-----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,
IJjMaM7aY4kmBrFX4DfwXVnxeCrvtRNB7uDuAJJMTY/4Bp7uic0yf3JYotBeZKId
264T2buV9SaygpnVyk+ZIw==
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 30, 2006 CEDAR FAIR, L.P. (Exact name of Registrant as specified in its charter) DELAWARE 1-9444 34-1560655 (State or other jurisdiction (Commission (I.R.S. Employer
of incorporation)
File No.)
Identification No.)
One Cedar Point Drive, Sandusky, Ohio |
44870-5259 |
(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code: (419) 626-0830
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On June 30, 2006, in connection with Cedar Fair, L.P.'s acquisition of five amusement parks previously owned indirectly by CBS Corporation as disclosed in Item 2.01 below, Cedar Fair, L.P. entered into a new $1,895 million bridge credit agreement with Bear Stearns Corporate Lending Inc., as Syndication Agent and Administrative Agent; Wachovia Bank, National Association, as Documentation Agent; and KeyBank National Association, as Collateral Agent (the "Bridge Agreement"). Cedar Fair, L.P. entered into the Bridge Agreement as a form of temporary financing to complete the acquisition and provide an interim source of working capital and with the intention of entering into longer-term financing arrangements as soon as possible. The term of the Bridge Agreement is through August 31, 2006, and Cedar Fair, L.P. intends to enter into an amended and restated credit agreement or similar financing arrangement with the parties set forth above and other financial institutions to provide longer-term financi ng prior to the termination of the Bridge Agreement. Proceeds from the loans were used to fund the acquisition referred to in Item 2.01, below, to pay the fees and expenses related thereto, to refinance the debt referred to in Item 1.02, below, and for general corporate purposes.
The credit facilities provided under the Bridge Agreement consist of a term loan in the amount of $1,745 million and commitments to make revolving loans of up to $150 million, each bearing interest at either a rate based on the London interbank offered rate plus 2.50% or a rate based on the prime rate announced from time to time by The Bank of New York plus 1.50%. The Bridge Agreement provides for interest-only payments during its term, with all principal and accrued interest due on August 31, 2006. The Bridge Agreement also provides for the issuance of documentary and standby letters of credit in an amount not to exceed $15 million at any time.
The Bridge Agreement and certain interest rate hedge obligations of Cedar Fair, L.P. are guaranteed by each of the subsidiaries of Cedar Fair, L.P. and is secured by a lien and security interest in all of the real and personal property of Cedar Fair, L.P. and each subsidiary, including a pledge of 100% of the stock of existing subsidiaries of Cedar Fair, L.P.
The Bridge Agreement contains certain customary representations and warranties and certain affirmative and negative covenants, including, among others, covenants with respect to the furnishing of financial statements, certificates and other information, the maintenance of entity existence, property and insurance, and limitations on indebtedness, liens, investments and fundamental changes. Financial covenants include a maximum consolidated leverage ratio of 6.75 to 1.00 and a minimum consolidated fixed charge coverage ratio of 1.05 to 1.00. Cedar Fair, L.P. and its subsidiaries are restricted from declaring or paying any dividends or distributions (other than dividends or distributions to Cedar Fair, L.P. or another subsidiary of Cedar Fair, L.P.) in excess of $26 million during the term of the Bridge Agreement. Cedar Fair, L.P. and its subsidiaries are also restricted from making or committing to capital expenditures in excess of $30 million in the aggregate during the term of the Bridge Agreement. < /P>
The Bridge Agreement provides for customary events of default with corresponding grace periods, including, among other things, failure to pay any principal or interest when due, failure to pay material indebtedness or the acceleration thereof, failure to comply with covenants, certain insolvency or receivership events affecting Cedar Fair, L.P. or its subsidiaries, failure in any material respect of any representation or warranty to be true when made or deemed made and the failure of the guarantee of any subsidiary to be in full force and effect. In the event of a default, the requisite number of lenders (or the Administrative Agent at their request) may declare all amounts owed under the Bridge Agreement immediately due and payable, terminate the lenders commitments to make loans under the Bridge Agreement, and/or exercise any and all remedies and other rights under the Bridge Agreement.
Certain of the lenders party to the Bridge Agreement, as well as certain of their respective affiliates, have performed, and may in the future perform, for Cedar Fair, L.P. and its subsidiaries, various commercial banking, investment banking, underwriting and other financial advisory services, for which they have received, and will receive, customary fees and expenses.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
On June 30, 2006, as part of entering into the new Agreement described in Item 1.01, above,
(a) Cedar Fair, L.P. terminated its Private Shelf Agreement dated as of August 24, 1994 and prepaid its $10 million 8.43% Senior Notes, Series A, due August 24, 2006;
(b) Cedar Fair, L.P., Cedar Fair, Magnum Management Corporation ("Magnum"), and Knott's Berry Farm terminated the Note Purchase Agreement dated as of February 8, 2002 and prepaid (i) $20 million 5.66% Senior Notes, Series D, due February 8, 2007, (ii) $20 million 6.56% Senior Notes, Series E, due February 8, 2012, (iii) $20 million 6.61% Senior Notes, Series F, due February 8, 2013, (iv) $20 million 6.66% Senior Notes, Series G, due February 8, 2014, and (v) $20 million 6.71% Senior Notes, Series H, due February 8, 2015;
(c) Cedar Fair, L.P., Cedar Fair, Magnum, and Knott's Berry Farm terminated the Note Purchase Agreement dated as of December 22, 2003 and prepaid (i) $20 million 4.62% Senior Notes, Series I, due December 22, 2009, (ii) $20 million 4.90% Senior Notes, Series J, due December 22, 2010, (iii) $20 million 5.71% Senior Notes, Series K, due December 22, 2016, (iv) $20 million 5.81% Senior Notes, Series L, due December 22, 2017, and (v) $20 million 5.86% Senior Notes, Series M, due December 22, 2018;
(d) Cedar Fair, L.P. and Knott's Berry Farm terminated the Amended and Restated Note Purchase and Private Shelf Agreement dated as of April 7, 2004 and prepaid (i) $50 million 6.68% Senior Notes, Series B, due August 24, 2011, (ii) $30 million 6.40% Senior Notes, Series C, due August 24, 2008, and (iii) $75 million 4.72% Senior Notes; and
(e) Cedar Fair, L.P., Cedar Fair, Magnum, and Knott's Berry Farm terminated the $250 million Credit Agreement dated as of March 14, 2006 with the financial institutions named therein, as Banks, and KeyBank National Association as Lead Arranger and Administrative Agent which was set to expire in March 2011. Letters of credit that were issued and outstanding under the Credit Agreement were deemed to have been issued under the Agreement described in Item 1.01, above.
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On June 30, 2006, Cedar Fair, L.P. completed the acquisition of all of the outstanding shares of capital stock of Paramount Parks Inc. from an indirect subsidiary of CBS Corporation. Upon closing of the transaction, Cedar Fair acquired, indirectly through Magnum, its wholly owned subsidiary, the following amusement parks: Canada's Wonderland near Toronto, Canada; Kings Island near Cincinnati, Ohio; Kings Dominion near Richmond, Virginia; Carowinds near Charlotte, North Carolina; and Great America located in Santa Clara, California. Cedar Fair, L.P. funded the aggregate purchase price of $1,243 million, (subject to certain post closing adjustments) with portions of the term loan and the revolving loan set forth in Item 1.01 above.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
The financial statements required by this Item 9.01 will be filed as an amendment to this Form 8-K not later than 71 calendar days after the deadline for filing this Report.
(b) Pro Forma Financial Information.
The pro forma financial information required by this Item 9.01 will be filed as an amendment to this Form 8-K not later than 71 calendar days after the deadline for filing this Report.
(d) Exhibits.
Exhibit No. |
Description |
2.1 |
Purchase Agreement among Bombay Hook LLC, CBS Corporation (solely for purposes of Section 11.12) and Cedar Fair, L.P. dated as of May 22, 2006 (the "Purchase Agreement"). |
2.2 |
Amendment No. 1 to the Purchase Agreement among Bombay Hook LLC, CBS Corporation and Cedar Fair, L.P. dated as of June 30, 2006. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CEDAR FAIR, L.P.
By: Cedar Fair Management, Inc., General Partner
By: |
/s/ Peter J. Crage |
Peter J. Crage |
Date: July 7, 2006
Exhibit Index
Exhibit No. |
Description |
2.1 |
Purchase Agreement among Bombay Hook LLC, CBS Corporation (solely for purposes of Section 11.12) and Cedar Fair, L.P. dated as of May 22, 2006 (the "Purchase Agreement"). |
2.2 |
Amendment No. 1 to the Purchase Agreement among Bombay Hook LLC, CBS Corporation and Cedar Fair, L.P. dated as of June 30, 2006. |
PURCHASE AGREEMENT
among
BOMBAY HOOK LLC,
CBS CORPORATION (solely for purposes of Section 11.12)
and
CEDAR FAIR, L.P.
