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As filed with the Securities and Exchange Commission on February 11, 2013
Registration No. 333-185697

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SeaWorld Entertainment, Inc.
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	7990	 	27-1220297	
(State or other jurisdiction of
incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	

9205 South Park Center Loop, Suite 400
Orlando, Florida 32819
(407) 226-5011
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

G. Anthony (Tony) Taylor, Esq.
Chief Legal Officer, General Counsel and Corporate Secretary
9205 South Park Center Loop, Suite 400
Orlando, Florida 32819
(407) 226-5011
(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Igor Fert, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
(212) 455-2000	 	Marc D. Jaffe, Esq.
Cathy A. Birkeland, Esq.
Michael A. Pucker, Esq.
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022-4834
(212) 906-1200	

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:     ¨ 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     ¨ 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     ¨ 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     ¨ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	 	¨ 	  	Accelerated filer	 	¨ 	
Non-accelerated filer	 	x   (Do not check if a smaller reporting company)	  	Smaller reporting company	 	¨ 	

CALCULATION OF REGISTRATION FEE

 	
Title of Each Class of
Securities to be Registered	 	Proposed
Maximum
Aggregate
Offering Price(1)(2)	 	Amount of
Registration Fee(3)	
Common Stock, par value $0.01 per share	 	$100,000,000	 	$13,640	

(1)	This amount represents the proposed maximum aggregate offering price of the securities registered hereunder to be sold by the Registrant and the selling stockholders. These figures are estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.	
(2)	Includes offering price of shares of common stock that the underwriters have the option to purchase. See “Underwriting (Conflicts of Interest).”	
(3)	Previously paid.	

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor do we or the selling stockholders seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
Subject to Completion. Dated February 11, 2013.

	  	             Shares	  		

SeaWorld Entertainment, Inc.
Common Stock

This is an initial public offering of shares of common stock of SeaWorld Entertainment, Inc.
SeaWorld Entertainment, Inc. is offering             of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional             shares. SeaWorld Entertainment, Inc. will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.
Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $         and $        . SeaWorld Entertainment, Inc. intends to list the common stock on The New York Stock Exchange (the “NYSE”) under the symbol “SEAS.” After the completion of this offering, affiliates of The Blackstone Group L.P. will continue to own a majority of the voting power of all outstanding shares of the common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. See “Principal and Selling Stockholders.”
See “ Risk Factors ” beginning on page 17 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 
									
 	  	Per Share	 	  	Total	 	
Initial public offering price	  	$	            	  	  	$	            	  	
Underwriting discounts and commissions	  	$	 	  	  	$	 	  	
Proceeds, before expenses, to SeaWorld Entertainment, Inc.	  	$	 	  	  	$	 	  	
Proceeds, before expenses, to the selling stockholders	  	$	 	  	  	$	 	  	
To the extent that the underwriters sell more than             shares of common stock, the underwriters have the option to purchase up to an additional             shares from the selling stockholders at the initial public offering price less the underwriting discounts and commissions.

The underwriters expect to deliver the shares against payment in New York, New York on                     , 2013.

Goldman, Sachs & Co.	 	 	 	 	 	J.P. Morgan	

Citigroup	  	BofA Merrill Lynch	 	Barclays	 	Wells Fargo Securities	

Prospectus dated                     , 2013.

Table of Contents
 TABLE OF CONTENTS
Prospectus

 	  	Page	 	
Market and Industry Data	  	 	ii	  	
Trademarks, Service Marks and Tradenames	  	 	ii	  	
Basis of Presentation	  	 	ii	  	
Prospectus Summary	  	 	1	  	
Risk Factors	  	 	17	  	
Special Note Regarding Forward-Looking Statements	  	 	34	  	
Use of Proceeds	  	 	36	  	
Dividend Policy	  	 	37	  	
Capitalization	  	 	38	  	
Dilution	  	 	39	  	
Selected Historical Consolidated Financial Data	  	 	41	  	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	43	  	
Business	  	 	63	  	
Management	  	 	83	  	
Principal and Selling Stockholders	  	 	110	  	
Certain Relationships and Related Party Transactions	  	 	112	  	
Organizational Structure	  	 	117	  	
Description of Indebtedness	  	 	118	  	
Description of Capital Stock	  	 	123	  	
Shares Eligible for Future Sale	  	 	132	  	
Material United States Federal Income and Estate Tax Consequences to Non-U.S. Holders	  	 	134	  	
Underwriting (Conflicts of Interest)	  	 	138	  	
Legal Matters	  	 	143	  	
Experts	  	 	143	  	
Where You Can Find More Information	  	 	143	  	
Index to Consolidated Financial Statements	  	 	F-1	  	

Through and including                     , 2013 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
Unless otherwise indicated or the context otherwise requires, financial data in this prospectus reflects the consolidated business and operations of SeaWorld Entertainment, Inc. and its consolidated subsidiaries.

