such period from the Co-Venture Partnerships, directly or indirectly, out of the Consolidated Cash Flow of the Co-Venture Partnerships in respect of such period. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization or original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness or Attributable Debt of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of 3 such Person or one of its Restricted Subsidiaries (whether or not such guarantee or Lien is called upon). The term "Consolidated Interest Expense" shall not include the consolidated interest expense of any Person with respect to (i) any obligations in respect of the SFEC Zero Coupon Senior Notes so long as (x) the Pledge and Escrow Agreement is in full force and effect and the Trustee maintains a valid and perfected security interest in cash or Government Securities in an amount sufficient to pay the aggregate principal amount at maturity of the SFEC Zero Coupon Senior Notes pursuant to the terms thereof or (y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and prior to any deduction in respect of dividends on any series of preferred stock of such Person, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (iii) the cumulative effect of a change in accounting principles shall be excluded. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity (including stated capital, additional paid-in capital and retained earnings) of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (x) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the date of this Indenture in the book value of any asset owned by such Person or a consolidated Subsidiary of such Person, (y) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in each case, Permitted Investments), and (z) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Co-Venture Partnerships" means (i) Six Flags Over Georgia, Ltd., a Georgia Limited Partnership, (ii) Texas Flags, Ltd., a Texas Limited Partnership and (iii) Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership. 4 "Credit Facilities" means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Six Flags Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. "Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. "Eligible Indebtedness" means any Indebtedness for money borrowed incurred by one or more Restricted Subsidiaries of the Company, provided that such Indebtedness for money borrowed is (other than as permitted by the Six Flags Credit Facility) contractually pari passu with and secured equally and ratably with all other Indebtedness for money borrowed of such Restricted Subsidiaries. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). 5 "Escrow Account" means the escrow account for the initial deposit of $[175.0] million dollars of the net proceeds from the sale of the Notes and cash in hand under the Pledge and Escrow Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Indebtedness" means up to $______ million in aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Six Flags Credit Facility) in existence on the date of this Indenture, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period and (ii) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on any such preferred stock payable solely in Equity Interests of the Company or such Restricted Subsidiary (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person for the fiscal year immediately preceding the date of such calculation, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of (a) the Consolidated Cash Flow of such Person for such period to (b) the Fixed Charges of such Person for such period. In the event that the referent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (ii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "GAAP" means generally accepted accounting principles 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 have been approved by a significant segment of the accounting profession, which are in effect from time to time. 6 "Global Note" means the Global Note in the form of Exhibit A hereto issued in accordance with Section 2.01 hereof. "Global Note Legend" means the legend set forth in Section 2.06(f), which is required to be placed on the Global Note issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged. "guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantor" means Premier Parks Inc. and its respective successors and assigns. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Holder" means a Person in whose name a Note is registered. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. The term "Indebtedness" shall not include (i) any obligations in respect of the SFEC Zero Coupon Senior Notes so long as (x) the Pledge and Escrow Agreement is in full force and effect and the Trustee maintains a valid and perfected security interest in cash or Government Securities in an amount sufficient to pay the aggregate principal amount at maturity of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or (y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement. "Indenture" means this Indenture, as amended or supplemented from time to time. 7 "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees and any deposit or advance made pursuant to any contract entered into in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company (other than pursuant to the terms of the Partnership Parks Agreements or the Subordinated Indemnity Agreement) such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07 "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Mandatorily Convertible Preferred Stock" means Premier's ___% Mandatorily Convertible Preferred Stock. "Marine World" means the Marine World Joint Powers Authority or any successor thereto. "Marine World Agreements" mean (i) the Parcel Lease, dated November 7, 1997, between Marine World and Park Management Corp. ("PMC"), (ii) the Reciprocal Easement Agreement, dated November 7, 1997, between Marine World and PMC, (iii) the Revenue Sharing Agreement, dated November 7, 1997, among Marine World, PMC and the Redevelopment Agency of the City of Vallejo (the "Agency"), (iv) the Purchase Option Agreement, dated as of August 29, 1997, among Marine World, the Agency, the City of Vallejo and PMC and (v) the 1997 Management Agreement, dated as of February 1, 1997, between Marine World and PMC, as amended, in each case, as the same may be modified or amended from time to time after the date of this Indenture, provided such modification or amendment does not adversely affect the interests of the Holders in any material respects. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, 8 excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) and (ii) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Note Guarantee" means the Guarantee by the Guarantor of the Company's payment obligations under this Indenture and the Notes, executed pursuant to the provisions of this Indenture. "Notes" has the meaning assigned to it in the preamble to this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means a Person who has an account with the Depositary. 9 "Partnership Parks Agreements" means (i) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., Six Flags Theme Parks Inc. and the Company and the Related Agreements (as defined therein), (ii) Overall Agreement, dated as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., Six Flags Theme Parks Inc. and the Company and the Related Agreements (as defined therein), and (iii) the Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein), in each case, as the same may be modified or amended from time to time after the date of this Indenture provided such modification or amendment does not adversely affect the interests of the Holders in any material respect. "Permitted Business" means any business related, ancillary or complementary to the businesses of the Company and its Restricted Subsidiaries on the date of this Indenture. "Permitted Investments" means an Investment by the Company or any Restricted Subsidiary in (i) cash or Cash Equivalents, (ii) the Company, a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Permitted Business; (iii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets (or the assets of any business unit or division of such Person) to, the Company or a Restricted Subsidiary; provided, however, that such Person's (or such unit's or division's) primary business is a Permitted Business; (iv) another Person if the aggregate amount of all Investments in all such other Persons does not exceed $15.0 million at any one time outstanding (with each Investment being valued as of the date made and without giving effect to subsequent changes in value); provided, however, that such Person's primary business is a Permitted Business; (v) promissory notes received as consideration for an Asset Sale which are secured by a Lien on the asset subject to such Asset Sale; provided that the aggregate amount of all such promissory notes at any one time outstanding does not exceed $5.0 million; (vi) non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10; (vii) assets acquired solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (viii) receivables owing to the Company or any Restricted Subsidiary, if created or acquired in the ordinary course of business; (ix) payroll, travel and similar advances that are made in the ordinary course of business; (x) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; and (xi) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments. "Permitted Liens" means (a) Liens to secure the Six Flags Credit Facility; (b) Liens to secure Eligible Indebtedness that was permitted to be incurred pursuant to the provisions of Section 4.09 of this Indenture; (c) Liens existing on the Issue Date; (d) Liens on property or shares of Capital Stock of another Person at the time such other Person becomes a Restricted Subsidiary of such Person; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming such a Restricted Subsidiary; provided further, however, that such Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries; (e) Liens on property at the time such Person or any of its Restricted Subsidiaries acquires the property, including any 10 acquisition by means of a merger or consolidation with or into such Person or a Restricted Subsidiary of such Person; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries; (f) Liens securing Indebtedness or other obligations of a Restricted Subsidiary of such Person owing to such Person or a Restricted Subsidiary of such Person; (g) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same type of property securing such Hedging Obligations; (h) Liens to secure any Permitted Refinancing Indebtedness; provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property) and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness refinanced at the time the original Lien became a Permitted Lien and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement; (i)(a) mortgages, liens, security interests, restrictions or encumbrances that have been placed by any developer, landlord or other third party on property over which the Company or any Restricted Subsidiary of the Company has easement rights or on any real property leased by the Company and subordination or similar agreements relating thereto and (b) any condemnation or eminent domain proceedings affecting any real property; (j) pledges or deposits by such Person under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (k) Liens imposed by law, such as carriers', warehousemen's and mechanic's Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; (l) Liens for property taxes not yet due or payable or subject to penalties for non-payment or which are being contested in good faith and by appropriate proceedings; (m) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially impair the use of such properties in the operation of the business of such Person; (n) Liens securing Purchase Money Indebtedness; provided, however, that (i) the Indebtedness secured by such Liens is otherwise permitted to be incurred under this Indenture, (ii) the principal amount of any Indebtedness secured by any such Lien does not exceed the cost of assets or property so acquired or constructed and (iii) the amount of Indebtedness secured by any such Lien is not subsequently increased, (o) Liens arising out of the transactions contemplated by the Partnership Parks Agreements, the Marine World Agreements, the Subordinated Indemnity Agreement or the Six Flags Agreement; and (p) Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $10.0 million at any one time outstanding. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of 11 (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses, including premiums, incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Pledge and Escrow Agreement" means the Pledge, Escrow and Disbursement Agreement, dated as of the date of this Indenture, by and between the Company and the Trustee governing the disbursement of funds from the Escrow Account, as amended from time to time in accordance with this Indenture. "Pledged Collateral" means the Collateral (as defined in the Pledge and Escrow Agreement) under the Pledge and Escrow Agreement. "Premier" means Premier Parks Inc., a Delaware corporation. "Premier Operations" means Premier Parks Operations Inc., a wholly owned subsidiary of Premier. "Public Equity Offering" means an underwritten primary public offering of common stock of any person pursuant to an effective registration statement under the Securities Act. "Purchase Money Indebtedness" means Indebtedness (i) consisting of the deferred purchase price of property, conditional sale obligations, obligation under any title retention agreement and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (ii) incurred to finance the acquisition by the Company or a Restricted Subsidiary of the Company of such asset, including additions and improvements; provided, however, that any Lien arising in connection with any such Indebtedness shall be limited to the specified asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property on which such asset is attached; and provided further, that such Indebtedness is incurred within 180 days after such acquisition, addition or improvement by the Company or Restricted Subsidiary of such asset. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above 12 designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Seller Preferred Stock" means Premier's Convertible Redeemable Preferred Stock issued to the sellers of SFEC common stock pursuant to the Six Flags Agreement. "SFEC Zero Coupon Senior Notes" means the Company's Zero Coupon Senior Notes due 1999. "SFTP" means Six Flags Theme Parks Inc., a wholly owned subsidiary of the Company. "Shared Services Agreement" means the Shared Services Agreement among the Company, Premier and Premier Operations as the same may be modified or amended from time to time after the date of this Indenture, provided such modification or amendment does not adversely affect the interests of the Holders in any material respect. "Six Flags Acquisition" means the acquisition by Premier by merger of all of the capital stock of the Company from its current stockholders pursuant to the Six Flags Agreement. "Six Flags Agreement" means that certain Agreement and Plan of Merger dated as of February 9, 1998, by and among Premier, Premier Parks Holdings Corporation, a Delaware Corporation, Premier Parks Merger Corporation, a Delaware Corporation, a certain group of sellers listed therein and the Company. "Six Flags Credit Facility" means that $472.0 million senior secured credit facility between SFTP and _____ dated as of ______, 1998. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Specified Amount" means, as of any date, (i) the product of (a) the Consolidated Cash Flow of the Company for the most recently ended four-quarter period for which financial statements have been filed with the SEC determined on a pro forma basis after giving effect to all acquisitions or Asset Sales made by the Company and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period, times (b) 0.75. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid 13 in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Strategic Equity Investment" means a cash contribution to the common equity capital of any Person or a purchase from any Person of common Equity Interests (other than Disqualified Stock), in either case by or from a Strategic Equity Investor and for aggregate cash consideration of at least $25.0 million. "Strategic Equity Investor" means, as of any date, any Person (other than an Affiliate of the Company) engaged in a Permitted Business which, as of the day immediately before such date, had a Total Equity Market Capitalization of at least $1.0 billion. "Subordinated Indemnity Agreement" means the Subordinated Indemnity Agreement, dated as of the date of the consummation of the Six Flags Acquisition, among Premier, the Company and its subsidiaries, Time Warner Inc., Time Warner Entertainment Company, L.P. and TW-SPV Co., as the same may be modified or amended from time to time after the date hereof, provided such modification or amendment does not adversely affect the interests of the Holders in any material respect. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% (49% in the case of Walibi, S.A.) of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (ii) any partnership or limited liability company (a) the sole general partner or the managing general partner (or equivalent) of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "Tax Sharing Agreement" means that certain Tax Sharing Agreement between Premier, the Company and the other parties named therein as the same may be modified or amended from time to time after the date of this Indenture, provided such modification or amendment does not adversely affect the interests of the Holders in any material respect. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Total Equity Market Capitalization" of any Person means, as of any day of determination, the sum of (i) the product of (A) the aggregate number of outstanding primary shares of common stock of such Person on such day (which shall not include any options or warrants on, or securities convertible or exchangeable into, shares of common stock of such Person) multiplied by (B) the average closing price of such common stock listed on a national securities exchange or the Nasdaq National Market System over the 20 consecutive business days immediately preceding such day, plus (ii) the liquidation value of any outstanding shares of preferred stock of such Person on such day. "Trustee" means the party named as such in the preamble hereto until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. 14 "Unrestricted Subsidiary" means (i) any Subsidiary (other than SFTP or any successor to SFTP) that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustees by filing with the Trustees a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote by the holder thereof in the election of the Board of Directors (or comparable body) of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person or by such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) 15 shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section "Affiliate Transaction"..............................4.11 "Asset Sale".........................................4.10 "Asset Sale Offer"...................................3.09 "Authentication Order"...............................2.02 "Bankruptcy Law".....................................4.01 "Basket Period"......................................4.07 "Change of Control Offer"............................4.15 "Change of Control Payment"..........................4.15 "Change of Control Payment Date" ....................4.15 "Covenant Defeasance"................................8.03 "Event of Default"...................................6.01 "Excess Proceeds"....................................4.10 "incur"..............................................4.09 "Legal Defeasance" ..................................8.02 "Offer Amount".......................................3.09 "Offer Period".......................................3.09 "Paying Agent".......................................2.03 "Permitted Debt".....................................4.09 "Purchase Date"......................................3.09 "Registrar"..........................................2.03 "Restricted Payments"................................4.07 SECTION 1.03. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. 16 SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES SECTION 2.01. FORM AND DATING. (a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantor and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Note. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. 17 SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Note. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Note. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. 18 SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA ss. 312(a). SECTION 2.06. TRANSFER AND EXCHANGE. (a) Transfer and Exchange of the Global Note. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. A Global Note will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice in writing that the Depositary it is unwilling or unable to continue to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company in its sole discretion determines that the Global Note (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. A Global Note also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Note. The transfer and exchange of beneficial interests in the Global Note shall be effected through the Depositary, in accordance with the provisions of this Indenture and the rules and procedures of the Depositary. Transfers of beneficial interests in the Global Note also shall require compliance with subparagraph (i) below: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in a Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (c) Transfer or Exchange of Beneficial Interests in the Global Note for Definitive Notes. If any holder of a beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. 19 (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in the Global Note. A Holder of a Definitive Note may exchange such Note for a beneficial interest in a Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Definitive Note and increase or cause to be increased the aggregate principal amount of the Global Note. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). A Holder of Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of a Definitive Note. (f) Global Note Legend. The following legend shall appear on the face of the Global Note issued under this Indenture in substantially the following form, unless specifically stated otherwise in the applicable provisions of this Indenture: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (g) Cancellation and/or Adjustment of the Global Note. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (h) General Provisions Relating to Transfers and Exchanges. 20 (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate the Global Note and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) The Global Note and Definitive Notes issued upon any registration of transfer or exchange of a Global Note or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Note or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (c) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate the Global Note and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. SECTION 2.07. REPLACEMENT NOTES If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. 21 Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. SECTION 2.10. TEMPORARY NOTES Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for 22 registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. REDEMPTION AND PREPAYMENT SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate; provided that, no Notes of $1,000 or less shall be redeemed in part. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. 23 SECTION 3.03. NOTICE OF REDEMPTION Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. 24 If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.07. OPTIONAL REDEMPTION. (a) Except as set forth in clause (b) of this Section 3.07, the Company shall not have the option to redeem the Notes pursuant to this Section 3.07 prior to __________, 2002. Thereafter, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on ___________ of the years indicated below: Year Percentage 2002........................................ _______% 2003........................................ _______ 2004........................................ _______ 2005 and thereafter......................... 100.000% (b) Notwithstanding the foregoing, during the first 36 months after the date of original issuance of the Notes, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued under this Indenture at a redemption price of ___% of the principal amount thereof on the redemption date with the net cash proceeds of one or more Public Equity Offerings by and/or the net cash proceeds of a Strategic Equity Investment in (i) the Company or (ii) Premier to the extent the net cash proceeds thereof are contributed to the Company as a capital contribution to the common equity of the Company; provided that in each case at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after the occurrence of each such redemption (excluding Notes held by Premier, the Company and its Subsidiaries); and provided, further, that any such redemption shall occur within 60 days of the date of the closing of each such Public Equity Offering and/or Strategic Equity Investment. (c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. 25 SECTION 3.08. MANDATORY REDEMPTION. Except as set forth in Sections 4.10 and 4.15, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrete or accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; 26 (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4. COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. 27 SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. SECTION 4.03. REPORTS. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, each of the Company and Premier shall furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company and Premier were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries and Premier and its consolidated subsidiaries, respectively (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's and Premier's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company and Premier were required to file such reports, in each case, within the time periods specified in the SEC's rules and regulations. In addition, whether or not required by the rules and regulations of the SEC, the Company and Premier shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company and Premier shall at all times comply with TIA ss. 314(a). SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view 28 to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and Pledge and Escrow Agreement, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and the Pledge and Escrow Agreement and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture or the Pledge and Escrow Agreement (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.05. TAXES. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.07. RESTRICTED PAYMENTS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on 29 account of any Equity Interests of the Company (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of any Equity Interests of the Company in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company that is subordinated to the Notes, except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments declared or made after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii) and (iii) of the next succeeding paragraph) shall not exceed, at the date of determination, the sum, without duplication, of (i) an amount equal to the Company's Consolidated Cash Flow for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Company's most recently ended full fiscal quarter for which financial statements have been filed with the SEC (the "Basket Period") less the product of 1.4 times the Company's Consolidated Interest Expense for the Basket Period, plus (ii) 100% of the aggregate net cash proceeds received by the Company after the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale after the date of this Indenture of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company and any sale of Equity Interests of the Company the net cash proceeds of which are applied pursuant to clause (ii) of the immediately succeeding paragraph), plus (iii) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of this Indenture, the fair market value of the Company's or its Restricted Subsidiary's, as the case may be, Investment in such Subsidiary as of the date of such redesignation. The foregoing provisions shall not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, 30 defeasance or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), (a) the purchase, redemption, retirement or other acquisition by the Company or any Restricted Subsidiary of the Company of partnership interests held by the partners in the limited partners of the Co-Venture Partnerships, the co-general partner of the Co-Venture Partnerships or, in each case, their successors, in accordance with and in the manner required or permitted by the terms of the Partnership Parks Agreements and (b) dividends or other distributions to Premier to enable Premier or its Restricted Subsidiaries to purchase, redeem, retire or otherwise acquire partnership interests held by the limited partners or co-general partner in the Co-Venture Partnerships, or their successors, in accordance with and in the manner required or permitted by the terms of the Partnership Parks Agreements; (v) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), (a) any transactions pursuant to or contemplated by, and payments made in connection with, and in accordance with the terms of, the Partnership Parks Agreements and (b) dividends or other distributions to Premier to enable Premier or its Restricted Subsidiaries to engage in any transactions pursuant to or contemplated by, and make any payments in connection with, and in accordance with the terms of, the Partnership Parks Agreements; (vi) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), (a) any transactions pursuant to or contemplated by, and payments made in connection with, and in accordance with the terms of, the Subordinated Indemnity Agreement and (b) dividends or other distributions to Premier to enable Premier or its Restricted Subsidiaries to engage in any transactions pursuant to or contemplated by, and make any payments in connection with, and in accordance with the terms of, the Subordinated Indemnity Agreement; (vii) in the event Premier issues common stock in exchange for or upon conversion of Seller Preferred Stock or Mandatorily Convertible Preferred Stock, dividends to Premier to allow Premier to make cash payments made in lieu of the issuance of fractional shares of common stock, not to exceed $250,000 in the aggregate in any fiscal year; (viii) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), the payment of dividends or other distributions to Premier to enable Premier to pay dividends on the Seller Preferred Stock in accordance with the terms thereof as in effect on the date of this Indenture; (ix) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company from employees, former employees, directors or former directors of the Company or any of its Restricted Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors); provided, however, that the aggregate amount of such repurchases shall not exceed $2.5 million in any twelve-month period; (x) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), any payment by the Company to Premier to permit Premier to pay any federal, state, local or other taxes that are then actually due and owing by Premier; provided that such amounts do not exceed the amounts that, without recognizing any tax attribute carryforwards or carrybacks, would otherwise be due and owing if the Company were an independent taxpayer; and (xi) so long as no Event of Default or Default shall have occurred and be continuing (or would result therefrom), any payment made pursuant to the Shared Services Agreement. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default; provided that in no event shall the business currently operated by SFTP be transferred to or held by an Unrestricted Subsidiary. For purposes of making such determination, all outstanding Investments held by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to 31 constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined by the Board of Directors of the Company whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $10.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of this Indenture, (b) the Partnership Parks Agreements, the Marine World Agreements or the Subordinated Indemnity Agreement, (c) the Six Flags Credit Facility as in effect on the date of this Indenture, (d) Eligible Indebtedness that was permitted to be incurred pursuant to the provisions of Section 4.09; provided that such Eligible Indebtedness is no more restrictive, taken as a whole, with respect to such dividends and other payment restrictions than those contained in the Six Flags Credit Facility, as the same was in effect on the date of this Indenture, (e) this Indenture and the Notes, (f) applicable law, (g) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred, (h) customary non-assignment provisions in leases, licenses or other contracts entered into in the ordinary course of business, (i) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (j) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (k) obligations otherwise permitted to be incurred pursuant to the provisions of Section 4.12 that limits the right of the obligee to dispose of the assets securing such obligations, (l) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business, (m) Permitting Refinancing Indebtedness so long as such Permitted Refinancing Indebtedness is no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those 32 contained in the Indebtedness refinanced thereby and (n) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Restricted Subsidiaries may incur Indebtedness if the Company's Fixed Charge Coverage Ratio at the time of incurrence of such Indebtedness or the issuance of such Disqualified Stock after giving pro forma effect thereto as if the same had occurred at the beginning of the most recently ended four full fiscal quarter period of the Company for which financial statements have been filed with the SEC, would have been at least 2.0 to 1. The Company shall not incur any Indebtedness that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the Notes on substantially identical terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured. The provisions of the first paragraph of this Section 4.09 will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company and its Restricted Subsidiaries of additional term Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $200.0 million less the aggregate amount of all mandatory or scheduled repayments of the principal of any such additional term Indebtedness (other than repayments that are immediately reborrowed) that have actually been made since the date of this Indenture; (ii) the incurrence by the Company and its Restricted Subsidiaries of additional revolving credit Indebtedness and letters of credit pursuant to Credit Facilities in an aggregate principal amount (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) at any one time outstanding not to exceed the Specified Amount as of such date of incurrence; provided that, that the aggregate principal amount of all Indebtedness incurred pursuant to this clause (ii) is reduced to an outstanding balance of $1.0 million or less for at least 30 consecutive days in each fiscal year; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company of Indebtedness represented by the Notes; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or 33 such Restricted Subsidiary, in an aggregate principal amount not to exceed $20.0 million at any time outstanding; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness and Indebtedness incurred pursuant to clauses (i) and (ii) above) that was permitted by this Indenture to be incurred; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on any such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of (a) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be incurred and (b) Currency Agreements that do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; (ix) Indebtedness in respect of performance bonds, letters of credits, surety or appeal bonds, prior to any drawing thereunder, for or in connection with pledges, deposits or payments made or given in the ordinary course of business; (x) the guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09 (including, without limiting the generality of the forgoing, the guarantee by any Restricted Subsidiary of the Company of Existing Indebtedness); (xi) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (xi); and (xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xii), not to exceed $40.0 million. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xii) above or is entitled to be incurred pursuant to the first paragraph of this Section 34 4.09, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 4.09 and such item of Indebtedness will be treated as having been incurred pursuant to one or more of such clauses and/or pursuant to the first paragraph hereof, as the Company shall specify. In connection with the Six Flags Acquisition and the related offerings occurring on the date of this Indenture, the Company shall be permitted to incur a portion of the Indebtedness to be incurred on that date pursuant to the Fixed Charge Coverage Ratio set forth in the first paragraph of this Section 4.09 to the extent permitted by such Fixed Charge Coverage Ratio calculated without regard to any Permitted Debt incurred on such date. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on preferred stock in the form of additional shares of the same class of preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Chareges of the Company as accrued. SECTION 4.10. ASSET SALES The Company shall not, and shall not permit any of its Restricted Subsidiaries to consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustees) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash; provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinate to the Notes) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability or, in the case of the sale of Capital Stock, that are assumed by the transferee by operation of law and (y) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are promptly (subject to ordinary settlement periods) converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received), shall be deemed to be cash for purposes of this provision. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company or the applicable Restricted Subsidiary may apply such Net Proceeds (a) to repay or repurchase Indebtedness of a Restricted Subsidiary of the Company (and to correspondingly reduce commitments with respect thereto in the case of revolving credit borrowings), (b) to the acquisition of all or substantially all of the assets of, or a majority of the Voting Stock of, another Person (or business unit or division of such Person); provided, that the primary business of such Person (or unit or division) is a Permitted Business, (c) to fund obligations of the Company or any Restricted Subsidiary under the Partnership Parks Agreements or the Subordinated Indemnity Agreement, (d) to the acquisition of Capital Stock of a Restricted Subsidiary of the Company held by Persons other than the Company or any Restricted Subsidiary, (e) to the making of a capital expenditure or (f) to the acquisition of other long-term assets that are used or useful in a Permitted Business. Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will be required to make an offer to all Holders of Notes and all holders of other pari passu Indebtedness of the Company containing provisions similar to those 35 set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other pari passu Indebtedness of the Company that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of repurchase, in accordance with the procedures set forth in this Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and such other Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. SECTION 4.11. TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $1.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business, or any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment or indemnification arrangements, stock options and stock ownership plans approved by the Board of Directors, or the grant of stock options or similar rights to employees and directors of the Company pursuant to plans approved by the Board of Directors, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not otherwise employees of the Company or its Restricted Subsidiaries, (iv) loans or advances to employees in the ordinary course of business, (v) Restricted Payments that are permitted by Section 4.07, (vi) transactions pursuant to or contemplated by, and in accordance with, the terms of the Subordinated Indemnity Agreement, (vii) transactions pursuant to or contemplated by, and in accordance with the terms of, the Shared Services Agreement, (viii) transactions pursuant to or contemplated by, and in accordance with the terms of, the Tax Sharing Agreement, (ix) transactions pursuant to and payments in connection with, and, in each case, in accordance with, the terms of the Partnership Parks Agreements and (x) transactions pursuant to or contemplated by, and in accordance with, the Marine World Agreements. 36 SECTION 4.12. LIENS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien securing trade payables, Attributable Debt or Indebtedness on any asset now owned or hereafter acquired, except Permitted Liens. SECTION 4.13. LINE OF BUSINESS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. SECTION 4.14. CORPORATE EXISTENCE. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, the Company shall make an offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase. Within 30 days following any Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes pursuant to the procedures required by this Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes as a result of a Change of Control. (b) On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company will 37 publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or a Restricted Subsidiary of the Company may enter into a sale and leaseback transaction if (i) the Company could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 or pursuant to clause (vi) of the second paragraph of Section 4.09 and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12, (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value (as determined in good faith by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee) of the property that is the subject of such sale and leaseback transaction and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and the Company or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, Section 4.10 hereof. SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS OF RESTRICTED SUBSIDIARIES. The Company (i) shall not, and shall not permit any Restricted Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary of the Company to any Person (other than the Company or a Restricted Subsidiary of the Company and other than transactions contemplated by the Partnership Parks Agreements and the Subordinated Indemnity Agreement), unless (a)(1) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Restricted Subsidiary or (2) after giving effect thereto, such Restricted Subsidiary will still constitute a Restricted Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with Section 4.10 hereof, and (ii) will not permit any Restricted Subsidiary of the Company to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Company or a Wholly Owned Restricted Subsidiary of the Company if, after giving effect thereto, such Restricted Subsidiary will not be a direct or indirect Subsidiary of the Company. SECTION 4.18. PAYMENTS FOR CONSENT. Neither the Company nor any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.19. PLEDGE AND ESCROW AGREEMENT DEPOSIT. Upon consummation of the initial sale of the Notes offered hereby on the date hereof, the Company shall deposit $[175.0] million of the net proceeds from the sale of the Notes and cash in hand, in the Escrow Account with the Trustee. The Escrow Account shall be governed by the terms of the Pledge and Escrow Agreement attached as Exhibit C hereto. 38 ARTICLE 5. SUCCESSORS SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes, this Indenture, the Pledge and Escrow Agreement pursuant to a supplemental Indenture in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction, provided that this clause (A) shall not apply to a merger of the Company with or into its direct parent or with or into a Wholly Owned Subsidiary of its direct parent and (B) will, both at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: 39 (a) the Company defaults in the payment when due of interest on the Notes and such default continues for a period of 30 days; (b) the Company defaults in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company fails to comply (i) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or 4.19 hereof or (ii) with any of the provisions of Article Four or Section 5.01 hereof for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class; (d) the Company fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture, the Notes, the Note Guarantee or the Pledge and Escrow Agreement for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class; (e) the Company or any Restricted Subsidiary fails to pay Indebtedness within any applicable grace period after final maturity or the acceleration of any Indebtedness by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated at any time exceeds $10.0 million; (f) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Restricted Subsidiaries and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $10.0 million; (g) the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; 40 (ii) appoints a Custodian of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; (i) the Company shall materially breach any representation, warranty or agreement set forth in the Pledge and Escrow Agreement, or a material default by the Company in the performance of any covenant set forth in the Pledge and Escrow Agreement, or repudiation by the Company of its obligations under the Pledge and Escrow Agreement, or the Pledge and Escrow Agreement shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect; or (j) except as permitted by this Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or the Guarantor, or any Person acting on behalf of the Guarantor, shall deny or disaffirm its obligations under such Guarantor's Note Guarantee. SECTION 6.02. ACCELERATION. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any Restricted Subsidiary that constitutes a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. If an Event of Default occurs on or after ____________, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to __________, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to such date, then, upon acceleration of the Notes, an additional premium shall also become and be 41 immediately due and payable in an amount, for each of the years beginning on ______ of the years set forth below, as set forth below (expressed as a percentage of the amount that would otherwise be due but for the provisions of this paragraph plus accrued interest, if any, to the date of payment): Year Percentage ---- ---------- 1998..............................................._______% 1999..............................................._______% 2000..............................................._______% 2001..............................................._______% SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; 42 (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or 43 otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article or the Pledge and Escrow Agreement, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this 44 Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. 45 (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in 46 accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: 47 (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). 48 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with 49 and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article Eight concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; 50 (f) the Company shall have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that on the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may 51 at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantor and the Trustee may amend or supplement this Indenture, the Pledge and Escrow Agreement, the Note Guarantee or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's or Guarantor's obligations to the Holders of the Notes by a successor to the Company or Guarantor pursuant to Article 5 or Article 11 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (f) to allow the Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company and 52 the Guarantor in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Sections 3.09, 4.10 and 4.15 hereof) and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Without the consent of at least 75% in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Notes), no waiver or amendment to either this Indenture or the Pledge and Escrow Agreement may make any change in the provisions of Section 4.19 or Article 10 hereof or the Pledge and Escrow Agreement that adversely affects the rights of any Holder of Notes. Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; 53 (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 and 4.15 hereof); (g) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (i) release the Guarantor from any of its obligations under its Note Guarantee or this Indenture or change the Note Guarantee in any way that would adversely affect the Holders, except in accordance with the terms of this Indenture. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. 54 Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10 COLLATERAL AND SECURITY SECTION 10.01. PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT. The due and punctual payment of the principal of and interest, if any, on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest (to the extent permitted by law), if any, on the Notes and performance of all other obligations of the Company to the Holders of Notes or the Trustee under this Indenture and the Notes, according to the terms hereunder or thereunder, shall be secured as provided in the Pledge and Escrow Agreement which the Company has entered into simultaneously with the execution of this Indenture and which is attached as Exhibit C hereto. Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Pledge and Escrow Agreement (including, without limitation, the provisions providing for foreclosure and release of Escrow Funds) as the same may be in effect or may be amended from time to time in accordance with its terms and authorizes and directs the Trustee to enter into the Pledge and Escrow Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith. The Company shall deliver to the Trustee copies of all documents pursuant to the Pledge and Escrow Agreement, and shall do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Pledge and Escrow Agreement, to assure and confirm to the Trustee the security interest in the Escrow Funds contemplated hereby, by the Pledge and Escrow Agreement or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Company shall take, or shall cause its Subsidiaries to take, upon request of the Trustee, any and all actions reasonably required to cause the Pledge and Escrow Agreement to create and maintain, as security for the Obligations of the Company hereunder, a valid and enforceable perfected first priority Lien in and on all the Pledged Collateral, in favor of the Trustee for the benefit of the Holders of Notes, superior to and prior to the rights of all third Persons and subject to no other Liens than Permitted Liens. SECTION 10.02. RECORDING AND OPINIONS. (a) The Company shall furnish to the Trustee simultaneously with the execution and delivery of this Indenture an Opinion of Counsel either (i) stating that in the opinion of such counsel all 55 action has been taken with respect to the recording, registering and filing of this Indenture, financing statements or other instruments necessary to make effective the Lien intended to be created by the Pledge and Escrow Agreement, and reciting with respect to the security interests in the Pledged Collateral, the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien effective. (b) The Company shall furnish to the Trustee on May 1 in each year beginning with May 1, 1998, an Opinion of Counsel, dated as of such date, either (i) (A) stating that, in the opinion of such counsel, action has been taken with respect to the recording, registering, filing, re-recording, re-registering and refiling of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of the Pledge and Escrow Agreement and reciting with respect to the security interests in the Pledged Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given, (B) stating that, based on relevant laws as in effect on the date of such Opinion of Counsel, all financing statements and continuation statements have been executed and filed that are necessary as of such date and during the succeeding 12 months fully to preserve and protect, to the extent such protection and preservation are possible by filing, the rights of the Holders of Notes and the Trustee hereunder and under the Pledge and Escrow Agreement with respect to the security interests in the Pledged Collateral, or (ii) stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien and assignment. (c) The Company shall otherwise comply with the provisions of TIA ss.314(b). SECTION 10.03. RELEASE OF COLLATERAL. (a) Subject to subsections (b), (c) and (d) of this Section 10.03, Pledged Collateral may be released from the Lien and security interest created by the Pledge and Escrow Agreement at any time or from time to time in accordance with the provisions of the Pledge and Escrow Agreement or as provided hereby. (b) No Pledged Collateral shall be released from the Lien and security interest created by the Pledge and Escrow Agreement pursuant to the provisions of the Pledge and Escrow Agreement unless there shall have been delivered to the Trustee the certificate required by this Section 10.03. (c) At any time when a Default or Event of Default shall have occurred and be continuing and the maturity of the Notes shall have been accelerated (whether by declaration or otherwise) and the Trustee has knowledge of such Default or Event of Default, no release of Pledged Collateral pursuant to the provisions of the Pledge and Escrow Agreement shall be effective as against the Holders of Notes. (d) The release of any Pledged Collateral from the terms of this Indenture and the Pledge and Escrow Agreement shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Pledged Collateral is released pursuant to the terms of the Pledge and Escrow Agreement. To the extent applicable, the Company shall cause TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to the release of property or securities from the Lien and security interest of the Pledge and Escrow Agreement and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Pledge and Escrow Agreement, to be complied with. Any certificate or opinion required by TIA ss. 314(d) may be made by an Officer of the Company except in cases where TIA ss. 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected or approved by the Trustee in the exercise of reasonable care. 56 SECTION 10.04. CERTIFICATES OF THE COMPANY. (a) The Company shall furnish to the Trustee, prior to each proposed release of Pledged Collateral pursuant to the Pledge and Escrow Agreement, (i) all documents required by TIA ss. 314(d) and (ii) an Opinion of Counsel, which may be rendered by internal counsel to the Company, to the effect that such accompanying documents constitute all documents required by TIA ss. 314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and such Opinion of Counsel. SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE PLEDGE AND ESCROW AGREEMENT. Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee may, in its sole discretion and without the consent of the Holders of Notes, take, on behalf of the Holders of Notes, all actions it deems necessary or appropriate in order to (a) enforce any of the terms of the Pledge and Escrow Agreement and (b) collect and receive any and all amounts payable in respect of the Obligations of the Company hereunder. The Trustee shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Pledged Collateral by any acts that may be unlawful or in violation of the Pledge and Escrow Agreement or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Pledged Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders of Notes or of the Trustee). SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE PLEDGE AND ESCROW AGREEMENT. The Trustee is authorized to receive any funds for the benefit of the Holders of Notes distributed under the Pledge and Escrow Agreement, and to make further distributions of such funds to the Holders of Notes according to the provisions of this Indenture. SECTION 10.07. TERMINATION OF SECURITY INTEREST. Upon the payment in full of all Obligations of the Company under this Indenture and the Notes, or upon Legal Defeasance, the Trustee shall release the Liens pursuant to this Indenture and the Pledge and Escrow Agreement. ARTICLE 11. NOTE GUARANTEE SECTION 11.01. GUARANTEE. Subject to this Article 11, the Guarantor hereby, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be 57 promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantor shall be obligated to pay the same immediately. The Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. The Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantor or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantor, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Note Guarantee. SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE. The Obligations of the Guarantor under its Note Guarantee pursuant to this Article 11 shall be junior and subordinated to all indebtedness that is not specifically by its terms made pari passu with or junior to the Note Guarantee of the Guarantor. SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY. The Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of the Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantor hereby 58 irrevocably agree that the obligations of the Guarantor under its Note Guarantee and this Article 11 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of the Guarantor that are relevant under such laws, result in the obligations of the Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE. To evidence its Note Guarantee set forth in Section 11.01, the Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form included in Exhibit B shall be endorsed by an Officer of the Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of the Guarantor by its President or one of its Vice Presidents. The Guarantor hereby agrees that its Note Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors. SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. The Guarantor may not consolidate with or merge with or into (whether or not the Guarantor is the surviving Person) another Person whether or not affiliated with the Guarantor unless: (a) subject to Section 11.05 hereof, the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) unconditionally assumes all the obligations of the Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set forth herein or therein; and (b) immediately after giving effect to such transaction, no Default or Event of Default exists. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Note Guarantee theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. 59 Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS. In the event of a sale or other disposition of all of the assets of the Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of the Guarantor, then the Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of the Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of the Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee shall execute any documents reasonably required in order to evidence the release of the Guarantor from its obligations under its Note Guarantee. If the Guarantor is not released from its obligations under its Note Guarantee the Guarantor shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of the Guarantor under this Indenture as provided in this Article 11. ARTICLE 12. MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall control. SECTION 12.02. NOTICES. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address If to the Company: Six Flags Entertainment Corporation 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Chief Financial Officer Facsimile number: (405) ___________ Telephone number: (405) 475-2500 60 With a copy to: James M. Coughlin, Esq. Baer Marks & Upham LLP 805 Third Avenue New York, New York 10022 Facsimile number: (212) 702-5810 Telephone number: (212) 702-5700 If to the Trustee: The Bank of New York ______________________ ______________________ Facsimile number: Attention: The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: 61 (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 12.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or the Pledge and Escrow Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SECTION 12.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 62 SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 12.11. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 63 SIGNATURES Dated as of ____________, 1998 SIX FLAGS ENTERTAINMENT CORPORATION BY: _______________________________ Name: Title: Attest: ______________________________ Name: Title: THE BANK OF NEW YORK BY: _______________________________ Name: Title: Attest: ______________________________ Authorized Signatory Date: 64 EXHIBIT A (Face of Note) ================================================================================ (a) CUSIP ________________ __% Senior Notes due 2006 No. ________ $ ____________ SIX FLAGS ENTERTAINMENT CORPORATION promises to pay to __________________________________________________________ or registered assigns, the principal sum of _____________________________________________________ Dollars on ___________, 2006. Interest Payment Dates: ____________, and ____________ Record Dates: ____________, and ____________ DATED: ____________, 1998 SIX FLAGS ENTERTAINMENT CORPORATION BY: _______________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: The Bank of New York, as Trustee By: _____________________________ ================================================================================ A-1 (Back of Note) ___% Senior Notes due 2006 THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTES OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Six Flags Entertainment Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at ___% per annum from , 1998 until maturity. The Company will pay interest semi-annually on and of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be ______, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the or next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium on, the Global Note and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. A-2 3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE AND PLEDGE AND ESCROW AGREEMENT. The Company issued the Notes under an Indenture dated as of , 1998 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. The Notes are obligations of the Company limited to $170.0 million in aggregate principal amount. The Notes are secured by a pledge of Government Securities pursuant to the Pledge and Escrow Agreement referred to in the Indenture. 5. OPTIONAL REDEMPTION. (a) Except as set forth in subparagraph (b) of this Paragraph 5, the Company shall not have the option to redeem the Notes prior to __________, 2002. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on __________ of the years indicated below: Year Percentage - ---- ---------- 2002..................................... _______% 2003..................................... _______% 2004..................................... _______% 2005 and thereafter...................... 100.000 % (b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, during the first 36 months after the date of original issuance of the Notes, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the Notes originally issued under the Indenture at a redemption price of ____% of the principal amount thereof on the redemption date with the net cash proceeds of one or more Public Equity Offerings and/or the net cash proceeds of a Strategic Equity Investment (i) the Company or (ii) Premier to the extent the net cash proceeds thereof are contributed to the Company as a capital contribution to the common equity of the Company; provided that in each case at least 65% of the aggregate principal amount of maturity of the Notes originally issued remains outstanding immediately after the occurrence of each such redemption (excluding the Notes held by Premier, the Company and its Subsidiaries); and provided, further, that any such redemption shall occur within 60 days of the date of the closing of each such Public Equity Offering and/or Strategic Equity Investment. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. A-3 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, when the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date fixed for the closing of such offer in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Pledge and Escrow Agreement or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes voting as a single class, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class. However, without the consent of at least 75% in principal amount of the A-4 Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Notes), no waiver or amendment to either the Indenture or the Pledge and Escrow Agreement may make any change in the provisions of Section 4.19 or Article 10 of the Indenture or the Pledge and Escrow Agreement that adversely affects the rights of any Holder of Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by the Company to comply (A) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or 4.19 of the Indenture and (B) with any of the provisions of Article Four or Section 5.01 of the Indenture for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class; (iv) failure by the Company for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding voting as a single class to comply with certain other agreements in the Indenture, the Notes, the Note Gurantee or the Pledge and Escrow Agreement; (v) default under certain other agreements relating to Indebtedness of the Company which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries; (viii) the breach of certain representations, warranties or agreements set forth in the Pledge and Escrow Agreement, or a material default by the Company in the performance of any covenant set forth in the Pledge and Escrow Agreement, or repudiation by the Company of its obligations under the Pledge and Escrow Agreement, or the Pledge and Escrow Agreement shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect; and (ix) except as permitted by the Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or the Guarantor, or any Person acting on behalf of the Guarantor, shall deny or disaffirm its obligations under such Guarantor's Note Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company A-5 is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN NET (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Six Flags Entertainment Corporation 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Corporate Secretary A-6 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint -------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ____________________ Your Signature: ______________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. A-7 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $________ Date: ____________________ Your Signature: ___________________________ (Sign exactly as your name appears on the Note) Tax Identification No: ____________________ Signature Guarantee. A-8 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Amount of Amount of of decrease in increase in this Global Note Signature of Principal Amount Principal Amount following such authorized officer of of of decrease (or Trustee or Note Date of Exchange this Global Note this Global Note increase) Custodian - ---------------- ---------------- ---------------- ---------------- ---------------------
A-9 EXHIBIT B FORM OF NOTATION OF GUARANTEE For value received, the Guarantor, Premier Parks, Inc. (which term includes any successor Person under the Indenture) has, unconditionally guaranteed on a fully subordinated basis, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of __________, 1998 (the "Indenture") among Six Flags Entertainment Corporation, Premier Parks Inc. and The Bank of New York, as trustee (the "Trustee"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Notes (as defined in the Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantor to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 11 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination of this Note Guarantee as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Note in accordance with the provisions of the Indenture. Premier Parks Inc. By: ________________________________ Name: Title: B-1 L&W DRAFT 3/18/98 ================================================================================ SENIOR NOTES PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT by and between SIX FLAGS ENTERTAINMENT CORPORATION and THE BANK OF NEW YORK as Trustee ================================================================================ THIS PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"), dated as of __________, 1998, is by and between SIX FLAGS ENTERTAINMENT CORPORATION (the "Company") and The Bank of New York, as trustee under the Indenture referred to below (the "Trustee"). RECITALS A. The Senior Notes. Pursuant to that certain Indenture (the "Indenture"), dated as of ______________, 1998, by and between the Company and the Trustee, the Company will issue $170,000,000 in aggregate principal amount of ___% Senior Notes due 2006 (collectively, the "Senior Notes"). Immediately after receipt of payment for the Senior Notes (the "Deposit Time"), the Company will deposit $175,000,000.00 (the "Escrow Funds"), into a segregated cash collateral trust account with the Trustee at its office at ____________, New York, New York, in the name of The Bank of New York, as Trustee, "Escrow Account for Senior Notes" (such account is herein referred to as the "Escrow Account"). The Escrow Account and all balances and investments from time to time therein shall be under the sole control and dominion of the Trustee, for the benefit of the Trustee and the ratable benefit of the Holders of the Senior Notes. B. Purpose. The parties hereto desire to set forth their agreement with regard to the administration of the Escrow Account, the creation of a security interest in the Collateral (as defined herein) and the conditions upon which funds will be released from the Escrow Account. C. Definitions. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Security Interest. (a) Pledge and Assignment of Collateral. The Company hereby irrevocably pledges, assigns and sets over to the Trustee, and grants to the Trustee, for the benefit of the Trustee and the ratable benefit of the Holders of the Senior Notes, a first priority continuing security interest in all of the Company's right, title and interest in and to all of the following, whether now owned or existing or hereafter acquired or created (collectively, the "Collateral"): 2 (i) all funds from time to time held in the Escrow Account, including, without limitation, the Escrow Funds and all certificates and instruments, if any, from time to time representing or evidencing the Escrow Account or the Escrow Funds; (ii) all investments of funds in the Escrow Account, which all shall constitute Government Securities, and whether held by or registered in the name of the Trustee or otherwise and all certificates and instruments, if any, from time to time representing or evidencing any such Government Securities; (iii) all notes, certificates of deposit, deposit accounts, checks and other instruments evidencing such Government Securities from time to time hereafter delivered to or otherwise possessed by the Trustee, for or on behalf of the Company, in substitution for or in addition to any or all of the then existing Collateral; (iv) all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Collateral; and (v) all proceeds of any of the foregoing, including, without limitation, cash proceeds. (b) Secured Obligations. This Agreement secures the due and punctual payment and performance of all Obligations of the Company, whether now or hereafter existing, under the Senior Notes and the Indenture including, without limitation, interest and premium, if any, accrued on the Senior Notes after the commencement of a bankruptcy, reorganization or similar proceeding involving the Company to the extent permitted by applicable law (collectively, the "Secured Obligations"). (c) Delivery of Collateral. All certificates or instruments, if any, representing or evidencing the Collateral shall be held by or on behalf of the Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance reasonably satisfactory to the Trustee. All securities in uncertificated or book-entry form and all security entitlements, if any, in each case representing or evidencing the Collateral shall be registered in the name of the Trustee (or any of its nominees) as the registered owner thereof by book-entry or as otherwise appropriate so as to properly identify the interest of the Trustee therein. In addition, the Trustee shall have the right, at any time following the occurrence of an Event of Default, to transfer to or to register in the name of the Trustee or any of its nominees any or all other Collateral. Except as otherwise provided herein, all Collateral shall be deposited and held in the Escrow Account. The Trustee shall have the right at any time to exchange certificates or instruments representing 3 or evidencing all or any portion of the Collateral for certificates or instruments of smaller or larger denominations in the same aggregate amount. (d) Further Assurances. Prior to, contemporaneously herewith, and at any time and from time to time hereafter, the Company will, at the Company's expense, execute and deliver to the Trustee such other instruments and documents, and take all further action as it deems necessary or advisable or as the Trustee may reasonably request including an Opinion of Counsel, upon which the Trustee may conclusively rely, to confirm or perfect the security interest of the Trustee granted or purported to be granted hereby or to enable the Trustee to exercise and enforce its rights and remedies hereunder with respect to any Collateral and the Company will take all necessary action to preserve and protect the security interest created hereby as a first priority, perfected Lien and encumbrance upon the Collateral. The Company will pay all costs incurred in connection with any of the foregoing. (e) Establishing and Maintaining Accounts. So long as this Agreement is in full force and effect: (i) the Company shall establish and maintain the Escrow Account with the Trustee in New York, New York. The Collateral shall at all times be subject to the sole dominion and control of the Trustee, which shall hold the Collateral and administer the Escrow Account subject to the terms and conditions of this Agreement. The Company shall have no right of withdrawal from the Escrow Account nor any other right or power with respect to the Collateral, except as expressly provided herein; and (ii) it shall be a term and condition of the Escrow Account, notwithstanding any term or condition to the contrary in any other agreement relating to the Escrow Account and except as otherwise provided by the provisions of Article 3 of this Agreement, that no amount in the Escrow Account (including, without limitation, interest on or other proceeds of the Escrow Account or on any Government Securities held therein) shall be paid or released to or for the account of, or withdrawn by or for the account of, the Company or any other person or entity other than the Trustee or its designated agent. (f) Transfers and Other Liens. Until termination of this Agreement pursuant to Section 8, the Company agrees that it will not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral, except for the security interest under this Agreement. (g) Trustee Appointed Attorney-in-Fact. In addition to all of the powers granted to the Trustee pursuant to Article 7 of the Indenture, the Company hereby irrevocably appoints the Trustee as the Company's attorney-in-fact, coupled with an interest, with full 4 authority in the place and stead of the Company and in the name of the Company or otherwise, from time to time in the Trustee's discretion to take any action and to execute any instrument which the Trustee may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the Company representing any interest payment, dividend or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and the expenses of the Trustee incurred in connection therewith shall be payable by the Company. (h) Trustee May Perform. Without limiting the authority granted under Section 1(g) and except with respect to the failure of the Company to deliver investment instructions, which shall be governed by Section 2(b) hereof, if the Company fails to perform any agreement contained herein, the Trustee may, but shall not be obligated to, itself perform, or cause performance of, such agreement, and the expenses of the Trustee incurred in connection therewith shall be payable by the Company. In the event that the Trustee performs pursuant to this Section 1(h), the Company shall indemnify the Trustee in the manner provided in Section 7.07 of the Indenture. 