Dated as of May 22, 2006
SECTION 1.1. Certain Defined Terms *
SECTION 1.2. Other Defined Terms *
ARTICLE II PURCHASE AND SALE *
SECTION 2.1. Purchase and Sale. *
SECTION 2.2. Estimated Working Capital; Payment of Estimated Purchase Price *
SECTION 2.3. Purchase Price Adjustment *
SECTION 2.4. Closing *
SECTION 2.5. Closing Deliveries by Seller *
SECTION 2.6. Closing Deliveries by Parent and Purchaser *
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER *
SECTION 3.1. Organization *
SECTION 3.2. Authority; Enforceability *
SECTION 3.3. Non-Contravention *
SECTION 3.4. Governmental Consents *
SECTION 3.5. Capitalization of the Companies *
SECTION 3.6. Company Subsidiaries *
SECTION 3.7. Financial Information. *
SECTION 3.8. No Undisclosed Liabilities *
SECTION 3.9. Absence of Certain Changes or Events *
SECTION 3.10. Contracts. *
SECTION 3.11. Compliance with Law *
SECTION 3.12. Litigation *
SECTION 3.13. Employee Compensation and Benefit Plans; ERISA. *
SECTION 3.14. Labor Matters *
SECTION 3.15. Properties *
SECTION 3.16. Intellectual Property *
SECTION 3.17. Environmental Laws. *
SECTION 3.18. Taxes *
SECTION 3.19. Insurance *
SECTION 3.20. Affiliate Agreements *
SECTION 3.21. Sufficiency of Assets; Newco *
SECTION 3.22. Brokers *
SECTION 3.23. No Other Representations or Warranties *
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER *
SECTION 4.1. Organization *
SECTION 4.2. Authority; Enforceability *
SECTION 4.3. Non-Contravention *
SECTION 4.4. Governmental Consents *
SECTION 4.5. Purchase for Investment *
SECTION 4.6. Financing *
SECTION 4.7. Brokers *
SECTION 4.8. Prohibited Transactions *
ARTICLE V ADDITIONAL AGREEMENTS *
SECTION 5.1. Conduct of Business Prior to the Closing *
SECTION 5.2. Access to Information *
SECTION 5.3. Further Action; Reasonable Best Efforts *
SECTION 5.4. Resignations *
SECTION 5.5. Directors' and Officers' Indemnification and Insurance. *
SECTION 5.6. Books and Records *
SECTION 5.7. Public Announcements *
SECTION 5.8. Permitted Reorganization *
SECTION 5.9. Collective Bargaining Agreement Arrangements *
SECTION 5.10. Further Assurances *
SECTION 5.11. Letters of Credit *
SECTION 5.12. Insurance *
SECTION 5.13. Termination of Affiliate Relations *
SECTION 5.14. Updated Title Commitment *
SECTION 5.15. Noncompetition; Nonsolicitation of Senior Employees *
SECTION 5.16. No Solicitation or Negotiation *
ARTICLE VI EMPLOYEE MATTERS *
SECTION 6.1. Employee Matters *
ARTICLE VII TAX MATTERS *
SECTION 7.1. Tax Indemnities *
SECTION 7.2. Reimbursement *
SECTION 7.3. Tax Returns *
SECTION 7.4. Contests and Cooperation; Disputes *
SECTION 7.5. Refunds and Tax Benefits *
SECTION 7.6. Transfer Taxes *
SECTION 7.7. Tax Sharing Agreements *
SECTION 7.8. Section 338(h)(10) Election *
SECTION 7.9. Tax Treatment of Indemnity Payments *
ARTICLE VIII CONDITIONS TO CLOSING *
SECTION 8.1. Mutual Conditions to Closing *
SECTION 8.2. Conditions to Obligations of Parent and Purchaser *
SECTION 8.3. Conditions to Obligations of Seller *
ARTICLE IX INDEMNIFICATION *
SECTION 9.1. Survival of Representations, Warranties and Covenants *
SECTION 9.2. Indemnification *
SECTION 9.3. Limits on Indemnification *
SECTION 9.4. Computation of Indemnifiable Losses *
SECTION 9.5. Access *
SECTION 9.6. Mitigation of Damages *
SECTION 9.7. Indemnification as Exclusive Remedy *
ARTICLE X TERMINATION, AMENDMENT AND WAIVER *
SECTION 10.1. Termination *
SECTION 10.2. Effect of Termination *
SECTION 10.3. Expenses *
SECTION 10.4. Amendment *
SECTION 10.5. Waiver *
ARTICLE XI GENERAL PROVISIONS *
SECTION 11.1. Materiality; Seller Disclosure Letter *
SECTION 11.2. Notices *
SECTION 11.3. Severability *
SECTION 11.4. Entire Agreement *
SECTION 11.5. Assignment *
SECTION 11.6. No Third Party Beneficiaries *
SECTION 11.7. Governing Law *
SECTION 11.8. Specific Performance; Jurisdiction *
SECTION 11.9. Counterparts *
SECTION 11.10. Interpretation *
SECTION 11.11. Parent Guarantee *
SECTION 11.12. CBS Guarantee *
SCHEDULE I Adjusted Working Capital Amount
SCHEDULE II Knowledge
SCHEDULE III Permitted Reorganization
SCHEDULE IV Seller Disclosure Letter
PURCHASE AGREEMENT, dated as of May 22, 2006 (this "Agreement"), among Bombay Hook LLC, a Delaware limited liability company ("Seller"), CBS Corporation, a Delaware corporation ("CBS"), and Cedar Fair, L.P., a Delaware limited partnership ("Parent").
RECITALS
A. Seller owns 100 shares of the common stock, no par value (the "Paramount Parks Common Stock"), of Paramount Parks Inc., a Delaware corporation ("Paramount Parks"), representing 100% of the outstanding shares of capital stock of Paramount Parks (the "Paramount Parks Shares");
B. On or prior to the Closing, CBS shall consummate a Permitted Reorganization (as defined below), pursuant to which Paramount Parks will own, among other matters, 100% of the outstanding shares of capital stock of Kings Island Company, a Delaware corporation ("Kings Island" and, together with Paramount Parks, the "Companies"), and (indirectly, through a newly-formed wholly owned Nova Scotia unlimited liability company ("Holdco"), and a newly-formed corporation ("Interco")) 100% of the issued and outstanding shares of a newly-formed Nova Scotia unlimited liability company, including its predecessors, where applicable ("Newco"), that will own the assets and liabilities primarily related to the Canadian theme park division (the "Canadian Parks Business") of CBS Canada Holdings Inc., a Canadian Federal corporation ("CBS Canada"); and
C. Seller desires to sell, and Purchaser desires to purchase from Seller, the Paramount Parks Shares, pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual terms, conditions and agreements set forth herein, the parties hereto hereby agree as follows:
. As used in this Agreement, the following terms have the following meanings:
"Action" means any action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.
"Adjusted December 31 Working Capital Amount" means the Adjusted Working Capital Amount based on the Balance Sheet as of the Balance Sheet Date, as more precisely set forth on Schedule I.
"Adjusted Working Capital Amount" means Scheduled Assets minus Scheduled Liabilities.
"Affiliate" means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided that with respect to CBS, Seller, the Company Subsidiaries, Newco, Holdco, Interco or CBS Canada, "Affiliate" means any other person that directly, or indirectly through one or more intermediaries, is controlled by CBS.
"Applicable Rate" means LIBOR plus fifty (50) basis points per annum.
"Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.
"Cash and Cash Equivalents" means cash, cash equivalents (including marketable securities and short term investments) and liquid investments (plus all deposits in transit and less all outstanding checks, in each case, as of the Closing Date).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Subsidiaries" means Western Row Properties, Inc. an Ohio corporation, and Paramount Parks Experience, Inc., a Nevada corporation.
"Competition Act" means the Competition Act, R.S.C. 1985, c. C-34, as amended, and the regulations promulgated thereunder.
"Confidentiality Agreement" means the confidentiality agreement dated as of March 1, 2006, between Cedar Fair, L.P. and CBS Corporation.
"Control" (including the terms "controlled by" and "under common control with"), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, including, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
"Encumbrance" means any security interest, pledge, mortgage, lien, charge, option to purchase or lease or otherwise acquire any interest, conditional sales agreement, restriction, covenant, easement, right of way, title defect, adverse claim of ownership or use, or other encumbrance of any kind other than those arising by reason of restrictions on transfers under federal, state and foreign securities laws.
"ERISA" means the United States Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means any trade or business, whether or not incorporated, that together with the Companies would be deemed to be a single employer for purposes of Section 4001 of ERISA.
"Exchange Act" means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"GAAP" means United States generally accepted accounting principles and practices as in effect from time to time.
"Governmental Authority" means any United States or Canadian federal, state, provincial, municipal or local or any other foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
"Great America Real Property" shall mean that certain Leased Real Property referred to on Section 3.15(b) of the Seller Disclosure Letter as "Great America".
"HSR Act" means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Improvements" means, with respect to any Real Property, all buildings, fixtures, improvements and facilities located on or attached to such Real Property owned or leased by the Companies, the Company Subsidiaries or CBS Canada (as applicable) and used in, on or at such Real Property.
"Indebtedness" means, with respect to any Person, (i) indebtedness of such Person for borrowed money, (ii) other indebtedness of such Person evidenced by notes, bonds, debentures or similar instruments (including payment or performance bonds), (iii) capitalized leases or other long-term obligations classified as indebtedness of such Person under GAAP, consistent with classifications in the Balance Sheet, (iv) indebtedness evidenced by letters of credit or bank acceptances, (v) deferred purchase price obligations, (vi) any obligation secured by an Encumbrance against any of the assets of the Companies, Company Subsidiaries or Canadian Parks Business, (vii) interest rate protection agreements, foreign currency exchange agreements or other interest rate or exchange rate hedging arrangements, (viii) any interest, prepayment penalties or fees, any premiums, any breakage amounts or any other amounts payable in connection with the foregoing and (ix) any guarantee of any of the Indebtedness of an y other Person (provided that, Indebtedness for purposes of Section 2.1(ii), 2.2 and 2.3 and the calculation of the Closing Debt shall only include the foregoing items (i), (ii) and (iii) and provided, further, that Indebtedness shall not include any other Liability set forth on the Balance Sheet or the Closing Balance Sheet that Seller or its Affiliates (other than the Companies, the Company Subsidiaries, Holdco, Newco and Interco) has assumed or agreed to retain in accordance with this Agreement and the transactions contemplated hereby).
"Intellectual Property" means all intellectual property and intellectual property rights, whether protected, created or arising under the laws of the United States or Canada, including (i) patents, inventions, technology, discoveries, processes, industrial designs, techniques and know-how; (ii) all works of authorship, including copyrights and copyrightable works (including software, source code, object code, databases and related items, Internet site content, graphics, photography, textual works, rights in characters, audiovisual works, musical compositions, sound recordings, and protected elements of pictorial, graphic and sculptural works); (iii) trademarks, service marks, trade names, corporate names, brand names, domain names, logos, slogans, trade dress and other source indicators, and the goodwill of the business appurtenant thereto; (iv) trade secrets, ways of doing business and confidential or proprietary information, and (v) all registrations or applications for registration of any of the foregoing, including all reissues, divisions, continuations and extensions thereof.
"Knowledge" means (i) with respect to Parent or Purchaser, the actual knowledge of the executive officers of Parent or Purchaser, after reasonable inquiry under the circumstances and (ii) with respect to Seller, the actual knowledge of the individuals listed on Schedule II hereto, after reasonable inquiry under the circumstances.
"Law" means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code or other requirement of law of a Governmental Authority or any Governmental Order.
"Liabilities" means any and all Indebtedness and other liabilities and obligations (other than with respect to Taxes), whether accrued or fixed, absolute or contingent, matured or unmatured.
"LIBOR" means the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) as the rate for dollar deposits with a 30 day maturity.
"Material Adverse Effect" means any change, circumstance, event or effect that would be materially adverse to the business, financial condition or results of operations of the Companies, the Company Subsidiaries and the Canadian Parks Business taken as a whole, other than any change, circumstance, event or effect resulting from (i) changes in general economic conditions, (ii) the announcement of this Agreement and the transactions contemplated hereby, or the performance of this Agreement and the transactions contemplated hereby (other than the Permitted Reorganization), including compliance with the covenants set forth herein, (iii) general changes or developments in the industries in which the Companies, the Company Subsidiaries and the Canadian Parks Business operate or changes or developments in financial markets or commodity prices, (iv) any actions required under this Agreement to obtain any approval or authorization under applicable antitrust or competition laws for the consummation of the transactions contemplated by this Agreement, (v) changes in any Laws or applicable accounting regulations or principles or (vi) any attack on, or by, outbreak or escalation of hostilities or acts of terrorism involving, the United States or Canada, any declaration of war by the United States or Canada or any other national or international calamity, except, in the case of items (i) - (iii) and (v) above, for changes, circumstances, events or effects that affect the Companies, the Company Subsidiaries and the Canadian Parks Business as a whole in a materially disproportionate manner to other operators in the industries in which the Companies, the Company Subsidiaries and the Canadian Parks Business operate.
"Material Survey Exceptions" means (i) any encroachments, overlaps or boundary line disputes relating to Improvements encroaching onto property not owned by the Companies, the Company Subsidiaries or CBS Canada (as applicable) or (ii) any Encumbrances on the Real Property owned by the Companies, the Company Subsidiaries or CBS Canada and conveyed to Purchaser pursuant to this Agreement, in each case that would be shown by an accurate survey of the Real Property and that require the removal or relocation of all or any material portion of those certain amusement rides and other Improvements identified on Section 1.1 of the Seller Disclosure Letter.