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
 
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 MARKET AND INDUSTRY DATA
Market data and industry statistics and forecasts used throughout this prospectus are based on the good faith estimates of management, which in turn are based upon management’s reviews of independent industry publications, reports by market research firms and other independent and publicly available sources. Although we believe that these third-party sources are reliable, we do not guarantee the accuracy or completeness of this information and have not independently verified this information. Similarly, internal Company surveys, while believed by us to be reliable, have not been verified by any independent sources. Unless we indicate otherwise, market data and industry statistics used throughout this prospectus are for the year ended December 31, 2011.
In this prospectus (i) references to the “TEA/AECOM Report” refer to Theme Index: The Global Attractions Attendance Report , TEA/AECOM, 2011, (ii) references to the “Freedonia Report” refer to The Freedonia Group Inc.’s Focus on Amusement Parks report dated July 2011 and (iii) references to the “IBISWorld Report” refer to the IBISWorld Industry Report 71311: Amusement Parks in the US dated July 2012. Unless otherwise noted, attendance rankings included in this prospectus are based on the TEA/AECOM Report and theme park industry statistics are based on the Freedonia Report and/or the IBISWorld Report.
Although we are not aware of any misstatements regarding the industry data that we present in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Risk Factors,” “Special Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus.
 TRADEMARKS, SERVICE MARKS AND TRADENAMES
We own or have rights to use a number of registered and common law trademarks, service marks and trade names in connection with our business in the United States and in certain foreign jurisdictions, including SeaWorld Entertainment ™ , SeaWorld Parks & Entertainment ™ , SeaWorld ® , Shamu ® , Busch Gardens ® , Aquatica ™ , Discovery Cove ® , Sea Rescue™ and other names and marks that identify our theme parks, characters, rides, attractions and other businesses. In addition, we have certain rights to use Sesame Street ® marks, characters and related indicia through certain license agreements with Sesame Workshop (f/k/a Children’s Television Workshop) (“Sesame Workshop”).
Solely for convenience, the trademarks, service marks, and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners.
 BASIS OF PRESENTATION
On December 1, 2009, investment funds affiliated with The Blackstone Group L.P. and certain co-investors, through SeaWorld Entertainment, Inc. and its wholly-owned subsidiary, SeaWorld Parks & Entertainment, Inc. (“SWPEI”), acquired 100% of the equity interests of Sea World LLC (f/k/a SeaWorld, Inc.) and SeaWorld Parks & Entertainment LLC (f/k/a Busch Entertainment Corporation) from certain subsidiaries of Anheuser-Busch Companies, Inc. We refer to this acquisition and related
 