2. Investment and Liquidation of Funds in Escrow Account. Funds deposited in the Escrow Account shall be invested and reinvested by the Trustee on the following terms and conditions: (a) Investments. The Company shall immediately deposit all Escrow Funds into the Escrow Account. Funds deposited in the Escrow Account may, subject to the provisions of Articles 2 and 3 of this Agreement, be invested and reinvested in the name of and by the Trustee, at the written direction of the Company, in direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged ("Government Securities"). (b) Investment Instructions. If the Company fails to give written investment instructions to the Trustee by 12:00 noon (New York time) on any Business Day on which there is uninvested cash and/or maturing Government Securities in the Escrow Account, the Trustee is hereby unconditionally instructed and authorized and directed to invest any such cash or the proceeds of any maturing Government Securities in the Escrow Account in Government Securities maturing on the next Business Day. The Company's failure to give such investment instructions shall not constitute a default or an event of default hereunder. (c) Interest. All interest earned on funds invested in Government Securities shall be held in the Escrow Account and reinvested in accordance with the terms hereof and will be subject to the security interest granted hereunder to the Trustee. (d) Limitation of Trustee's Liability. In no event shall the Trustee have any liability to the Company or any other Person for investing the funds from time to time in the Escrow Account in accordance with the provisions of this Article 2, regardless of whether greater 5 income or a higher yield could have been obtained had the Trustee invested such funds in different Government Securities, or for any loss (including breakage costs or loss of principal) associated with the sale or liquidation of Government Securities in accordance with the terms of this Agreement, in each case other than with respect to gross negligence or willful misconduct of the Trustee. (e) Liquidation of Funds. In liquidating any Government Securities in accordance with Article 3 of this Agreement, the Company may, so long as no Event of Default has occurred and is continuing, direct the Trustee as to which Government Securities shall be liquidated. 3. Disposition of Collateral Upon Defeasance Payment. (a) Release of Escrow Funds for Defeasance Payment. So long as no Event of Default shall have occurred and be continuing, if the Company delivers to the Trustee a duly completed and executed Defeasance Payment Certificate substantially in the form of Exhibit A hereto, the Trustee shall, within five (5) Business Days after its receipt of such Defeasance Payment Certificate, liquidate such amount of Government Securities in the Escrow Account as may be necessary to obtain in cash the amount requested in such Defeasance Payment Certificate. Upon receipt of the foregoing, unless a Trust Officer of the Trustee has actual knowledge that any statement in such Defeasance Payment Certificate is untrue (and provided that, after application of the funds requested in the applicable Defeasance Payment Certificate, the Company would be in compliance with Section 4(d) hereof), the Trustee shall transfer the amount set forth in such Defeasance Payment Certificate in immediately available funds in accordance with the terms of such Defeasance Payment Certificate. (b) Termination of Security Interest. Upon transfer by the Trustee of the Escrow Funds to the Paying Agent as set forth in Section 3(a), the security interest evidenced by this Agreement in the Collateral in the Escrow Account will terminate and be of no further force and effect. Furthermore, upon any other release of any Collateral from the Escrow Account in accordance with the terms of this Agreement, the security interest evidenced by this Agreement in such Collateral so released will terminate and be of no further force and effect. 4. Representations and Warranties. The Company hereby represents and warrants to the Trustee and the Holders of the Senior Notes that: (a) The execution, delivery and performance by the Company of this Agreement are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any assets of the Company, except for the security interests granted under this Agreement. 6 (b) The Company is the record and beneficial owner of the Collateral, free and clear of any Lien or claims of any person or entity (except for the security interests granted under this Agreement). No financing statement covering the Collateral is on file in any public office other than the financing statements filed pursuant to this Agreement. (c) This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally or general principles of equity and commercial reasonableness. (d) The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in and to the Collateral, securing the payment of the Secured Obligations for the benefit of the Trustee and the ratable benefit of the Holders of Senior Notes, enforceable as such against all creditors of the Company and any persons purporting to purchase any of the Collateral from the Company other than as permitted by the Indenture. (e) Except as set forth in Section 4(d) above, no consent of any other Person and no consent, authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (1) for the pledge by the Company of the Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Company or (2) for the exercise by the Trustee of the rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement. (f) No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Company, threatened by or against the Company with respect to this Agreement or any of the transactions contemplated hereby. (g) The pledge of the Collateral pursuant to this Agreement is not prohibited by any applicable law or governmental regulation, release, interpretation or opinion of the Board of Governors of the Federal Reserve System or other regulatory agency (including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System). 5. Covenants. The Company covenants and agrees with the Trustee and the Holders of Senior Notes from and after the date of this Agreement until the Termination Date as follows: (a) The Company (i) will not (A) sell or otherwise dispose of, or grant any option or warrant with respect to, any of the Collateral or (B) create or permit to exist any Lien upon or with respect to any of the Collateral (except for the Lien created pursuant to this Agreement) and (ii) except as otherwise provided in this Agreement, at all times will be the sole beneficial owner of the Collateral. 7 (b) The Company will not (a) enter into any agreement or understanding that purports to or may restrict or inhibit the Trustee's rights or remedies hereunder, including, without limitation, the Trustee's right to sell or otherwise dispose of the Collateral in accordance with the terms of this Agreement or (b) fail to pay or discharge any tax, assessment or levy of any nature not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment with regard to the Collateral. (c) The Company will use, within 30 Business Days of receipt thereof, the Escrow Funds released hereunder only for a Defeasance Payment, which shall legally defease or redeem the Company's Zero Coupon Senior Notes due 1999. As used in this Agreement, the term "Defeasance Payment" means (i) a payment sufficient to repay in full all outstanding obligations under the Company's Zero Coupon Senior Notes due 1999 at maturity or (ii) a payment pursuant to Section 4.01(ii) of the indenture governing the Company's Zero Coupon Senior Notes due 1999 sufficient to effect a covenant defeasance of such notes pursuant to such indenture. 6. Remedies upon Default. If any Event of Default shall have occurred and be continuing: (a) The Trustee may, without notice to the Company and at any time or from time to time, liquidate all Government Securities and transfer all funds in the Escrow Account to the Paying Agent to apply such funds in accordance with Section 2.04 of the Indenture. (b) The Trustee may also exercise in respect of the Collateral, in addition to the other rights and remedies provided for herein or in the Indenture or otherwise available to it, all the rights and remedies of a secured party after a default under the Uniform Commercial Code in effect at that time in the State of New York (the "Code") (whether or not the Code applies to the affected Collateral). (c) Any cash held by the Trustee as Collateral and all proceeds received by the Trustee in respect of any sale or liquidation of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Trustee, be held by the Trustee as collateral for, and/or then or at any time thereafter be applied (after payment of any costs and expenses incurred in connection with any sale, liquidation or disposition of or realization upon the Collateral and the payment of any amounts payable to the Trustee) in whole or in part by the Trustee for the ratable benefit of the Holders of the Senior Notes against all or any part of the Secured Obligations in such order as the Trustee shall elect. Any surplus of such cash or cash proceeds held by the Trustee and remaining after payment in full of all the Secured Obligations and the costs and expenses incurred by and amounts payable to the Trustee hereunder or under the Indenture shall be paid over to the Company or to whomsoever shall be lawfully entitled to receive such surplus. 8 For the avoidance of doubt, if any Event of Default shall have occurred and be continuing, the Trustee shall not release any Collateral to, or at the direction of, the Company. 7. Indemnity and Authority of the Trustee. The Company shall indemnify the Trustee against any and all loses, liabilities or expenses incurred by it arising out of or in connection with the acceptance of administration of its duties under this Agreement, including the costs and expenses of enforcing this Agreement against the Company (including this Section 7) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7 shall survive the satisfaction and discharge of this Agreement. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) of the Indenture occurs, the expenses and compensation for the services (including the fees and expenses of its agent and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee may conclusively rely upon any Officer's Certificate or Opinion of Counsel it receives pursuant to Section 7.02 of the Indenture. 8. Termination. (a) This Agreement shall create a continuing security interest in and to the Collateral and such security interest shall, unless otherwise provided in the Indenture or in this Agreement, remain in full force and effect until the Company makes a Defeasance Payment (the "Termination Date"). This Agreement shall be binding upon the Company, its successors and assigns, and shall inure, together with the rights and remedies of the Trustee hereunder, to the benefit of the Trustee, the Holders of Senior Notes and their respective successors, transferees and assigns. (b) Subject to the provisions of Section 9(c) hereof, this Agreement shall terminate upon the Termination Date. At such time, the Trustee shall, at the written request of the Company, reassign and redeliver to the Company all of the Collateral hereunder that has not 9 been sold, disposed of, retained or applied by the Trustee in accordance with the terms of this Agreement and the Indenture. Such reassignment and redelivery shall be without warranty (either express or implied) by or recourse to the Trustee, except as to the absence of any prior assignments by or encumbrances created by the Trustee on its interest in the Collateral, and shall be at the expense of the Company. 9. Miscellaneous. (a) Waiver. Either party hereto may specifically waive any breach of this Agreement by any other party, but no such waiver shall be deemed to have been given unless such waiver is in writing, signed by the waiving party, and specifically designates the breach waived, nor shall any such waiver constitute a continuing waiver of similar or other breaches. (b) Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. (c) Survival of Provisions. All representations, warranties and covenants of the Company contained herein shall survive the execution and delivery of this Agreement, and shall terminate only upon the termination of this Agreement; provided, however that the Company's obligations pursuant to Section 7 hereof shall survive the termination of this Agreement (including any termination under applicable bankruptcy laws) or the resignation or removal of the Trustee. (d) Assignment. This Agreement shall inure to and be binding upon the parties and their respective successors and permitted assigns; provided, however, that the Company may not assign its rights or obligations hereunder without the express prior written consent of the Trustee, acting at the direction of the Holders as provided in the Indenture. (e) Entire Agreement; Amendments. This Agreement and the Indenture contain the entire agreement among the parties with respect to the subject matter hereof and supersede any and all prior agreements, understandings and commitments with respect thereto, whether oral or written; provided, however, that this Agreement is executed and accepted by the Trustee subject to all terms and conditions of its acceptance of the trust under the Indenture, as fully as if said terms and conditions were set forth at length herein. This Agreement may be amended only by a writing signed by duly authorized representatives of both parties. The Trustee may execute an amendment to this Agreement only if the requisite consent of the Holders of the Senior Notes required by Section 9.02 of the Indenture has been obtained, unless no such consent is required by such Section 9.02 of the Indenture. (f) Notices. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail 10 (registered or certified return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company: Six Flags Entertainment Corporation 11501 Northeast Expressway Oklahoma City, Oklahoma 73131 Attention: Chief Financial Officer Facsimile number: (405) ________ Telephone number: (405) 475-2500 With a copy to: James M. Coughlin, Esq. Baer Marks & Upham LLP 805 Third Avenue New York, New York 10022 Facsimile number: (212) 702-5810 Telephone number: (212) 702-5700 If to the Trustee: The Bank of New York _____________________ _____________________ Attention: ___________________ Facsimile number: (212) ___________ Telephone number: (212) ___________ The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other that those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. (g) Expenses. The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Agreement and services hereunder as the Company and the Trustee have separately agreed. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee 11 promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. (h) Security Interest Absolute. All rights of the Trustee and the Holders of Senior Notes and security interests hereunder, and all obligations of the Company hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Indenture or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Indenture; (c) any exchange, surrender, release or non-perfection of any Liens on any other collateral for all or any of the Secured Obligations; or (d) to the extent permitted by applicable law, any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Company in respect of the Secured Obligations or of this Agreement. (i) Counterpart Originals. The parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them represent the same agreement. (j) Limitation by Law. All rights, remedies and powers provided herein may be exercised only to the extent that they will not render this Agreement not entitled to be recorded, registered or filed under provisions of any applicable law. (k) Rights of Holders of Senior Notes. No Holder of Senior Notes shall have any independent rights hereunder other than those rights granted to individual Holders of Senior Notes pursuant to Section 6.07 of the Indenture; provided that nothing in this subsection shall limit any rights granted to the Trustee under the Senior Notes or the Indenture. (l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES. (i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF SENIOR NOTES IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. (ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR NOTES, HAVE THE RIGHT, TO THE EXTENT 12 PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS CLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS. (iii) THE COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. (iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE NOR ANY HOLDER OF SENIOR NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. (v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY 13 WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS OF SENIOR NOTES ON THE OTHER HAND. [SIGNATURE PAGE FOLLOWS] 14 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Pledge, Escrow and Disbursement Agreement as of the day first written above. COMPANY: SIX FLAGS ENTERTAINMENT CORPORATION By: __________________________________ Name: Title: TRUSTEE: THE BANK OF NEW YORK By: __________________________________ Name: Title: EXHIBIT A [Form of] Defeasance Payment Certificate PREMIER PARKS INC. Date: ________________ The undersigned executive officers of Six Flags Entertainment Corporation, a Delaware corporation (the "Company"), hereby certify, pursuant to Section 3(a) of the Pledge, Escrow and Disbursement Agreement, dated as of __________, 1998 (the "Escrow Agreement"), by and between the Company and The Bank of New York, as trustee (the "Trustee"), under the Indenture dated as of _________, 1998 (the "Indenture"), between the Company and the Trustee, that: 1. This request for release of funds constitutes a Defeasance Payment Certificate (as defined in the Indenture) and has been duly authorized by all necessary corporate action and does not contravene, or constitute a default under, any provision of applicable law or regulation or the certificate of incorporation of the Company or of the Escrow Agreement, the Indenture or any other agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any assets of the Company. 2. No Event of Default has occurred and is continuing under the Indenture. 3. The Company will use the Escrow Funds released hereby within 30 Business Days to legally defease or redeem its Zero Coupon Senior Notes due 1999. The Company hereby requests the Trustee to liquidate $_________ worth of Government Securities in the Escrow Account by not later than 12:00 noon (New York time) on ________, _____ and to transfer $___________ in immediately available funds to the Paying Agent for payment to _______________ at ________________. A-1 Capitalized terms used herein without definition shall have the meanings set forth in the Indenture. By: __________________________________ Name: ________________________________ Title: _______________________________ By: __________________________________ Name: ________________________________ Title: _______________________________ A-2 EX-4.(R) 12 CERT OF DESIG - MAND CONV PREFERRED STOCK Exhibit 4(r) PREMIER PARKS INC. CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF THE ___% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $1.00 PER SHARE Pursuant to Section 151 of the General Corporation Law of the State of Delaware The following resolution was duly adopted by the Board of Directors of Premier Parks Inc., a Delaware corporation (the "Corporation"), pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, on ____________, 1998, by the unanimous written consent of the Board of Directors: RESOLVED that, pursuant to the authority expressly granted to the Board of Directors of the Corporation by the Certificate of Incorporation of the Corporation, and pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, there be created from the 500,000 shares of Preferred Stock, par value $1.00 per share (the "Preferred Stock"), of the Corporation authorized to be issued pursuant to the Certificate of Incorporation, a series of Preferred Stock consisting of _______ shares of ___% Convertible Redeemable Preferred Stock (the "Redeemable Preferred Stock"), the voting powers, designations, preferences and relative, participating, optional or other special rights of which, and qualifications, limitations or restrictions thereof, shall be as follows: 1. DEFINITIONS. As used herein, the following terms shall have the following meanings: 1.1 "Accrued Dividends" shall mean, with respect to any share of Redeemable Preferred Stock, as of any date, the accrued and unpaid dividends on such share from and including the most recent Dividend Payment Date (or the Issue Date, if such date is prior to the first Dividend Payment Date) to but not including such date. 1.2 "Accumulated Dividends" shall mean, with respect to any share of Redeemable Preferred Stock, as of any date, the aggregate accumulated and unpaid dividend on such share from the Issue Date until the most recent Dividend Payment Date prior to such date. There shall be no Accumulated Dividends with respect to any share of Redeemable Preferred Stock prior to the first Dividend Payment Date. 2 1.3 "Affiliate" shall mean, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such first Person. For the purpose of this definition, "control" shall mean, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. 1.4 "Board of Directors" shall mean the Board of Directors of the Corporation or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action. 1.5 "Business Day" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law or executive order to close. 1.6 "Certificate of Incorporation" shall mean the Certificate of Incorporation of the Corporation, as amended from time to time. 1.7 "Closing Price" of the Common Stock, as of any day, shall mean (a) the last reported sale price of such stock (regular way), or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case as reported on the principal national securities exchange on which such stock is listed or admitted to trading or (b) if the Common Stock is not listed or admitted to trading on any national securities exchange, the last reported sale price, or in case no such sale takes place on such day, the average of the highest reported bid and the lowest reported asked quotation for the Common Stock, in either case reported on NASDAQ, or a similar service if NASDAQ is no longer reporting such information. 1.8 "Common Stock" shall mean the class of Common Stock, par value $.05 per share, of the Corporation or any other class of stock resulting from successive changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or as a result of a subdivision or combination. 1.9 "Common Stock Conversion Rate" shall mean, as of any date, a rate for each share of Redeemable Preferred Stock equal to (i) the Liquidation Value thereof plus all Accumulated Dividends and Accrued Dividends thereon to the date of conversion, divided by (ii) the Conversion Price in effect as of such date. 3 1.10 "Conversion Price" shall equal $___ per share of Redeemable Preferred Stock.(1) 1.11 "Current Market Price" shall mean, with respect to each share of Common Stock as of any date, the weighted average of the daily Closing Prices per share of Common Stock on the principal national securities exchange on which such stock is then listed or admitted to trading for the 5 consecutive Trading Days prior to such date; provided that if on any such date the shares of Common Stock are not listed or admitted for trading on any national securities exchange or quoted by NASDAQ or a similar service, the Current Market Price for a share of Common Stock shall be the fair market value of such share as determined by three Independent Financial Experts, one selected by the Corporation (which selection shall be communicated in writing to the holders of the Redeemable Preferred Stock), one selected by the holders of two-thirds of the shares of Redeemable Preferred Stock (which selection shall be communicated in writing to the Corporation) and one selected by the two Independent Financial Experts so chosen. The determination of fair market value by such Independent Financial Expert shall be final, binding and conclusive on the Corporation and all holders of the Redeemable Preferred Stock. All costs and fees of any of the Independent Financial Experts retained in accordance with the foregoing shall be borne by the Corporation. 1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.13 "Excluded Securities" means shares of Common Stock issued upon conversion of the shares of Redeemable Preferred Stock [or upon conversion of the shares of Mandatorily Redeemable Preferred Stock]. 1.14 "Independent Financial Expert" means an independent nationally recognized investment banking firm. 1.15 "Issue Date" shall mean the Closing Date (as defined in the Merger Agreement). 1.16 "Junior Stock" shall mean the Common Stock and the shares of any other class or series of stock of the Corporation which, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the - -------------------- (1) This number, pursuant to the Holdco Preferred Stock term sheet, will equal ___ % of the weighted average of the Closing Price of the Common Stock for the 20 consecutive trading days ending on the third trading day prior to the Issue Date. 4 relative rights, preferences and limitations thereof, shall be junior to the Redeemable Preferred Stock in respect of the right to receive dividends and to participate in any distribution of assets other than by way of dividends. 1.17 "Liquidation Value" shall have the meaning assigned to such term in Section 8.1 hereof. 1.18 "Mandatorily Redeemable Preferred Stock" means the ___% Mandatorily Redeemable Preferred Stock, par value $1.00 per share, of the Company issued on the date hereof. 1.19 "Mandatory Redemption Price" of a share of Redeemable Preferred Stock means the Liquidation Value thereof plus an amount equal to all Accumulated Dividends and Accrued Dividends thereon to the date of redemption. 1.20 "Merger Agreement" shall mean the Agreement and Plan of Merger, dated as of February 9, 1998 (as the same may be amended from time to time, the "Merger Agreement") by and among Premier Parks Inc., Premier Parks Holdings Corporation, PPStar I, Inc., Holders of the Capital Stock of Six Flags Entertainment Corporation ("SFEC") and SFEC. 1.21 "NASDAQ" shall mean the National Association of Securities Dealers, Inc. Automated Quotation System. 1.22 "Optional Redemption Price" of a share of Redeemable Preferred Stock means, (i) with respect to Section 3.1 hereof, the greater of (x) the Liquidation Value thereof and (y) the Current Market Price thereof, in each case plus all Accrued Dividends and Accumulated Dividends thereon to the date of redemption or (ii) with respect to Section 3.2 hereof, sum of (x) the Liquidation Value thereof, (y) all Accrued Dividends and Accumulated Dividends thereon to the date of redemption and (z) an amount equal to the percentage of the Dividend Rate set forth opposite the 12-month periods commencing on the anniversary of the Issue Date of the years set forth below in which such conversion occurs: Period Percentage of Dividend Rate ------ --------------------------- 2001 70% 2002 62.22% 2003 54.44% 2004 46.66% 2005 38.88% 2006 31.10% 2007 23.32% 2008 15.54% 2009 7.78% 2010 0% 5 1.23 "Parity Stock" shall mean the Mandatorily Redeemable Preferred Stock and shares of any other class or series of stock of the Corporation which, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall, in the event that the stated dividends thereon are not paid in full, be entitled to share ratably with the Redeemable Preferred Stock in the payment of dividends, including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends were declared and paid in full, and shall, in the event that the amounts payable thereon on liquidation are not paid in full, be entitled to share ratably with the Redeemable Preferred Stock in any distribution of assets other than by way of dividends in accordance with the sums which would be payable in such distribution if all sums payable were discharged in full; PROVIDED, HOWEVER, that the term "Parity Stock" shall be deemed to refer (i) in Section 2.2 hereof, to any stock which is Parity Stock in respect of the right to receive dividends and (ii) in Section 8 hereof, to any stock which is Parity Stock in respect of any distribution of assets other than by way of dividends. 1.24 "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, limited liability company, unincorporated organization, estate, other entity or government or any agency or political subdivision thereof. 1.25 "Pro Rata Repurchase" shall mean any purchase of shares of Common Stock by the Corporation or by any of its subsidiaries whether for cash, shares of capital stock of the Corporation, other securities of the Corporation, evidences of indebtedness of the Corporation or any other Person or any other property (including, without limitation, shares of capital stock, other securities or evidences of indebtedness of a subsidiary of the Corporation), or any combination thereof, effected while any of the shares of Redeemable Preferred Stock are outstanding, which purchase is subject to Section 13(e) of the Exchange Act or is made pursuant to an offer made available to all holders of Common Stock. 1.26 "Redemption Price" means the Optional Redemption Price if such price is determined pursuant to Section 3 hereof, or the Mandatory Redemption Price if such price is determined pursuant to Section 4 hereof. 1.27 "Senior Stock" shall mean the shares of any class or series of stock of the Corporation which, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall be senior to the Redeemable Preferred Stock in respect of the right to receive dividends or to participate in any distribution of assets other than by way of dividends; PROVIDED, HOWEVER, that after the date hereof, 6 the Corporation may not issue any Senior Stock while any shares of the Redeemable Preferred Stock are outstanding. 1.28 "Trading Day" shall mean, so long as the Common Stock is listed or admitted to trading on a national securities exchange, a day on which the principal national securities exchange on which the Common Stock is listed is open for the transaction of business, or, if the Common Stock is not so listed or admitted for trading on any national securities exchange, a day on which NASDAQ is open for the transaction of business. 2. DIVIDENDS. 2.1 The holders of shares of the outstanding shares of Redeemable Preferred Stock shall be entitled, when, as and if declared by the Board of Directors out of funds legally available therefor, to receive dividends on each outstanding share of Preferred Stock, payable quarterly, in arrears, at an annual rate of ___% (the "DIVIDEND RATE"). Dividends payable for each full dividend period will be computed by dividing (x) the product of the Liquidation Value times the Dividend Rate by (y) four and shall be payable on the last Business Day of March, June, September and December in each year (the "Dividend Payment Date"), commencing on June 30, 1998, to the holders of record of Redeemable Preferred Stock at the close of business on the preceding Business Day, or such other dates as are fixed by the Board of Directors within ten (10) days prior to the Dividend Payment Date (each a "Record Date"). Such dividends shall be cumulative from the Issue Date and shall accrue on a day-to-day basis, whether or not earned or declared, from and after the Issue Date and shall be payable in cash. Dividends on Redeemable Preferred Stock which are not declared and paid when due will compound quarterly on each Dividend Payment Date at the Dividend Rate. Dividends payable for any partial dividend period shall be computed on the basis of actual days elapsed over a 360-day year consisting of twelve 30-day months. 2.2 Except as hereinafter provided in this Section 2.2, unless all dividends on the outstanding shares of Redeemable Preferred Stock and any Parity Stock that shall have accrued and become payable as of any date shall have been paid, or declared and funds shall have been set apart for payment thereof, no dividend or other distribution (payable other than in shares of Junior Stock) shall be paid to the holders of Junior Stock or Parity Stock, and no shares of Redeemable Preferred Stock, Parity Stock or Junior Stock shall be purchased or redeemed by the Corporation or any of its subsidiaries (except by conversion into or exchange for, or out of the net cash proceeds from the concurrent sale of, Junior Stock), nor shall any monies be paid or made available for a sinking fund for the purchase or redemption of any Redeemable Preferred Stock, Junior Stock or Parity Stock; PROVIDED, HOWEVER, that nothing herein shall prevent the Corporation from completing the purchase of Redeemable Preferred Stock, Parity Stock or Junior Stock for which a purchase contract was entered into, or the notice of redemption of which was originally 7 published, prior to the date on which any such dividends were first required to be paid. When dividends are not paid in full upon the shares of Redeemable Preferred Stock and any Parity Stock, all dividends declared upon shares of Redeemable Preferred Stock and all Parity Stock shall be declared pro rata so that the amount of dividends declared per share on Redeemable Preferred Stock and all such Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of Redeemable Preferred Stock and all such Parity Stock bear to each other. Holders of shares of Redeemable Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on Redeemable Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on Redeemable Preferred Stock which may be in arrears. 2.3 The holders of shares of Redeemable Preferred Stock at the close of business on a Record Date will be entitled to receive the dividend payment on those shares (except that holders of shares called for redemption on a redemption date between such Record Date and the Dividend Payment Date will be entitled to receive such dividend on such redemption date as indicated in Section 2.1 hereof) on the corresponding Dividend Payment Date notwithstanding the subsequent conversion thereof or the Company's default in payment of the dividend due on that Dividend Payment Date. However, shares of Redeemable Preferred Stock surrendered for conversion during the period between the close of business on any Record Date and the close of business on the day immediately preceding the applicable Dividend Payment Date (except for shares called for redemption on a redemption date during that period) must be accompanied by payment of an amount equal to the dividend payable on the shares on that Dividend Payment Date. A holder of shares of Redeemable Preferred Stock on a Record Date who (or whose transferee) tenders any shares for conversion on a Dividend Payment Date will receive the dividend payable by the Company on the Redeemable Preferred Stock on that date, and the converting holder need not include payment in the amount of such dividend upon surrender of shares of Redeemable Preferred Stock for conversion. Except as provided above, the Company shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of Common Stock issued upon conversion. 3. OPTIONAL REDEMPTION. 3.1 The Corporation may, at its sole option, subject to the provisions of Section 2.2, redeem at any time during the 90-day period following the Issue Date, out of funds legally available therefor, all of the outstanding shares of Redeemable Preferred Stock at a redemption price for each share of Redeemable Preferred Stock called for redemption pursuant to this Section 3.1 equal to the Optional Redemption Price. With respect to each share of Redeemable Preferred Stock properly tendered for redemption pursuant to this Section 3.1, if the 8 Corporation fails to pay the Optional Redemption Price on the date fixed for redemption, the Corporation shall also pay an amount equal to interest on the amount determined in the above sentence at 12% per annum, compounded on a quarterly basis, from the date fixed for redemption to the date the Redemption Price is actually paid (such interest shall be in addition to, and not in lieu of, any other remedies available to the holders of shares of Redeemable Preferred for failure by the Corporation to pay the Optional Redemption Price as provided herein). 3.2 The Corporation may, at its sole option, subject to the provisions of Section 2.2, redeem at any time following the third anniversary of the Issue Date, out of funds legally available therefor, all or less than all of the outstanding shares of Redeemable Preferred Stock at a redemption price for each share of Redeemable Preferred Stock called for redemption pursuant to this Section 3.2 equal to the Optional Redemption Price. With respect to each share of Redeemable Preferred Stock properly tendered for redemption pursuant to this Section 3.2, if the Corporation fails to pay the Optional Redemption Price on the date fixed for redemption, the Corporation shall also pay an amount equal to interest on the amount determined in the above sentence at 12% per annum, compounded on a quarterly basis, from the date fixed for redemption to the date the Optional Redemption Price is actually paid (such interest shall be in addition to, and not in lieu of, any other remedies available to the holders of shares of Redeemable Preferred for failure by the Corporation to pay the Optional Redemption Price as provided herein). In the event that fewer than all the outstanding shares of Redeemable Preferred Stock are to be redeemed pursuant to this Section 3.2, the number of shares to be redeemed shall be redeemed on a pro rata basis based on the number of shares held by each holder thereof. 4. MANDATORY REDEMPTION. On the twelfth anniversary of the Issue Date (or, if such date is not a Business Day, on the first Business Day after such date), the Corporation shall, subject to the provisions of Section 2.2, redeem out of funds legally available therefor, all of the outstanding shares of Redeemable Preferred Stock at a redemption price for each share equal to the Mandatory Redemption Price. With respect to each share of Redeemable Preferred Stock properly tendered for redemption pursuant to this Section 4, if the Corporation fails to pay the Mandatory Redemption Price on the date fixed for redemption, the Corporation shall also pay an amount equal to interest on the amount determined in the above sentence at 12% per annum, compounded on a quarterly basis, from the date fixed for redemption to the date the Mandatory Redemption Price is actually paid (such interest shall be in addition to, and not in lieu of, any other remedies available to the holders of shares of Redeemable Preferred for failure by the Corporation to pay the Mandatory Redemption Price as provided herein). 9 5. PROCEDURES FOR REDEMPTION 5.1 In the event the Corporation shall elect to redeem shares of Redeemable Preferred Stock pursuant to Section 3, or is obligated to redeem shares of Redeemable Preferred Stock pursuant to Section 4, it shall provide notice of such redemption by first class mail, postage prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior to the redemption date, to each record holder of the shares to be redeemed, at such holder's address as the same appears on the books of the Corporation. Each such notice shall state: (i) the time and date as of which the redemption shall occur; (ii) the total number of shares of Redeemable Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the Redemption Price; (iv) that shares of Redeemable Preferred Stock called for redemption may be converted at any time prior to the time and date fixed for redemption (unless (x) the Corporation shall default in the payment of the Redemption Price, in which case such right shall not terminate at such time and date or (y) the holders of such shares do not yet have the right to convert such shares under Section 6 below); (v) the Common Stock Conversion Rate; (vi) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price; and (vii) that dividends on the shares to be redeemed will cease to accrue on such redemption date. 5.2 If notice of redemption shall have been given by the Corporation as provided in Section 5.1, dividends on the shares of Redeemable Preferred Stock so called for redemption shall cease to accrue, such shares shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Corporation with respect to shares so called for redemption (except the right to receive from the Corporation the Redemption Price without interest and except the right to convert such shares in accordance with Section 6) shall cease (including any right to receive dividends otherwise payable on any Dividend Payment Date that would have occurred after the time and date of redemption) from and after the time and date fixed in the notice of redemption as the time and date of redemption (unless the Corporation shall default in the payment of the Redemption Price, in which case such rights shall not terminate at such time and date). Upon surrender (in accordance with the notice of redemption) of the certificate or certificates for any shares to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice of redemption shall so state), such shares shall be redeemed by the Corporation at the Redemption Price. In case fewer than all the shares represented by any such certificate are to be redeemed, a new certificate shall be issued representing the unredeemed shares, without cost to the holder thereof, together with the amount of cash, if any, in lieu of fractional shares. Subject to applicable escheat laws, any moneys so set aside by the Corporation and unclaimed at the end of one year from the redemption date shall revert to the general funds of the Corporation, after which reversion the holders of such shares so called for redemption shall look only to the general funds of the Corporation for the 10 payment of the redemption price without interest. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time. 6. CONVERSION RIGHTS. 6.1 Each holder of a share of Redeemable Preferred Stock shall have the right, at any time after the 90th day following the Issue Date, or, as to any share of Redeemable Preferred Stock called for redemption with a date fixed for redemption which is after the 90th day following the Issue Date, at any time prior to the time and date fixed for such redemption (unless the Corporation defaults in the payment of the Redemption Price, in which case such right shall not terminate at such time and date), to convert such share into fully paid and nonassessable shares of Common Stock equal to the Common Stock Conversion Rate as of the date of conversion. 6.2 No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of Redeemable Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Redeemable Preferred Stock, the Corporation shall, subject to Section 6.5(e), make a cash payment (calculated to the nearest $.01) equal to such fraction multiplied by the Closing Price of the Common Stock on the last Trading Day prior to the date of conversion; provided, that, if on any such date the shares of Common Stock are not listed or admitted for trading on any national securities exchange or quoted by NASDAQ or a similar service, the Closing Price for a share of Common Stock shall be the fair market value as determined by three Independent Financial Experts, one selected by the Corporation (which selection shall be communicated in writing to the holder of the Redeemable Preferred Stock exercising its conversion right hereunder), one selected by the holders of the shares of Redeemable Preferred Stock exercising its conversion right hereunder (which selection shall be communicated in writing to the Corporation) and one selected by the two Independent Financial Experts so chosen. The determination of fair market value by such Financial Expert shall be final, binding and conclusive on the Corporation and the holder of Redeemable Preferred Stock exercising its conversion right hereunder. All costs and fees of any of the Independent Financial Experts retained in accordance with the foregoing shall be borne by the Corporation. 6.3 Any holder of shares of Redeemable Preferred Stock electing to convert such shares into Common Stock shall surrender the certificate or certificates for such shares at the offices of the Corporation (or at such other place as the Corporation may designate by notice to the holders of shares of Redeemable Preferred Stock) during regular business hours, duly endorsed to the Corporation or in blank, or accompanied by instruments of transfer to the Corporation or in blank, in form reasonably satisfactory to the Corporation, and shall give written notice to the Corporation at such offices that such holder elects to convert such shares of 11 Redeemable Preferred Stock. As soon as practicable (but in no event later than three (3) Business Days) after any holder deposits certificates for shares of Redeemable Preferred Stock, accompanied by the written notice above prescribed, the Corporation shall issue and deliver at such office to the holder for whose account such shares were surrendered, or to his nominee, certificates representing the number of shares of Common Stock and the cash in lieu of fractional shares, if any, to which such holder is entitled upon such conversion. 6.4 Conversion shall be deemed to have been made as of the date that certificates for the shares of Redeemable Preferred Stock to be converted and the written notice, are received by the Corporation; and the Person entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such Common Stock on such date. The Corporation shall not be required to deliver certificates for shares of Common Stock while the stock transfer books for such stock or for Redeemable Preferred Stock are duly closed for any purpose, but certificates for shares of Common Stock shall be issued and delivered as soon as practicable after the opening of such books. 6.5 The Common Stock Conversion Rate shall be adjusted from time to time as follows: (a) If the Corporation shall, at any time or from time to time while any shares of the Redeemable Preferred Stock are outstanding, (i) pay a dividend on its Common Stock in shares of its capital stock, (ii) combine its outstanding shares of Common Stock into a smaller number of shares, (iii) subdivide its outstanding shares of Common Stock or (iv) issue by reclassification of its shares of Common Stock any shares of capital stock of the Corporation, then the Common Stock Conversion Rate in effect immediately before such action shall be adjusted so that the holders of the Redeemable Preferred Stock, upon conversion of shares thereof immediately following such action, shall be entitled to receive the kind and amount of shares of capital stock of the Corporation which they would have owned or been entitled to receive upon or by reason of such event if such shares of Redeemable Preferred Stock had been converted immediately before the record date or effective date for such action. An adjustment made pursuant to this Section 6.5(a) shall become effective retroactively immediately after the record date in the case of a dividend or distribution and shall become effective retroactively immediately after the effective date in the case of a subdivision, combination or reclassification. For the purposes of this Section 6.5(a) if the kind or amount of securities receivable upon the payment of any dividend, subdivision, combination or reclassification is subject to an election to be made by the holders of Common Stock, then each holder of Redeemable Preferred Stock shall be deemed to have failed to exercise any such right to make such election (provided that if the kind or amount of securities receivable upon such dividend, subdivision, combination or reclassification is not the same for each nonelecting share, then the kind and amount of securities receivable upon such dividend, subdivision, combination or reclassification for each nonelecting share shall 12 be deemed to be the kind and amount so receivable per share by a plurality of the nonelecting shares). (b) If the Corporation shall, at any time or from time to time while any of the Redeemable Preferred Stock is outstanding, issue rights or warrants to all or substantially all holders of shares of its Common Stock entitling them (for a period expiring within 45 days after the record date for such issuance) to subscribe for or purchase shares of Common Stock (or securities exercisable, convertible or exchangeable for or into shares of Common Stock) at a price per share less than the Current Market Price of the Common Stock at such record date (treating the price per share of the securities exercisable, convertible or exchangeable for or into Common Stock as equal to (x) the sum of (i) the price for a unit of the security exercisable, convertible or exchangeable for or into Common Stock plus (ii) any additional consideration initially payable upon the exercise, conversion or exchange of such security for or into Common Stock divided by (y) the number of shares of Common Stock initially underlying such exercisable, convertible or exchangeable security), the Common Stock Conversion Rate shall be adjusted so that it shall equal the rate determined by multiplying the Common Stock Conversion Rate in effect immediately prior to the date of issuance of such rights or warrants by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase (or into or for which the exercisable, convertible or exchangeable securities so offered are initially exercisable, convertible or exchangeable), and the denominator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase (or the aggregate purchase price of the exercisable, convertible or exchangeable securities so offered plus the aggregate amount of any additional consideration initially payable upon exercise, conversion or exchange for or into Common Stock) would purchase at such Current Market Price of the Common Stock. Such adjustment shall become effective retroactively immediately after the record date for the determination of stockholders entitled to receive such rights or warrants. (c) If the Corporation shall, at any time or from time to time while any of the Redeemable Preferred Stock is outstanding, distribute to all or substantially all holders of shares of its Common Stock (including any such distribution made in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation and the Common Stock is not changed or exchanged) cash, evidences of indebtedness, securities or other assets (excluding dividends payable in shares of Common Stock for which adjustment is made under Section 6.5(a)) or rights, options or warrants to subscribe for or purchase securities of the Corporation (excluding those for which adjustment is made under Section 6.5(b)), then in each such case the Common Stock Conversion Rate shall be adjusted so that it shall equal the rate determined by multiplying the Common Stock 13 Conversion Rate in effect immediately prior to the date of such distribution by a fraction, the numerator of which shall be the Current Market Price of the Common Stock on the record date referred to below, and the denominator of which shall be such Current Market Price of the Common Stock less the then fair market value (as determined by the Board of Directors in good faith or, if requested by the holders of two-thirds of the Redeemable Preferred Stock, by an Independent Financial Expert selected in the manner described in the definition of the term "Current Market Price") of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights, options or warrants applicable to one share of Common Stock (provided that such denominator shall never be less than $.01). (d) If the Corporation or any subsidiary thereof shall, at any time or from time to time while any of the Redeemable Preferred Stock is outstanding, make a Pro Rata Repurchase, the Common Stock Conversion Rate shall be adjusted by multiplying the Common Stock Conversion Rate in effect immediately prior to such action by a fraction (which in no event shall be less than one (1)), the numerator of which shall be the product of (i) the number of shares of Common Stock outstanding immediately before such Pro Rata Repurchase minus the number of shares of Common Stock repurchased in such Pro Rata Repurchase and (ii) the Current Market Price of the Common Stock as of the day immediately preceding the first public announcement by the Corporation of the intent to effect such Pro Rata Repurchase, and the denominator of which shall be (i) the product of (x) the number of shares of Common Stock outstanding immediately before such Pro Rata Repurchase and (y) the Current Market Price of the Common Stock as of the day immediately preceding the first public announcement by the Corporation of the intent to effect such Pro Rata Repurchase minus (ii) the aggregate purchase price of the Pro Rata Repurchase (provided that such denominator shall never be less than $.01). (e) All calculations under this Section 6.5 shall be made to the nearest $.01 (with $.005 being rounded upward), one-hundredth of a share (with .005 being rounded upward) or, in the case of a conversion rate, one ten-thousandth (with .00005 being rounded upward). Notwithstanding any other provision of this Section 6.5, the Corporation shall not be required to make any adjustment of the Common Stock Conversion Rate unless such adjustment would require an increase or decrease of at least 0.01% of such rate. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least 0.01% in such rate. Any adjustments under this Section 6.5 shall be made successively whenever an event requiring such an adjustment occurs. (f) Whenever an adjustment in the Common Stock Conversion Rate is required, the Corporation shall promptly cause to be mailed (but in any event not later than five (5) days after the date of the event giving rise to such adjustment) first-class postage prepaid, to the holders of record of the outstanding 14 shares of Redeemable Preferred Stock, notice of such adjustment and a certificate of a firm of independent public accountants of recognized national standing selected by the Board of Directors (who shall be appointed at the Corporation's expense and who may be the independent public accountants regularly employed by the Corporation) setting forth the adjusted Common Stock Conversion Rate in effect as of such date determined as provided herein. Such notice and certificate shall set forth in reasonable detail such facts as shall be necessary to show the reason for and the manner of computing such adjustment. (g) In the event that at any time as a result of an adjustment made pursuant to this Section 6.5, the holder of any share of Redeemable Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of stock of the Corporation other than shares of Common Stock, the conversion rate of such other shares so receivable upon conversion of any such share of Redeemable Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in subparagraphs (a) through (f) and (h) of this Section 6.5, and the provisions of this Section 6 with respect to the Common Stock shall apply on like or similar terms to any such other shares. (h) No adjustment shall be made pursuant to this Section if the effect thereof would be to reduce the Conversion Price below the par value of the Common Stock and the Corporation shall not take any action if the effect thereof would be to reduce the Conversion Price below the par value of the Common Stock. 6.6 In case of either (a) any consolidation or merger to which the Corporation is a party, other than a merger or consolidation in which the Corporation is the surviving or continuing corporation and which does not result in any reclassification of, or change (other than a change in par value or from par value to no par value or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock or (b) any sale or conveyance of all or substantially all of the property and assets of the Corporation, then each share of Redeemable Preferred Stock then outstanding shall be converted in such merger or consolidation or shall be convertible from and after such sale or conveyance of property and assets into the kind and amount of shares of stock or other securities and property receivable upon such consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock into which such shares of Redeemable Preferred Stock could have been converted immediately prior to such consolidation, merger, sale or conveyance, subject to adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 6 (and assuming that if the kind or amount of securities, cash or other property receivable upon such consolidation, merger, sale or conveyance is subject to an election to be made by the holders of Common Stock, each holder of Common Stock shall be deemed to have failed to exercise any such right to make such election 15 (provided that if the kind or amount of securities, cash or other property receivable upon such consolidation, merger, sale or conveyance is not the same for each non-electing share, then the kind and amount of securities, cash or other property receivable upon such consolidation, merger, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the nonelecting shares)). The Corporation shall not enter into any of the transactions referred to in clause (a) or (b) of the preceding sentence unless effective provision shall be made so as to give effect to the provisions set forth in this Section 6.6 and the surviving or continuing corporation shall agree to be bound by the provisions of this Section 6.6 for the benefit of the holders of Redeemable Preferred Stock. The provisions of this Section 6.6 shall apply similarly to successive consolidations, mergers, sales or conveyances. 6.7 The Corporation shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued stock, for the purpose of effecting the conversion of the shares of Redeemable Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Redeemable Preferred Stock into such Common Stock at any time (assuming that, at the time of the computation of such number of shares, all such Common Stock would be held by a single holder). The Corporation shall from time to time, in accordance with the laws of the State of Delaware, use its best efforts to cause the authorized amount of Common Stock to be increased if the aggregate of the authorized amount of the Common Stock remaining unissued and the issued shares of such Common Stock in its treasury (other than any shares of such Common Stock reserved for issuance in any other connection) shall not be sufficient to permit the conversion of the shares of Redeemable Preferred Stock into the Common Stock. The Corporation covenants that any shares of Common Stock issued upon conversions of the Redeemable Preferred Stock shall be validly issued, fully paid and nonassessable. 6.8 If any shares of Common Stock which would be issuable upon conversion of shares of Redeemable Preferred Stock hereunder require registration with or approval of any governmental authority before such shares may be issued upon conversion, the Corporation will in good faith and as expeditiously as possible cause such shares to be duly registered or approved, as the case may be. 6.9 The Corporation shall pay any and all issue or other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Redeemable Preferred Stock pursuant hereto. The Corporation shall not, however, be required to pay any tax which is payable in respect of any transfer involved in the issue or delivery of Common Stock in a name other than that in which the shares of Redeemable Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. 16 6.10 For purposes of this Section 6, the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation or any subsidiary. The Corporation shall not pay a dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. 6.11 If any action or transaction would require adjustment of the Common Stock Conversion Rate pursuant to more than one paragraph of this Section 6, only one adjustment shall be made and each such adjustment shall be the amount of adjustment that has the highest absolute value. 6.12 In case: (a) of a consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required; or (b) of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation; or (c) of any Pro Rata Repurchase or other action triggering an adjustment to the Common Stock Conversion Rate pursuant to this Section 6; then, in each case, the Corporation shall cause to be mailed, first-class postage prepaid, to the holders of record of the outstanding shares of Redeemable Preferred Stock, at least twenty (20) days prior to the applicable record date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of any distribution or grant of rights or warrants triggering an adjustment to the Common Stock Conversion Rate pursuant to this Section 6, or, if a record is not to be taken, the date as of which the holders of record of Common Stock entitled to such distribution, rights or warrants are to be determined, or (y) the date on which any reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation, winding up or Pro Rata Repurchase is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation, winding up or Pro Rata Repurchase. Failure to give the notice specified hereunder shall have no effect on the status or effectiveness of the action to which the required notice relates. 17 7. VOTING. 7.1 The shares of Redeemable Preferred Stock shall have no voting rights except as required by law or as set forth below: (a) If the Corporation fails to pay dividends for an aggregate of six quarters (whether consecutive or nonconsecutive), then on the day following the sixth such Dividend Payment Date on which the quarterly dividend payment was not made by the Corporation pursuant to Section 4(a) hereof, the number of directors constituting the Board of Directors shall be increased by two (2) (in addition to any such increase in directorships required by any similar provision of the Certificate of Incorporation or the certificate of designation in respect of any other class or series of preferred stock of the Corporation) and the holders of shares of Redeemable Preferred Stock (in addition to all other rights) shall have the exclusive right, voting separately as a class, to elect two (2) directors of the Corporation. Such voting rights shall continue in effect until the Corporation pays quarterly dividends pursuant to Section 4(a) hereof on four (4) consecutive Dividend Payment Dates. (b) Such voting rights may be exercised initially either by written consent or at a special meeting of the holders of the shares of Redeemable Preferred Stock having such voting rights, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at each such annual meeting until such time as shares of Redeemable Preferred Stock are no longer outstanding, at which time or times such voting rights and the term of the directors elected pursuant to Section 7.1(a) shall terminate. (c) At any time when such voting rights shall have vested in holders of shares of Redeemable Preferred Stock described in Section 7.1(a), and if such rights shall not already have been exercised by written consent, a proper officer of the Corporation may call, and, upon the written request, addressed to the Secretary of the Corporation, of the record holders of shares representing twenty-five percent (25%) of the voting power of the shares then outstanding of Redeemable Preferred Stock, shall call, a special meeting of the holders of shares of Redeemable Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation, or, if none, at a place designated by the Board of Directors. Notwithstanding the provisions of this Section 7.1(c), no such special meeting shall be called during a period within 60 days immediately preceding the date fixed for the next annual meeting of stockholders. (d) At any meeting held for the purpose of electing directors at which the holders of shares of Redeemable Preferred Stock shall have the right to elect directors as provided herein, the presence in person or by proxy of the holders of shares representing more than sixty-six and two-thirds percent (66 2/3%) in 18 voting power of the then outstanding shares of Redeemable Preferred Stock having such right shall be required and shall be sufficient to constitute a quorum of such class for the election of directors by such class. (e) Any director elected by holders of shares of Redeemable Preferred Stock pursuant to the voting right created under this Section 7.1 shall hold office until the next annual meeting of stockholders (unless such term has previously terminated pursuant to Section 7.1(b)) and any vacancy in respect of any such director shall be filled only by vote of the remaining director so elected, or if there be no such remaining director, by the holders of shares of Redeemable Preferred Stock by written consent or at a special meeting called in accordance with the procedures set forth in Section 7.1(c), or, if no such special meeting is called or written consent executed, at the next annual meeting of stockholders. Upon any termination of such voting right, subject to applicable law, the term of office of all directors elected by holders of shares of Redeemable Preferred Stock voting separately as a class pursuant to this Section 7.1 shall terminate. (f) So long as any shares of Redeemable Preferred Stock remain outstanding, unless a greater percentage shall then be required by law, the Corporation shall not, without the affirmative vote at a meeting or the written consent with or without a meeting of the holders of shares of Redeemable Preferred Stock representing at least sixty-six and two-thirds percent (662/3%) of the aggregate voting power of shares of Redeemable Preferred Stock, voting as a separate class, (i) after the Issue Date, authorize or issue any Senior Stock or Parity Stock or reclassify any Junior Stock as Parity Stock or Senior Stock or reclassify any Parity Stock as Senior Stock, (ii) amend, alter or repeal any of the provisions of the Certificate of Incorporation, so as in any such case to materially and adversely affect the preferences, special rights, powers or privileges of the shares of Redeemable Preferred Stock, or (iii) consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, any person or entity unless (A) the entity formed by such consolidation or merger (if other than the Corporation) or to which such sale, assignment, transfer, lease or conveyance or other disposition shall have been made shall be a corporation organized or existing under the laws of the United State or any State thereof or the District of Columbia and (B) the Redeemable Preferred Stock shall be converted into or exchanged for and shall become shares of such successor, transferee or resulting corporation or a parent corporation of such corporation, having in respect of such successor, transferee or resulting corporation or a parent corporation the identical powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereon, that the Redeemable Preferred Stock had immediately prior to such transaction. (g) In exercising the voting rights set forth in this Section 7.1, each share of Redeemable Preferred Stock shall have a number of votes equal to its Liquidation Value. 19 7.2 No consent of holders of shares of Redeemable Preferred Stock shall be required for (i) the creation of any indebtedness of any kind of the Corporation or (ii) the authorization or issuance of any class of Junior Stock. 8. LIQUIDATION RIGHTS. 8.1 Upon the dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, the holders of the shares of Redeemable Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to stockholders, in preference to the holders of, and before any payment or distribution shall be made on, Junior Stock, the amount of $50 per share (the "Liquidation Value"), plus an amount equal to all Accumulated Dividends and Accrual Dividends thereon to the date of final distribution (whether or not declared). 8.2 Neither the sale, exchange or other conveyance (for cash, shares of stock, securities or other consideration) of all or substantially all the property and assets of the Corporation nor the merger or consolidation of the Corporation into or with any other corporation, or the merger or consolidation of any other corporation into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 8. 8.3 After the payment to the holders of the shares of Redeemable Preferred Stock of full preferential amounts provided for in this Section 8, the holders of Redeemable Preferred Stock as such shall have no right or claim to any of the remaining assets of the Corporation. 8.4 In the event the assets of the Corporation available for distribution to the holders of shares of Redeemable Preferred Stock upon any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to Section 8.1, no such distribution shall be made on account of any shares of any Parity Stock upon such dissolution, liquidation or winding up unless proportionate distributive amounts shall be paid on account of the shares of Redeemable Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all Parity Stock are entitled upon such dissolution, liquidation or winding up. 9. OTHER PROVISIONS. 9.1 Shares of Redeemable Preferred Stock issued and reacquired will, upon compliance with the applicable requirements of Delaware law, have the status of authorized but unissued shares of Preferred Stock of the Corporation undesignated as to series and may with any and all other authorized but 20 unissued shares of Preferred Stock of the Corporation be designated or redesignated and issued or reissued, as the case may be, as part of any series of Preferred Stock of the Corporation, except that any issuance or reissuance of shares of Redeemable Preferred Stock must be in compliance with this certificate of designation. 9.2 The Corporation shall be entitled to recognize the exclusive right of a Person registered on its records as the holder of shares of Redeemable Preferred Stock, and such record holder shall be deemed the holder of such shares for all purposes. 9.3 All notice periods referred to herein shall commence on the date of the mailing of the applicable notice. IN WITNESS WHEREOF, Premier Parks Inc. has caused this certificate to be signed and attested this ___ day of April 1998. PREMIER PARKS INC. By: -------------------------------- Name: Title: EX-4.(S) 13 EXHIBIT 4(S) EXHIBIT 4(s) [Draft--3/22/98] CERTIFICATE OF DESIGNATION OF % MANDATORILY CONVERTIBLE PREFERRED STOCK OF PREMIER PARKS INC. ------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware ------------- PREMIER PARKS INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Company"), does hereby certify that the following resolution was duly adopted by the Board of Directors of the Company (the "Board") in a unanimous written consent dated , 1998: RESOLVED, that pursuant to the authority conferred upon the Board by the provisions of the Company's Restated Certificate of Incorporation (the "Certificate") and in accordance with Section 151 of the General Corporation Law of the State of Delaware, the Board hereby creates, from the 500,000 shares of preferred stock, $1.00 par value per share (the "Preferred Stock"), of the Company, authorized to be issued pursuant to the Certificate, a series of Preferred Stock consisting of 11,500 shares of % Mandatorily Convertible Preferred Stock and hereby fixes the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of such preferences and/or rights, of the shares of that series as follows: Section 1. Designation. (a) The shares of the series will be designated as the % Mandatorily Convertible Preferred Stock (the "Mandatorily Convertible Preferred Stock"). The total number of authorized shares of the Mandatorily Convertible Preferred Stock will be 11,500. (b) Any shares of the Mandatorily Convertible Preferred Stock that at any time have been acquired upon conversion or otherwise acquired by the Company shall, after such conversion or other acquisition, resume the status of authorized and unissued shares of Preferred Stock without designation as to series until such shares are once more designated as part of a particular series by the Board. Section 2. Rank. The shares of Mandatorily Convertible Preferred Stock will rank on parity, both as to payment of dividends and distribution of assets upon liquidation, with (i) any Preferred Stock issued by the Company to the sellers of the capital stock of Six Flags Entertainment Corporation (the "Seller Preferred Stock") in connection with the Company's acquisition of such capital stock and (ii) any other Preferred Stock issued by the Company in the future that by its terms ranks pari passu with the shares of Mandatorily Convertible Preferred Stock. Section 3. Dividends. (a) The holders of record of the shares of Mandatorily Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board out of funds legally available therefor, dividends ("Preferred Dividends") from the date of the initial issuance of the shares of Mandatorily Convertible Preferred Stock at the rate of $ per annum or $ per quarter per share of Mandatorily Convertible Preferred Stock, payable quarterly in arrears on January 1, April 1, July 1 and October 1 or, if any such date is not a business day (as defined in Section 7 hereof), the Preferred Dividend due on such date shall be payable on the next succeeding business day (each such payment date being a "Regular Dividend Payment Date"). The first dividend period will be from the date of initial issuance of the shares of Mandatorily Convertible Preferred Stock to but excluding July 1, 1998 and will be payable on July 1, 1998. Preferred Dividends shall cease to accrue on shares of Mandatorily Convertible Preferred Stock on the Mandatory Conversion Date (as defined in Section 4 hereof) or on the date of their earlier conversion. Preferred Dividends shall be payable to holders of record of shares of Mandatorily Convertible Preferred Stock as they appear on the stock register of the Company on record dates not less than 15 nor more than 60 days preceding the payment date thereof, as shall be fixed by the Board. Preferred Dividends payable on shares of Mandatorily Convertible Preferred Stock for any period less than a full quarterly dividend period (or, in the case of the first Preferred Dividend, from the date of initial issuance of the shares of Mandatorily Convertible Preferred Stock to the first Regular Dividend Payment Date) will be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in any period less than one month. Preferred Dividends shall accrue on a daily basis (computed as set forth in the immediately preceding sentence) whether or not there are funds of the Company legally available for the payment of such Preferred Dividends and whether or not such Preferred Dividends are declared. Accrued but unpaid Preferred Dividends shall cumulate as of the Regular Dividend Payment Date on which they first become payable, but no interest shall accrue on accumulated but unpaid Preferred Dividends. (b) Preferred Dividends may be paid, at the election of the Company, (i) out of funds legally available therefor, (ii) through the delivery of shares of the Company's common stock, par value $0.05 per share (the "Common Stock") or 2 (iii) through any combination of the foregoing, provided that a Preferred Dividend may be paid in whole or in part by delivery of shares of Common Stock only if paid on the Regular Dividend Payment Date for such dividend. If the Company elects to pay any Preferred Dividend, in whole or in part, by delivery of shares of Common Stock, the Company shall deliver to holders of record of shares of Mandatorily Convertible Preferred Stock on the related record date for such Preferred Dividend payment (determined as set forth in Section 2(a) hereof), a number of shares of Common Stock for each share of Mandatorily Convertible Preferred Stock held thereby determined by dividing the dollar amount of such Preferred Dividend payment which is to be paid per share of Mandatorily Convertible Preferred Stock in shares of Common Stock by an amount (the "Cash Equivalent Amount") equal to 95% of the average Closing Price (as defined in Section 7 hereof) per share of Common Stock on the ten Trading Days (as defined in Section 7 hereof) ending on the third Trading Day preceding the related record date (the "Dividend Stock Price") (appropriately adjusted in such manner as the Board in good faith deems appropriate to take into account any stock dividend on the Common Stock, or any subdivision, split, combination or reclassification of the Common Stock that occurs, or the ex-dividend date for which occurs, during the period following the first Trading Day in such ten-Trading Day Period and ending on the last full Trading Day immediately preceding the payment of the Preferred Dividend). The Dividend Stock Price for any Preferred Dividend which shall be paid, in whole or in part, through the delivery of shares of Common Stock shall be determined on the related record date for such Preferred Dividend payment. Any portion of a Preferred Dividend that is declared and not paid by the Company through delivery of shares of Common Stock on the related Regular Dividend Payment Date will be paid in cash. If the Company elects to make a Preferred Dividend payment, in whole or in part, through the delivery of shares of Common Stock, it will give notice of such determination (including the amount of the Preferred Dividend per share of Mandatorily Convertible Preferred Stock which is to be paid through the delivery of shares of Common Stock and the Cash Equivalent Amount) by publication, on the related record date for such Preferred Dividend payment, in a daily newspaper of national circulation. (c) Whether or not the Mandatory Conversion Date has occurred, (i) no dividends (other than dividends payable in shares of, or warrants, rights or options exercisable for or convertible into shares of, any capital stock, including without limitation, the Common Stock, of the Company ranking junior to the Mandatorily Convertible Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation (collectively "Junior Stock") and cash in lieu of fractional shares in connection with any such dividend) may be paid or declared in cash or otherwise, nor may any other distribution by made 3 (other than a distribution payable in Junior Stock and cash in lieu of fractional shares in connection with any such distribution), on any Junior Stock; (ii) no shares of any Junior Stock may be purchased, redeemed or otherwise acquired by the Company or any of its subsidiaries (except in connection with a reclassification or exchange of any Junior Stock through the issuance of other Junior Stock (and cash in lieu of fractional shares in connection therewith) or the purchase, redemption or other acquisition of any Junior Stock (x) with any Junior Stock (and cash in lieu of fractional shares in connection therewith) or (y) in connection with purchases in an aggregate amount up to $5.0 million from employees of the Company on termination of their employment for whatever reason) nor may any funds be set aside or made available for any sinking funds for the purchase, redemption or acquisition of any Junior Stock; and (iii) no dividends or other distributions may be declared or paid on any Preferred Stock (including the Mandatorily Convertible Preferred Stock) that does not constitute Junior Stock ("Parity Preferred Stock") (other than dividends or other distributions payable in Junior Stock and cash in lieu of fractional shares in connection therewith), and the Company may not purchase, redeem or otherwise acquire any Parity Preferred Stock (except with any Junior Stock and cash in lieu of fractional shares in connection therewith and except with the right, subject to the requirement set out following clause (D) of this paragraph and any similar requirement of any other Preferred Stock, to receive accrued and unpaid dividends) unless, in the case of either (i) or (ii) or (iii): (A) full dividends on Parity Preferred Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such dividend, distribution, purchase, redemption, acquisition, setting aside or making available, as applicable, to the extent such dividends are cumulative, (B) dividends in full for the current quarterly dividend period have been paid, or declared and set aside for payment, on all Parity Preferred Stock to the extent such dividends are cumulative, (C) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement and sinking funds, if any, for any Parity Preferred Stock, and 4 (D) the Company is not in default on any of its obligations to redeem any Parity Preferred Stock, or, in the case of (iii) only, with respect to the declaration and payment of dividends on Parity Preferred Stock, any such dividends are declared and paid pro rata so that the amounts of any dividends declared and paid per share of Mandatorily Convertible Preferred Stock and each other share of Parity Preferred Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends (including any accumulation with respect to unpaid dividends for prior dividend periods, if such dividends are cumulative) per share of Mandatorily Convertible Preferred Stock and such other share of Parity Preferred Stock bear to each other. Section 4. Conversion Rights. (a) Unless previously converted at the option of the holder into Common Stock in accordance with the provisions of Section 4(c), on , 2001 (the "Mandatory Conversion Date") each outstanding share of Mandatorily Convertible Preferred Stock will convert automatically (the "Mandatory Conversion") into a number of shares of Common Stock at the Conversion Rate (as defined below) in effect on the Mandatory Conversion Date and the holder thereof shall have the right to receive an amount in cash equal to all accrued and unpaid Preferred Dividends on such share of Mandatorily Convertible Preferred Stock (other than previously declared Preferred Dividends payable to a holder of record as of a prior date) to the Mandatory Conversion Date, whether or not declared, out of funds legally available for the payment of Preferred Dividends, subject to the requirement set forth following clause (D) of Section 3(c) above and any similar requirement of any other Certificate of Designations for Preferred Stock. The "Conversion Rate" is initially equal to (i) if the Conversion Price (as defined in Section 7 hereof) is greater than or equal to $ (the "Threshold Appreciation Price"), shares of Common Stock per share of Mandatorily Convertible Preferred Stock, (ii) if the Conversion Price is less than the Threshold Appreciation Price but is greater than $ (the "Initial Price"), (A) a fraction equal to the Initial Price divided by the Conversion Price of (B) 500 shares of Common Stock per share of Mandatorily Convertible Preferred Stock and (iii) if the Conversion Price is less than or equal to the Initial Price, 500 shares of Common Stock per share of Mandatorily Convertible Preferred Stock. The ratios of shares of Common Stock per share of Mandatorily Convertible Preferred Stock specified in clauses (i), (ii) and (iii) of the immediately preceding sentence are hereinafter referred to as the "Share Components". The Conversion Rate, the Threshold Appreciation Price and the Initial Price are subject to adjustment as set forth in Sections 4(e), 4(f) and 4(g). (b) Preferred Dividends on the shares of Mandatorily Convertible Preferred Stock shall cease to accrue and such shares of Mandatorily Convertible Preferred Stock shall cease to be outstanding on the Mandatory Conversion Date. The 5 Company shall make such arrangements as it deems appropriate for the issuance of certificates representing shares of Common Stock and for the payment of cash in respect of accrued and unpaid dividends on the Mandatorily Convertible Preferred Stock, if any, or cash in lieu of fractional shares, if any, without interest, in exchange for and contingent upon surrender of certificates representing the shares of Mandatorily Convertible Preferred Stock, and the Company may defer the payment of dividends on such shares of Common Stock and the voting thereof until, and make such payment and voting contingent upon, the surrender of certificates representing the shares of Mandatorily Convertible Preferred Stock, provided that the Company shall give the holders of the shares of Mandatorily Convertible Preferred Stock such notice of any such actions as the Company deems appropriate and upon such surrender such holders shall be entitled to receive such dividends declared and paid, if any, without interest, on such shares of Common Stock subsequent to the Mandatory Conversion Date. (c) Shares of Mandatorily Convertible Preferred Stock are convertible, in whole or in part, at the option of the holders thereof ("Optional Conversion"), at any time prior to the Mandatory Conversion Date, into shares of Common Stock at a rate of shares of Common Stock for each share of Mandatorily Convertible Preferred Stock (the "Optional Conversion Rate"), subject to adjustment as set forth in Sections 4(e) and 4(f). Optional Conversion of shares of Mandatorily Convertible Preferred Stock may be effected by delivering certificates evidencing such shares, together with written notice of conversion and proper assignment of such certificates to the Company or in blank (and, if Optional Conversion is to occur after the close of business on a record date for any payment of declared Preferred Dividends and before the opening of business on the next succeeding dividend payment date, payment in cash of an amount equal to the Preferred Dividend payable on such date on such shares), to the office of any transfer agent for the shares of Mandatorily Convertible Preferred Stock or to any other office or agency maintained by the Company for that purpose and otherwise in accordance with Optional Conversion procedures established by the Company. Each Optional Conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the foregoing requirements shall have been satisfied. The Optional Conversion shall be at the Optional Conversion Rate in effect at such time on such date. (d) Holders of shares of Mandatorily Convertible Preferred Stock at the close of business on a record date for any payment of declared Preferred Dividends shall be entitled to receive the Preferred Dividend so declared on such shares of Mandatorily Convertible Preferred Stock on the corresponding dividend payment date notwithstanding the Optional Conversion of such shares of Mandatorily Convertible Preferred Stock following such record date and prior to such dividend payment date. However, shares of Mandatorily Convertible Preferred Stock surrendered for Optional Conversion after the close of business on a record date for any payment of declared Preferred Dividends and 6 before the opening of business on the next succeeding dividend payment date must be accompanied by payment in cash of an amount equal to the Preferred Dividend payable on such date on such shares. Except as provided above, upon any Optional Conversion of shares of Mandatorily Convertible Preferred Stock, the Company shall make no payment of or allowance for unpaid Preferred Dividends, whether or not in arrears, on such shares of Mandatorily Convertible Preferred Stock as to which Optional Conversion has been effected or previously declared dividends or distributions on the shares of Common Stock issued upon such Optional Conversion. (e) The Conversion Rate and the Optional Conversion Rate are each subject to adjustment from time to time as provided below in this Section 4(e). (i) If the Company shall pay or make a dividend or other distribution with respect to its Common Stock in shares of Common Stock (including by way of reclassification of any shares of its Common Stock (other than pursuant to any of the transactions set forth in Section 4(f)), each of the Share Components and the Optional Conversion Rate in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by multiplying such Share Components and Optional Conversion Rate by a fraction of which the numerator shall be the sum of the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination, excluding the effect of such dividend or distribution, plus the total number of shares of Common Stock constituting such dividend or other distribution, and of which the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination, excluding the effect of such dividend or distribution, such increase to become effective at the opening of business on the day following the date fixed for such determination. For the purposes of this Section 4(e)(i), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company and the number of shares constituting such dividend or other distribution shall include shares represented by cash issued in lieu of fractional shares of Common Stock. (ii) In case shares of Common Stock outstanding shall be subdivided or split into a greater number of shares of Common Stock, each of the Share Components and the Optional Conversion Rate in effect at the opening of business on the day following the day upon which such subdivision or split becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall be combined into a lesser number of shares of Common Stock, each of the Share Components and the Optional Conversion Rate in effect at the opening of business on the day following the day 7 upon which such combination becomes effective shall be proportionately reduced, such increases or reductions, as the case may be, to become effective at the opening of business on the day following the day upon which such subdivision or split or combination becomes effective. (iii) If the Company shall, after the date hereof, issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price (as defined in Section 7 hereof) of the Common Stock on the record date for the determination of stockholders entitled to receive such rights or warrants, then in each case each of the Share Components and the Optional Conversion Rate shall be adjusted by multiplying such Share Components and the Optional Conversion Rate in effect on such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the record date for issuance of such rights or warrants, excluding the effect of such issuance, plus the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights or warrants, and of which the denominator shall be the number of shares of Common Stock outstanding at the close of business on the record date for issuance of such rights or warrants, excluding the effect of such issuance, plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered for subscription or purchase pursuant to such rights or warrants would purchase at such Current Market Price (determined by multiplying such total number of offered shares by the exercise price of such rights or warrants and dividing the product so obtained by such Current Market Price). Such adjustment shall become effective at the opening of business on the business day next following the record date for the determination of stockholders entitled to receive such rights or warrants. Shares of Common Stock held by the Company or by another company of which a majority of the shares entitled to vote in the election of directors are held, directly or indirectly, by the Company shall not be deemed to be outstanding for purposes of such computation. Any shares of Common Stock issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend for purposes of calculating the number of outstanding shares of Common Stock under this Section 4(e)(iii). To the extent that shares of Common Stock are not delivered by reason of the expiration of such rights or warrants, each of the Share Components and the Optional Conversion Rate shall be readjusted to the Share Components and the Optional Conversion Rate which would then be in effect had the adjustments made by reason of the issuance of such rights or warrants been made upon the basis of the issuance of rights or warrants in respect of only the number of shares of Common Stock actually delivered. 8 (iv) If the Company shall pay a dividend or make a distribution to all holders of Common Stock consisting of evidences of its indebtedness, cash or other assets (including shares of capital stock of the Company other than dividends or distributions of Common Stock (or other common stock of the Company issued by way of reclassification) referred to in Section 4(e)(i) above but excluding any cash dividends or distributions, other than Extraordinary Cash Distributions (as defined below)), or shall issue to all holders of Common Stock rights or warrants to subscribe for or purchase any of its securities (other than those referred to in Section 4(e)(iii) above), then in each such case each of the Share Components and the Optional Conversion Rate shall be adjusted by multiplying such Share Components and the Optional Conversion Rate in effect on the record date for such dividend or distribution or for the determination of stockholders entitled to receive such rights or warrants, as the case may be, by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on such record date, and of which the denominator shall be such Current Market Price per share of Common Stock less either (A) the fair market value (as determined by the Board, whose determination shall be conclusive) on such record date of the portion of the assets or evidences of indebtedness so distributed, or of such rights or warrants, applicable to one share of Common Stock or (B) if applicable, the amount of the Extraordinary Cash Distribution applicable to one share of Common Stock. Such adjustment shall become effective at the opening of business on the business day next following the record date for such dividend or distribution or for the determination of holders entitled to receive such rights or warrants, as the case may be. "Extraordinary Cash Distribution" means, with respect to any cash dividend or distribution paid on any date, the amount, if any, by which all cash dividends or distributions on the Common Stock paid during the consecutive 12-month period ending on and including such date (other than cash dividends and cash distributions for which a prior adjustment to each of the Share Components and Optional Conversion Rate was previously made), exceeds, on a per share of Common Stock basis, ten percent (10%) of the average daily Closing Price of the Common Stock over such consecutive 12-month period. (v) Anything in this Section 4 notwithstanding, the Company shall be entitled (but shall not be required) to make such upward adjustments in each of the Share Components and the Optional Conversion Rate in addition to those set forth by this Section 4, as the Company, in its sole discretion, shall determine to be advisable, in order that any stock dividend, subdivision or split of stock, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock (or any transaction that could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal 9 Revenue Code of 1986, as amended, or any successor provision) hereafter made by the Company to its stockholders will not be taxable in whole or in part. (vi) All adjustments to each of the Share Components and the Optional Conversion Rate shall be calculated to the nearest 1/100th of a share of Common Stock. No adjustment in the Share Components or the Optional Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) therein; provided, however, that any adjustments which by reason of this subsection are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All adjustments to the Share Components and the Optional Conversion Rate shall be made successively. (vii) Prior to taking any action that could result in adjustment affecting the Conversion Rate or the Optional Conversion Rate such that the imputed conversion price for shares of Common Stock issued upon Mandatory Conversion or upon Optional Conversion would be below the then par value of the Common Stock, the Company shall take any corporate action which may, in the opinion of its Board, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at the Conversion Rate or the Optional Conversion Rate as so adjusted. (f) In case of any consolidation or merger to which the Company is a party (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which each share of Common Stock outstanding immediately prior to the merger or consolidation remains unchanged in all material respects), or in case of any sale or transfer to another corporation of the property of the Company as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (other than in connection with a merger or acquisition), each share of Mandatorily Convertible Preferred Stock shall, after consummation of such transaction, be subject to (i) conversion at the option of the holder into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock (including fractional shares for this purpose) into which such share of Mandatorily Convertible Preferred Stock might have been converted immediately prior to consummation of such transaction and (ii) conversion on the Mandatory Conversion Date into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock (including fractional shares for this purpose) into which such share of Mandatorily Convertible Preferred Stock would have been converted if the conversion on the Mandatory Conversion Date had occurred immediately prior to the date of consummation of such transaction, plus the right, subject to the requirement set forth following 10 clause (D) of Section 3(c) and any similar requirement of any other Certificate of Designations for Preferred Stock, to receive cash in an amount equal to all accrued and unpaid dividends on such share of Mandatorily Convertible Preferred Stock (other than previously declared dividends payable to a holder of record as of a prior date); and assuming in each case that such holder of shares of Common Stock failed to exercise rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon consummation of such transaction (provided that, if the kind or amount of securities, cash or other property receivable upon consummation of such transaction is not the same for each non-electing share, then the kind and amount of securities, cash or other property receivable upon consummation of such transaction for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The kind and amount of securities into or for which the shares of Mandatorily Convertible Preferred Stock shall be convertible after consummation of such transaction shall be subject to adjustment as described in Section 4(e) following the date of consummation of such transaction. The Company may not become a party to any such transaction unless the terms thereof are consistent with the foregoing. (g) If an adjustment is made to the Conversion Rate pursuant to any of Sections 4(e)(i) through 4(e)(iv), an adjustment shall also be made to the Threshold Appreciation Price and the Initial Price as such terms are used to determine which of clauses (i), (ii) or (iii) of the definition of "Conversion Rate" will apply at the Mandatory Conversion Date and for purposes of calculating the fraction in sub-clause (ii)(A) of the definition of Conversion Rate. The required adjustments to the Threshold Appreciation Price and the Initial Price shall be made at the Mandatory Conversion Date by multiplying each of the Threshold Appreciation Price and the Initial Price by the inverse of the cumulative number or fraction determined pursuant to the Share Component adjustment procedures described in Section 4(e). In the case of the reclassification of any shares of Common Stock into any common stock other than Common Stock, such common stock shall be deemed Common Stock solely to determine the Threshold Appreciation Price and the Initial Price and to apply the Conversion Rate at the Mandatory Conversion Date. Each such adjustment to the Threshold Appreciation Price or the Initial Price shall be made successively. (h) Whenever the Conversion Rate and the Optional Conversion Rate are adjusted as provided in Section 4(e), the Company shall: (i) forthwith compute the adjusted Conversion Rate, Optional Conversion Rate, Threshold Appreciation Price and Initial Price in accordance with this Section 4 and prepare a certificate signed by the Chief Financial Officer, any Vice President, the Treasurer or the Controller of the Company setting forth the adjusted Conversion Rate, Optional Conversion Rate, Threshold Appreciation 11 Price and Initial Price, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based, which certificate shall be conclusive, final and binding evidence of the correctness of the adjustment, and shall file such certificate forthwith with the transfer agent or agents for the shares of Mandatorily Convertible Preferred Stock and any depositary for any shares of Mandatorily Convertible Preferred Stock represented by depositary shares; (ii) make a prompt public announcement stating that the Conversion Rate, Optional Conversion Rate, Threshold Appreciation Price and Initial Price have been adjusted and setting forth the adjusted Conversion Rate, Optional Conversion Rate, Threshold Appreciation Price and Initial Price, including, in the event any shares of Mandatorily Convertible Preferred Stock are represented by depositary shares, the adjusted Conversion Rate or Optional Conversion Rate on a per depositary share basis; and (iii) mail a notice stating that the Conversion Rate, Optional Conversion Rate, Threshold Appreciation Price and Initial Price have been adjusted, the facts requiring such adjustment and upon which such adjustment is based and setting forth the adjusted Conversion Rate, Optional Conversion Rate, Threshold Appreciation Price and Initial Price to the holders of record of the outstanding shares of the Mandatorily Convertible Preferred Stock, and, in the event any shares of Mandatorily Convertible Preferred Stock are represented by depositary shares, to the holders of record of the depositary receipts evidencing such depositary shares, no later than 45 days after the end of the Company's fiscal quarter period during which the facts requiring such adjustment occurred. (i) In case, at any time while any of the shares of Mandatorily Convertible Preferred Stock are outstanding, (i) the Company shall declare a dividend (or any other distribution) on the Common Stock, excluding any cash dividends other than Extraordinary Cash Distributions, or (ii) the Company shall authorize the issuance to all holders of the Common Stock of rights or warrants to subscribe for or purchase shares of the Common Stock or of any other subscription rights or warrants, or (iii) the Company shall authorize any reclassification of the Common Stock (other than a subdivision, split or combination thereof) or of any consolidation or merger to which the Company is a party and for which approval 12 of any stockholders of the Company is required (except for a merger of the Company into one of its subsidiaries solely for the purpose of changing the corporate domicile of the Company to another state of the United States and in connection with which there is no substantive change in the rights or privileges of any securities of the Company other than changes resulting from differences in the corporate statutes of the state the Company was then domiciled in and the new state of domicile), or of the sale or transfer of all or substantially all the assets of the Company (except to one or more wholly-owned subsidiaries), then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the shares of Mandatorily Convertible Preferred Stock, and shall cause to be mailed to the holders of shares of Mandatorily Convertible Preferred Stock at their last addresses as they shall appear on the stock register, and, in the event any shares of Mandatorily Convertible Preferred Stock are represented by depositary shares, to the holders of record of the depositary receipts evidencing such depositary shares, at least 10 business days before the date specified in clause (A) or (B) below (or the earlier of such specified dates, in the event that more than one date is specified), a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, or issuance of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, or issuance of rights or warrants are to be determined, or (B) the date on which any such reclassification, consolidation, merger, sale or transfer is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property (including cash), if any, deliverable upon such reclassification, consolidation, merger, sale or transfer. The failure to give or receive the notice required by this subsection (i) or any defect therein shall not affect the legality or validity of any such dividend, distribution, issuance of any right or warrant or other action. 5. No Fractional Shares. (a) No fractional shares of Common Stock shall be issued upon the conversion of any shares of the Mandatorily Convertible Preferred Stock. In lieu of any fractional share otherwise issuable in respect of the aggregate number of shares of Mandatorily Convertible Preferred Stock of any holder that are converted upon Mandatory Conversion or any Optional Conversion, such holder shall be entitled to receive an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Price of the Common Stock determined (a) as of the fifth Trading Day immediately preceding the Mandatory Conversion Date, in the case of Mandatory Conversion, or (b) as of the second Trading Day immediately preceding the effective date of conversion, in the case of an Optional Conversion by a holder. If more than one share of Mandatorily Convertible Preferred Stock shall be surrendered for conversion at one time by or for the same holder, the number of shares of Common Stock issuable upon 13 conversion thereof shall be computed on the basis of the aggregate number of shares of Mandatorily Convertible Preferred Stock so converted. No fractional shares of Common Stock shall be issued in connection with the Company's delivery of shares of Common Stock in payment of any dividend on the Mandatorily Convertible Preferred Stock on the Regular Dividend Payment Date for such dividend. In lieu of any fractional share otherwise so issuable by the Company, the holder of Mandatorily Convertible Preferred Stock otherwise entitled to such fractional share shall be entitled to receive an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Price of the Common Stock determined as of the fifth Trading Day immediately preceding the related Regular Dividend Payment Date. On the Mandatory Conversion Date, the fractional share of Common Stock that any holder of Mandatorily Convertible Preferred Stock would otherwise be entitled to receive shall be determined by adding all the fractional shares such holder would be entitled to receive (i) on the mandatory conversion of all shares of Mandatorily Convertible Preferred Stock held by such holder and (ii) on the payment of the regular quarterly dividend on all shares of Mandatorily Convertible Preferred Stock held by such holder at the related record date. On the Mandatory Conversion Date, the Company may, at its option, deliver any whole number of shares of Common Stock resulting from the addition of fractional shares resulting from (i) and (ii) above in shares of Common Stock and any resulting fractional shares in cash. (b) If payment in cash in lieu of fractional shares of Common Stock in accordance with the preceding paragraph would result in the Company's failure to be in compliance with any debt instrument to which it is a party, the Company shall be entitled to deliver a whole share of Common Stock in lieu of cash to holders of shares of Mandatorily Convertible Preferred Stock entitled to fractional shares of Common Stock (beginning with the holders entitled to the largest fractional shares) until delivery of cash in lieu of fractional shares of Common Stock to the remaining holders of shares of Mandatorily Convertible Preferred Stock would no longer result in the Company's failure to be in compliance with such debt instrument. 6. Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of Mandatorily Convertible Preferred Stock as herein provided, free from any preemptive rights, such maximum number of shares of Common Stock as shall from time to time be issuable upon the Mandatory Conversion or Optional Conversion of all the shares of Mandatorily Convertible Preferred Stock then outstanding. 14 7. Certain Definitions. As used in this Certificate of Designations: (i) the term "business day" shall mean any day other than a Saturday, a Sunday or a day on which the NYSE, banking institutions or trust companies in New York, New York, are authorized or obligated by law or executive order to close; (ii) the term "Closing Price" of any security shall mean on any date of determination (i) the closing sale price (or, if no closing sale price is reported, the last reported sale price) of such security (regular way) on the New York Stock Exchange (the "NYSE") on such date, (ii) if such security is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which such security is so listed, (iii) if such security is not so listed on a United States national or regional securities exchange, as reported by the NASDAQ Stock Market, (iv) if such security is not so reported, the last quoted bid price for such security in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or (v) if such security is not so quoted, the average of the mid-point of the last bid and ask prices for such security from each of at least three nationally recognized investment banking firms selected by the Company for such purpose; (iii) the term "Conversion Price" shall mean the average Closing Price per share of Common Stock for the 20 Trading Days immediately prior to (but not including) the Mandatory Conversion Date; provided, however, that, if there are not 20 Trading Days for the Common Stock occurring later than the 60th calendar day immediately prior to, but not including, the Mandatory Conversion Date, the "Conversion Price" shall be the market value per share of Common Stock as of the Mandatory Conversion Date as determined by a nationally recognized investment banking firm retained for such purpose by the Company; (iv) the term "Current Market Price" means, as of any date of determination, the average Closing Price per share of Common Stock for the 20 Trading Days immediately prior to the date of determination; provided, however, that if there are not 20 Trading Days for the Common Stock occurring later than the 60th calendar day immediately prior to, but not including, such date, the Current Market Price shall be determined as the market value per share of Common Stock as of such date as determined by a nationally recognized investment banking firm retained for such purpose by the Company; 15 (v) the term "record date" shall be such date as is from time to time fixed by the Board with respect to the receipt of dividends or the taking of any action or exercise of any voting rights permitted hereby; and (vi) the term "Trading Day" shall mean a business day on which the security, the Closing Price of which is being determined, (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of such security. 8. Payment of Taxes. The Company shall pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on the conversion of shares of Mandatorily Convertible Preferred Stock pursuant to Section 4; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any registration or transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the registered holder of shares of Mandatorily Convertible Preferred Stock converted or to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid. 9. Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, and subject to the rights of the holders of any other series of Preferred Stock, the holders of outstanding shares of Mandatorily Convertible Preferred Stock are entitled to receive the sum of $ per share, plus an amount equal to any accrued and unpaid dividends thereon, out of the assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Junior Stock upon liquidation, dissolution or winding up. If upon any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the assets of the Company are insufficient to permit the payment of the full preferential amounts payable with respect to shares of Mandatorily Convertible Preferred Stock and all other series of Parity Preferred Stock, the holders of shares of Mandatorily Convertible Preferred Stock and of all other series of Parity Preferred Stock shall share ratably in any distribution of assets of the Company in proportion to the full respective preferential amounts to which they are entitled. After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Mandatorily Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Company. A consolidation or merger of the Company with one or more corporations or a sale or transfer of substantially all the assets of the 16 Company shall not be deemed to be a liquidation, dissolution, or winding up of the Company. 10. Voting Rights. The holders of shares of Mandatorily Convertible Preferred Stock shall not be entitled to any voting rights, except as required by applicable state law or as described below. (a) In the event that dividends on the shares of Mandatorily Convertible Preferred Stock or any other series of Preferred Stock shall be in arrears and unpaid for six quarterly dividend periods, or if any other series of Preferred Stock shall be entitled for any other reason to exercise voting rights, separate from the Common Stock, to elect any Directors of the Company ("Preferred Stock Directors"), the holders of the shares of Mandatorily Convertible Preferred Stock (voting separately as a class with holders of all other series of Preferred Stock which does not have a separate class vote and upon which like voting rights have been conferred and are exercisable), with each share of Mandatorily Convertible Preferred Stock entitled to 500 votes on this and other matters in which Preferred Stock votes as a group, shall be entitled to vote for the election of two Preferred Stock Directors, such Directors to be in addition to the number of Directors constituting the Board immediately prior to the accrual of such right. Such right, when vested, shall continue until all dividends in arrears on the shares of Mandatorily Convertible Preferred Stock and such other series of Preferred Stock shall have been paid in full and the right of any other series of Preferred Stock to exercise voting rights, separate from the Common Stock, to elect any Preferred Stock Directors shall terminate or have terminated, and, when so paid and such termination occurs or has occurred, such right of the holders of the shares of Mandatorily Convertible Preferred Stock shall cease. Upon any termination of the aforesaid voting right, subject to the requirements of the Delaware corporation law and the Certificate, such Preferred Stock Directors shall cease to be Directors of the Company and shall resign. (b) The Company will not, without the approval of the holders of at least 66-2/3% of all the shares of Mandatorily Convertible Preferred Stock then outstanding: (i) amend, alter, or repeal any of the provisions of the Certificate or the By-laws of the Company so as to affect adversely the powers, preferences or rights of the holders of the shares of Mandatorily Convertible Preferred Stock then outstanding or reduce the minimum time required for any notice to which only the holders of the shares of Mandatorily Convertible Preferred Stock then outstanding may be entitled (an amendment of the Certificate to authorize or create, or to increase the authorized amount of or to issue, Junior Stock, Preferred Stock ranking on parity with the shares of Mandatorily Convertible Preferred Stock or any stock of any class ranking on parity with the shares of Mandatorily 17 Convertible Preferred Stock shall be deemed not to affect adversely the powers, preferences or rights of the holders of the shares of Mandatorily Convertible Preferred Stock); (ii) create any series of Preferred Stock ranking prior to the shares of Mandatorily Convertible Preferred Stock as to payment of dividends or the distribution of assets upon liquidation; or (iii) authorize or create, or increase the authorized amount of, any capital stock, or any security convertible into capital stock, of any class ranking prior to the shares of Mandatorily Convertible Preferred Stock as to payment of dividends or the distribution of assets upon liquidation. 18 11. Severability of Provisions. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. IN WITNESS WHEREOF, Premier Parks Inc. has caused this Certificate of Designations to be signed by Kieran E. Burke, its Chairman and Chief Executive Officer, and attested by James M. Coughlin, its Assistant Secretary, as of this day of , 1998. PREMIER PARKS INC., By ------------------------------------- Name: Kieran E. Burke Title: Chairman and Chief Executive Officer Attest: By ------------------------------- Name: James M. Coughlin Title: Assistant Secretary 19 EX-4.(U) 14 EXHIBIT 4(U) EXHIBIT 4(u) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PREMIER PARKS INC. As Issuer AND THE BANK OF NEW YORK As Depositary AND OWNERS AND HOLDERS OF DEPOSITARY RECEIPTS Deposit Agreement Dated as of April , 1998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEPOSIT AGREEMENT DEPOSIT AGREEMENT dated as of April , 1998 among PREMIER PARKS INC., incorporated under the laws of Delaware (herein called the Issuer), THE BANK OF NEW YORK, a New York banking corporation (herein called the Depositary), and all Owners and holders from time to time of Depositary Receipts issued hereunder. W I T N E S S E T H : WHEREAS, the Issuer desires to provide, as hereinafter set forth in this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of the Issuer with the Depositary for the purposes set forth in this Deposit Agreement, for the creation of Depositary Shares representing the Shares so deposited and for the execution and delivery of Depositary Receipts evidencing the Depositary Shares; and WHEREAS, the Depositary Receipts are to be substantially in the form of Exhibit A annexed hereto, with appropriate insertions, modifications and omissions, as hereinafter provided in this Deposit Agreement; NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties hereto as follows: ARTICLE I DEFINITIONS The following definitions shall for all purposes, unless otherwise clearly indicated, apply to the respective terms used in this Deposit Agreement: SECTION 1.1 Depositary Shares. The term "Depositary Shares" shall mean the securities representing the interests in the Deposited Securities and evidenced by the Receipts issued hereunder. Each Depositary Share shall represent 1/500 of a Share and the same proportional interest in any and all other securities, property and cash received by the Depositary in respect thereof and held hereunder, until there shall occur a change in Deposited Securities covered by Section 4.8 with respect to which additional Receipts are not executed and delivered, and thereafter Depositary Shares shall evidence the amount of Shares or Deposited Securities specified in such Sections. SECTION 1.2 Article; Section. Wherever references are made in this Deposit Agreement to an "Article" or "Articles" or to a "Section" or "Sections", such references shall mean an article or articles or a section or sections of this Deposit Agreement, unless otherwise required by the context. SECTION 1.3 Certificate of Designation. The term "Certificate of Designation" shall mean the Certificate of Designation adopted by the Board of Directors of the Issuer establishing and setting forth the rights, preferences, privileges and limitations of the Shares. SECTION 1.4 Closing Price. The term "Closing Price" of any security shall mean on any date of determination (i) the closing sale price (or, if no closing sale price is reported, the last reported sale price) of such security (regular way) on the New York Stock Exchange (the "NYSE") on such date, (ii) if such security is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which such security is so listed, (iii) if such security is not so listed on a United States national or regional securities exchange, as reported by the NASDAQ Stock Market, (iv) if such security is not so reported, the last quoted bid price for such security in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or (v) if such security is not so quoted, the average of the mid-point of the last bid and ask prices for such security from each of at least three nationally recognized investment banking firms selected by the Issuer for such purpose. SECTION 1.5 Commission. The term "Commission" shall mean the Securities and Exchange Commission of the United States or any successor governmental agency in the United States. 