"Permitted Encumbrances" means: (i) liens for Taxes, governmental assessments and governmental charges or levies, in each case not yet due and payable, (ii) Encumbrances imposed by Law, (iii) pledges or deposits made in the ordinary course of business to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations, (iv) mechanics', carriers', construction, workers', repairers' and similar Encumbrances arising or incurred in the ordinary course of business for amounts not yet due or being diligently contested in good faith by appropriate proceedings, (v) zoning, by-laws, entitlement and other land use and environmental regulations by Governmental Authorities, (vi) such other imperfections or irregularities in title, charges, easements, reciprocal easement agreements, covenants, restrictions and other customary encumbrances on title to real property or that are shown on the surveys of the Owned Real Property delivered or made avail able to Parent or any Updated Surveys hereinafter delivered (other than Material Survey Exceptions, which shall not be Permitted Encumbrances); provided, that none of the foregoing, in the aggregate, are material in amount or materially adversely affect the value or continued use of the property to which they relate in the conduct of the business currently conducted thereon, (vii) as to any Leased Real Property, any Encumbrance affecting the interest of the lessor thereof, and (viii) any matters disclosed in title reports delivered or made available to Parent prior to the date of this Agreement (other than Material Survey Exceptions, which shall not be Permitted Encumbrances).
"Permitted Reorganization" means an internal reorganization of assets or Subsidiaries owned by Seller or its Affiliates to be completed on or prior to the Closing Date to effect the transfer of (i) assets or stock of Subsidiaries to the Companies or Seller or an Affiliate of Seller, and (ii) assets from the Companies or CBS Canada to Seller, the Companies or an Affiliate of Seller (other than the Companies), as described on Schedule III.
"Person" means any individual, partnership, firm, corporation, association, trust, unincorporated organization, joint venture, limited liability company or other entity.
"Scheduled Assets" means all "Current Assets" set forth on the Balance Sheet or the Closing Balance Sheet, but excluding (i) "Cash and cash equivalents", (ii) receivables owed to the Companies, the Company Subsidiaries, Holdco, Newco and Interco from Seller or its Affiliates (other than the Companies, the Company Subsidiaries, Holdco, Newco and Interco) that the Companies, the Company Subsidiaries, Holdco or Newco has agreed to cancel in accordance with this Agreement and the transactions contemplated hereby, and (iii) deferred Tax assets included under "Other Current Assets", as more precisely set forth on Schedule I.
"Scheduled Liabilities" means all "Current Liabilities" set forth on the Balance Sheet or the Closing Balance Sheet, but excluding (i) "Deferred tax liabilities", included under "Accrued Expenses and Other Current Liabilities", (ii) Indebtedness (including capitalized lease obligations), included under "Accrued Expenses and Other Current Liabilities", and (iii) any other Liability set forth on the Balance Sheet or the Closing Balance Sheet that Seller or its Affiliates (other than the Companies, the Company Subsidiaries, Holdco, Newco and Interco) has assumed or agreed to retain or cancel in accordance with this Agreement and the transaction contemplated hereby, as more precisely set forth on Schedule I.
"Securities Act" means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Standard Title Exceptions" means the following exceptions customarily contained in ALTA title insurance commitments or title insurance policies, unless removed: (i) rights or claims of parties in possession not shown by the public records; (ii) encroachments, overlaps, boundary line discrepancies and other matters which would be disclosed by an accurate survey and an inspection of the Owned Real Property and the Great America Real Property and (iii) easements or claims of easements not shown by public records.
"Subsidiaries" of a Person means any and all corporations, partnerships, limited liability companies and other entities, whether incorporated or unincorporated, with respect to which such Person or any Subsidiary of such Person, directly or indirectly, owns securities having the power or otherwise has the power to elect at least a majority of the board of directors or similar body governing the affairs of such entity, or the management of which is otherwise controlled, directly or indirectly through one or more subsidiaries or intermediaries, or both, by such person.
"Tax" or "Taxes" means all federal, state, provincial, local, territorial and foreign income, profits, franchise, license, capital, capital gains, transfer, ad valorem, wage, severance, occupation, import, custom, gross receipts, payroll, sales, employment, use, property, real estate, Canada Pension Plan, employer health tax, excise, value added, goods and services, estimated, stamp, alternative or add-on minimum, environmental, withholding and any other taxes, duties, assessments or governmental tax charges of any kind whatsoever, together with all interest, penalties and additions imposed with respect to such amounts.
"Tax Act" means the Income Tax Act (Canada), as amended.
"Tax Authority" and "Taxing Authority" means any domestic, foreign, federal, national, state, provincial, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.
"Tax Return" or "Tax Returns" means all returns, declarations, reports, claims for refund or information returns or statements relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof filed or to be filed with any Tax Authority in connection with the determination, assessment or collection of Taxes.
"Title Companies" means with respect to the Great America Real Property and the Owned Real Property located in the United States, Chicago Title Insurance Company.
"Transfer Taxes" means all sales, value added, goods and services, excise, multi-stage, retail sales, use and land transfer taxes, stamp duties, stamp duty reserve tax, stamp duty land tax and any other similar taxes, duties, assessments or governmental charges, together with all interest, penalties and additions imposed with respect to such amounts.
"Updated Survey" means an update to the existing surveys of the Owned Real Property located in the United States and the Great America Real Property which have been made available to Purchaser, in form and substance sufficient to enable to the Title Companies to delete the standard exception for encroachments, overlaps, boundary line discrepancies and other matters that would be disclosed by an accurate survey or inspection of the Owned Real Property located in the United States and the Great America Real Property.
"Updated Title Commitments" means updates to the title reports or ALTA commitments previously made available to Purchaser for title insurance issued by the Title Companies in respect of the Owned Real Property located in the United States and the Great America Real Property on the Title Companies' most current form together with legible copies of all instruments referred to therein (to the extent located by the Title Companies).
. The following terms have the meanings defined for such terms in the Sections set forth below:
Term Section
Action 1.1
Adjusted December 31 Working Capital Amount 1.1
Adjusted Working Capital Amount 1.1
Affiliate 1.1
Affiliate Agreement 3.20
Affiliate Indebtedness 5.13(a)
Agreement Preamble
Allocation Statement 2.3(a)
Antitrust Law 5.3(b)
Applicable Rate 1.1
Assistance Costs 5.12(a)
Assumed Litigation 9.2(a)(iii)
Balance Sheet 3.7(a)
Balance Sheet Date 3.7(a)
Base Purchase Price 2.1(b)(i)
Benefit Plans 3.13(a)
Bureau 5.3(b)
Business 5.15(a)
Business Day 1.1
Canadian Benefit Plans 6.1(h)
Canadian Business Employees 3.13(a)
Canadian Intellectual Property 3.16(a)
Canadian Parks Business Recitals
Cash and Cash Equivalents 1.1
CBS Preamble
CBS Canada Recitals
CICL Plan 6.1(h)
Claim Notice 9.2(c)
Closing 2.4
Closing Balance Sheet 2.3(a)
Closing Cash 2.1(b)(iii)
Closing Date 2.4
Closing Debt 2.1(b)(ii)
COBRA 6.1(d)
Code 1.1
Collective Bargaining Agreements 3.14
Commissioner 8.1(c)(i)
Companies Recitals
Company Intellectual Property 3.16(a)
Company Plan 3.13(d)
Company Subsidiaries 1.1
Competition Act 1.1
Confidentiality Agreement 1.1
Control 1.1
Covered Dependents 6.1(b)
Covered Employees 6.1(a)
Dispute Notice 9.2(c)
DOJ 5.3(b)
Encumbrance 1.1
Environmental Laws 3.17(c)
Environmental Permits 3.17(c)
ERISA 1.1
ERISA Affiliate 1.1
Estimated Adjustment Report 2.2(a)
Estimated Closing Balance Sheet 2.2(a)
Estimated Purchase Price 2.2(a)
Exchange Act 1.1
Exclusive Period 5.15(a)
Final Adjustment Report 2.3(b)
Final Adjustment Report Date 2.3(b)
Financial Statements 3.7(a)
FTC 5.3(b)
GAAP 1.1
Governmental Authority 1.1
Governmental Order 1.1
Great America Real Property 1.1
Holdco Recitals
HSR Act 1.1
Improvements 1.1
Indebtedness 1.1
Indemnified Director or Officer 5.5(b)
Indemnified Party 9.2(c)
Indemnifying Party 9.2(c)
Insurance Policies 3.19
Intellectual Property 1.1
Interco Recitals
Interim Financial Statements 3.7(a)
Kings Island Recitals
Kings Island Common Stock 3.5
Knowledge 1.1
Law 1.1
Leased Real Property 3.15(b)
Liabilities 1.1
LIBOR 1.1
Loss 9.2(a)
Material Adverse Effect 1.1
Material Contract 3.10(a)
Material Survey Exceptions 1.1
Materials of Environmental Concern 3.17(c)
Newco Recitals
Nonassignable Assets 5.10(b)
Objection Notice 2.3(b)
Owned Real Property 3.15(a)
Paramount Parks Recitals
Paramount Parks Common Stock Recitals
Paramount Parks Shares Recitals
Parent Preamble
Permitted Encumbrances 1.1
Permitted Reorganization 1.1
Person 1.1
Pre-Closing Tax Period 7.1(a)
Preliminary Adjustment Report 2.3(a)
Preliminary Purchase Price 2.3(a)
Purchase Price 2.1(b)(v)
Purchaser 11.5
Purchaser 401(k) Plan 6.1(e)
Purchaser Interim Payment 2.3(c)
Purchaser Pension Plans 6.1(h)(i)
Real Property 3.15(b)
Real Property Lease 3.15(b)
Scheduled Assets 1.1
Scheduled Liabilities 1.1
Section 338(h)(10) Election 7.8
Securities Act 1.1
Seller Preamble
Seller 401(k) Plan 6.1(e)
Seller Disclosure Letter Article III
Seller Interim Payment 2.3(c)
Standard Title Exceptions 1.1
Statutory Plans 3.13(a)
Straddle Period 7.1(a)
Subsidiaries 1.1
Surviving Agreements 5.13(b)
Tax 1.1
Tax Act 1.1
Tax Authority 1.1
Tax Claim 7.4(a)
Tax Dispute 7.4(f)
Tax Return 1.1
Tax Returns 1.1
Taxable Sale 4.8
Taxes 1.1
Taxing Authority 1.1
Termination Date 10.1(c)
Third Party Claims 9.2(d)
Title Companies 1.1
Title Policy 3.15(i)
Transfer Taxes 1.1
Unresolved Objection Purchase Price 2.3(c)
Updated Survey 1.1
Updated Title Commitments 1.1
. No later than five (5) Business Days prior to the Closing Date, Seller shall deliver to Purchaser a combined balance sheet of the Companies, the Company Subsidiaries, Newco, Holdco and Interco (the "Estimated Closing Balance Sheet") as of the close of business on the Closing Date, estimated in good faith. The Estimated Closing Balance Sheet shall (i) be prepared in accordance with GAAP, applied on a basis consistent with prior periods, and as applied to prepare the Balance Sheet, and (ii) include estimated normal fiscal year-end closing adjustments. The Estimated Closing Balance Sheet shall be accompanied by a report (the "Estimated Adjustment Report") setting forth in reasonable detail (i) the estimated Adjusted Working Capital Amount as of the close of business on the Closing Date as reflected on the Estimated Closing Balance Sheet, (ii) a statement setting forth in reasonable detail the amount of Closing Debt and Closing Cash and (iii) Seller's good faith cal culation of the Purchase Price based on the estimated amounts set forth in the Estimated Adjustment Report (the "Estimated Purchase Price"), which report shall be certified by a financial officer of Seller.