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financing transactions as the “2009 Transactions.” As a result of the 2009 Transactions, Blackstone and the other co-investors currently own, through SW Cayman L.P., SW Cayman A L.P., SW Cayman B L.P., SW Cayman C L.P., SW Delaware D L.P., SW Cayman E L.P., SW Cayman F L.P., SW Cayman Co-Invest L.P., SW Cayman (GS) L.P. and SW Cayman (GSO) L.P. (collectively, the “Partnerships”), 100% of the common stock of SeaWorld Entertainment, Inc., the issuer in this offering. The Partnerships are the selling stockholders in this offering. For a more complete description of the Partnerships, see “Principal and Selling Stockholders” and “Certain Relationships and Related Party Transactions—Limited Partnership Agreements and Equityholders Agreement.”
As used in this prospectus, unless otherwise noted or the context otherwise requires, (i) references to the “Company,” “we,” “our” or “us” refer to SeaWorld Entertainment, Inc. and its consolidated subsidiaries, (ii) references to the “Issuer” refer to SeaWorld Entertainment, Inc. exclusive of its subsidiaries, (iii) references to “Blackstone” or the “Sponsor” refer to certain investment funds affiliated with The Blackstone Group L.P., (iv) references to the “Investor Group” refer, collectively, to Blackstone and other co-investors in the Partnerships, (v) references to the “2009 Advisory Agreement” refer to the Amended and Restated 2009 Advisory Agreement among SeaWorld Parks & Entertainment, Inc. (f/k/a SW Acquisitions Co., Inc.), Sea World Parks & Entertainment LLC, Sea World LLC and affiliates of Blackstone, (vi) references to “ABI” refer to Anheuser-Busch, Incorporated, (vii) references to “guests” refer to our theme park visitors, (viii) references to “customers” refer to any consumer of our products and services, including guests of our theme parks, (ix) references to “impressions” refer to the metric used to measure the number of times that a particular advertising message can be seen or heard through various media platforms and (x) references to the “underwriters” are to the firms listed on the cover page of this prospectus.
All references herein to a fiscal year refer to the 12 months ended December 31 of such year, and references to the first, second, third and fourth fiscal quarters refer to the three months ended March 31, June 30, September 30 and December 31, respectively.
Information presented as of and for the fiscal years ended December 31, 2011 and December 31, 2010 is derived from our audited consolidated financial statements for those periods included elsewhere in this prospectus. Information presented for the one month period ended December 31, 2009 is derived from our audited consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows for the one month period ended December 31, 2009 included elsewhere in this prospectus. The results for the one month period ended December 31, 2009 include the results of operations of the Company from December 1, 2009, the date of the 2009 Transactions, to December 31, 2009. Information presented for the nine months ended September 30, 2012 and September 30, 2011 is derived from our unaudited condensed consolidated financial statements for those periods included elsewhere in this prospectus.
The historical consolidated financial statements and financial data included in this prospectus are those of SeaWorld Entertainment, Inc. and its consolidated subsidiaries. The historical consolidated financial information and financial data for the periods prior to the 2009 Transactions (the “Predecessor Financial Information”) is not presented in this prospectus because it is not comparable and therefore not meaningful to a prospective investor. The Predecessor Financial Information does not fully reflect our operations on a stand-alone basis and we believe would not materially contribute to an investor’s understanding of our historical financial performance. The Predecessor Financial Information prepared on a basis comparable with our consolidated financial statements included in this prospectus is not available and cannot be provided without unreasonable effort and expense. We believe that the omission of the Predecessor Financial Information will not have a material impact on an investor’s understanding of our financial results and condition and related trends.
 
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 PROSPECTUS SUMMARY
This summary highlights certain significant aspects of our business and this offering. This is a summary of information contained elsewhere in this prospectus, is not complete and does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus, including the information presented under the section entitled “Risk Factors” and the consolidated financial statements and the notes thereto, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of certain factors such as those set forth in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” When making an investment decision, you should also read the discussion under “Basis of Presentation” above for the definition of certain terms used in this prospectus and a description of certain transactions and other matters described in this prospectus.

Company Overview
We are a leading theme park and entertainment company delivering personal, interactive and educational experiences that blend imagination with nature and enable our customers to celebrate, connect with and care for the natural world we share. We own or license a portfolio of globally recognized brands including such iconic brands as SeaWorld, Shamu and Busch Gardens. Over our more than 50 year history, we have built a diversified portfolio of 11 destination and regional theme parks that are grouped in key markets across the United States, many of which showcase our one-of-a-kind collection of approximately 67,000 marine and terrestrial animals. Our theme parks feature a diverse array of rides, shows and other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for our guests. In addition to our theme parks, we have recently begun to leverage our brands into media, entertainment and consumer products.
During the 12 months ended September 30, 2012, we hosted more than 24 million guests in our theme parks, including approximately 2.7 million international guests from over 55 countries and six continents, and generated an estimated 5.6 billion impressions through television, digital and other media platforms. In the year ended December 31, 2011 and the nine months ended September 30, 2012, we had total revenues of $1,330.8 million and $1,160.6 million, respectively, and net income of $19.1 million and $86.2 million, respectively. Our increasing revenue and growing profit margins, combined with our disciplined approach to capital expenditures and working capital management, enable us to generate strong and recurring cash flow.
Our portfolio of branded theme parks includes the following marquee names:
 
 	Ÿ 	 	SeaWorld .     SeaWorld is widely recognized as the leading marine-life theme park brand in the world. Our SeaWorld theme parks, located in Orlando, San Antonio and San Diego, each rank among the most highly attended theme parks in the industry and offer up-close interactive experiences and a variety of live performances, including shows featuring Shamu in specially designed amphitheaters. We offer our guests numerous animal encounters, including the opportunity to work with trainers and feed marine animals, as well as themed thrill rides and theatrical shows that creatively incorporate our one-of-a-kind animal collection.	
 