2 SECTION 1.6 Deposit Agreement. The term "Deposit Agreement" shall mean this Agreement, as the same may be amended from time to time in accordance with the provisions hereof. SECTION 1.7 Depositary; Corporate Trust Office. The term "Depositary" shall mean The Bank of New York, a New York banking corporation and any successor as depositary hereunder. The term "Corporate Trust Office", when used with respect to the Depositary, shall mean the office of the Depositary which at the date of this Agreement is 101 Barclay Street, New York, New York, 10286. SECTION 1.8 Deposited Securities. The term "Deposited Securities" as of any time shall mean Shares at such time deposited under this Deposit Agreement and any and all other securities, property and cash received by the Depositary in respect thereof and at such time held hereunder. SECTION 1.9 Issuer. The term "Issuer" shall mean Premier Parks Inc., incorporated under the laws of Delaware, and its successors. SECTION 1.10 Owner. The term "Owner" shall mean the person in whose name a Receipt is registered on the books of the Depositary maintained for such purpose. SECTION 1.11 Receipts. The term "Receipts" shall mean the Depositary Receipts issued hereunder evidencing Depositary Shares. SECTION 1.12 Registrar. The term "Registrar" shall mean any bank or trust company having an office in the Borough of Manhattan, The City of New York, which shall be appointed to register Receipts and transfers of Receipts as herein provided. SECTION 1.13 Restricted Securities. The term "Restricted Securities" shall mean Shares, or Receipts evidencing Depositary Shares representing such Shares, which are acquired directly or indirectly from the Issuer or its affiliates (as defined in Rule 144 under the Securities Act of 1933) in a transaction or chain of transactions not involving any public offering or which are subject to resale limitations under Regulation 3 D under that Act or both, or which are held by an officer, director (or persons performing similar functions) or other affiliate of the Issuer, or which are subject to other restrictions on sale or deposit under the laws of the United States, or under a shareholder agreement or the Restated Certificate of Incorporation or by-laws of the Issuer. SECTION 1.14 Securities Act of 1933. The term "Securities Act of 1933" shall mean the United States Securities Act of 1933, as from time to time amended. SECTION 1.15 Shares. The term "Shares" shall mean the Issuer's % Mandatorily Convertible Preferred Stock, par value $1.00 per share, heretofore validly issued and outstanding and fully paid, nonassessable and free of any pre-emptive rights of the holders of outstanding capital stock of the Issuer or hereafter validly issued and outstanding and fully paid, nonassessable and free of any pre-emptive rights of the holders of outstanding capital stock of the Issuer or interim certificates representing such Shares. SECTION 1.16 Trading Day. The term "Trading Day" shall mean a business day on which the security, the Closing Price of which is being determined, (i) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (ii) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of such security. ARTICLE II FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS SECTION 2.1 Form and Transferability of Receipts. Definitive Receipts shall be substantially in the form set forth in Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and 4 omissions, as hereinafter provided. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose, unless such Receipt shall have been executed by the Depositary by the manual or facsimile signature of a duly authorized signatory of the Depositary and, if a Registrar for the Receipts shall have been appointed, countersigned by the manual or facsimile signature of a duly authorized officer of the Registrar. The Depositary shall maintain books on which each Receipt so executed and delivered as hereinafter provided and the transfer of each such Receipt shall be registered. Receipts bearing the manual or facsimile signature of a duly authorized signatory of the Depositary who was at any time a proper signatory of the Depositary shall bind the Depositary, notwithstanding that such signatory has ceased to hold such office prior to the execution and delivery of such Receipts by the Registrar or did not hold such office on the date of issuance of such Receipts. The Receipts may be endorsed with or have incorporated in the text thereof such legends or recitals or modifications not inconsistent with the provisions of this Deposit Agreement as may be required by the Depositary or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which Depositary Shares may be listed or to indicate any special limitations or restrictions to which any particular Receipts are subject by reason of the date of issuance of the underlying Deposited Securities or otherwise. Title to a Receipt (and to the Depositary Shares evidenced thereby), when properly endorsed or accompanied by proper instruments of transfer, shall be transferable by delivery with the same effect as in the case of a negotiable instrument; provided, however, that the Depositary, notwithstanding any notice to the contrary, may treat the Owner thereof as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes. SECTION 2.2 Deposit of Shares. Subject to the terms and conditions of this Deposit Agreement, Shares may be deposited by delivery thereof by the Issuer to the Depositary on any closing date for the sale of the Depositary Shares representing such Shares to an underwriter in connection with the public offering of such Depositary Shares, accompanied by any appropriate instrument or 5 instruments of transfer, or endorsement, in form satisfactory to the Depositary, together with all such certifications as may be required by the Depositary in accordance with the provisions of this Deposit Agreement, and, if the Depositary requires, together with a written order directing the Depositary to execute and deliver to, or upon the written order of, the Issuer, a Receipt or Receipts for the number of Depositary Shares representing such deposit. All shares so deposited shall be recorded in the name of the Depositary on the books of the Issuer. Deposited Securities shall be held by the Depositary for the account and to the order of the Depositary or at such other place or places as the Depositary shall determine. SECTION 2.3 Execution and Delivery of Receipts. Upon receipt by the Depositary of any deposit pursuant to Section 2.2 hereunder (and in addition, if the transfer books of the Issuer are open, the Depositary may in its sole discretion require a proper acknowledgment or other evidence from the Issuer that any Deposited Securities have been recorded upon the books of the Issuer in the name of the Depositary or its nominee), together with the other documents required as above specified, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall execute and deliver at its Corporate Trust Office, to or upon the written order of the Issuer, 6 a Receipt or Receipts, registered in the name or names and evidencing any authorized number of Depositary Shares deliverable in respect of such deposit requested by the Issuer, but only upon payment to the Depositary of all taxes and governmental charges and stock transfer and registration fees payable in connection with such deposit and the transfer of the Deposited Securities. SECTION 2.4 Transfer of Receipts; Combination and Split-up of Receipts. The Depositary, subject to the terms and conditions of this Deposit Agreement, shall register transfers of Receipts on its transfer books from time to time, upon any surrender of a Receipt, by the Owner in person or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer, and duly stamped as may be required by the laws of the State of New York and of the United States of America. Thereupon the Depositary shall execute a new Receipt or Receipts and deliver the same to or upon the order of the person entitled thereto. The Depositary, subject to the terms and conditions of this Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of Depositary Shares requested, evidencing the same aggregate number of Depositary Shares as the Receipt or Receipts surrendered. The Depositary may appoint one or more co-transfer agents for the purpose of effecting transfers, combinations and split-ups of Receipts at designated transfer offices on behalf of the Depositary. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Owners or persons entitled to Receipts and will be entitled to protection and indemnity to the same extent as the Depositary. SECTION 2.5 Surrender of Receipts and Withdrawal of Shares. Upon surrender at the Corporate Trust Office of the Depositary of a Receipt for the purpose of withdrawal of the Deposited Securities (it being understood that, with 7 respect to any withdrawal of Shares, only whole Shares may be withdrawn) represented by the Depositary Shares evidenced by such Receipt, and upon payment of all taxes and governmental charges payable in connection with such surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of this Deposit Agreement, the Owner of such Receipt shall be entitled to delivery, to him or upon his order, of the amount of Deposited Securities at the time represented by the Depositary Shares evidenced by such Receipt. Delivery of such Deposited Securities may be made by the delivery of (i) certificates for Shares being withdrawn in the name of such Owner or as ordered by him or by certificates for Shares being withdrawn properly endorsed or accompanied by proper instruments of transfer to such Owner or as ordered by him and (ii) any other securities, property and cash to which such Owner is then entitled in respect of such Receipt to such Owner or as ordered by him. Such delivery shall be made, as hereinafter provided, without unreasonable delay. A Receipt surrendered for such purposes may be required by the Depositary to be properly endorsed in blank or accompanied by proper instruments of transfer in blank, and if the Depositary so requires, the Owner thereof shall execute and deliver to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be delivered to or upon the written order of a person or persons designated in such order. Thereupon the Depositary shall, subject to Sections 2.6, 3.1 and 3.2 and to the other terms and conditions of this Deposit Agreement, deliver at the Corporate Trust Office to or upon the written order of the person or persons designated in the order delivered to the Depositary as above provided, the amount of Deposited Securities represented by the Depositary Shares evidenced by such Receipt. SECTION 2.6 Limitations on Execution and Delivery, Transfer and Surrender of Receipts. As a condition precedent to the execution and delivery, registration of transfer, split-up, combination or surrender of any Receipt or withdrawal of any Deposited Securities or the exercise of any conversion right referred to in Section 2.10, the Depositary, any of the Depositary's agents or the Registrar may require any or all of the following: (i) payment to it of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto 8 (including any such tax or charge and fee with respect to Shares being deposited or withdrawn or with respect to the Common Stock (as defined in Section 2.9) of the Issuer being delivered upon conversion); (ii) the production of proof satisfactory to it as to the identity and genuineness of any signature and (iii) compliance with any regulations the Depositary may establish consistent with the provisions of this Deposit Agreement, including, without limitation, this Section 2.6. The transfer of Receipts in particular instances may be refused or the registration of transfer of outstanding Receipts generally may be suspended, during any period when the transfer books of the Depositary are closed, or if any such action is deemed necessary or advisable by the Depositary or the Issuer at any time or from time to time because of any requirement of law or of any government or governmental body or commission, or under any provision of this Deposit Agreement, or, with the approval of the Issuer, for any other reason. Notwithstanding any other provision of this Deposit Agreement or the Receipts, the surrender of outstanding Receipts and withdrawal of Deposited Securities may not be suspended subject only to (i) temporary delays caused by closing the transfer books of the Depositary or the Issuer or the payment of dividends, (ii) the payment of taxes, stock transfer or registration fees and similar charges, and (iii) compliance with any U.S. laws or governmental regulations relating to the Receipts or to the withdrawal of the Deposited Securities. SECTION 2.7 Lost Receipts, etc. In case any Receipt shall be mutilated, destroyed, lost or stolen, the Depositary shall execute and deliver a new Receipt of like tenor in exchange and substitution for such mutilated Receipt upon cancelation thereof, or in lieu of and in substitution for such destroyed, lost or stolen Receipt. Before the Depositary shall execute and deliver a new Receipt in substitution for a destroyed, lost or stolen Receipt, the Owner thereof shall have (i) filed with the Depositary (a) a request for such execution and delivery before the Depositary has notice that the Receipt has been acquired by a bona fide purchaser and (b) a sufficient indemnity bond and (ii) satisfied any other reasonable requirements imposed by the Depositary. 9 SECTION 2.8 Cancelation and Destruction of Surrendered Receipts. All Receipts surrendered to the Depositary shall be canceled by the Depositary. The Depositary is authorized to destroy Receipts so canceled. SECTION 2.9 Mandatory Conversion of Shares into Common Stock. On the date fixed for mandatory conversion of the Shares by the Certificate of Designation (the "Mandatory Conversion Date"), all then outstanding Shares other than Shares represented by Depositary Shares shall mandatorily convert into (i) shares of common stock, par value $0.05 per share (the "Common Stock"), of the Issuer at the applicable rate specified in the Certificate of Designation, (ii) cash in lieu of fractional shares of Common Stock otherwise deliverable by the Issuer upon such conversion and (iii) the right to receive amounts in cash equal to all accrued and unpaid dividends on such Shares to the Mandatory Conversion Date (other than previously declared dividends payable to a holder of record of the Shares as of a prior date), all as provided in and subject to the Certificate of Designation. From and after the Mandatory Conversion Date, Shares represented by Depositary Shares shall also be mandatorily converted, and such Depositary Shares shall be deemed no longer outstanding and all rights of the Owners of the Receipts evidencing such Depositary Shares (except the right to receive (i) the Common Stock to which such Owner is entitled upon conversion, (ii) any cash payable with respect to any fractional shares of Common Stock otherwise deliverable by the Depositary upon conversion, (iii) any cash for accrued and unpaid dividends on such Shares (other than previously declared dividends payable to an Owner as of a prior date) and (iv) any other securities, property or cash to which such Owner is entitled hereunder) shall cease and terminate. Upon surrender of the Receipts evidencing such Depositary Shares at the Corporate Trust Office or at such office or to such agent of the Depositary as the Depositary may designate for such purpose (properly endorsed or assigned for transfer, as the Depositary or such agent shall so require), such Depositary Shares shall be converted into, subject to adjustment as provided in the Certificate of Designation and this Deposit Agreement, (i) a number of shares of Common Stock per Depositary Share equal to one-five hundredth of the number (including fractional shares) of shares of Common Stock which each Share converted into at the applicable rate 10 specified in the Certificate of Designation, (ii) cash in lieu of fractional shares of Common Stock otherwise deliverable by the Depositary upon such conversion, calculated in accordance with Section 4.12 hereof, (iii) the right to receive cash for any accrued and unpaid dividends on the Shares represented by such Depositary Shares (other than previously declared dividends payable to an Owner as of a prior date) and (iv) the right to receive any other securities, property or cash to which Owners are entitled hereunder. On the Mandatory Conversion Date, for each Owner of a Receipt or Receipts, the Issuer shall deposit with the Depositary (i) certificates for the number of shares of Common Stock and (ii) the amount of cash in lieu of fractional shares determined as set forth in the preceding paragraph into which the Depositary Shares evidenced by such Receipt or Receipts shall convert on the Mandatory Conversion Date (assuming proper surrender of such Receipt or Receipts to the Depositary or any of its agents) and (iii) subject to the Certificate of Designation, an amount in cash equal to all accrued and unpaid dividends on the Shares represented by such Depositary Shares to the Mandatory Conversion Date (other than previously declared dividends payable to an Owner as of a prior date). With respect to Owners which hold a Receipt or Receipts eveidencing more than one Depositary Share on the Mandatory Conversion Day, the number of shares of Common Stock and the amount of cash in lieu of fractional shares to be deposited by the Issuer with the Depositary on that date shall be computed on the basis of the aggregate number of Depositary Shares evidenced by such Receipt or Receipts. Using such shares of Common Stock and cash, the Depositary shall as promptly as practicable deliver to each Owner of a Receipt or Receipts which properly delivers such Receipt or Receipts to the Depositary or any of its agents certificates for the number of shares of Common Stock and the amount of cash, without interest, to which such Owner is entitled pursuant to the preceding provisions. No fractional shares of Common Stock will be delivered by the Depositary in connection with mandatory conversion of Shares represented by Depositary Shares on the Mandatory Conversion Date. 11 SECTION 2.10 Optional Conversion of Shares into Common Stock. Subject to the terms and conditions of this Deposit Agreement, an Owner of a Receipt or Receipts evidencing Depositary Shares representing whole or fractional Shares may surrender such Receipt or Receipts at the Corporate Trust Office or at such office or to such agents of the Depositary as the Depositary may designate for such purpose, together with a notice of conversion duly completed and executed, thereby directing the Depositary or any such agent to instruct the Issuer to cause the conversion (which may include partial conversions) of the number of Shares (which instruction may be given by reference to the number of Depositary Shares representing such Shares) specified in such notice of conversion into shares of Common Stock at the rate specified in the Certificate of Designation, and an assignment of such Receipt or Receipts to the Issuer or in blank, duly completed and executed (and, if such conversion is to occur after the close of business on a record date for any payment of declared dividends on the Shares and before the opening of business on the next succeeding dividend payment date, payment in cash of an amount equal to the dividend payable on such date on the Shares so converted). To the extent that an Owner delivers to the Depositary for conversion a Receipt or Receipts evidencing Depositary Shares representing Shares which in the aggregate (including fractional Shares) would result in a fractional share of Common Stock being deliverable by the Issuer upon such Shares' conversion at the rate specified in the Certificate of Designation, the Issuer shall deliver to such Owner payment in cash in lieu of such fractional share of Common Stock, calculated in accordance with Section 4.12 hereof. If a Receipt or Receipts eveidencing more than one Depositary Share shall be surrendered for conversion of the Shares represented thereby at one time by the same Owner, the number of shares of Common Stock and the amount of cash in lieu of fractional shares deliverable by the Issuer upon such conversion shall be computed on the basis of the aggregate number of Shares (including fractional Shares) represented by Depositary Shares evidenced by the Receipt or Receipts so surrendered. Upon receipt by the Depositary or an agent of the Depositary of a Receipt or Receipts, together with a notice of conversion, duly completed and executed, directing the Depositary or such agent to instruct the Issuer to cause the conversion (which may be a partial conversion) of a specified number of Shares (which instruction may be by 12 reference to the number of Depositary Shares representing such Shares) at the rate specified in the Certificate of Designation, and an assignment of such Receipt or Receipts to the Issuer or in blank, duly completed and executed, the Depositary or such agent shall instruct the Issuer, subject to adjustment as provided in the Certificate of Designation and this Deposit Agreement, (i) to cause the conversion (which may be a partial conversion) at the rate specified in the Certificate of Designation of the number of Shares represented by the Depositary Shares evidenced by the Receipt or Receipts so surrendered for conversion as specified in the written notice to the Depositary or such agent and (ii) to cause the delivery to the Owner of such Receipt or Receipts of (a) a certificate or certificates evidencing the number of whole shares of Common Stock into which the Shares (including fractional Shares) represented by the Depositary Shares evidenced by such Receipt or Receipts have been converted, and (b) the amount of cash to which such Owner is entitled in lieu of fractional shares of Common Stock otherwise deliverable by the Issuer upon such conversion, calculated in accordance with Section 4.12 hereof. The Issuer shall as promptly as practicable after receipt thereof cause the delivery of the certificate or certificates and cash referred to in (a) and (b) above, and such conversion shall be deemed to have been effected immediately prior to the close of business on the date of such receipt and shall occur at the rate specified in the Certificate of Designation in effect at such time and on such date. Upon such conversion, the Depositary or such agent (i) shall deliver to the Owner a Receipt evidencing the number of Depositary Shares evidenced by the surrendered Receipt or Receipts over the number of Depositary Shares evidenced by such Receipt or Receipts that have been so converted, (ii) shall cancel the Depositary Shares evidenced by Receipts surrendered for conversion and (iii) shall deliver to the Issuer or its transfer agent for the Shares for cancelation the number of Shares (including fractional Shares) represented by the Depositary Shares evidenced by the Receipts so surrendered and so converted. Upon the delivery of the Shares to be canceled due to such conversion by the Depositary or such agent to the Issuer or its transfer agent, the Issuer or its transfer agent shall deliver to the Depositary or such agent, as applicable, a certificate or certificates evidencing the number of Shares, if any, that equals the excess of the number of Shares evidenced by the surrendered certificate over the number of Shares evidenced by that certificate that have been so 13 converted. Depositary Shares converted in connection with conversion of the Shares represented thereby shall only be converted in whole, and not in part. The Owner of a Receipt or Receipts on any dividend payment record date established by the Depositary as provided in Section 4.6 hereof shall be entitled to receive the dividend payable with respect to the Depositary Shares evidenced by such Receipt or Receipts on the dividend payment date notwithstanding the conversion (which may be a partial conversion) subsequent to such record date of the Shares represented by such Depositary Shares. However, if a Receipt or Receipts are surrendered for conversion after the close of business on a dividend payment record date established by the Depositary and before the opening of business on the next succeeding dividend payment date, the Owner of such Receipt or Receipts shall pay to the Depositary an amount equal to the dividend payable on such dividend payment date on the Depositary Shares evidenced by the Receipt or Receipts being surrendered for conversion. Any Owner of a Receipt or Receipts on a dividend payment record date established by the Depositary who (or whose transferee) surrenders such Receipt or Receipts with instructions to the Depositary for conversion of the underlying Shares on the next succeeding dividend payment date shall receive the dividend payable with respect to the Depositary Shares evidenced by such Receipt or such Receipts and shall not be required to include payment of the amount of such dividend on such Depositary Shares upon surrender of such Receipt or Receipts for conversion. Upon the conversion of any Share for which a notice of conversion has been provided to the Depositary or an agent of the Depositary by the Owner of the Receipt or Receipts evidencing the Depositary Shares representing such Share, dividends shall cease to become payable on such Depositary Shares, such Depositary Shares shall be deemed no longer outstanding, all rights of the Owner of the Receipt or Receipts evidencing such Depositary Shares (except the right to receive (i) the Common Stock to which such Owner is entitled upon conversion, (ii) any cash payable with respect to any fractional shares of Common Stock otherwise deliverable by the Issuer upon conversion, (iii) any Receipts evidencing Depositary Shares representing Shares which were not so converted and (iv) any other securities, property or cash to which such Owner is entitled hereunder) 14 shall cease and terminate, and the Receipt or Receipts evidencing such Depositary Shares shall be cancelled. No fractional shares of Common Stock shall be deliverable by the Issuer upon conversion of the Shares represented by the Depositary Shares. ARTICLE III CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS SECTION 3.1 Filing Proofs, Certificates and Other Information. Any Owner of a Receipt may be required from time to time to file with the Depositary such proof of citizenship or residence, to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper. The Depositary may withhold the registration of transfer of any Receipt or the distribution of any dividend or sale or distribution of rights or of the proceeds thereof or the delivery of any Deposited Securities or the exercise of any conversion right referred to in Section 2.9 and 2.10 or the delivery of any Common Stock upon such conversion until such proof or other information is filed or such certificates are executed or such representations and warranties made. SECTION 3.2 Liability of Owner for Taxes. If any tax or other governmental charge shall become payable with respect to any Receipt or any Deposited Securities represented by Depositary Shares evidenced by any Receipt or with respect to any conversion right referred to in Section 2.10, such tax or other governmental charge shall be payable by the Owner of such Receipt to the Depositary. The Depositary may refuse to effect any transfer of such Receipt or any withdrawal of Deposited Securities represented by Depositary Shares evidenced by such Receipt or any such conversion until such payment is made, and may withhold any dividends or other distributions, or may sell for the account of the Owner thereof any part or all of the Deposited Securities represented by the Depositary Shares evidenced by such Receipt, and may apply such dividends or other distributions or the proceeds of any such sale in payment of such tax or other governmental charge and the 15 Owner of such Receipt shall remain liable for any deficiency. SECTION 3.3 Warranties on Deposit of Shares. The Issuer, upon depositing Shares under this Deposit Agreement, shall be deemed thereby to represent and warrant that such Shares and each certificate therefor are validly issued, fully paid, nonassessable and free of any pre-emptive rights of the holders of outstanding capital stock of the Issuer and that the person making such deposit is duly authorized so to do. The Issuer shall also be deemed to represent that the deposit of such Shares and the sale of Receipts evidencing Depositary Shares representing Shares by the Issuer are not restricted under the Securities Act of 1933. Such representations and warranties shall survive the deposit of Shares and issuance of Receipts. ARTICLE IV THE DEPOSITED SECURITIES SECTION 4.1 Cash Distributions. Whenever the Depositary shall receive any cash dividend or other cash distribution on any Deposited Securities (other than cash dividends or cash distributions paid by the Issuer to the Depositary in lieu of fractional shares of Common Stock otherwise deliverable by the Issuer upon conversion of the Depositary Shares or in payment of dividends on the Depositary Shares), the Depositary shall distribute the dividend or distribution thus received to the Owners entitled thereto, in proportion, insofar as practicable, to the number of Depositary Shares representing such Deposited Securities held by them respectively. In the event that the Issuer or the Depositary shall be required to withhold and does withhold from any such cash dividend or such other cash distribution an amount on account of taxes, the amount distributed to the Owner of the Receipts evidencing Depositary Shares representing such Deposited Securities shall be reduced accordingly. The Depositary shall distribute only such amount, however, as can be distributed without attributing to any Owner a fraction of one cent. Any such fractional amounts shall be rounded to the nearest whole cent and so distributed to Owners entitled thereto. The Depositary will forward to the Issuer or its 16 agent such information from its records as the Issuer may reasonably request to enable the Issuer or its agent to file necessary reports with governmental agencies. SECTION 4.2 Regular Share Dividends Payable in Common Stock. Pursuant to and subject to the terms of the Certificate of Designation, the Issuer may pay dividends (in whole or in part) on the Shares through the delivery of shares of Common Stock, so long as shares of Common Stock delivered in payment of a dividend are delivered on the regular dividend payment date (as set forth in the Certificate of Designation) for such dividend. Dividends paid by the Issuer on Shares represented by Depositary Shares shall be paid to the Depositary, as record holder of such Shares (assuming the Depositary was also the record holder for such Shares on the related record date for such dividend payment). The Depositary shall distribute, on the related regular dividend payment date, shares of Common Stock paid to it by the Issuer as dividends on the Shares to persons who were Owners on the related record date for such dividend, as established by the Depositary in accordance with Section 4.6 hereof. The Depositary shall distribute to each such Owner on such date, for each Depositary Share evidenced by a Receipt or Receipts held by such Owner on the related record date for such dividend (it being understood that the number of fractional shares of Common Stock to which such Owner is entitled with respect to such dividend shall be determined on the basis of its aggregate holdings of such Depositary Shares), (i) a number of shares (subject to clause (ii) of this sentence) of Common Stock equal to one-five hundredth of the number of shares of Common Stock (including fractional shares) payable per Share in payment of the related dividend as determined pursuant to the Certificate of Designation and (ii) the amount of cash to which such Owner is entitled in lieu of fractional shares of Common Stock otherwise distributable by the Depositary under clause (i), calculated in accordance with Section 4.12 hereof. The Issuer shall deposit with the Depositary, on or prior to the regular dividend payment date (as set forth in the Certificate of Designation) for any dividend which the Issuer has elected to pay in whole or in part in shares of Common Stock, for each Owner which held a Receipt or Receipts on the related record date for such dividend as established by the Depositary, (i) certificates for the number of shares of Common Stock and (ii) the amount of cash 17 in lieu of fractional shares to which such Owner is entitled pursuant to the preceding sentence. No fractional shares of Common Stock will be delivered by the Depositary to persons who were Owners on the related record date for a dividend on the Shares in connection with the Depositary's distribution of a dividend on the Shares paid by the Issuer to it in shares of Common Stock. SECTION 4.3 Distributions Other Than Cash, Share Dividends Paid in Common Stock, Shares or Rights. Subject to the provisions of Section 4.8, whenever the Depositary shall receive any distribution other than a distribution described in Sections 4.1, 4.2, 4.4 or 4.5, the Depositary shall cause the securities or property received by it to be distributed to the Owners entitled thereto, in proportion to the number of Depositary Shares representing Deposited Securities held by them respectively, in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution; provided, however, that if in the opinion of the Depositary such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that the Issuer or the Depositary withhold an amount on account of taxes or other governmental charges or that such securities must be registered under the Securities Act of 1933 in order to be distributed to Owners or holders) the Depositary deems such distribution not to be feasible, the Depositary may adopt such method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and the net proceeds of any such sale shall be distributed by the Depositary to the Owners entitled thereto as in the case of a distribution received in cash pursuant to Section 4.1. SECTION 4.4 Distributions in Shares. If any distribution upon any Deposited Securities consists of a dividend in, or free distribution of, Shares, the Depositary may, and shall if the Issuer shall so request, distribute to the Owners of outstanding Receipts entitled thereto, in proportion to the number of Depositary Shares representing such Deposited Securities held by them respectively, additional Receipts evidencing an aggregate number of Depositary Shares representing the amount of 18 Shares received as such dividend or free distribution, subject to the terms and conditions of the Deposit Agreement with respect to the deposit of Shares and the issuance of Depositary Shares evidenced by Receipts, including the withholding of any tax or other governmental charge as provided in Section 4.10. In lieu of delivering Receipts for fractional Depositary Shares in any such case, the Depositary shall sell the amount of Shares represented by the aggregate of such fractions and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1, or, if the Depositary deems such sale and distribution not feasible, the Depositary may adopt such method as it shall deem equitable and practicable in substitution for delivering Receipts for fractional Depositary Shares. SECTION 4.5 Rights. In the event that the Issuer shall offer or cause to be offered to the holders of any Deposited Securities any rights to subscribe for additional Shares or any rights of any other nature, the Depositary shall have discretion as to the procedure to be followed in making such rights available to any Owners or in disposing of such rights on behalf of any Owners and making the net proceeds available to such Owners or, if by the terms of such rights offering or for any other reason, the Depositary may not either make such rights available to any Owners or dispose of such rights and make the net proceeds available to such Owners, then the Depositary shall allow the rights to lapse. If at the time of the offering of any rights the Depositary determines in its discretion that it is lawful and feasible to make such rights available to all Owners or to certain Owners but not to other Owners, the Depositary may distribute to any Owner to whom it determines the distribution to be lawful and feasible, in proportion to the number of Depositary Shares held by such Owner, warrants or other instruments therefor in such form as it deems appropriate. In circumstances in which rights would otherwise not be distributed, if an Owner of Receipts requests the distribution of warrants or other instruments in order to exercise the rights allocable to the Depositary Shares of such Owner hereunder, the Depositary will make such rights available to such Owner upon written notice from the Issuer to the Depositary that (i) the Issuer has elected in its sole discretion to permit such rights to be exercised and (ii) such Owner has executed such documents as the Issuer 19 has determined in its sole discretion are reasonably required under applicable law. If the Depositary has distributed warrants or other instruments for rights to all or certain Owners, then upon instruction from such an Owner pursuant to such warrants or other instruments to the Depositary from such Owner to exercise such rights, upon payment by such Owner to the Depositary for the account of such Owner of an amount equal to the purchase price of the Shares to be received upon the exercise of the rights, and upon payment of any other charges as set forth in such warrants or other instruments, the Depositary shall, on behalf of such Owner, exercise the rights and purchase the Shares, and the Issuer shall cause the Shares so purchased to be delivered to the Depositary on behalf of such Owner. As agent for such Owner, the Depositary shall cause the Shares so purchased to be deposited pursuant to Section 2.2 of this Deposit Agreement, and shall, pursuant to Section 2.3 of this Deposit Agreement, execute and deliver Receipts to such Owner. In the case of a distribution pursuant to the second paragraph of this section, such Receipts shall be legended in accordance with applicable U.S. laws, and shall be subject to the appropriate restrictions on sale, deposit, cancelation, and transfer under such laws. If the Depositary determines in its discretion that it is not lawful and feasible to make such rights available to all or certain Owners, it may sell the rights, warrants or other instruments in proportion to the number of Depositary Shares held by the Owners to whom it has determined it may not lawfully or feasibly make such rights available, and allocate the net proceeds of such sales (net of all taxes and governmental charges payable in connection with such rights and subject to the terms and conditions of this Deposit Agreement) for the account of such Owners otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any Receipt or otherwise. The Depositary will not offer rights to Owners unless both the rights and the securities to which such rights relate are either exempt from registration under the Securities Act of 1933 with respect to a distribution to Owners or are registered under the provisions of such Act. 20 If an Owner of Receipts requests distribution of warrants or other instruments, notwithstanding that there has been no such registration under such Act, the Depositary shall not effect such distribution unless it has received an opinion from recognized counsel in the United States for the Issuer upon which the Depositary may rely that such distribution to such Owner is exempt from such registration. The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make such rights available to Owners in general or any Owner in particular. SECTION 4.6 Fixing of Record Date. Whenever any cash dividend or other cash distribution or any dividend to be paid by the Issuer in shares of Common Stock shall become payable or any distribution other than cash shall be made, or whenever rights, preferences or privileges shall be offered or issued with respect to the Deposited Securities, or whenever for any reason the Depositary causes a change in the number of Shares that are represented