. Within ninety (90) days after the Closing Date, Purchaser shall furnish to Seller a combined balance sheet of the Companies, the Company Subsidiaries, Newco, Holdco and Interco (the "Closing Balance Sheet") as of the close of business on the Closing Date. The Closing Balance Sheet shall (i) be prepared in accordance with GAAP, applied on a basis consistent with prior periods, and as applied to prepare the Balance Sheet, and (ii) include normal fiscal year-end closing adjustments except that there shall be no requirement for a physical inventory. The Closing Balance Sheet shall be accompanied by a report (the "Preliminary Adjustment Report") setting forth in reasonable detail (x) the Adjusted Working Capital Amount as of the close of business on the Closing Date, (y) a statement setting forth in reasonable detail the amount of Closing Debt and Closing Cash and (z) Purchaser's good faith calculation of the Purchase Price based on the amounts set forth in the Preli minary Adjustment Report (the "Preliminary Purchase Price"), which report shall be certified by a financial officer of Purchaser. Seller and its representatives shall have the right to review and copy the computations and work papers (including accountants' work papers, subject to such confidentiality restrictions as Purchaser's accountants shall reasonably request) and Purchaser's underlying books and records used in connection with Purchaser's determination of the Preliminary Purchase Price , and to have reasonable access to the employees and accountants of Purchaser regarding questions concerning Purchaser's determination of the Preliminary Purchase Price arising in the course of their review thereof. If requested by Purchaser, Seller shall furnish to Purchaser a statement (the "Allocation Statement") setting forth any corporate allocations previously provided by Seller and its Affiliates to the Companies and the Company Subsidiaries for the period from the Balance Shee t Date through the Closing Date and any necessary supporting information reasonably requested.
. Upon the terms and subject to the conditions of this Agreement, the sale and purchase of the Paramount Parks Shares contemplated by this Agreement shall take place at a closing (the "Closing") to be held at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York at 10:00 a.m., New York City time, on the second Business Day following (but not including) the date on which the last of the conditions set forth in Article VIII are satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to fulfillment or waiver of such conditions) or at such other place or at such other time or on such other date as the parties may mutually agree upon in writing (the day on which the Closing takes place being the "Closing Date").
. At the Closing, Seller shall deliver to Parent and Purchaser:
. At the Closing, Parent and Purchaser shall deliver to Seller:
Except as set forth on the disclosure letter delivered by Seller to Parent and Purchaser on or prior to the execution of this Agreement and attached to this Agreement as Schedule IV (the "Seller Disclosure Letter"), Seller hereby represents and warrants to Parent and Purchaser that:
. Each of the Companies and the Company Subsidiaries is duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization, and has the requisite corporate or similar power and authority to own, lease or use its properties and to carry on its business as presently conducted and is duly qualified to do business and is in good standing (where such concept exists) as a foreign corporation in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary. As of the Closing Date, Newco, Holdco and Interco will be duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and will have the requisite corporate or similar power and authority to own, lease or use its properties and (in the case of Newco) to carry on the Canadian Parks Business and will be duly qualified to do business and will be in good standing (where such concept exists) as a foreign corporation in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except where the failure to be so qualified or in good standing would not reasonably be expected to have a Material Adverse Effect. Complete and correct copies of the certificate of incorporation and by-laws (or other comparable governing instrument) of each of the Companies have been, and of Newco, Holdco and Interco will be, made available to Parent.
. CBS has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery by CBS of this Agreement and the performance by CBS of its obligations hereunder have been duly authorized by all necessary corporate action. Seller has all necessary limited liability company power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby have been duly and validly authorized by all necessary limited liability company action on the part of Seller and no other limited liability company proceedings on the part of Seller are necessary pursuant to its limited liability company agreement to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and de livered by CBS and Seller and, assuming due authorization, execution and delivery of this Agreement by Parent and Purchaser, constitutes a legal, valid and binding agreement of CBS and Seller, enforceable against CBS and Seller in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, 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).
. The execution, delivery and performance of this Agreement by CBS and Seller do not and will not (a) conflict with or violate its limited liability company agreement or the certificate of incorporation or by-laws (or other comparable governing instrument) of CBS or the Companies, (b) assuming that all consents, approvals and authorizations contemplated by Section 3.4 have been obtained and all filings described in such Section have been made, conflict with or violate any Law applicable to CBS, Seller, the Companies or any of the Company Subsidiaries, Newco, Holdco or Interco or by which its or any of their respective properties are bound or (c) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other in strument or obligation to which any of the Companies, the Company Subsidiaries, CBS Canada (solely with respect to the Canadian Parks Business), Seller or CBS is a party or by which any of the Companies, the Company Subsidiaries, CBS Canada (solely with respect to the Canadian Parks Business), Seller or CBS or any of their respective properties are bound, except, in the case of clause (c), for any such conflict, violation, breach, default, loss, right or other occurrence which would not (i) prevent or materially delay any of the Companies, Seller or CBS from performing its obligations under this Agreement in any material respect or (ii) reasonably be expected to have a Material Adverse Effect.
. Set forth on Section 3.5 of the Seller Disclosure Letter is the number of authorized, issued and outstanding shares of capital stock of each of the Companies. All of the issued and outstanding Paramount Parks Shares have been validly issued, have not been issued in violation of any preemptive or similar rights, and are fully paid and non-assessable and owned by Seller free and clear of any Encumbrances. All of the issued and outstanding shares of common stock, par value $1.00 per share (the "Kings Island Common Stock"), of Kings Island have been validly issued, have not been issued in violation of any preemptive or similar rights, are fully paid and non-assessable and, as of the date hereof, are owned by French Street Management LLC, a Delaware limited liability company, and Mattalex Corporation, a Delaware corporation, free and clear of any Encumbrances. As of the Closing Date, all of the Kings Island Common Stock will be fully paid and non-assessable and owned by Paramount Par ks free and clear of any Encumbrances. As of the Closing Date, all of the issued and outstanding Newco shares and Holdco shares will be validly issued, will not have been issued in violation of any preemptive or similar rights, and will be fully paid and non-assessable and owned by Paramount Parks (in the case of Interco), Interco (in the case of Holdco) or Holdco (in the case of Newco) free and clear of any Encumbrances. Except as set forth in this Section 3.5, there are no other outstanding shares, options, warrants, calls, rights or commitments or any other agreements of any character relating to dividend rights or to the sale, transfer, issuance or voting of, or the granting of rights to acquire, any equity securities of the Companies, Holdco, Interco or Newco, or any securities or other instruments convertible into, exchangeable for or evidencing the right to purchase any equity securities of the Companies, Holdco, Interco or Newco. The transfer and delivery of the Paramount Parks Shares by Seller to Purchaser as contemplated by this Agreement will transfer good and valid title to the Paramount Parks Shares to Purchaser, free and clear of all Encumbrances, except Encumbrances arising as a result of any action taken by Parent or any of its Affiliates.
. All the outstanding shares of capital stock, partnership interests, limited liability company interests or other equity interests, as applicable, of the Company Subsidiaries are validly issued, fully paid and nonassessable, have not been issued in violation of any preemptive or similar rights, and are owned, directly or indirectly, by the Companies free and clear of any Encumbrances. There are no outstanding options, warrants, calls, rights or commitments or any other agreements of any character relating to the sale, issuance or voting of, or the granting of rights to acquire, any shares of the capital stock, partnership interests, limited liability company interests or other equity interests, as applicable, of any Company Subsidiary, or any securities or other instruments convertible into, exchangeable for or evidencing the right to purchase any shares of capital stock, partnership interests, membership interests or other equity interests, as applicable, of any Company Subsidiary.
. None of the Companies nor any of the Company Subsidiaries has any Liabilities, and there are no Liabilities with respect to the Canadian Parks Business, of a nature required by GAAP to be reflected in a consolidated corporate balance sheet, except Liabilities that are accrued or reserved against in the Financial Statements or are reflected in the notes thereto, that were incurred in the ordinary course of business since the Balance Sheet Date or that would not reasonably be expected to have a Material Adverse Effect.
. Since the Balance Sheet Date, except as contemplated by this Agreement, the business of the Companies and the Company Subsidiaries and the Canadian Parks Business has been conducted in the ordinary course and, since such date, there has not been (a) any change, event or occurrence which has had or would reasonably be expected to have a Material Adverse Effect or (b) any action or event that, if it had occurred after the date of this Agreement, would have required the consent of Parent under Section 5.1.
Each such contract described in clauses (i)-(x) is referred to herein as a "Material Contract".
. None of the Companies nor any of the Company Subsidiaries is in violation of any Law or Governmental Orders, and there are no outstanding violations of Law or Governmental Orders with respect to the Canadian Parks Business, except for any violation or possible violation that would not reasonably be expected to be material to the Companies, the Company Subsidiaries or the Canadian Parks Business, as the case may be. The Companies, the Company Subsidiaries and the Canadian Parks Business have all permits, licenses, authorizations, exemptions, orders, consents, approvals and franchises from Governmental Authorities required to conduct their respective businesses and the Canadian Parks Business as now being conducted, except for any such permit, license, authorization, exemption, order, consent, approval or franchise the absence of or failure to comply with would not reasonably be expected to be material to the Companies, the Company Subsidiaries or the Canadian Parks Business, as t he case may be.
. There are no Actions pending or, to the Knowledge of Seller, threatened against the Companies or any Company Subsidiary, or relating to the Canadian Parks Business, which would reasonably be expected to have a Material Adverse Effect. None of the Companies, any Company Subsidiary or the Canadian Parks Business is a party or subject to or in default under any Governmental Order which would reasonably be expected to have a Material Adverse Effect or subject to any continuing Government Order, settlement agreement or other similar written agreement with, or, to the Knowledge of the Seller, continuing investigation by, any Governmental Authority.
. Except as would not reasonably be expected to have a Material Adverse Effect: (a) to the Knowledge of Seller, no union organizational campaign is in progress with respect to the employees of the Companies or Company Subsidiaries or Canadian Business Employees; (b) there are not now, nor, during the past 12 months, have there been any strikes, works stoppages or slowdowns or other material labor controversies, and, to the Knowledge of Seller, no such controversies are threatened; with respect to the Companies or Company Subsidiaries or Canadian Parks Business; (c) there are no material unfair labor practice charges pending, nor, to the Knowledge of Seller, are any threatened, with respect to the Companies or Company Subsidiaries or the Canadian Parks Business; (d) none of the Companies, any Company Subsidiary or CBS Canada (solely with respect to the Canadian Parks Business) has received notice during the past three years of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an audit or investigation of the Companies or Company Subsidiaries and, to the Knowledge of Seller, no such audit or investigation is in progress; and (e) none of the Companies, any Company Subsidiary or Canadian Parks Business is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to employment practices. Section 3.14 of the Seller Disclosure Letter sets forth a correct and complete list of each contract or collective bargaining agreement with any labor union or similar organization to which any of the Companies, any Company Subsidiary or CBS Canada (solely with respect to the Canadian Parks Business) is a party or by which any of the Companies, any Company Subsidiary or CBS Canada (solely with respect to the Canadian Parks Business) is bound (collectively, the "Collective Bargaining Agreements").
.