 	Ÿ 	 	Busch Gardens .     Our Busch Gardens theme parks are family-oriented destinations designed to immerse guests in foreign geographic settings. They are renowned for their beauty and award-winning landscaping and gardens and allow our guests to discover the natural side of	

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 	fun by offering a family experience featuring a variety of attractions and world class rollercoasters in a richly-themed environment. Busch Gardens Tampa presents our collection of exotic animals from Africa, Asia and Australia. Busch Gardens Williamsburg, which has been named the Most Beautiful Park in the World by the National Amusement Park Historical Association for 22 consecutive years, showcases European-themed cultural and culinary experiences, including high-quality theatrical productions.	
 
 	Ÿ 	 	Aquatica .     Our Aquatica branded water parks are premium, family-oriented destinations that are based in a South Seas-themed tropical setting. Aquatica water parks build on the aquatic theme of our SeaWorld brand and feature high-energy rides, water attractions, white-sand beaches and an innovative and entertaining presentation of marine and terrestrial animals. We position our Aquatica water parks as companion water parks to our SeaWorld theme parks in Orlando and San Diego and we have an Aquatica water park situated within our SeaWorld San Antonio theme park.	
 
 	Ÿ 	 	Discovery Cove .     Discovery Cove is a reservations only, all-inclusive, marine-life day resort adjacent to SeaWorld Orlando. Discovery Cove offers guests personal, signature experiences, including the opportunity to swim and interact with dolphins, take an underwater walking reef tour and enjoy pristine white-sand beaches and landscaped private cabanas. Discovery Cove presently limits its attendance to approximately 1,300 guests per day and features premium culinary offerings in order to provide guests with a more relaxed, intimate and high-end luxury resort experience.	
 
 	Ÿ 	 	Sesame Place .     Sesame Place is the only U.S. theme park based entirely on the award-winning television show Sesame Street. Located between Philadelphia and New York City, Sesame Place is a destination where parents and children can share in the spirit of imagination and experience Sesame Street together through whirling rides, water slides, colorful shows and furry friends. In addition, we have introduced Sesame Street brands in our other theme parks through Sesame Street-themed rides, shows, children’s play areas and merchandise.	

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Our theme parks are consistently recognized among the top theme parks in the world and rank among the most highly-attended in the industry. We generally locate our theme parks in geographical clusters, which improves our ability to serve guests by providing them with a varied, comprehensive vacation experience and valuable multi-park pricing packages, as well as improving our operating efficiency through shared overhead costs. The following table summarizes our theme park portfolio:

Location	 	Theme
Park	 	Year
Opened	 	Season	 	Animal
Habitats (2)	 	Rides (3)	 	Shows (4)	 	Play
Areas (5)	 	Events (6)	 	Distinctive
Experiences (7)	
Orlando, FL	 	  	 	1973	 	Year-
round	 	19	 	14	 	18	 	2	 	7	 	17	
	 	  	 	2000	 	Year-
round	 	5	 	0	 	0	 	0	 	0	 	5	
	 	  	 	2008	 	Year-
round	 	5	 	13	 	0	 	2	 	0	 	2	
Tampa, FL	 	  	 	1959	 	Year-
round	 	16	 	30	 	18	 	11	 	9	 	20	
	 	  	 	1980	 	Mar-Oct	 	0	 	12	 	0	 	4	 	1	 	2	
San Diego,
CA	 	  	 	1964	 	Year-
round	 	26	 	10	 	20	 	2	 	4	 	11	
	 	  	 	1996 (1)	 	May-Sep	 	2	 	11	 	0	 	0	 	0	 	0	
San Antonio,
TX	 	  	 	1988	 	Feb-Dec	 	12	 	23	 	29	 	12	 	7	 	32	
Williamsburg,
VA	 	  	 	1975	 	Mar-Oct
& Dec	 	7	 	38	 	16	 	8	 	6	 	28	
	 	  	 	1984	 	May-Sep	 	1	 	14	 	1	 	4	 	0	 	6	
Langhorne,
PA	 	  	 	1980	 	May-Oct
& Dec	 	0	 	22	 	14	 	9	 	4	 	7	
Total (8)	 	 
  	 	 	 	 	 	93	 	187	 	116	 	54	 	38	 	130	