by each Depositary Share, or whenever the Depositary shall receive notice of any meeting at which holders of Shares are entitled to vote or of which holders of Shares are entitled to notice, the Depositary shall fix a record date (which shall be the same date as the record date fixed by the Issuer in respect of the Shares) (i) for the determination of the Owners who shall be (a) entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof or (b) entitled to give instructions for the exercise of voting rights at any such meeting, or (ii) on or after which each Depositary Share will represent the changed number of Shares. SECTION 4.7 Voting of Deposited Securities. Upon receipt of notice of any meeting at which the holders of Shares are entitled to vote, the Depositary shall, as soon as practicable thereafter, mail to the Owners a notice, which shall be provided by the Issuer and which shall contain (i) such information as is contained in such notice of meeting, and (ii) a statement that the Owners as of the close of business on a specified record date fixed pursuant to Section 4.6 shall be entitled, subject to any applicable provision of law, the Restated Certificate of Incorporation or the by-laws of the Issuer, to instruct the Depositary as to the exercise of the voting rights 21 pertaining to the amount of Shares or other Deposited Securities represented by their respective Depositary Shares and (iii) a statement as to the manner in which such instructions may be given. Upon the written request of an Owner on such record date, the Depositary shall endeavor, in so far as practicable, to vote or cause to be voted the amount of Shares or other Deposited Securities represented by the Depositary Shares evidenced by such Receipt in accordance with the instructions set forth in such request. The Issuer hereby agrees to take all reasonable action that may be deemed necessary by the Depositary in order to enable the Depositary to vote such Shares or cause such Shares to be voted. In the absence of specific instructions from the Owner of a Receipt, the Depositary will abstain from voting to the extent of the Shares represented by the Depositary Shares evidenced by such Receipt. SECTION 4.8 Changes Affecting Deposited Securities. In circumstances where the provisions of Section 4.3 do not apply, upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the Issuer or to which it is a party, any securities which shall be received by the Depositary in exchange for or in conversion of or in respect of Deposited Securities, shall be treated as new Deposited Securities under this Deposit Agreement, and Depositary Shares evidenced by Receipts then outstanding shall thenceforth represent the proportionate interest of Owners thereof in the new Deposited Securities so received in exchange or conversion, unless additional Receipts are delivered pursuant to the following sentence. In any such case the Depositary may, and shall if the Issuer shall so request, execute and deliver additional Receipts as in the case of a dividend in Shares, or call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing such new Deposited Securities. SECTION 4.9 Reports. The Depositary shall make available for inspection by Owners at its Corporate Trust Office any reports and communications, including any proxy soliciting material, received from the Issuer which are both (i) received by the Depositary as the holder of the Deposited Securities and (ii) made generally available to the holders of such Deposited Securities by the Issuer. The Issuer agrees that 22 it shall deliver to the Depositary, and the Depositary shall, promptly after receipt thereof, transmit to the Owners of the Receipts, in each case at the address recorded in the Depositary's books, copies of all notices and reports (including financial statements) required by law, by the rules of any national securities exchange upon which the Depositary Shares are listed or by the Restated Certificate of Incorporation or the Certificate of Designation to be furnished by the Issuer to holders of Shares. Such transmission shall be at the Issuer's expense and the Issuer shall provide the Depositary with such number of copies of such documents as the Depositary may reasonably request. In addition, the Depositary will transmit to the Owners of Receipts at the Issuer's expense such other documents as may be requested by the Issuer. SECTION 4.10 Lists of Owners. Promptly upon request by the Issuer, the Depositary shall, at the expense of the Issuer, furnish to it a list, as of a recent date, of the names, addresses and holdings of Depositary Shares by all persons in whose names Receipts are registered on the books of the Depositary. SECTION 4.11 Withholding. In the event that the Depositary determines that any distribution in property (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge which the Depositary is obligated to withhold, the Depositary may by public or private sale dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner as the Depositary deems necessary and practicable to pay any such taxes or charges and the Depositary shall distribute the net proceeds of any such sale after deduction of such taxes or charges to the Owners entitled thereto. SECTION 4.12 Fractional Shares. No fractional shares of Common Stock will be delivered by the Issuer or the Depositary, as applicable, to the Owners of Receipts upon mandatory or optional conversion into shares of Common Stock. In lieu of any fractional share otherwise deliverable in respect of the aggregate number of Depositary Shares evidenced by a Receipt or Receipts of any Owner that are converted upon mandatory conversion, such Owner shall be entitled to receive an amount in cash equal to the same fraction of the Closing 23 Price (as defined in Section 1.1 hereof) of the Common Stock as of the fifth Trading Day (as defined in Section 1.1 hereof) immediately preceding the Mandatory Conversion Date. In lieu of any fractional share otherwise deliverable in respect of the aggregate number of Shares represented by Depositary Shares evidenced by a Receipt or Receipts of any Owner that are converted upon any optional conversion, such Owner shall be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock as of the second Trading Day immediately preceding the effective date of conversion. If a Receipt or Receipts evidencing more than one Depositary Share are surrendered for conversion at one time by or for the same Owner, the number of shares of Common Stock and the amount of cash in lieu of fractional shares deliverable upon conversion shall be computed on the basis of the aggregate number of Depositary Shares evidenced by the Receipt or Receipts so surrendered. No fractional shares of Common Stock will be delivered by the Depositary to persons who were Owners on the related record date for a dividend on the Shares in connection with the Depositary's distribution of a dividend on the Shares paid by the Issuer to it in shares of Common Stock. In lieu of any fractional share otherwise so deliverable, such Owners shall be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock determined as of the fifth Trading Day immediately preceding the dividend payment date. On the Mandatory Conversion Date, the fractional share of Common Stock that any Owner would otherwise be entitled to receive shall be determined by adding all the fractional shares such Owner would be entitled to receive (i) on the mandatory conversion of all Depositary Shares evidenced by Receipts held by such Owner and (ii) on the payment of the regular quarterly dividend on all Depositary Shares evidenced by Receipts held by such Owner at the related record date. On the Mandatory Conversion Date, the Issuer may, at its option, deliver any whole number of shares of Common Stock resulting from the addition of fractional shares resulting from (i) and (ii) above in shares of Common Stock and any remaining fractional shares in cash. In the event that (i) mandatory conversion of the Depositary Shares, (ii) voluntary conversions of the Shares represented by the Depositary Shares, (iii) the Depositary's delivery of shares of Common Stock as dividends on the Depositary Shares to persons who were Owners of the Receipts 24 evidencing such Depositary Shares on the related record date for such dividend, (iv) the combination of (i) and (iii) pursuant to the preceding paragraph or (v) some combination of the foregoing result in any Owner of Receipts evidencing Depositary Shares being entitled to cash in lieu of a fractional share on the same date, the Issuer will deliver (either directly or through the Depositary, as applicable) to all such Owners cash in an amount equal to the total amount of cash to which all such Owners of Receipts are entitled in lieu of fractional shares on such date. If payment in cash in lieu of fractional shares of Common Stock in accordance with the preceding six paragraphs would result in the Issuer's failure to be in compliance with any debt instrument to which it is a party, the Issuer shall be entitled to deliver (either directly or through the Depositary, as applicable) a whole share of Common Stock in lieu of cash to Owners entitled to fractional shares of Common Stock (beginning with the Owners entitled to the largest fractional shares) until delivery of cash in lieu of fractional shares of Common Stock to the remaining Owners would no longer result in the Issuer's failure to be in compliance with such debt instrument. ARTICLE V THE DEPOSITARY AND THE ISSUER SECTION 5.1 Maintenance of Office and Transfer Books by the Depositary. Until termination of this Deposit Agreement in accordance with its terms, the Depositary shall maintain in the Borough of Manhattan, The City of New York, facilities for the execution and delivery, registration, registration of transfers and surrender of Receipts in accordance with the provisions of this Deposit Agreement. The Depositary shall keep books for the registration of Receipts and transfers of Receipts which at all reasonable times shall be open for inspection by the Owners, provided that such inspection shall not be for the purpose of communicating with Owners in the interest of a business or object other than the business of the Issuer or a matter related to this Deposit Agreement or the Receipts. 25 The Depositary may close the transfer books, at any time or from time to time, when deemed expedient by it in connection with the performance of its duties hereunder. If any Receipts or the Depositary Shares evidenced thereby are listed on one or more stock exchanges in the United States, the Depositary shall act as Registrar or appoint a Registrar or one or more co-registrars for registry of such Receipts in accordance with any requirements of such exchange or exchanges. SECTION 5.2 Prevention or Delay in Performance by the Depositary or the Issuer. Neither the Depositary nor the Issuer shall incur any liability to any Owner or holder of any Receipt, if by reason of any provision of any present or future law or regulation of the United States or of any governmental or regulatory authority or stock exchange, or by reason of any provision, present or future, of the Restated Certificate of Incorporation or by-laws of the Issuer, or by reason of any act of God or war or other circumstances beyond its control, the Depositary or the Issuer shall be prevented or forbidden from, or be subject to any civil or criminal penalty on account of, doing or performing any act or thing which by the terms of this Deposit Agreement it is provided shall be done or performed; nor shall the Depositary or the Issuer incur any liability to any Owner or holder of any Receipt by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or thing which by the terms of this Deposit Agreement it is provided shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement. Where, by the terms of a distribution pursuant to Sections 4.1, 4.3, or 4.4 of the Deposit Agreement, or an offering or distribution pursuant to Section 4.5 of the Deposit Agreement, or for any other reason, such distribution or offering may not be made available to Owners, and the Depositary may not dispose of such distribution or offering on behalf of such Owners and make the net proceeds available to such Owners, then the Depositary shall not make such distribution or offering, and shall allow any rights, if applicable, to lapse. SECTION 5.3 Obligations of the Depositary and the Issuer. The Issuer assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to 26 Owners or holders of Receipts, except that it agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith. The Depositary assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Owner or holder of any Receipt (including, without limitation, liability with respect to the validity or worth of the Deposited Securities), except that it agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith. Neither the Depositary nor the Issuer shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the Receipts, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability shall be furnished as often as may be required. Neither the Depositary nor the Issuer shall be liable for any action or nonaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or any other person believed by it in good faith to be competent to give such advice or information. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. The Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or nonaction is in good faith. No disclaimer of liability under the Securities Act of 1933 is intended by any provision of this Deposit Agreement. 27 SECTION 5.4 Resignation and Removal of the Depositary. The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Issuer, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. The Depositary may at any time be removed by the Issuer by written notice of such removal effective upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. In case at any time the Depositary acting hereunder shall resign or be removed, the Issuer shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York and having a combined capital and surplus of at least $50,000,000. Every successor depositary shall execute and deliver to its predecessor and to the Issuer an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor, nevertheless, upon payment of all sums due it and on the written request of the Issuer shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all right, title and interest in the Deposited Securities to such successor, and shall deliver to such successor a list of the Owners of all outstanding Receipts. Any such successor depositary shall promptly mail notice of its appointment to the Owners. Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act. SECTION 5.5 Distribution of Additional Shares, Rights, etc. The Issuer agrees that in the event of any issuance or distribution of (1) additional Shares, (2) rights to subscribe for Shares, (3) securities convertible into Shares, or (4) rights to subscribe for such securities, (each a "Distribution"), the Issuer will promptly furnish to the Depositary a written opinion from 28 U.S. counsel for the Issuer, which counsel shall be satisfactory to the Depositary, stating whether or not the Distribution requires a Registration Statement under the Securities Act of 1933 to be in effect prior to making such Distribution available to Owners entitled thereto. If in the opinion of such counsel a Registration Statement is required, such counsel shall furnish to the Depositary a written opinion as to whether or not there is a Registration Statement in effect which will cover such Distribution. The Issuer agrees with the Depositary that neither the Issuer nor any company controlled by, controlling or under common control with the Issuer will at any time deposit any Shares, either originally issued or previously issued and reacquired by the Issuer or any such affiliate, unless a Registration Statement is in effect as to such Shares under the Securities Act of 1933. SECTION 5.6 Indemnification. The Issuer agrees to indemnify the Depositary, its directors, employees, agents and affiliates, and hold each of them harmless from, any liability or expense (including, but not limited to, the fees and expenses of counsel) which may arise out of acts performed or omitted, in accordance with the provisions of this Deposit Agreement and of the Receipts, as the same may be amended, modified or supplemented from time to time, (i) by the Depositary or its directors, employees, agents and affiliates, except for any liability or expense arising out of the negligence or bad faith of either of them, or (ii) by the Issuer or any of its directors, employees, agents and affiliates. The Depositary agrees to indemnify the Issuer, its directors, employees, agents and affiliates and hold them harmless from any liability or expense which may arise out of acts performed or omitted by the Depositary or its directors, employees, agents and affiliates due to their negligence or bad faith. SECTION 5.7 Charges of Depositary. No fees, charges and expenses of the Depositary or any agent of the Depositary hereunder or of any Registrar shall be payable by any person other than the Issuer, except for any taxes (including transfer taxes, if any) and other governmental charges and except as provided in this Deposit Agreement. All other fees, charges and expenses of the Depositary and any agent of the Depositary hereunder and of 29 any Registrar incident to the performance of their respective obligations hereunder shall be paid upon consultation and agreement between the Depositary and the Issuer as to the amount and nature of such fees, charges and expenses. The Depositary shall present its statement for fees, charges and expenses to the Issuer once every month or at such other intervals as the Issuer and the Depositary may agree. The Depositary may own and deal in any class of securities of the Issuer and its affiliates and in Receipts. SECTION 5.8 Retention of Depositary Documents. The Depositary is authorized to destroy those documents, records, bills and other data compiled during the term of this Deposit Agreement at the times permitted by the laws or regulations governing the Depositary unless the Issuer requests that such papers be retained for a longer period or turned over to the Issuer or to a successor depositary. SECTION 5.9 Exclusivity. The Issuer agrees not to appoint any other depositary for issuance of Depositary Receipts so long as The Bank of New York is acting as Depositary hereunder. SECTION 5.10 List of Restricted Securities Owners. From time to time, the Issuer shall provide to the Depositary a list setting forth, to the actual knowledge of the Issuer, those persons or entities who beneficially own Restricted Securities and the Issuer shall update that list on a regular basis. The Issuer agrees to advise in writing each of the persons or entities so listed that such Restricted Securities are ineligible for deposit hereunder. The Depositary may rely on such a list or update but shall not be liable for any action or omission made in reliance thereon. ARTICLE VI AMENDMENT AND TERMINATION SECTION 6.1 Amendment. The form of the Receipts and any provision of this Deposit Agreement may at any time and from time to time be amended by agreement between the Issuer and the Depositary 30 in any respect that they may deem necessary or desirable. Any amendment that shall impose any fees, taxes or charges (other than taxes and other governmental charges, fees and expenses provided for herein or in the Receipts), or that shall otherwise prejudice any substantial existing right of Owners of Receipts, shall not become effective as to outstanding Receipts until the expiration of 90 days after notice of such amendment shall have been given to the Owners of outstanding Receipts. Every Owner of an outstanding Receipt at the time any such amendment becomes effective shall be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by this Deposit Agreement as amended thereby. In no event shall any amendment impair the right, subject to the provisions of this Deposit Agreement, of any Owner to surrender any Receipt or Receipts evidencing Depositary Shares representing Shares with instructions to the Depositary or an applicable agent of the Depositary to deliver to the Owner such Shares or to cause the conversion of such Shares into Common Stock and cash for fractional shares of Common Stock and, in each case, all securities and other property, if any, represented thereby, except in order to comply with mandatory provisions of applicable law. SECTION 6.2 Termination. The Deposit Agreement shall terminate at the close of business on the Mandatory Conversion Date upon distribution by the Depositary to each Owner entitled thereto of (i) shares of Common Stock and cash (whether in lieu of fractional shares or otherise) received by the Depositary from the Issuer for madatory conversion of, and/or dividend payments on, the Depositary Shares eveidenced by the Receipt or Receipts held by such Owner and (ii) all other securities property and cash then held by the Depositary hereunder. On and after the date of termination, the Owner of a Receipt will, upon surrender of such Receipt at the Corporate Trust Office of the Depositary and payment of any applicable taxes or governmental charges, be entitled to delivery, to him or upon his order, of the amount of Deposited Securities represented by the Depositary Shares evidenced by such Receipt. If any Receipts shall remain outstanding after the date of termination, the Depositary thereafter shall discontinue the registration of transfers of Receipts, shall suspend the distribution of dividends to the Owners thereof, and shall not give any further notices or perform any further acts under this Deposit Agreement, except that the Depositary shall continue to collect dividends and other distributions pertaining to Deposited Securities, shall sell rights as provided in this Deposit Agreement, and shall continue to deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net 31 proceeds of the sale of any rights or other property, in exchange for Receipts surrendered to the Depositary (after deducting, in each case, any applicable taxes or governmental charges). At any time after the expiration of one year from the date of termination, the Depositary may sell the Deposited Securities then held hereunder and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of Receipts which have not theretofore been surrendered, such Owners thereupon becoming general creditors of the Depositary with respect to such net proceeds. After making such sale, the Depositary shall be discharged from all obligations under this Deposit Agreement, except to account for such net proceeds and other cash (after deducting, in each case, any applicable taxes or governmental charges). Upon the termination of this Deposit Agreement, the Issuer shall be discharged from all obligations under this Deposit Agreement except for its obligations to the Depositary under Sections 5.6 and 5.7 hereof. ARTICLE VII MISCELLANEOUS SECTION 7.1 Counterparts. This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts shall constitute one and the same instrument. Copies of this Deposit Agreement shall be filed with the Depositary and shall be open to inspection by any holder or Owner of a Receipt during business hours. SECTION 7.2 No Third Party Beneficiaries. This Deposit Agreement is for the exclusive benefit of the parties hereto and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person. 32 SECTION 7.3 Severability. In case any one or more of the provisions contained in this Deposit Agreement or in the Receipts should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby. SECTION 7.4 Holders and Owners as Parties; Binding Effect. The holders and Owners of Receipts from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions hereof and of the Receipts by acceptance thereof. SECTION 7.5 Notices. Any and all notices to be given to the Issuer shall be deemed to have been duly given if personally delivered or sent by mail or cable, telex or facsimile transmission confirmed by letter, addressed to Mr. Kieran E. Burke, Premier Parks Inc., 122 East 42nd Street, 49th Floor, New York, NY 10168 (facsimile: (212) 949-6203) or any other place to which the Issuer may have transferred its principal office. Any and all notices to be given to the Depositary shall be deemed to have been duly given if in English and personally delivered or sent by mail or cable, telex or facsimile transmission confirmed by letter, addressed to The Bank of New York, 101 Barclay Street, New York, New York 10286, Attention: American Depositary Receipt Administration, or any other place to which the Depositary may have transferred its Corporate Trust Office. Any and all notices to be given to any Owner shall be deemed to have been duly given if personally delivered or sent by mail or cable, telex or facsimile transmission confirmed by letter, addressed to such Owner at the address of such Owner as it appears on the transfer books for Receipts of the Depositary, or, if such Owner shall have filed with the Depositary a written request that notices intended for such Owner be mailed to some other address, at the address designated in such request. Delivery of a notice sent by mail or cable, telex or facsimile transmission shall be deemed to be effected at the time when a duly addressed letter containing the same 33 (or a confirmation thereof in the case of a cable, telex or facsimile transmission) is deposited, postage prepaid, in a post-office letter box. The Depositary or the Issuer may, however, act upon any cable, telex or facsimile transmission received by it, notwithstanding that such cable, telex or facsimile transmission shall not subsequently be confirmed by letter as aforesaid. SECTION 7.6 Governing Law. This Deposit Agreement and the Receipts shall be interpreted and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by the laws of the State of New York. 34 IN WITNESS WHEREOF, PREMIER PARKS INC. and THE BANK OF NEW YORK have duly executed this agreement as of the day and year first set forth above and all Owners shall become parties hereto upon acceptance by them of Receipts issued in accordance with the terms hereof. PREMIER PARKS INC., as Issuer By: ------------------------------ Name: Title: THE BANK OF NEW YORK, as Depositary By: ------------------------------ Name: Title: 35 Exhibit A to Deposit Agreement N0. DEPOSITARY SHARES (Each Depositary Share represents 1/500 of a deposited Share) THE BANK OF NEW YORK DEPOSITARY RECEIPT FOR _____ SHARES OF THE % MANDATORILY CONVERTIBLE PREFERRED STOCK, PAR VALUE $1.00 PER SHARE, OF PREMIER PARKS INC. (INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE) The Bank of New York as depositary (hereinafter called the "Depositary"), hereby certifies that , or registered assigns IS THE OWNER OF DEPOSITARY SHARES representing interests in deposited shares of % Mandatorily Convertible Preferred Stock, par value $1.00 per share (herein called "Shares"), of Premier Parks Inc., incorporated under the laws of the State of Delaware (herein called the "Issuer"). At the date hereof, each Depositary Share represents 1/500 of a Share which is deposited under the deposit agreement at the Corporate Trust Office of the Depositary. The Depositary's Corporate Trust Office is located at a different address than its principal executive office. Its Corporate Trust Office is located at 101 Barclay Street, New York, N.Y. 10286, and its principal executive office is located at 48 Wall Street, New York, N.Y. 10286. THE DEPOSITARY'S CORPORATE TRUST OFFICE ADDRESS IS 101 BARCLAY STREET, NEW YORK, N.Y. 10286 1. THE DEPOSIT AGREEMENT. This Depositary Receipt is one of an issue (herein called "Receipts"), all issued and to be issued upon the terms and conditions set forth in the deposit agreement, dated as of , 1998 (herein called the "Deposit Agreement"), by and among Issuer, the Depositary, and all Owners and holders from time to time of Receipts issued thereunder, each of whom by accepting a Receipt agrees to become a party thereto and become bound by all the terms and conditions thereof. The Deposit Agreement sets forth the rights of Owners and holders of the Receipts and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of such Shares and held thereunder (such Shares, securities, property, and cash are herein called "Deposited Securities"). Copies of the Deposit Agreement are on file at the Depositary's Corporate Trust Office in New York City. The statements made on the face and reverse of this Receipt are summaries of certain provisions of the Deposit Agreement and are qualified by and subject to the detailed provisions of the Deposit Agreement, to which reference is hereby made. Capitalized terms not defined herein shall have the meanings set forth in the Deposit Agreement. 2. SURRENDER OF RECEIPTS AND WITHDRAWAL OF SHARES. Upon surrender at the Corporate Trust Office of the Depositary of this Receipt, and subject to the terms and conditions of the Deposit Agreement, the Owner hereof is entitled to delivery, to him or upon his order, of the amount of Deposited Securities (it being understood that, with respect to any withdrawal of Shares, only whole Shares may be withdrawn) at the time represented by the Depositary Shares for which this Receipt is issued. Delivery of such Deposited Securities may be made by the delivery of (i) certificates for Shares being withdrawn in the name of the Owner hereof or as ordered by him or by certificates for the Shares being withdrawn properly endorsed or accompanied by proper instruments of transfer to such Owner or as ordered by him and (ii) any other securities, property and cash to which such Owner is then entitled in respect of this Receipt to such Owner or as ordered by him. Such delivery will be made at the Corporate Trust Office of the Depositary. Notwithstanding any other provision of the Deposit Agreement or this Receipt, the surrender of 2 outstanding Receipts and withdrawal of Deposited Securities may be suspended only for (i) temporary delays caused by closing the transfer books of the Depositary or Issuer or the payment of dividends, (ii) the payment of taxes, stock transfer or registration fees and similar charges, and (iii) compliance with any U.S. laws or governmental regulations relating to the Receipts or to the withdrawal of the Deposited Securities. 3. MANDATORY CONVERSION OF SHARES INTO COMMON STOCK. On the date fixed for mandatory conversion of the Shares by the Certificate of Designation (the "Mandatory Conversion Date"), all then outstanding Shares other than Shares represented by Depositary Shares shall mandatorily convert into (i) shares of common stock, par value $0.05 per share (the "Common Stock"), of the Issuer at the applicable rate specified in the Certificate of Designation, (ii) cash in lieu of fractional shares of Common Stock otherwise deliverable by the Issuer upon such conversion and (iii) the right to receive amounts in cash equal to all accrued and unpaid dividends on such Shares to the Mandatory Conversion Date (other than previously declared dividends payable to a holder of record of the Shares as of a prior date), all as provided in and subject to the Certificate of Designation. From and after the Mandatory Conversion Date, Shares represented by Depositary Shares shall also be manditorily converted, and such Depositary Shares shall be deemed no longer outstanding and all rights of the Owners of the Receipts evidencing such Depositary Shares (except the right to receive (i) the Common Stock to which such Owner is entitled upon conversion, (ii) any cash payable with respect to any fractional shares of Common Stock otherwise deliverable by the Depositary upon conversion, (iii) any cash for accrued and unpaid dividends on such Shares (other than previously declared dividends payable to an Owner as of a prior date) and (iv) any other securities, property or cash to which such Owner is entitled under the Deposit Agreement) shall cease and terminate. Upon surrender of the Receipts evidencing such Depositary Shares at the Corporate Trust Office or at such office or to such agent of the Depositary as the Depositary may designate for such purpose (properly endorsed or assigned for transfer, as the Depositary or such agent shall so require), such Depositary Shares shall be converted into, subject to adjustment as provided in the Certificate of Designation and the Deposit Agreement, (i) a 3 number of shares of Common Stock per Depositary Share equal to one-five hundredth of the number (including fractional shares) of shares of Common Stock which each Share converted into at the applicable rate specified in the Certificate of Designation, (ii) cash in lieu of fractional shares of Common Stock otherwise deliverable by the Depositary upon such conversion, calculated in accordance with Section 4.12 of the Deposit Agreement, (iii) the right to receive cash for any accrued and unpaid dividends on the Shares represented by such Depositary Shares (other than previously declared dividends payable to an Owner as of a prior date) and (iv) the right to receive any other securities, property or cash to which Owners are entitled under the Deposit Agreement. On the Mandatory Conversion Date, for each Owner of a Receipt or Receipts, the Issuer shall deposit with the Depositary (i) certificates for the number of shares of Common Stock and (ii) the amount of cash in lieu of fractional shares determined as set forth in the preceding paragraph into which the Depositary Shares evidenced by such Receipt or Receipts shall convert on the Mandatory Conversion Date (assuming proper surrender of such Receipt or Receipts to the Depositary or any of its agents) and (iii) subject to the Certificate of Designation, an amount in cash equal to all accrued and unpaid dividends on the Shares represented by such Depositary Shares to the Mandatory Conversion Date (other than previously declared dividends payable to an Owner as of a prior date). With respect to Owners which hold a Receipt or Receipts evidencing more than one Depositary Share on the Mandatory Conversion Day, the number of shares of Common Stock and the amount of cash in lieu of fractional shares to be deposited by the Issuer with the Depositary on that date shall be computed on the basis of the aggregate number of Depositary Shares evidenced by such Receipt or Receipts. Using such shares of Common Stock and cash, the Depositary shall as promptly as practicable deliver to each Owner of a Receipt or Receipts which properly delivers such Receipt or Receipts to the Depositary or any of its agents certificates for the number of shares of Common Stock and the amount of cash, without interest, to which such Owner is entitled pursuant to the preceding provisions. No fractional shares of Common Stock will be delivered by the Depositary in connection with mandatory conversion of 4 Shares represented by Depositary Shares on the Mandatory Conversion Date. 4. OPTIONAL CONVERSION OF SHARES INTO COMMON STOCK. Subject to the terms and conditions of the Deposit Agreement, an Owner of a Receipt or Receipts evidencing Depositary Shares representing whole or fractional Shares may surrender such Receipt or Receipts at the Corporate Trust Office or at such office or to such agents of the Depositary as the Depositary may designate for such purpose, together with a notice of conversion duly completed and executed, thereby directing the Depositary or any such agent to instruct the Issuer to cause the conversion (which may include partial conversions) of the number of Shares (which instruction may be given by reference to the number of Depositary Shares representing such Shares) specified in such notice of conversion into shares of Common Stock at the rate specified in the Certificate of Designation, and an assignment of such Receipt or Receipts to the Issuer or in blank, duly completed and executed (and, if such conversion is to occur after the close of business on a record date for any payment of declared dividends on the Shares and before the opening of business on the next succeeding dividend payment date, payment in cash of an amount equal to the dividend payable on such date on the Shares so converted). To the extent that an Owner delivers to the Depositary for conversion a Receipt or Receipts evidencing Depositary Shares representing Shares which in the aggregate (including fractional Shares) would result in a fractional share of Common Stock being deliverable by the Issuer upon such Shares' conversion at the rate specified in the Certificate of Designation, the Issuer shall deliver to such Owner payment in cash in lieu of such fractional share of Common Stock, calculated in accordance with Section 4.12 of the Deposit Agreement. If a Receipt or Receipts eveidencing more than one Depositary Share shall be surrendered for conversion of the Shares represented thereby at one time by the same Owner, the number of shares of Common Stock and the amount in cash in lieu of fractional shares deliverable by the Issuer upon such conversion shall be computed on the basis of the aggregate number of Shares (including fractional Shares) represented by Depositary Shares evidenced by the Receipts or Receipts so surrendered. Upon receipt by the Depositary or an agent of the Depositary of a Receipt or Receipts, together with a notice of conversion, duly completed and executed, directing the 5 Depositary or such agent to instruct the Issuer to cause the conversion (which may be a partial conversion) of a specified number of Shares (which instruction may be by reference to the number of Depositary Shares representing such Shares) at the rate specified in the Certificate of Designation, and an assignment of such Receipt or Receipts to the Issuer or in blank, duly completed and executed, the Depositary or such agent shall instruct the Issuer, subject to adjustment as provided in the Certificate of Designation and this Deposit Agreement, (i) to cause the conversion (which may be a partial conversion) at the rate specified in the Certificate of Designation of the number of Shares represented by the Depositary Shares evidenced by the Receipt or Receipts so surrendered for conversion as specified in the written notice to the Depositary or such agent and (ii) to cause the delivery to the Owner of such Receipt or Receipts of (a) a certificate or certificates evidencing the number of whole shares of Common Stock into which the Shares (including fractional Shares) represented by the Depositary Shares evidenced by such Receipt or Receipts have been converted, and (b) the amount of cash to which such Owner is entitled in lieu of fractional shares of Common Stock otherwise deliverable by the Issuer upon such conversion, calculated in accordance with Section 4.12 of the Deposit Agreement. The Issuer shall as promptly as practicable after receipt thereof cause the delivery of the certificate or certificates and cash referred to in (a) and (b) above, and such conversion shall be deemed to have been effected immediately prior to the close of business on the date of such receipt and shall occur at the rate specified in the Certificate of Designation in effect at such time and on such date. Upon such conversion, the Depositary or such agent shall deliver to the Owner a Receipt evidencing the number of Depositary Shares evidenced by the surrendered Receipt or Receipts over the number of Depositary Shares evidenced by such Receipt or Receipts that have been so converted. Depositary Shares converted in connection with conversion of the Shares represented thereby shall only be converted in whole, and not in part. The Owner of a Receipt or Receipts on any dividend payment record date established by the Depositary as provided in the Deposit Agreement shall be entitled to receive the dividend payable with respect to the Depositary Shares evidenced by such Receipt or Receipts on the dividend payment date notwithstanding the conversion (which may be a partial conversion) subsequent to such record date of the 6 Shares represented by such Depositary Shares. However, if a Receipt or Receipts are surrendered for conversion after the close of business on a dividend payment record date established by the Depositary and before the opening of business on the next succeeding dividend payment date, the Owner of such Receipt or Receipts shall pay to the Depositary an amount equal to the dividend payable on such dividend payment date on the Depositary Shares evidenced by the Receipt or Receipts being surrendered for conversion. Any Owner of a Receipt or Receipts on a dividend payment record date established by the Depositary who (or whose transferee) surrenders such Receipt or Receipts with instructions to the Depositary for conversion of the underlying Shares on the next succeeding dividend payment date shall receive the dividend payable with respect to the Depositary Shares evidenced by such Receipt or such Receipts and shall not be required to include payment of the amount of such dividend on such Depositary Shares upon surrender of such Receipt or Receipts for conversion. Upon the conversion of any Share for which a notice of conversion has been provided to the Depositary or an agent of the Depositary by the Owner of the Receipt or Receipts evidencing the Depositary Shares representing such Share, dividends shall cease to become payable on such Depositary Shares, such Depositary Shares shall be deemed no longer outstanding, all rights of the Owner of the Receipt or Receipts evidencing such Depositary Shares (except the right to receive (i) the Common Stock to which such Owner is entitled upon conversion, (ii) any cash payable with respect to any fractional shares of Common Stock otherwise deliverable by the Issuer upon conversion, (iii) any Receipts evidencing Depositary Shares representing Shares which were not so converted and (iv) any other securities, property or cash to which such Owner is entitled under the Deposit Agreement) shall cease and terminate, and the Receipt or Receipts evidencing such Depositary Shares shall be cancelled. No fractional shares of Common Stock shall be deliverable by the Issuer upon conversion of the Shares represented by the Depositary Shares. 