. Except as would not reasonably be expected to have a Material Adverse Effect, (i) the Companies and the Company Subsidiaries own or have the right to use, pursuant to a license or otherwise, all Intellectual Property required to operate their respective businesses as currently conducted ("Company Intellectual Property"), free and clear of all Encumbrances, other than Permitted Encumbrances; (ii) as of the date of this Agreement CBS Canada owns, or has the right to use, and at the Closing, Newco will own, or have the right to use, pursuant to a license or otherwise, all Intellectual Property required to operate the Canadian Parks Business as currently conducted (the "Canadian Intellectual Property"), free and clear of all Encumbrances, other than Permitted Encumbrances; (iii) Section 3.16(a)(iii) of the Seller Disclosure Letter is a complete and correct list of all registrations and applications for Company Intellectual Property owned by the Companies or the Compan y Subsidiaries and Canadian Intellectual Property owned by CBS Canada and all of same are unexpired and subsisting and have not been abandoned, cancelled or dedicated to the public; (iv) there are no pending, or to the Knowledge of Seller, threatened Actions against any of the Companies, the Company Subsidiaries or CBS Canada (solely relating to the Canadian Intellectual Property), alleging that the Company Intellectual Property, Canadian Intellectual Property or the operation of their businesses infringes, dilutes, misappropriates or otherwise violates the Intellectual Property of any other Person; (v) there are no Governmental Orders limiting or restricting any of the Companies or the Company Subsidiaries' use of the Company Intellectual Property, or limiting or restricting CBS Canada's use of the Canadian Intellectual Property; (vi) for the two years prior to the date hereof, none of the Companies, any Company Subsidiary or CBS Canada (solely with respect to the Canadian Intellectual Property) has receive d any written notice of any claims alleging that the Company Intellectual Property or Canadian Intellectual Property is invalid or that the use thereof or the operation of the businesses infringes, dilutes, misappropriates or otherwise violates the Intellectual Property of any other Person, other than claims that have since been finally resolved; (vii) to the Knowledge of Seller, no other Person is materially infringing, misappropriating or otherwise violating any Company Intellectual Property owned by the Companies or the Company Subsidiaries or the Canadian Intellectual Property owned by CBS Canada; (viii) to the Knowledge of Seller, the Company Intellectual Property owned by the Companies or the Company Subsidiaries, the Canadian Intellectual Property owned by CBS Canada, and the operation of their business do not materially infringe, dilute, misappropriate or violate the Intellectual Property of any other Person; and (ix) the Companies and the Company Subsidiaries have taken all reasonable actions to pro tect their material Company Intellectual Property, and CBS Canada has taken all reasonable actions to protect the material Canadian Intellectual Property.
"Environmental Laws" means all foreign, federal, state, local, Province of Ontario or Government of Canada statutes, regulations, ordinances, codes, or decrees (including the federal Comprehensive Environmental Response, Compensation and Liability Act and the federal Resource Conservation and Recovery Act, and any similar state statutes) protecting the environment including quality of the ambient air, soil, surface water or groundwater, or, to the extent relating to exposure to Materials of Environmental Concern, protecting public health, in effect as of the date of this Agreement.
"Environmental Permits" means all permits, licenses, registrations, and other authorizations required under applicable Environmental Laws.
"Materials of Environmental Concern" means, for property located in the United States of America, any substance defined as hazardous or toxic or as a contaminant pursuant to the Federal Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act or any other similar applicable Environmental Law and, for property located in the Province of Ontario, any substance defined as hazardous or toxic or as a contaminant pursuant to the Ontario Environmental Protection Act or any other similar applicable Environmental Law, all as in effect as at the date of this Agreement, and shall include petroleum, friable asbestos and polychlorinated biphenyls.
. Except as set forth in Section 3.18 of the Seller Disclosure Letter:
. Section 3.19 of the Seller Disclosure Letter lists, as of the date hereof, all of the policies of insurance currently maintained by CBS and its Affiliates that cover the business, employees, directors, officers, operations, property or assets of the Companies, the Company Subsidiaries and the Canadian Parks Business (collectively, the "Insurance Policies"). The Insurance Policies are in full force and effect and all premiums due have either been paid or adequate provisions for the payment thereof has been made (it being acknowledged by Purchaser and Pa rent that coverage of the Companies, the Company Subsidiaries and the Canadian Parks Business or any of their respective businesses, operations, personnel and other risks attributable to them under all the Insurance Policies shall cease as of the Closing Date pursuant to Section 5.12 of this Agreement). CBS and its Affiliates have not received any written notice of any material increase of premiums with respect to, or cancellation or non-renewal of, any of the Insurance Policies. There are no material claims by CBS and its Affiliates under any of the Insurance Policies relating to the business, assets or properties of the Companies, the Company Subsidiaries or the Canadian Parks Business as to which any insurance company is denying liability or defending under a reservation of rights or similar clause.
. Section 3.20 of the Seller Disclosure Letter sets forth each contract, agreement, arrangement or understanding (written or oral) in effect as of the date hereof between: (i) any of the Companies or any of the Company Subsidiaries or CBS Canada (solely with respect to the Canadian Parks Business), on the one hand, and (ii) any of Seller or any other Affiliate of Seller (other than the Companies, Company Subsidiaries or CBS Canada), on the other hand (each, an "Affiliate Agreement") that is material to the operations of the business of the Companies, the Company Subsidiaries and the Canadian Parks Business, as conducted on the date hereof. As of the date hereof, all such Affiliate Agreements were, in the reasonable business judgment of the parties thereto, entered into on an arms-length basis. Each of the Affiliate Agreements is valid and binding on each of the parties thereto and in full force and effect in all material respects and, except as provided in this Agreement, upon cons ummation of the transactions contemplated hereby, shall be terminated without penalty or payment. None of the Companies, the Company Subsidiaries or CBS Canada is (and to Seller's Knowledge, no other party is) in material breach or material default under any Affiliate Agreement and, to Seller's Knowledge, no event has occurred that, with or without notice or lapse of time or both, would result in a material breach or material default under any Affiliate Agreement.
.
. No agent, broker, finder or investment banker (other than Citigroup Global Markets Inc., whose fees shall be paid Seller) is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller or the Companies.
. Except for the representations and warranties contained in this Article III or otherwise in this Agreement, Parent and Purchaser acknowledge that neither Seller nor any other Person on behalf of Seller makes any other express or implied representation or warranty with respect to the Companies, the Canadian Parks Business or Seller with respect to any other information provided to Parent or Purchaser. Neither Seller nor any other Person will have or be subject to any liability or indemnification obligation to Parent or Purchaser or any other Person resulting from the distribution to Parent or Purchaser, or use by Parent or Purchaser of, any such information, including any information, documents, projections, forecasts or other material made available to Parent or Purchaser in certain "data rooms", confidential information memoranda, management presentations or in any other form in expectation of the transactions contemplated by t his Agreement. Parent and Purchaser acknowledge that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans, that Parent and Purchaser are familiar with such uncertainties, that Parent and Purchaser are taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans), and that Parent and Purchaser shall have no claim against anyone with respect thereto; provided that the foregoing acknowledgements shall not preclude Parent and Purchaser from seeking any available remedy for fraud. Neither Parent nor Purchaser is relying on any statement, representation or warranty, oral or written, express or implied, other than those set forth in this Article III or otherwise in this Agreement.
Parent and Purchaser hereby, jointly and severally, represent and warrant to Seller as follows:
. Each of Parent and Purchaser is or will by the Closing be duly organized, validly existing and in good standing under the laws of the state of its organization.
. Each of Parent and Purchaser has or will upon execution have the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery by each of Parent and Purchaser of this Agreement and the performance by each of Parent and Purchaser of its obligations hereunder have been or will upon execution have been duly authorized by all necessary corporate action on the part of each of Parent and Purchaser. This Agreement has and will have been duly executed and delivered by each of Parent and Purchaser and constitutes a legal, valid and binding agreement of each of Parent and Purchaser, enforceable against each of Parent and, when executed, Purchaser in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, 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).
. The execution, delivery and performance of this Agreement by Parent and Purchaser do not and will not (a) conflict with or violate their respective certificates of incorporation or by-laws, (b) assuming that all consents, approvals and authorizations contemplated by Section 4.4 have been obtained and all filings described in such Section have been made, conflict with or violate any Law applicable to Parent or Purchaser or any of their respective Subsidiaries or by which either of them or any of their respective properties are bound or (c) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation to which Parent or Purchaser or any of their respective Subsidiaries is a party or b y which either Parent or Purchaser or any of their respective Subsidiaries or any of their respective properties are bound, except, in the case of clauses (b) and (c), for any such conflict, violation, breach, default, loss, right or other occurrence which would not prevent or materially delay the consummation of the transactions contemplated hereby.
. The execution, delivery and performance of this Agreement by each of Parent and Purchaser and the consummation by each of Parent and Purchaser of the transactions contemplated hereby do not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Authority, except as required under or pursuant to (a) the HSR Act, (b) the Competition Act, (c) the applicable requirements of antitrust or other competition Laws of other jurisdictions and (d) any other consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not prevent or materially delay the consummation of the transactions contemplated hereby.
. Each of Parent and Purchaser acknowledges that the Shares have not been registered under the Securities Act or under any state securities laws. Each of Parent and Purchaser (a) is not an underwriter as such term is defined under the Securities Act, (b) is acquiring the Shares solely for investment with no present intention to distribute any of the Shares to any Person and (c) will not sell or otherwise dispose of any of the Shares, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws.
. Purchaser has or by the Closing will have immediately available funds necessary to consummate the transactions contemplated by this Agreement and to pay all related fees and expenses.
. No agent, broker, finder or investment banker (other than Bear Stearns and Rothschild & Co., whose fees shall be paid by Parent or Purchaser) is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Purchaser.
. Parent has no current intention to effect, directly or indirectly, any one or more of the following: (i) an issuance, sale, assignment, transfer or disposition of any shares of any of the Companies, Interco, Holdco, Newco or any Company Subsidiary, except for a Taxable Sale; or (ii) a sale assignment, transfer or disposition of any asset (other than money disposed of on the payment a dividend or a reduction of paid-up capital) of the Companies, Interco, Holdco, Newco or any Company Subsidiary, except for a Taxable Sale. For purposes of this Section 4.8, "Taxable Sale" means a sale, assignment, transfer or disposition of any shares or assets by a Person for proceeds not less than fair market value if, under the Tax laws of the country in which the Person is resident for Tax purposes, the resulting gain or loss, if any, is computed as if the shares or assets were disposed of for proceeds of disposition that are not less than their fair market value, and the gain or loss so computed is recognized for the purposes of those laws.
. During the period from the date hereof until the Closing Date, except as expressly contemplated by this Agreement (including, for the avoidance of doubt, in connection with the Permitted Reorganization), as set forth in Section 5.1 of the Seller Disclosure Letter or as required by Law, or unless Parent shall otherwise agree in writing, Seller shall cause each of the Companies, each of the Company Subsidiaries and CBS Canada (solely with respect to the Canadian Parks Business) to conduct its business in the ordinary course of business, to use its commercially reasonable efforts to preserve substantially intact its business organization, and to preserve its present relationships with suppliers, lessors and employees and other Persons with which it has significant business relations. Between the date of this Agreement and the Closing Date, except as otherwise contemplated by this Agreement (including, for the avoidance of doubt, in connection with the Permitted Reorganization and Section 5.13), as se t forth in Section 5.1 of the Seller Disclosure Letter or as required by Law, Seller shall not permit any of the Companies, any Company Subsidiary or CBS Canada (solely with respect to the Canadian Parks Business) to do any of the following without the prior written consent of Purchaser (which consent shall not be unreasonably withheld or delayed):
.