(1)	On November 20, 2012, we acquired the Knott’s Soak City Chula Vista water park from a subsidiary of Cedar Fair, L.P. We plan to rebrand this water park as Aquatica San Diego before it re-opens in 2013.	
(2)	Represents animal habitats without a ride or show element, often adjacent to a similarly themed attraction.	
(3)	Represents rides, including mechanical rides and water slides.	
(4)	Represents annual and seasonal shows with live entertainment, animals, characters and/or 3-D or 4-D experiences.	
(5)	Represents pure play areas, typically designed for children or seasonal special event oriented, often without a queue (such as water splash areas and Halloween mazes).	
(6)	Represents special limited time events.	
(7)	Represents special experiences, such as educational tours, immersive dining experiences and swimming with animals, often limited to small groups and individuals and/or requiring a supplemental fee.	
(8)	The total number of animal habitats, rides, shows, play areas, events and distinctive experiences in our theme park portfolio varies seasonally.	

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Our Competitive Strengths
 
 	Ÿ 	 	Iconic Brands That Consumers Know and Love.     We believe that our brands are internationally recognized cultural touch points representing the intersection of “where imagination meets nature.” Our brand portfolio is highly stable, reducing our exposure to changing consumer tastes. We use our brands and intellectual property to increase awareness of our theme parks, drive attendance to our theme parks and create “out-of-park” experiences for our guests as a way to connect with them before they visit our theme parks and to stay connected with them after their visit. The popularity of our brands is evidenced by over 32 million unique visitors to our websites from January 2012 through December 2012. In addition to our theme parks, we have recently begun to leverage our brands into media, entertainment and consumer products, and our Sea Rescue television program was seen by more than 27 million viewers in its first season and has been extended for a second season.	
 
 	Ÿ 	 	World-Class, Differentiated Theme Parks.     We own and operate 11 theme parks, including five of the top 20 theme parks in the United States as measured by attendance. Our theme parks are beautifully themed and deliver high-quality entertainment, aesthetic appeal, shopping and dining and have won numerous awards, including Amusement Today’s Golden Ticket Awards for Best Landscaping. Our theme parks feature seven of the 50 highest rated steel rollercoasters in the world, led by Apollo’s Chariot, the #4 rated steel rollercoaster in the world. Our theme parks have won the top three spots in Amusement Today’s annual Golden Ticket Award for Best Marine Life Park since the award’s inception in 2006. We have over 600 attractions that appeal to guests of all ages, including 93 animal habitats, 116 shows and 187 rides. In addition, we have over 300 restaurants and specialty shops . Our theme parks appeal to the entire family and offer a broad range of experiences, ranging from emotional and educational animal encounters to thrilling rides and exciting shows. 	
 
 	Ÿ 	 	Diversified Business Portfolio.     Our portfolio of theme parks is diversified in a number of important respects. Our theme parks are located across the United States, which helps protect us from the impact of localized events. Each theme park showcases a different mix of zoological, thrill-oriented and family-friendly attractions. This varied portfolio of entertainment offerings attracts guests from a broad range of demographics and geographies. Our theme parks appeal to both regional and destination guests, which provides us with a stable attendance base while allowing us to benefit from improvements in macroeconomic conditions, including increased consumer spending and international travel.	
 
 	Ÿ 	 	One of the World’s Largest Zoological Collections.     We believe we are attractively positioned in the industry due to our ability to display our extensive animal collection in a differentiated and interactive manner. We believe we have one of the world’s largest zoological collections with approximately 67,000 animals, including approximately 7,000 marine and terrestrial animals and approximately 60,000 fish. With 28 killer whales, we have the largest group of killer whales in human care. We have established successful and innovative breeding programs that have produced 29 killer whales, 151 dolphins and 115 sea lions, among other species, and our marine animal populations are characterized by their substantial genetic diversity. More than 80% of our marine mammals were born in human care.	
 
 	Ÿ 	 	Strong Competitive Position .     Our competitive position is protected by the combination of our powerful brands, extensive animal collection and expertise and premier in-park assets located on valuable real estate. Our animal collection and zoological expertise, which have evolved over our more than four decades of caring for animals, would be very difficult to replicate. Over the past two years, we have made extensive investments in new marketable	

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 	attractions and infrastructure and we believe that our theme parks are well capitalized. The limited supply of real estate suitable for theme park development coupled with high initial capital investment, long development lead-times and zoning and other land use restrictions constrain the number of large theme parks that can be constructed. We estimate that the replacement value of our assets, including approximately 2,000 acres of owned land, exceeds $5 billion.	
 