7 5. TRANSFERS, SPLIT-UPS, AND COMBINATIONS OF RECEIPTS. The transfer of this Receipt is registrable on the books of the Depositary at its Corporate Trust Office by the Owner hereof in person or by a duly authorized attorney, upon surrender of this Receipt properly endorsed for transfer or accompanied by proper instruments of transfer and funds sufficient to pay any applicable transfer taxes and upon compliance with such regulations, if any, as the Depositary may establish for such purpose. This Receipt may be split into other such Receipts, or may be combined with other such Receipts into one Receipt, evidencing the same aggregate number of Depositary Shares as the Receipt or Receipts surrendered. As a condition precedent to the execution and delivery, registration of transfer, split-up, combination or surrender of any Receipt or withdrawal of any Deposited Securities or the exercise of any optional conversion right with respect to any Depositary Shares, the Depositary, any of the Depositary's agents or the Registrar may require any or all of the following: (i) payment to it of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn or with respect to the Common Stock being delivered upon conversion); (ii) the production of proof satisfactory to it as to the identity and genuineness of any signature and (iii) compliance with any regulations the Depositary may establish consistent with the provisions of the Deposit Agreement. The transfer of Receipts in particular instances may be refused, or the registration of transfer of outstanding Receipts generally may be suspended, during any period when the transfer books of the Depositary are closed, or if any such action is deemed necessary or advisable by the Depositary or Issuer at any time or from time to time because of any requirement of law or of any government or governmental body or commission, or under any provision of the Deposit Agreement or this Receipt, or, with the approval of the Issuer, for any other reason. 8 6. LIABILITY OF OWNER FOR TAXES. If any tax or other governmental charge shall become payable with respect to any Receipt or any Deposited Securities represented by Depositary Shares evidenced hereby or with respect to any optional conversion right with respect to any Depositary Shares, such tax or other governmental charge shall be payable by the Owner hereof to the Depositary. The Depositary may refuse to effect any transfer of this Receipt or any withdrawal of Deposited Securities represented by Depositary Shares evidenced by such Receipt or any such conversion until such payment is made, and may withhold any dividends or other distributions, or may sell for the account of the Owner hereof any part or all of the Deposited Securities represented by the Depositary Shares evidenced by this Receipt, and may apply such dividends or other distributions or the proceeds of any such sale in payment of such tax or other governmental charge and the Owner hereof shall remain liable for any deficiency. 7. WARRANTIES OF DEPOSITORS. The Issuer, upon depositing Shares under the Deposit Agreement, shall be deemed thereby to represent and warrant that such Shares and each certificate therefor are validly issued, fully paid, nonassessable and free of any pre-emptive rights of the holders of outstanding capital stock of the Issuer and that the person making such deposit is duly authorized so to do. The Issuer shall also be deemed to represent that the deposit of such Shares and the sale of Receipts evidencing Depositary Shares representing such Shares by the Issuer are not restricted under the Securities Act of 1933. Such representations and warranties shall survive the deposit of Shares and issuance of Receipts. 8. FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION. Any Owner of a Receipt may be required from time to time to file with the Depositary such proof of citizenship or residence, to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper. The Depositary may withhold the registration of transfer of any Receipt or the distribution of any dividend or sale or distribution of rights or of the proceeds thereof or the delivery of any 9 Deposited Securities or the exercise of any conversion right until such proof or other information is filed or such certificates are executed or such representations and warranties made. 9. CHARGES OF DEPOSITARY. The Issuer will pay all fees, charges and expenses of the Depositary, except for taxes (including transfer taxes, if any) and other governmental charges and such charges as are expressly provided in the Deposit Agreement. The Depositary may own and deal in any class of securities of Issuer and its affiliates and in Receipts. 10. TITLE TO RECEIPTS. It is a condition of this Receipt and every successive holder and Owner of this Receipt by accepting or holding the same consents and agrees, that title to this Receipt when properly endorsed or accompanied by proper instruments of transfer, is transferable by delivery with the same effect as in the case of a negotiable instrument; provided, however, that the Depositary, notwithstanding any notice to the contrary, may treat the person in whose name this Receipt is registered on the books of the Depositary as the absolute owner hereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in the Deposit Agreement and for all other purposes. 11. VALIDITY OF RECEIPT. This Receipt shall not be entitled to any benefits under the Deposit Agreement or be valid or obligatory for any purpose, unless this Receipt shall have been executed by the Depositary by the manual or facsimile signature of a duly authorized signatory of the Depositary and, if a Registrar for the Receipts shall have been appointed, countersigned by the manual or facsimile signature of a duly authorized officer of the Registrar. 12. REPORTS, INSPECTION OF TRANSFER BOOKS. The Depositary will make available for inspection by Owners of Receipts at its Corporate Trust Office any reports and communications, including any proxy soliciting material, received from Issuer which are both (i) received by the Depositary as the holder of the Deposited Securities and (ii) made generally available to the holders of such 10 Deposited Securities by Issuer. The Issuer will deliver to the Depositary, and the Depositary will, promptly after receipt thereof, transmit to the Owners of the Receipts, in each case at the address recorded in the Depositary's books, copies of all notices and reports (including financial statements) required by law, by the rules of any national securities exchange upon which the Depositary Shares are listed or by the Restated Certificate of Incorporation or the Certificate of Designation to be furnished by the Issuer to holders of Shares. Such transmission shall be at the Issuer's expense and the Issuer shall provide the Depositary with such number of copies of such documents as the Depositary may reasonably request. In addition, the Depositary will transmit to the Owners of Receipts at the Issuer's expense such other documents as may be requested by the Issuer. The Depositary shall keep books for the registration of Receipts and transfers of Receipts which at all reasonable times shall be open for inspection by the Owners of Receipts, provided that such inspection shall not be for the purpose of communicating with Owners of Receipts in the interest of a business or object other than the business of Issuer or a matter related to the Deposit Agreement or the Receipts. 13. DIVIDENDS AND DISTRIBUTIONS. Whenever the Depositary shall receive any cash dividend or other cash distribution on any Deposited Securities (other than cash dividends or cash distributions paid by the Issuer to the Depositary in lieu of fractional shares of Common Stock otherwise deliverable by the Issuer upon conversion of the Depositary Shares or in payment of dividends on the Depositary Shares), the Depositary shall distribute the dividend or distribution thus received to the Owners entitled thereto, in proportion, insofar as practicable, to the number of Depositary Shares representing such Deposited Securities held by them respectively. In the event that the Issuer or the Depositary shall be required to withhold and does withhold from any such cash dividend or such other cash distribution an amount on account of taxes, the amount distributed to the Owner of the Receipts evidencing Depositary Shares representing such Deposited Securities shall be reduced accordingly. 11 Pursuant to and subject to the terms of the Certificate of Designation, the Issuer may pay dividends (in whole or in part) on the Shares through the delivery of shares of Common Stock, so long as shares of Common Stock delivered in payment of a dividend are delivered on the regular dividend payment date (as set forth in the Certificate of Designation) for such dividend. Dividends paid by the Issuer on Shares represented by Depositary Shares shall be paid to the Depositary, as record holder of such Shares (assuming the Depositary was also the record holder for such Shares on the related record date for such dividend payment). The Depositary shall distribute, on the related regular dividend payment date, shares of Common Stock paid to it by the Issuer as dividends on the Shares to persons who were Owners on the related record date for such dividend, as established by the Depositary in accordance with the Deposit Agreement. The Depositary shall distribute to each such Owner on such date, for each Depositary Share evidenced by a Receipt or Receipts held by such Owner on the related record date for such dividend (it being understood that the number of fractional shares of Common Stock to which such Owner is entitled with respect to such dividend shall be determined on the basis of its aggregate holdings of such Depository Shares), (i) a number of shares (subject to clause (ii) of this sentence) of Common Stock equal to one-five hundredth of the number of shares of Common Stock (including fractional shares) payable per Share in payment of the related dividend as determined pursuant to the Certificate of Designation and (ii) the amount of cash to which such Owner is entitled in lieu of fractional shares of Common Stock otherwise distributable by the Depositary under clause (i), calculated in accordance with Section 4.12 of the Deposit Agreement. The Issuer shall deposit with the Depositary, on or prior to the regular dividend payment date (as set forth in the Certificate of Designation) for any dividend which the Issuer has elected to pay in whole or in part in shares of Common Stock, for each Owner which held a Receipt or Receipts on the related record date for such dividend as established by the Depositary, (i) certificates for the number of shares of Common Stock and (ii) the amount of cash in lieu of fractional shares to which such Owner is entitled pursuant to the preceding sentence. No fractional shares of Common Stock will be delivered by the Depositary to persons who were Owners on the related record date for a dividend on the Shares in connection with 12 the Depositary's distribution of a dividend on the Shares paid by the Issuer to it in shares of Common Stock. Subject to the provisions of Section 4.8, whenever the Depositary shall receive any distribution other than a distribution described in Sections 4.1, 4.2, 4.4 or 4.5, the Depositary shall cause the securities or property received by it to be distributed to the Owners entitled thereto, in proportion to the number of Depositary Shares representing Deposited Securities held by them respectively, in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution; provided, however, that if in the opinion of the Depositary such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason the Depositary deems such distribution not to be feasible, the Depositary may adopt such method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and the net proceeds of any such sale shall be distributed by the Depositary to the Owners entitled thereto as in the case of a distribution received in cash pursuant to Section 4.1 of the Deposit Agreement. If any distribution upon any Deposited Securities consists of a dividend in, or free distribution of, Shares, the Depositary may, and shall if the Issuer shall so request, distribute to the Owners of outstanding Receipts entitled thereto, in proportion to the number of Depositary Shares representing such Deposited Securities held by them respectively, additional Receipts evidencing an aggregate number of Depositary Shares representing the amount of Shares received as such dividend or free distribution, subject to the terms and conditions of the Deposit Agreement with respect to the deposit of Shares and the issuance of Depositary Shares evidenced by Receipts, including the withholding of any tax or other governmental charge as provided in Section 4.10 of the Deposit Agreement. In lieu of delivering Receipts for fractional Depositary Shares in any such case, the Depositary shall sell the amount of Shares represented by the aggregate of such fractions and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1, or, if the Depositary deems such sale and distribution not feasible, the Depositary may adopt such method as it shall deem 13 equitable and practicable in substitution for delivering Receipts for fractional Depositary Shares. In the event that the Depositary determines that any distribution in property (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge which the Depositary is obligated to withhold, the Depositary may by public or private sale dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner as the Depositary deems necessary and practicable to pay any such taxes or charges and the Depositary shall distribute the net proceeds of any such sale after deduction of such taxes or charges to the Owners of Receipts entitled thereto. 14. RIGHTS. In the event that the Issuer shall offer or cause to be offered to the holders of any Deposited Securities any rights to subscribe for additional Shares or any rights of any other nature, the Depositary shall have discretion as to the procedure to be followed in making such rights available to any Owners or in disposing of such rights on behalf of any Owners and making the net proceeds available to such Owners or, if by the terms of such rights offering or for any other reason, the Depositary may not either make such rights available to any Owners or dispose of such rights and make the net proceeds available to such Owners, then the Depositary shall allow the rights to lapse. If at the time of the offering of any rights the Depositary determines in its discretion that it is lawful and feasible to make such rights available to all Owners or to certain Owners but not to other Owners, the Depositary may distribute to any Owner to whom it determines the distribution to be lawful and feasible, in proportion to the number of Depositary Shares held by such Owner, warrants or other instruments therefor in such form as it deems appropriate. In circumstances in which rights would otherwise not be distributed, if an Owner of Receipts requests the distribution of warrants or other instruments in order to exercise the rights allocable to the Depositary Shares of such Owner hereunder, the Depositary will make such rights available to such Owner upon written notice from the Issuer to the Depositary that (i) the Issuer has elected in its sole discretion to permit such rights to be exercised and 14 (ii) such Owner has executed such documents as the Issuer has determined in its sole discretion are reasonably required under applicable law. If the Depositary has distributed warrants or other instruments for rights to all or certain Owners, then upon instruction from such an Owner pursuant to such warrants or other instruments to the Depositary from such Owner to exercise such rights, upon payment by such Owner to the Depositary for the account of such Owner of an amount equal to the purchase price of the Shares to be received upon the exercise of the rights, and upon payment of any other charges as set forth in such warrants or other instruments, the Depositary shall, on behalf of such Owner, exercise the rights and purchase the Shares, and the Issuer shall cause the Shares so purchased to be delivered to the Depositary on behalf of such Owner. As agent for such Owner, the Depositary shall cause the Shares so purchased to be deposited pursuant to Section 2.2 of the Deposit Agreement, and shall, pursuant to Section 2.3 of the Deposit Agreement, execute and deliver Receipts to such Owner. In the case of a distribution pursuant to the second paragraph of this section, such Receipts shall be legended in accordance with applicable U.S. laws, and shall be subject to the appropriate restrictions on sale, deposit, cancelation, and transfer under such laws. If the Depositary determines in its discretion that it is not lawful and feasible to make such rights available to all or certain Owners, it may sell the rights, warrants or other instruments in proportion to the number of Depositary Shares held by the Owners to whom it has determined it may not lawfully or feasibly make such rights available, and allocate the net proceeds of such sales (net of all taxes and governmental charges payable in connection with such rights and subject to the terms and conditions of the Deposit Agreement) for the account of such Owners otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any Receipt or otherwise. The Depositary will not offer rights to Owners unless both the rights and the securities to which such rights relate are either exempt from registration under the Securities Act of 1933 with respect to a distribution to 15 Owners or are registered under the provisions of such Act. If an Owner of Receipts requests distribution of warrants or other instruments, notwithstanding that there has been no such registration under such Act, the Depositary shall not effect such distribution unless it has received an opinion from recognized counsel in the United States for the Issuer upon which the Depositary may rely that such distribution to such Owner is exempt from such registration. The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make such rights available to Owners in general or any Owner in particular. 15. RECORD DATES. Whenever any cash dividend or other cash distribution or any dividend to be paid by the Issuer in shares of Common Stock shall become payable or any distribution other than cash shall be made, or whenever rights, preferences or privileges shall be offered or issued with respect to the Deposited Securities, or whenever for any reason the Depositary causes a change in the number of Shares that are represented by each Depositary Share, or whenever the Depositary shall receive notice of any meeting at which holders of Shares are entitled to vote or of which holders of Shares are entitled to notice, the Depositary shall fix a record date (which shall be the same date as the record date fixed by the Issuer in respect of the Shares) (i) for the determination of the Owners who shall be (a) entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof or (b) entitled to give instructions for the exercise of voting rights at any such meeting, or (ii) on or after which each Depositary Share will represent the changed number of Shares. 16. VOTING OF DEPOSITED SECURITIES. Upon receipt of notice of any meeting at which the holders of Shares are entitled to vote, the Depositary shall, as soon as practicable thereafter, mail to the Owners a notice, which shall be provided by the Issuer and which shall contain (i) such information as is contained in such notice of meeting, and (ii) a statement that the Owners as of the close of business on a specified record date fixed by the Depositary pursuant to the Deposit Agreement shall be entitled, subject to any applicable provision of law, the 16 Restated Certificate of Incorporation or the by-laws of the Issuer, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Shares or other Deposited Securities represented by their respective Depositary Shares and (iii) a statement as to the manner in which such instructions may be given. Upon the written request of an Owner on such record date, the Depositary shall endeavor, in so far as practicable, to vote or cause to be voted the amount of Shares or other Deposited Securities represented by the Depositary Shares evidenced by such Receipt in accordance with the instructions set forth in such request. The Issuer hereby agrees to take all reasonable action that may be deemed necessary by the Depositary in order to enable the Depositary to vote such Shares or cause such Shares to be voted. In the absence of specific instructions from the Owner of a Receipt, the Depositary will abstain from voting to the extent of the Shares represented by the Depositary Shares evidenced by such Receipt. 17. CHANGES AFFECTING DEPOSITED SECURITIES. In circumstances where the provisions of Section 4.3 of the Deposit Agreement do not apply, upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the Issuer or to which it is a party, any securities which shall be received by the Depositary in exchange for or in conversion of or in respect of Deposited Securities, shall be treated as new Deposited Securities under the Deposit Agreement, and Depositary Shares evidenced by Receipts then outstanding shall thenceforth represent the proportionate interest of Owners thereof in the new Deposited Securities so received in exchange or conversion, unless additional Receipts are delivered pursuant to the following sentence. In any such case the Depositary may, and shall if the Issuer shall so request, execute and deliver additional Receipts as in the case of a dividend in Shares, or call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing such new Deposited Securities. 18. FRACTIONAL SHARES. No fractional shares of Common Stock will be delivered by the Issuer or the Depositary, as applicable, to the Owners of Receipts upon mandatory or optional conversion into shares of Common Stock. 17 In lieu of any fractional share otherwise deliverable in respect of the aggregate number of Depositary Shares evidenced by a Receipt or Receipts of any Owner that are converted upon mandatory conversion, such Owner shall be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock as of the fifth Trading Day immediately preceding the Mandatory Conversion Date. In lieu of any fractional share otherwise deliverable in respect of the aggregate number of Shares represented by Depositary Shares evidenced by a Receipt or Receipts of any Owner that are converted upon any optional conversion, such Owner shall be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock as of the second Trading Day immediately preceding the effective date of conversion. If a Receipt or Receipts evidencing more than one Depositary Share are surrendered for conversion at one time by or for the same Owner, the number of shares of Common Stock and the amount of cash in lieu of fractional shares deliverable upon conversion shall be computed on the basis of the aggregate number of Depositary Shares evidenced by the Receipt or Receipts so surrendered. No fractional shares of Common Stock will be delivered by the Depositary to persons who were Owners on the related record date for a dividend on the Shares in connection with the Depositary's distribution of a dividend on the Shares paid by the Issuer to it in shares of Common Stock. In lieu of any fractional share otherwise so deliverable, such Owners shall be entitled to receive an amount in cash equal to the same fraction of the Closing Price of the Common Stock determined as of the fifth Trading Day immediately preceding the dividend payment date. On the Mandatory Conversion Date, the fractional share of Common Stock that any Owner would otherwise be entitled to receive shall be determined by adding all the fractional shares such Owner would be entitled to receive (i) on the mandatory conversion of all Depositary Shares evidenced by Receipts held by such Owner and (ii) on the payment of the regular quarterly dividend on all Depositary Shares evidenced by Receipts held by such Owner at the related record date. On the Mandatory Conversion Date, the Issuer may, at its option, deliver any whole number of shares of Common Stock resulting from the addition of fractional shares resulting from (i) and (ii) above in shares of Common Stock and any remaining fractional shares in cash. 18 In the event that (i) mandatory conversion of the Depositary Shares, (ii) voluntary conversions of the Shares represented by the Depositary Shares, (iii) the Depositary's delivery of shares of Common Stock as dividends on the Depositary Shares to persons who were Owners of the Receipts evidencing such Depositary Shares on the related record date for such dividend, (iv) the combination of (i) and (iii) pursuant to the preceding paragraph or (v) some combination of the foregoing result any Owner of Receipts evidencing Depositary Shares being entitled to cash in lieu of a fractional share on the same date, the Issuer will deliver (either directly or through the Depositary, as applicable) to all such Owners cash in an amount equal to the total amount of cash to which all such Owners of Receipts are entitled in lieu of fractional shares on such date. If payment in cash in lieu of fractional shares of Common Stock in accordance with the preceding six paragraphs would result in the Issuer's failure to be in compliance with any debt instrument to which it is a party, the Issuer shall be entitled to deliver (either directly or through the Depositary, as applicable) a whole share of Common Stock in lieu of cash to Owners entitled to fractional shares of Common Stock (beginning with the Owners entitled to the largest fractional shares) until delivery of cash in lieu of fractional shares of Common Stock to the remaining Owners would no longer result in the Issuer's failure to be in compliance with such debt instrument. 19. LIABILITY OF ISSUER AND DEPOSITARY. Neither the Depositary nor Issuer shall incur any liability to any Owner or holder of any Receipt, if by reason of any provision of any present or future law or regulation of the United States or of any governmental or regulatory authority or stock exchange, or by reason of any provision, present or future, of the Restated Certificate of Incorporation or by-laws of the Issuer, or by reason of any act of God or war or other circumstances beyond its control, the Depositary or Issuer shall be prevented or forbidden from, or be subject to any civil or criminal penalty on account of, doing or performing any act or thing which by the terms of the Deposit Agreement it is provided shall be done or performed; nor shall the Depositary or Issuer incur any liability to any Owner or holder of a Receipt by reason of any non-performance or delay, caused as aforesaid, in the 19 performance of any act or thing which by the terms of the Deposit Agreement it is provided shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. Where, by the terms of a distribution pursuant to Sections 4.1, 4.3 or 4.4 of the Deposit Agreement, or an offering or distribution pursuant to Section 4.5 of the Deposit Agreement, or for any other reason, such distribution or offering may not be made available to Owners of Receipts, and the Depositary may not dispose of such distribution or offering on behalf of such Owners and make the net proceeds available to such Owners, then the Depositary shall not make such distribution or offering, and shall allow any rights, if applicable, to lapse. Neither Issuer nor the Depositary assumes any obligation or shall be subject to any liability under the Deposit Agreement to Owners or holders of Receipts, except that they agree to perform their obligations specifically set forth in the Deposit Agreement without negligence or bad faith. The Depositary shall not be subject to any liability with respect to the validity or worth of the Deposited Securities. Neither the Depositary nor Issuer shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect to the Receipts, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability shall be furnished as often as may be required. Neither the Depositary nor Issuer shall be liable for any action or nonaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or any other person believed by it in good faith to be competent to give such advice or information. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. The Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or nonaction is in good faith. The Issuer agrees to indemnify the Depositary, its directors, 20 employees, agents and affiliates, and hold each of them harmless from, any liability or expense (including, but not limited to, the fees and expenses of counsel) which may arise out of acts performed or omitted, in accordance with the provisions of the Deposit Agreement and of the Receipts, as the same may be amended, modified or supplemented from time to time, (i) by either the Depositary or its directors, employees, agents and affiliates, except for any liability or expense arising out of the negligence or bad faith of either of them, or (ii) by the Issuer or any of its directors, employees, agents and affiliates. No disclaimer of liability under the Securities Act of 1933 is intended by any provision of the Deposit Agreement. 20. RESIGNATION AND REMOVAL OF THE DEPOSITARY. The Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of its election so to do delivered to the Issuer, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may at any time be removed by Issuer by written notice of such removal, effective upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. 21 21. AMENDMENT. The form of the Receipts and any provision of the Deposit Agreement may at any time and from time to time be amended by agreement between the Issuer and the Depositary in any respect that they may deem necessary or desirable. Any amendment that shall impose any fees, taxes or charges (other than taxes and other governmental charges, fees and expenses provided for in the Deposit Agreement or in the Receipts), or that shall otherwise prejudice any substantial existing right of Owners of Receipts, shall not become effective as to outstanding Receipts until the expiration of 90 days after notice of such amendment shall have been given to the Owners of outstanding Receipts. Every Owner of an outstanding Receipt at the time any such amendment becomes effective shall be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right, subject to the provisions of the Deposit Agreement, of any Owner to surrender any Receipt or Receipts evidencing Depositary Shares representing Shares with instructions to the Depositary or an applicable agent of the Depositary to deliver to the Owner such Shares or to cause the conversion of such Shares into Common Stock and cash for fractional shares of Common Stock and, in each case, all securities and other property, if any, represented thereby, except in order to comply with mandatory provisions of applicable law. 22. TERMINATION OF DEPOSIT AGREEMENT. The Deposit Agreement shall terminate at the close of business on the Madatory Conversion Date upon distribution by the Depositary to each Owner entitled thereto of (i) shares of Common Stock and cash (whether in lieu of fractional shares or otherwise) received by the Depositary from the Issuer for madatory conversion of, and/or dividend payments on, the Deposiatary Shares evidenced by the Receipt or Receipts held by such Owner, and (ii) all other securities, property and cash then held by the Depositary hereunder. On and after the date of termination, the Owner of a Receipt will, upon surrender of such Receipt at the Corporate Trust Office of the Depositary and payment of any applicable taxes or governmental charges, be entitled to delivery, to him or upon his order, of the amount of Deposited Securities represented by the Depositary Shares evidenced by such Receipt. If any Receipts shall remain outstanding after the date of termination, the Depositary thereafter shall discontinue the registration of transfers of Receipts, shall suspend the distribution of dividends to the Owners thereof, and shall not give any further notices or perform any further acts under the Deposit Agreement, except that the Depositary shall continue 22 to collect dividends and other distributions pertaining to Deposited Securities, shall sell rights as provided in the Deposit Agreement, and shall continue to deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for Receipts surrendered to the Depositary (after deducting, in each case, any applicable taxes or governmental charges). At any time after the expiration of one year from the date of termination, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it under the Deposit Agreement, unsegregated and without liability for interest, for the pro rata benefit of the Owners of Receipts which have not theretofore been surrendered, such Owners thereupon becoming general creditors of the Depositary with respect to such net proceeds. After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement, except to account for such net proceeds and other cash (after deducting, in each case, any applicable taxes or governmental charges). Upon the termination of the Deposit Agreement, the Issuer shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary under Sections 5.6 and 5.7 of the Deposit Agreement. 23 EX-5 15 OPINION OF BAER, MARKS EXHIBIT 5 March 24, 1998 Premier Parks Inc. 122 East 42nd Street New York, New York 10168 Re: Registration Statement on Form S-3 ------------------------------------------------------------- (File No. 333-45859) Gentlemen: We have acted as your counsel in connection with the filing of a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission, relating to the registration under the Securities Act of 1933, as amended (the "Securities Act") of (i) 13,000,000 shares of common stock, par value $.05 per share (the "Common Stock"), of Premier Parks Inc. (the "Company"); (ii) up to 1,950,000 additional shares of Common Stock which may be sold to the Underwriters pursuant to thirty (30) day over-allotment options; (iii) 5,000,000 Premium Income Equity Securities ("PInESp") consisting of depositary shares, each representing one five-hundredth of a share of Mandatorily Convertible Preferred Stock and (iv) up to 750,000 additional PInES which may be sold to the Underwriters pursuant to a thirty (30) day over-allotment option. Capitalized terms used herein but not otherwise defined shall have the respective meanings set forth in the Registration Statement. In connection with the foregoing, we have examined copies of the Company's Certificate of Incorporation and By-laws, each as amended through the date hereof, the minutes of unanimous written consents of the Board of Directors and shareholders of the Company and originals or copies, satisfactory to us, of all such corporate records, agreements, certificates and other documents of the Company as we have deemed relevant and necessary as a basis for the opinion hereinafter expressed. In such examination, we have assumed the genuineness of all signatures, the authenticity and accuracy of all documents submitted to us as copies. As to questions of fact material to such opinion, we have relied upon certificates of public officials and certificates of officers or other representatives of the Company. Based upon the foregoing and subject to the qualifications and limitations stated herein, we are of the opinion that (a) the Company is a validly existing corporation under the laws of the State of Delaware and (b) the Common Stock, the PInES and the Mandatorily Convertible Preferred Stock represented by such PInES, when sold to the Underwriters in accordance with the terms and conditions of the Underwriting Agreement, will be validly issued, fully paid and non-assessable. We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the use of our name under the caption "Legal Matters" in the Prospectus forming a part of the Registration Statement. In giving such consent, we do not thereby concede that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations promulgated thereunder, or that we are "experts" within the meanings of the Securities Act or the rules and regulations promulgated thereunder. Very truly yours, EX-23.(B) 16 CONSENT OF KPMG PEAT MARWICK EXHIBIT 23(B) INDEPENDENT AUDITORS' CONSENT The Board of Directors Premier Parks Inc.: We consent to the use of our report included herein and to the reference to our firm under the heading "Experts" in the Prospectus. KPMG Peat Marwick LLP Oklahoma City, Oklahoma March 23, 1998 EX-23.(C) 17 CONSENT OF ERNST & YOUNG EXHIBIT 23(C) CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated February 14, 1998, with respect to the financial statements of Six Flags Entertainment Corporation included in the Registration Statement (Amendment No. 2 to Form S-3, No. 333-45859) and related Prospectus of Premier Parks Inc. Ernst & Young LLP New York, New York March 23, 1998 EX-23.(E) 18 CONSENT OF CARPENTER, MOUNTJOY EXHIBIT 23(E) INDEPENDENT AUDITORS' CONSENT The Board of Directors Kentucky Kingdom, Inc. We consent to the incorporation by reference in the registration statement on Form S-3 of Premier Parks, Inc. of our report dated December 12, 1997, except as to Note K which is as of March 4, 1998, relating to the balance sheet of Kentucky Kingdom as of November 2, 1997, and the related statements of income, changes in stockholders equity and cash flows for the year then ended, which report appears in the amended report on Form 8-K/A of Premier Parks, Inc. and to the reference to our firm under the heading "Experts" in the Prospectus. Carpenter, Mountjoy & Bressler, PSC Louisville, Kentucky March 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----