.
. On the Closing Date, Seller shall cause to be delivered to Parent duly signed resignations (from the applicable board of directors or office), effective immediately after the Closing, of all directors and officers of the Companies and each Company Subsidiary, in each case that is also employed by CBS, and shall take such other action as is necessary to accomplish the foregoing.
. Purchaser shall retain all of the books and records of the Companies, the Company Subsidiaries and the Canadian Parks Business for a period of seven years after the Closing or such longer time as may be required by Law and, subject to restrictions imposed from time to time in good faith upon advice of counsel respecting the provision of privileged communications or competitively sensitive information and any applicable confidentiality agreement with any Person, shall provide, only in such manner that does not unreasonably interfere with the business of the Companies or any Company Subsidiary or the Canadian Parks Business, reasonable access to such pre-Closing books and records (or copies thereof at Seller's expense) to the Seller or its agents, at reasonable times and upon reasonable notice, after the Closing to the extent reasonably necessary for legitimate business reasons, such as disputing any indemnification claim, the preparation of financial statements, Tax returns, the defense of litigatio n or Tax audits or complying with other legal requirements.
. Each of Seller and Purchaser agrees that no public release or announcement concerning the transactions contemplated by this Agreement shall be issued by any party or any of its Affiliates without the prior written consent of Seller and Purchaser (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be required by Law or the rules or regulations of any applicable United States securities exchange, in which case the party required to make the release or announcement shall use its reasonable best efforts to allow each other party reasonable time to comment on such release or announcement in advance of such issuance, it being understood that the final form and content of any such release or announcement, to the extent so required, shall be at the final discretion of the disclosing party.
. Prior to the Closing Date, Seller shall, and shall cause its Subsidiaries and Affiliates to, effect the Permitted Reorganization in accordance with Schedule III (including the terms of the Canadian contribution agreement set forth in Schedule III), attached hereto. Seller agrees to reasonably consult with Purchaser with respect to effecting the Permitted Reorganization. Seller shall be responsible for all Taxes and out-of-pocket costs and expenses arising out of or related to the Permitted Reorganization; provided that, for the avoidance of doubt, Seller shall not be liable for Taxes owing by Newco (or any successor thereof) in respect of any period after the Closing Date and attributable to the fact that the Canadian Parks Business will be transferred on a tax deferred basis, rather than on a fully taxable basis, for Canadian income tax purposes.
. Effective as of the Closing, Purchaser shall assume all rights, obligations and liabilities of Seller and its Affiliates under each Collective Bargaining Agreement that arise on or after the Closing Date.
. Subject to the terms and conditions of this Agreement, each of the parties hereto shall use its respective best efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Law, and execute and deliver such documents and other papers, as may be required to consummate the transactions contemplated by this Agreement as promptly as is practicable. Seller shall, as promptly as is reasonably practicable, give such notices to third parties and use its reasonable best efforts to obtain the third party consent listed in Section 5.10(a) of the Seller Disclosure Letter. Purchaser shall cooperate and use all reasonable best efforts to assist Seller in giving such notices and obtaining such consents.
. Purchaser shall replace, within 60 days of the Closing Date, each outstanding letter of credit issued for the benefit of the Companies, the Company Subsidiaries, Interco, Holdco or Newco or the Canadian Parks Business set forth in Section 5.11 of the Seller Disclosure Letter, with a letter of credit reasonably satisfactory to the beneficiary thereof, and cause such beneficiary to return the original letters of credit to Seller or the relevant Affiliate of Seller (other than the Companies, the Company Subsidiaries, Interco, Holdco or Newco); provided that in the event Purchaser is unable to replace any letter of credit referred to above by such time, Purchaser (i) shall unconditionally reimburse Seller or the relevant Affiliate of Seller for any payments required to be made by Seller or any Affiliate of Seller in relation to any drawing of such letter of credit and any fees incurred to the issuer of such letter of credit and (ii) continue to use its reasonable best efforts to replace such let ters of credit as soon as practicable.
. As of the close of business on the Closing Date: (i) Seller will terminate or cause its Affiliates to terminate all coverage relating to the Companies, the Company Subsidiaries, Interco, Holdco, Newco and the Canadian Parks Business and their respective businesses, assets and employees under the Insurance Policies for the benefit of all of their controlled subsidiaries, including the Companies, the Company Subsidiaries, Interco, Holdco, Newco and the Canadian Parks Business; provided, however, that (i) no such termination of any occurrence policy in force as of the Closing Date shall be effected so as to prevent the Companies, the Company Subsidiaries and Newco from recovering under such policies (other than policies for which Seller or its Affiliates are financially responsible as "self- or captive-insurers" or reinsurers) for losses from events occurring prior to the Closing Date to the extent Seller shall have received written notice of claims relating to such events on or before the first anniversary of the Closing Date, it being understood that the Companies, the Company Subsidiaries, Interco, Holdco and Newco shall be responsible for any deductible payable under the terms of the applicable policy in connection with any such claims; (ii) no such termination of any claims made policy in force as of the Closing Date shall be effected so as to prevent the Companies and Newco from recovering under such policies (other than policies for which Seller or its Affiliates are financially responsible as "self- or captive-insurers" or reinsurers) for losses from events occurring prior to the Closing Date to the extent Seller shall have received written notice of claims relating to such events on or before the Closing Date, it being understood that the Companies, the Company Subsidiaries, Interco, Holdco and Newco shall be responsible for any deductible payable under the terms of the applicable policy in connection with any such claims; and (iii) Purchaser shall become solel y responsible for all insurance coverage and related risk of loss with respect to the Companies, the Company Subsidiaries, Interco, Holdco and Newco and their respective businesses, assets and employees based on (x) events occurring on or after the Closing Date, (y) events occurring prior to the Closing Date for which notice has not been received as described by the date set forth in the foregoing clauses (i) and (ii) and (z) claims (other than Assumed Litigation) for which Seller or its Affiliates are financially responsible as "self- or captive-insurers" or reinsurers. Seller shall promptly be reimbursed by Purchaser for all reasonable costs and expenses paid after the Closing Date (a) at Purchaser's request, (b) reasonably incurred in providing the assistance described in this Section 5.12 or (c) all amounts paid by Seller and its Affiliates for claims that are subject to clause (z) above ("Assistance Costs"). Assistance Costs shall include reasonable out-of-pocket third party expenses, including reasonable attorneys' fees and reasonable claims adjustment expenses, paid in connection with investigating, preparing, or pursuing recoveries from insurance contracts and retroactive or prospective premium increases to the extent (and only to the extent) attributable to losses incurred in connection with the Companies, the Company Subsidiaries, Interco, Holdco or Newco following the Closing.
. Except as contemplated by this Agreement or set forth in Section 5.13 of the Disclosure Letter, on or prior to the Closing Date, (i) all Indebtedness made by CBS or Seller (or their respective Affiliates other than the Companies, the Company Subsidiaries or the Canadian Parks Business) to the Companies, the Company Subsidiaries or the Canadian Parks Business (or vice versa) prior to the date hereof or after the date hereof in compliance with this Agreement shall be canceled, settled and terminated without any payment or other transfer of assets or rights in respect of such Indebtedness (collectively, "Affiliate Indebtedness") and (ii) all other liabilities owed to CBS or any of its Affiliates (other than the Companies, the Company Subsidiaries and the Canadian Parks Business) by the Companies, the Company Subsidiaries or the Canadian Parks Business, as the case may be, or owed to the Companies, the Company Subsidiaries or the Canadian Parks Business, by CBS or any of its Affiliat es (other than the Companies, the Company Subsidiaries or the Canadian Parks Business) shall in each case be canceled, settled and terminated without any payment in respect of such liability, other than payables for goods sold and services rendered in the ordinary course of business, which shall be paid in the ordinary course of business.
. If requested by Purchaser, Seller agrees to use commercially reasonable efforts to provide to the Purchaser Updated Title Commitments and Updated Surveys to the Owned Real Property located in the United States and the Great America Real Property, as soon as practicable; provided that in no event shall the receipt of any such Updated Title Commitments and Updated Surveys be a condition to or delay the Closing. Subject to approval by the Title Companies, the metes and bounds legal descriptions of the land encompassing the Real Property and contained on the Updated Surveys shall be used in the Updated Title Commitments and in all documents of transfer to be executed hereunder wherein the legal descriptions should appear. Seller shall promptly be reimbursed by Purchaser for all costs and expenses paid (a) at Purchaser's request or (b) incurred in connection with obtaining any such Updated Title Commitments and Updated Surveys. In the event that Purchaser elects to obtain new title policies or endorsements to the existing Title Policies, Purchaser shall be responsible for all title premiums, endorsement costs and similar title charges.
. For a period of three years from the Closing Date (the "Exclusive Period"), CBS and Seller shall not and shall cause their respective Subsidiaries not to, directly or indirectly engage in, operate, manage, consult with, advise, partner with, lease or license any assets or provide financing to or invest in any Person that develops, owns or operates an amusement or theme park within 500 miles of any facility listed in Section 5.15 of the Seller Disclosure Letter (the "Business"); provided, however, that the foregoing will not prohibit (i) the ownership of less than five percent interest in a Person whose shares are traded in a recognized stock exchange or traded in an over-the-counter market, or (ii) the ownership of, or by, a Business as a result of a merger, acquisition, consolidation or other business combination with a Person whose primary business is not the Business.
. Seller agrees that between the date of this Agreement and the earlier of (a) the Closing or (b) the termination of this Agreement pursuant to Section 10.1 hereof, Seller shall not, and shall cause its Affiliates and its and its Affiliates' respective directors, officers and employees not to, and shall use reasonable best efforts to cause its representatives not to, directly or indirectly (i) solicit, initiate, consider, encourage or accept any other proposals or offers from any Person (A) relating to any acquisition or purchase of all or any portion of the Paramount Parks Shares or material assets of the Companies, the Company Subsidiaries and the Canadian Parks Business, as a whole or (B) enter into any business combination wi th any of the Companies, the Company Subsidiaries or CBS Canada (with respect to the Canadian Parks Business) or (ii) participate in any discussions, negotiations and other communications, regarding or furnish to any other Person any information with respect to, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any other Person to seek to do any of the foregoing. Seller immediately shall cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons conducted heretofore with respect to any of the foregoing. Seller shall notify Purchaser promptly if any such proposal or offer, or any inquiry or other contact with any Person with respect thereto, is made. Seller agrees not to, and to cause CBS not to, without the prior written consent of Parent, release any Person from, or waive any provision of, any confidentiality agreement to which Seller or CBS is a party.
.
.
. After the Closing, Seller or Purchaser (each a "party"), as the case may be, shall provide or shall cause to be provided reimbursement for any Taxes paid by one party or its Affiliates which are the responsibility of the other party or its Affiliates in accordance with the terms of this Section 7.1 or Section 7.6. Within a reasonable time prior to the payment of any such Taxes, the indemnified party paying such Taxes shall give written notice to the indemnifying party of the Taxes payable and the amount which is the liability of each party, although failure to do so will not relieve the indemnifying party of its liability hereunder except to the extent the indemnifying party is actually prejudiced as a result of such failure. Subject to the delivery of prior written notice of the payment of any such Taxes, the party required to provide reimbursement hereunder shall pay such amount by the latest to occur of (i) the date payment is made by the party paying such Taxes, (ii) fifteen Busines s Days after receipt of such prior written notice, and (iii) 10 days prior to the due date for payment of such Taxes; provided, however, if there is a disagreement relating to the amount of Taxes payable by the indemnifying party, such disagreement will be resolved in the time and manner described in Section 7.4(f).