 	Ÿ 	 	Proven and Experienced Management Team and Employees with Specialized Animal Expertise.     Our senior management team, led by Jim Atchison, our Chief Executive Officer and President, includes some of the most experienced theme park executives in the world, with an average tenure of more than 28 years in the industry. The management team is comprised of highly skilled and dedicated professionals with wide ranging experience in theme park operations, zoological operations, product development, business development and marketing. In addition, we are one of the world’s foremost zoological organizations with approximately 1,550 employees dedicated to animal welfare, training, husbandry and veterinary care.	
 
 	Ÿ 	 	Proximity of Complementary Theme Parks.     Our theme parks are grouped in key locations near large population centers across the United States, which allows us to realize revenue and operating expense efficiencies. Having theme parks located within close proximity to each other enables us to cross market and offer bundled ticket and travel packages. In addition, closely located theme parks provide operating efficiencies including sales, marketing, procurement and administrative synergies as overhead expenses are shared among the theme parks within each region. We intend to continue to capitalize on this strength through our recent acquisition of Knott’s Soak City Chula Vista in California, which will complement our SeaWorld San Diego theme park.	
 
 	Ÿ 	 	Attractive, Stable Profit Margins and Strong Cash Flow Generation.     Our attractive, stable profit margins, combined with our disciplined approach to capital expenditures and working capital management, enable us to generate strong and recurring cash flow. Five of our 11 theme parks are open year-round, reducing our seasonal cash flow volatility. In addition, we have substantial tax assets which we expect to be available to defer a portion of our cash tax burden going forward.	
 
 	Ÿ 	 	Care for Our Community and the Natural World.     Caring for our community and the natural world is a core part of our corporate identity and resonates with our guests. We focus on three core philanthropic areas: children, environment, and education. Through the power of entertainment, we are able to inspire children and educate guests of all ages. We support numerous charities and organizations across the country. For example, we are the primary supporter and corporate member of the SeaWorld & Busch Gardens Conservation Fund, a non-profit conservation foundation, which makes grants to wildlife research and conservation projects that protect wildlife and wild places worldwide. In addition, in collaboration with the government and other members of accredited stranding networks, we operate one of the world’s most respected programs to rescue ill and injured marine animals, with the goal to rehabilitate and return them back to the wild. Our animal experts have helped more than 22,000 ill, injured, orphaned and abandoned animals for more than four decades.	
Our Strategies
We plan to grow our business by increasing our existing theme park revenues through strategies designed to drive higher attendance and increase in-park per capita spending, as well as by creating new sources of revenue through expansion of our theme parks, new theme park development and extending our brands into new media, entertainment and consumer products. We believe that our

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strategies complement each other as they lead to increased brand strength and awareness and drive revenue growth and profitability. Our strategies include the following components:
 
 	Ÿ 	 	Continue to Create Memorable Experiences for Our Guests.      Our mission is to use the power of educational entertainment to continue to inspire our guests to celebrate, connect with and care for the natural world we share. We provide our guests with innovative and immersive theme park experiences, such as our 3-D, 360 degree TurtleTrek attraction at SeaWorld Orlando, which opened in 2012. We also offer guests exciting rides, animal encounters and beautifully-themed entertainment that are difficult to replicate, such as in-water experiences with beluga whales at SeaWorld Orlando and our Cheetah Hunt ride, which is a launch coaster opened in 2011 that runs alongside a cheetah habitat at Busch Gardens Tampa. As a result of these distinctive offerings, our guest surveys routinely report very high “Overall Satisfaction” scores, with 97% of recent respondents in 2012 ranking their experience good or excellent. Going forward, we will continue to develop high-quality experiences for our guests, focused on integrating our impressive animal collection with creatively themed settings and products that our guests will remember long after they leave our theme parks.	
 
 	Ÿ 	 	Drive Increased Attendance to Our Theme Parks .     We plan to drive increased attendance to our theme parks by continually introducing new attractions, differentiated experiences and enhanced service offerings. Because of the historic correlation between capital investment and increased attendance, we plan to add to our award-winning portfolio of assets and spend capital in support of marketable events, such as SeaWorld’s 50th Anniversary Celebration. We also plan to increase awareness of our theme parks and brands through effective media and marketing campaigns, including the targeted use of online and social media platforms. For example, since their introduction in 2006, our YouTube channels have attracted approximately 16 million views, and we believe that we can continue to use traditional and new media to increase awareness of our brands and drive attendance to our theme parks.	
 