.
.
.
. Notwithstanding any provision of this Agreement to the contrary, all Transfer Taxes arising out of the transactions contemplated by this Agreement (other than any Transfer Taxes arising out of the Permitted Reorganization which shall solely be borne by Seller) shall be shared equally by Seller and Purchaser. Seller and Purchaser shall jointly prepare all Tax Returns relating to such Transfer Taxes. Purchaser shall file, or shall cause to be filed, to the extent permitted by applicable law, all Tax Returns as may be required to comply with the provisions of such Tax Laws relating to Transfer Taxes. Seller shall cooperate with Purchaser in connection with all such filings and shall file any Tax Returns that Purchaser is not permitted to file.
. On or prior to the Closing Date, all tax sharing, tax allocation or similar agreements between any of the Companies, the Company Subsidiaries, Holdco, Newco or Interco on the one hand, and any of Seller or its Affiliates (other than the Companies, the Company Subsidiaries, Holdco, Newco or Interco), on the other hand, shall be terminated, and, after the Closing, none of the Companies, the Company Subsidiaries, Holdco, Newco, Interco, Seller, the Purchaser or any Affiliates of the foregoing shall be bound thereby or have any obligations or liability thereunder.
. At Purchaser's option, Purchaser and Seller shall join in timely making an election under section 338(h)(10) of the Code (and any corresponding elections under state, local, or foreign tax law) (collectively, a "Section 338(h)(10) Election") with respect to the purchase and sale of Paramount Parks and, if such election is made, at Purchaser's option, with respect to Paramount Parks Experience, Inc. and Interco (if applicable); provided, for the avoidance of doubt, that no such election shall be made with respect to Kings Island. Purchaser and Seller shall cooperate in the completion and timely filing of such elections in accordance with the provisions of Treasury Regulations section 1.338(h)(10)-1 (or any comparable provisions of state, local or foreign Tax law) or any successor provision. Seller and Purchaser agree not to take any action that could cause the Section 338(h)(10) Election to be invalid, and shall take no position contrary thereto unless required pursuant to a final determination (as defined in Section 1313(a) of the Code or any similar provision of any state, foreign or local law). Within ninety (90) days following the Closing Date, Purchaser shall prepare and deliver to Seller a draft schedule allocating the "aggregate deemed sales price," within the meaning of the Treasury regulations issued under Section 338(h)(10), among the assets of Paramount Parks and Paramount Parks Experience, Inc. in accordance with such regulations. Within forty-five (45) days of its receipt of such draft allocation schedule, Seller shall provide Purchaser with a written notice of any proposed changes thereto, together with a detailed explanation of the basis for such proposed changes. In the event that the Parties cannot agree on an allocation schedule within sixty (60) days after Purchaser's receipt of Seller's notice of proposed changes, the dispute shall be referred to the Accounting Firm. The allocation determined by the Accounting Firm shall be conclusive and binding upo n Purchaser and Seller, and each party shall file its Tax Returns in accordance with such allocation schedule. Notwithstanding the foregoing, the allocation under this Section 7.8 to Interco shall be consistent with the determination of "Fair Market Value," as provided under Schedule III.
. The parties agree to treat any indemnity payment made under this Article VII or Article IX as an adjustment to the Purchase Price for all federal, state, local and foreign Tax purposes, and the parties agree to, and shall cause their respective Affiliates to, file their Tax Returns accordingly.
. The respective obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment at or prior to the Closing, of each of the following conditions:
. The obligations of Parent and Purchaser to consummate the transactions contemplated by this Agreement shall be further subject to the satisfaction or waiver at or prior to the Closing, of each of the following conditions:
. The obligations of Seller to consummate the transactions contemplated under this Agreement shall be further subject to the satisfaction or waiver at or prior to the Closing Date of the following conditions:
. The representations and warranties contained in this Agreement shall expire on December 31, 2007; provided, however, that (a) the representations and warranties contained in Sections 3.1, 3.2, 3.5, 3.20, 3.21(a) (first sentence only), 3.22, 4.1, 4.2 and 4.7 shall survive indefinitely, (b) the representations and warranties contained in Section 3.17 shall expire on the third anniversary of the Closing Date, and (c) the representations and warranties contained in Section 3.13 shall survive until the date that is 60 days following the expiration of the applicable statute of limitations. If written notice of a claim has been given in accordance with Section 9.2(c) prior to the expiration of the applicable representations and warranties, then the relevant representations and warranties shall survive as to such claim, until such claim has been finally resolved. Any written claim by Parent or Purchaser with respect to a breach of any covenant or other agreement made by the Seller in this A greement to be performed at or prior to the Closing may be given at any time prior to the day that is three months following the Closing Date. All other covenants shall survive the Closing and survive indefinitely, except those that by their terms expire earlier.
. Purchaser and its Affiliates, officers, directors, employees, agents, successors and assigns shall be indemnified and held harmless by Seller for any and all Liabilities, Taxes (solely with respect to Section 3.18), losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including, reasonable attorneys' fees and expenses) actually suffered or incurred by them (hereinafter a "Loss"), arising out of or resulting from:
The foregoing provisions of this Section 9.2(a) shall not apply with respect to any Losses arising out of (and no indemnification hereunder shall be available with respect to) any breach of any representation or warranty of Sellers that is terminated as provided in Section 9.1.
The foregoing provisions of this Section 9.2(b) shall not apply with respect to any Losses arising out of (and no indemnification hereunder shall be available with respect to) any breach of any representation or warranty of Purchaser that is terminated as provided in Section 9.1.
. No amount shall be payable by Seller pursuant to Section 9.2(a) for any breach of any representation or warranty (other than any representation or warranty in Section 3.2, 3.5, 3.20, 3.21(a) (first sentence only) or 3.22) unless the aggregate amount of Losses indemnifiable under Section 9.2(a) for breaches of representations or warranties exceeds one percent (1%) of the Purchase Price (and only to the extent of such excess). No amount shall be payable by Purchaser pursuant to Section 9.2(b) for any breach of any representation or warranty (other than any representation or warranty in Sections 4.2 or 4.7) unless the aggregate amount of Losses indemnifiable under Section 9.2(b) for breaches of representations or warranties exceeds one percent (1%) of the Purchase Price (and only to the extent of such excess).
. Any amount payable pursuant to this Article IX shall be decreased to the extent of (i) any amounts actually recovered by the Indemnified Party from any third party (including insurance proceeds) in respect of an indemnifiable Loss, (ii) any net Tax benefit actually realized by the Indemnified Party arising out of an indemnifiable Loss and (iii) any amounts that relate to such Losses reflected in the Adjusted Working Capital Amount in the Final Adjustment Report. The Indemnifying Party and the Indemnified Parties shall cooperate in good faith in providing each other the information necessary to determine the Tax benefits, as the case may be, in each case. The Indemnified Parties shall use their commercially reasonable efforts to pursue payment under or from any insurer or third-party in respect of such Losses. Purchaser shall not, and shall cause the Companies, the Company Subsidiaries, Interco, Holdco and Newco not to, without the prior written consent of the Seller, waive, release, compromise, r educe or otherwise amend in any way that would limit coverage, any fully-paid insurance policies or coverage in effect at the Closing that relate to Losses.
. From and after the delivery of a Claim Notice by any Indemnified Party, each Indemnified Party shall grant the Indemnifying Party and its representatives all reasonable access to the books, records, employees and properties of such Indemnified Party (including the Companies, the Company Subsidiaries, Interco, Holdco and Newco) related to the matters to which the claim relates (provided that, as necessary to protect any attorney-client privilege, the parties shall execute a joint defense agreement containing customary terms). All such access shall be granted during normal business hours.
. The parties hereto shall cooperate with each other to mitigate any Losses, including maintaining insurance coverage with respect to the Companies, the Company Subsidiaries, Interco, Holdco and Newco.
. Except as expressly set forth in Section 5.15, the indemnification provided in this Article IX, subject to the limitations set forth herein, shall be the exclusive post-Closing remedy available to any party for any breach of any representation, warranty or covenant by the other party contained herein and no party shall pursue or seek to pursue any other remedy. Except as specifically set forth in or arising under this Agreement, from and after the Closing, the parties hereto waive any rights and claims that a party may have against any other party, whether in law or in equity, relating to the transactions contemplated hereby or thereby, including claims for contribution or other rights of recovery arising out of or relating to any Environmental Laws, claims for breach of contract, breach of representation or warranty, negligent misrepresentation and all claims for breach of duty; provided, however, that nothing set forth in this Agreement shall limit the rights, remedies and claims of any party hereto with respect to any fraud or willful misconduct by any other party hereto.
. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date:
. In the event of the termination of this Agreement pursuant to Section 10.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto, except with respect to Sections 3.22, 4.7, 5.2(b), 5.7, this Section 10.2, Section 10.3 and Article XI, which shall survive such termination.
. Except as otherwise specifically provided herein, each party shall bear its own expenses in connection with this Agreement and the transactions contemplated hereby.
. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Closing Date. This Agreement may not be amended except by an instrument in writing signed by the parties hereto.
. At any time prior to the Closing Date, any party hereto may extend the time for the performance of any of the obligations or other acts of the other parties hereto, waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and subject to the requirements of applicable Law, waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.
. As used in this Agreement, unless the context would require otherwise, the terms "material" or "material to the Companies and the Canadian Parks Business" and the concept of the "material" nature of an effect upon the Companies and the Canadian Parks Business shall be measured relative to the entire business of the Companies, the Company Subsidiaries and the Canadian Parks Business taken as a whole. As used in this Agreement, unless the context would require otherwise, the terms "material" or "material to the Companies" and the concept of the "material" nature of an effect upon the Companies shall be measured relative to the entire business of the Companies and the Company Subsidiaries taken as a whole. There have been, however, included in the Seller Disclosure Letter and may be included elsewhere in this Agreement items which are not "material" within the meaning of the immediately preceding sentence in order to avoid any mis understanding, and such inclusion shall not be deemed to be an agreement by Seller that such items are "material" or to further define the meaning of such term for purposes of this Agreement. Disclosures included in any Section of the Seller Disclosure Letter shall be considered to be made for purposes of all other Sections of the Seller Disclosure Letter to the extent that the relevance of any such disclosure to any other Section of the Seller Disclosure Letter is reasonably apparent from the text of such disclosure.
. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 11.2 prior to 5:00 p.m. (New York time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 5:00 p.m. (New York time) on any date and earlier than 11:59 p.m. (New York time) on such date, (iii) the Business Day following the date of dispatch, if sent by nationally recognized overnight courier service, or (iv) the tenth Business Day following the date of mailing, if sent by registered or certified mail, return receipt requested, postage prepaid. The address for such notices and communications shall be as follows:
CBS Corporation
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 975-1770
Attention: General Counsel
with a copy to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Telecopy: (212) 455-2502
Attention: John G. Finley, Esq. and Daniel Clivner, Esq.
if to Parent or Purchaser:
Cedar Fair, L.P.