 	Ÿ 	 	Expand In-Park Per Capita Spending through New and Enhanced Offerings.     We believe that by providing our guests additional and enhanced offerings at various price points, we can drive further spending in our theme parks. For example, we recently introduced an “all-day-dining deal” for a supplemental fee, which we believe has resulted in increased in-park per capita spending. In addition, we have developed iPhone and Android smartphone applications for our SeaWorld and Busch Gardens theme parks, which offer GPS navigation through the theme parks and interactive theme park maps that show the nearest dining locations, gift shops and ATMs and provide real-time updates on wait times for rides. Our guests have quickly adopted these products with over one million downloads of our smartphone applications from June 2011 through December 2012. We believe that going forward, there are significant avenues to expand guest offerings in ways that both increase guest satisfaction and provide us with incremental revenue.	
 
 	Ÿ 	 	Grow Revenue through Disciplined and Dynamic Pricing.     We are focused on increasing our revenues through a variety of ticket options and disciplined pricing and promotional strategies. We offer an array of tailored admission options, including season passes and multi-park tickets to motivate the purchase of higher value products and increase in-park per capita spending. In addition, to increase non-peak demand we offer seasonal and special events and concerts, some of which are separately priced. We have begun deploying a dynamic pricing model, which will enable us to adjust admission prices for our theme parks based on expected demand.	
 
 	Ÿ 	 	Increase Profitability through Operating Leverage and Rigorous Cost Management.     Adding incremental attendance and driving additional in-park per capita spending affords us with an opportunity to realize gains in profitability because of the fixed cost base and high operating leverage of our business. We also employ rigorous cost management	

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 	techniques to drive additional operating efficiencies. For example, we utilize a centralized procurement and strategic sourcing team and participate in several cooperative buying organizations to leverage our purchases company-wide and have also recently consolidated our marketing spending with a single agency to streamline our marketing efforts.	
 
 	Ÿ 	 	Pursue Disciplined Capital Deployment, Expansion and Acquisition Opportunities .     We pursue a disciplined capital deployment strategy focused on the development and improvement of rides, attractions and shows, as well as seek to leverage our strong brands and expertise to pursue selective domestic and international expansion and acquisition opportunities. As part of this strategy, we seek to replicate successful capital investments in particular attractions across multiple theme parks, as we did with our Journey to Atlantis watercoaster that premiered in SeaWorld Orlando and was later introduced in the other SeaWorld theme parks. We have been successful in grouping our theme parks and water parks near each other, which allows us to operate companion theme parks with reduced overhead costs and creates revenue opportunities through multi-park tickets and other joint marketing initiatives. For example, in November 2012, we acquired Knott’s Soak City Chula Vista water park, which is located near our SeaWorld San Diego theme park. We plan to re-launch the water park as Aquatica San Diego by mid-2013. We also evaluate new domestic theme park opportunities as well as potential joint venture opportunities that would allow us to expand internationally by combining our brands and zoological and operational expertise with third-party capital.	
 
 	Ÿ 	 	Leverage and Expand Our Brands to Increase Awareness and Create New Opportunities .     Our brands are highly regarded and are primarily based on our own intellectual property, which provides us with opportunities to leverage our intellectual property portfolio and develop new media, entertainment and consumer products. For example, in 2013 we will open Antarctica: Empire of the Penguin at our SeaWorld Orlando theme park that will feature a new animated penguin character, Puck, and coincide with the launch of new in-park merchandise, mobile gaming, and consumer products designed around the Puck character. In addition, we are able to expand into new media platforms by partnering with others to create new, powerful entertainment opportunities. For example, in 2012, we launched Sea Rescue, a Saturday morning television show airing on the ABC Network featuring our work to rescue injured animals in coordination with various government agencies and other rescue organizations, which attracted over 27 million viewers in its first season and has been rated as the number one show in its timeslot in a number of major U.S. markets since its debut.	
 
 	Ÿ 	 	Continue our Support of Species Conservation, Sustainability and Animal Welfare.     Our zoological know-how and coast-to-coast presence provide us with significant opportunities to contribute to global species conservation, sustainability and animal welfare initiatives. For example, our employees regularly assist in animal rescue efforts, and the non-profit SeaWorld & Busch Gardens Conservation Fund, of which we are the primary supporter and corporate member, makes grants to wildlife research and species conservation projects worldwide. Our species conservation efforts and philanthropic activities generate positive awareness and goodwill for our business. These efforts are a core part of our corporate culture and identity and resonate with our customers.	
Our Industry
We believe that the theme park industry is an attractive sector characterized by a proven business model that generates significant cash flow and has clear avenues for growth. Theme parks offer a strong consumer value proposition, particularly when compared to other forms of out-of-home entertainment such as concerts, sporting events, cruises and movies. As a result, theme parks attract a broad range of guests and generally exhibit strong margins across regions, operators, park types and macroeconomic conditions.