One Cedar Point Drive
Sandusky, Ohio 44870
Telecopy: (419) 627-2377
Attention: Peter J. Crage
with a copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, OH 44114-1304
Telecopy: (216) 479-8780
Attention: Gordon S. Kaiser, Esq.
. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
. This Agreement, the Seller Disclosure Letter and the Confidentiality Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, between the parties hereto with respect to the subject matter hereof.
. This Agreement may not be assigned by any party or by operation of law or otherwise without the prior written consent of each of the other parties (which consent may be granted or withheld in the sole discretion of such other party); provided, however, that Parent may assign its rights and obligations under this Agreement (other than Section 11.11) to a newly-formed direct wholly-owned subsidiary of Parent ("Purchaser") and upon such assignment Purchaser shall promptly execute this Agreement; provided, that all references to Purchaser herein shall be deemed to be references to Parent prior to such execution of this Agreement by Purchaser. Any attempted assignment in violation of this Section 11.5 shall be void.
. Except for Section 5.5, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the law of the State of New York.
. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States of America located in the State of New York, this being in addition to any other remedy to which such party is entitled at law or in equity. In addition, each of the parties hereto agrees that Action with respect to this Agreement or the transactions contemplated hereby may be brought only in the courts of the State of New York or the courts of the United States of America located in the State of New York, in each case located in the Borough of Manhattan, City of New York, State of New York. Each of the parties hereto submits to the jurisdiction of the courts of the Sta te of New York and the courts of the United States of America located in the State of New York over any Action with respect to this Agreement or the transactions contemplated hereby. Each of the parties hereto waives any objection that it may have to the venue of such Action in any such court or that such Action in such court was brought in an inconvenient court and agrees not to plead or claim the same. Each party hereto hereby agrees that, to the fullest extent permitted by Law, service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 11.2 shall be effective service of process for any suit or proceeding in connection with this Agreement or the transactions contemplated hereby.
. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
. When reference is made in this Agreement to a Section or Article, such reference shall be to a Section or Article of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". Whenever the words "ordinary course of business" are used in this Agreement, they shall be deemed to be followed by the words "consistent with past practice". For purposes of this Agreement, the term "objection" shall mean disagreement or statement in opposition, or any recommendation by any Governmental Authority challenging, prohibiting, restraining or enjoining the transactions contemplated by this Agreement, or any request fo r additional information subsequent to the filing of a notification and report form pursuant to the HSR Act. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
. Parent agrees to take all action necessary to cause Purchaser to perform all of its respective agreements, covenants and obligations under this Agreement. Parent unconditionally guarantees to Seller the full and complete performance by Purchaser of its respective obligations under this Agreement and shall be jointly and severally liable for any breach of any representation, warranty, covenant or obligation of Purchaser under this Agreement. This is a guarantee of payment and performance and not collectibility. Parent hereby waives diligence, presentment, demand of performance, filing of any claim, any right to require any proceeding first against Purchaser protest, notice and all demands whatsoever in connection with the performance of its obligations set forth in this Section 11.11.
. CBS agrees to take all action necessary to cause Seller to perform all of its respective agreements, covenants and obligations under this Agreement. CBS unconditionally guarantees to Parent and Purchaser the full and complete performance by Seller of its respective obligations under this Agreement and shall be jointly and severally liable for any breach of any representation, warranty, covenant or obligation of Seller pursuant to the terms, and subject to the limitations, set forth in this Agreement. This is a guarantee of payment and performance and not collectibility. CBS hereby waives diligence, presentment, demand of performance, filing of any claim, any right to require any proceeding first against Seller protest, notice and all demands whatsoever in connection with the performance of its obligations set forth in this Section 11.12.
IN WITNESS WHEREOF, Seller and Parent have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
BOMBAY HOOK LLC
By: /s/ Fredric G. Reynolds
Name: Fredric G. Reynolds
Title:
CEDAR FAIR, L.P.
By: /s/ Richard L. Kinzel
Name: Richard L. Kinzel
Title: Chairman of the Board, President and Chief Executive Officer
The undersigned joins in this Agreement for purposes of Section 11.12.
CBS CORPORATION
By: /s/ Fredric G. Reynolds
Name: Fredric G. Reynolds
Title: Executive Vice President, Chief Financial Officer
SCHEDULE I
Paramount Parks - Adjusted December 31 Working Capital Amount
($ in thousands) |
||
As of |
||
Parameter |
12/31/2005 |
|
Scheduled Assets |
||
Receivables |
$6,681 |
|
Inventory |
6,341 |
|
Prepaid insurance |
9,163 |
|
Other current assets (a) |
6,714 |
|
Total current assets |
$28,899 |
|
Scheduled Liabilities (b) |
||
Accounts payable |
$7,590 |
|
Accrued compensation |
7,574 |
|
Deferred income |
27,243 |
|
Accrued expenses and other current liabilities (a) |
19,340 |
|
Total current liabilities |
$61,747 |
|
Adjusted Working Capital |
($32,848) |
Note: Retention bonuses for Paramount Parks Inc. senior management are to be paid by Seller and will not be shown as an accrued liability, and as a result, will not be included in the calculation of Adjusted Working Capital.
SCHEDULE II
KNOWLEDGE
SCHEDULE III
PERMITTED REORGANIZATION
The steps of the Permitted Reorganization relating to the transfer of Kings Island Company to Paramount Parks Inc. are as follows:
1. Mattalex Corporation, a Delaware corporation, will be converted into a limited liability company in accordance with Section 266 of the Delaware General Corporation Law and Section 18-214 of the Delaware Limited Liability Company Act, and, in connection therewith, will change its name to Mattalex LLC.
2. Kings Island Company will distribute six hundred fifty-nine (659) shares of no par value, 6% Non-Cumulative, Nonvoting Preferred Stock of Detroit Television Station WKBD Inc. to CBS Operations Inc.
3. Each of French Street Management LLC and Mattalex LLC will contribute all of its stock of Kings Island Company to Paramount Parks Inc. After this contribution, Paramount Parks Inc. will own all of the outstanding stock of Kings Island Company.
The steps of the Permitted Reorganization relating to the transfer of the Canadian Parks Business are as follows:
1. Paramount Parks shall incorporate Interco as a Delaware corporation, unless Seller and Purchaser otherwise agree within ten (10) business days of the signing this Agreement. Upon incorporation, Paramount Parks shall subscribe for Interco shares for $100.
2. Interco shall incorporate Holdco as a Nova Scotia unlimited liability company. The authorized capital of Holdco shall consist of a single class of common shares with no par value. Upon incorporation, Interco shall subscribe for 100 Holdco common shares for $100.
3. Holdco shall incorporate Newco2 as a Nova Scotia unlimited liability company. The authorized capital of Newco2 shall consist of a single class of common shares with no par value. Upon incorporation, Holdco shall subscribe for 10 Newco2 common shares for $10 and shall make an inter-company loan of $90 to Newco2.
4. Newco2 shall incorporate Newco3 as a Nova Scotia unlimited liability company. The authorized capital of Newco3 shall include a class of common shares with no par value and a class of redeemable, retractable preferred shares. Upon incorporation, Newco2 shall subscribe for 10 Newco3 common shares for $10 and shall make an inter-company loan of $90 to Newco3.
5. Paramount Parks shall capitalize Interco, Holdco, Newco2 and Newco3 as follows:
(a) Paramount Parks shall subscribe for additional common shares of Interco at a subscription price equal to the aggregate of (i) the amount (the "Net Amount") by which the Fair Market Value of the assets of the Canadian Parks Business exceeds the Fair Market Value of the Canadian Parks liabilities, and (ii) the amount of Transfer Taxes payable on the asset transfer.
(b) Interco shall subscribe for additional common shares of Holdco for a subscription price equal to the Net Amount.
(c) Holdco shall subscribe for additional common shares of Newco2 and shall make an additional inter-company loan to Newco2, provided that the aggregate of the amount of such subscription and the amount of such loan shall be equal to the aggregate of the Net Amount and the amount of the Transfer Taxes, and at least 90% of the aggregate of such amounts shall be in the form of such inter-company loan.
(d) Newco2 shall subscribe for additional common shares of Newco3 and shall make an additional inter-company loan to Newco3, provided that the aggregate of the amount of such subscription and the amount of such loan shall be equal to the aggregate of the Net Amount and the amount of the Transfer Taxes, and at least 90% of the aggregate of such amounts shall be in the form of such inter-company loan.
6. CBS Canada shall sell the Canadian Parks Business to Newco3 in accordance with the Canadian asset purchase agreement, for a purchase price equal to the Fair Market Value of the assets of the Canadian Parks Business, to be satisfied as follows:
(a) As to an amount equal to the Fair Market Value of the Canadian Parks liabilities (which shall not exceed the aggregate tax basis in the transferred assets), by the assumption by Newco3 of the Canadian Parks liabilities; and
(b) As to the balance, by the issuance by Newco3 of preferred shares having an aggregate redemption amount equal to the Net Amount.
7. The Canadian asset purchase agreement shall provide, among other things, that
(i) Subject to the following sentence: Newco3 will become responsible for, and will indemnify and save harmless CBS Canada and its Affiliates and their respective directors, officers, shareholders, employees and agents from and against all claims arising that in connection with liabilities, debts and obligations that are assumed by Newco3 and liabilities, debts and obligation that are not otherwise transferred to Newco3 but that relate to the Canadian Parks Business; and CBS Canada shall remain responsible for and will indemnify and save harmless Newco3 and its directors, officers, shareholders, employees and agents from and against all claims relating to liabilities, debts and obligations of CBS Canada which are not assumed by Newco3 and which do not otherwise relate to the Canadian Parks Business. The rights and obligations of the parties under this paragraph (i) are subject in their entirety to the provisions and limitations of the Agreement and nothing herein is intended to expand in any way the l iability of Parent, Purchaser or their Affiliates, on the one hand, or CBS or its Affiliates, on the other hand, other than as expressly contemplated by the Agreement.
(j) Newco3 shall cooperate with CBS Canada and provide all such information and assistance reasonably required by CBS Canada in order to produce financial statements, complete tax filings and respond to inquiries from any Governmental Authority.
8. Newco3 shall pay the Transfer Taxes.
9. The Newco3 preferred shares shall be redeemed in cash, and Newco3 shall pay the Net Amount in cash to CBS Canada in satisfaction of the redemption price.
10. Newco2 and Newco3 shall amalgamate under the laws of Nova Scotia to form an amalgamated company ("Newco"). As a consequence of the amalgamation,
(a) the issued shares and inter-company indebtedness of Newco3 will be cancelled,
(b) the issued shares and inter-company indebtedness of Newco2 will become issued shares and inter-company indebtedness of Newco, and
(c) Newco will be a wholly owned subsidiary of Holdco.
11. Seller and Purchaser agree to treat and will cause their respective Affiliates to treat Holdco and Newco as disregarded entities for United States federal income tax purposes, and shall not take any action or make any election inconsistent therewith.
All documentation regarding the Permitted Reorganization shall be prepared by Seller in draft and such draft documentation shall be delivered to Purchaser. Purchaser shall have a reasonable opportunity to review and comment on such draft documentation, and Seller shall act reasonably in considering Purchaser's comments.
The contribution agreement will not have a price adjustment clause that provides for a price adjustment in the event a taxing authority determines the purchase price was not equal to fair market value.
In this Schedule:
"Fair Market Value" " means fair market value, as reasonably determined by Seller and Purchaser.