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According to the Freedonia Report, the U.S. theme park industry, which hosts approximately 315 million visitors per year, is comprised of a large number of venues ranging from a small group of high attendance, heavily-themed destination theme parks to a large group of lower attendance local theme parks and family entertainment centers. According to the TEA/AECOM Report, the United States is the largest theme park market in the world with six of the ten largest theme park operators and 12 of the 25 most-visited theme parks in the world. In 2011, the U.S. theme park industry generated approximately $11.0 billion in revenues, according to the IBISWorld Report, which represented a 3.0% compounded annual growth rate since 2003.
Risks Related to Our Business and this Offering
Investing in our common stock involves substantial risks, and our ability to successfully operate our business is subject to numerous risks, including those that are generally associated with operating in the theme park industry and the broader entertainment industry. Some of the more significant challenges and risks include the following:
 
 	Ÿ 	 	we could be adversely affected by a decline in discretionary consumer spending or consumer confidence. Difficult economic conditions and the unavailability of discretionary income may adversely impact attendance figures and guest spending patterns at our theme parks, which could adversely affect our revenue and profitability;	
 
 	Ÿ 	 	various factors beyond our control, including natural disasters, bad weather or forecasts of bad weather, an outbreak of infectious disease affecting our animals and a rise in oil prices and travel costs, could adversely affect attendance and guest spending patterns at our theme parks;	
 
 	Ÿ 	 	our inability to protect our valuable intellectual property rights, including as a result of intellectual property infringement claims by others resulting in the loss of our intellectual property rights, could adversely affect our business;	
 
 	Ÿ 	 	incidents or adverse publicity involving the risk of accidents, illnesses, environmental incidents and other incidents concerning our theme parks or the theme park industry generally could harm our brands and reputation, as well as negatively impact our revenue and profitability;	
 
 	Ÿ 	 	adverse litigation judgments or settlements could reduce our profitability or limit our ability to operate our business;	
 
 	Ÿ 	 	changes in or violations of federal and state regulations governing the treatment of animals, or the loss of licenses and permits required to exhibit animals, could materially adversely affect our business;	
 
 	Ÿ 	 	featuring animals at our theme parks involves some degree of risk to our employees and guests which could materially adversely affect us;	
 
 	Ÿ 	 	the loss of key personnel, including members of our senior management team who have extensive experience in the industry, may adversely affect our business;	
 
 	Ÿ 	 	the restrictions in our debt agreements may limit our flexibility in operating our business;	
 
 	Ÿ 	 	our substantial leverage could, among other things, adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations under our indebtedness; and	

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 	Ÿ 	 	other factors set forth under “Risk Factors” in this prospectus.	
Before you participate in this offering, you should carefully consider all of the information in this prospectus, including matters set forth under the heading “Risk Factors.”
Recent Developments
On November 20, 2012, we acquired the Knott’s Soak City Chula Vista water park from a subsidiary of Cedar Fair, L.P. for $15.0 million, of which approximately $12.0 million was paid at closing and the remaining $3.0 million will be paid on or before September 1, 2013, subject to customary closing costs and adjustments. We plan to rebrand this water park as Aquatica San Diego before it re-opens in mid-2013.
Corporate History and Information
SeaWorld Entertainment, Inc. was incorporated in Delaware on October 2, 2009 in connection with the 2009 Transactions and changed its name from “SW Holdco, Inc.” to SeaWorld Entertainment, Inc. on December 13, 2012.
Our principal executive offices are located at 9205 South Park Center Loop, Suite 400, Orlando, Florida 32819, and our telephone number is (407) 226-5011. We maintain a corporate website at              , as well as a number of other theme park specific and marketing websites. The information contained on our websites or that can be accessed through our websites neither constitutes part of this prospectus nor is incorporated by reference herein.
Our Sponsor
Blackstone is one of the world’s leading investment and advisory firms. Blackstone’s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Through its different investment businesses, as of September 30, 2012, Blackstone had total assets under management of approximately $204.6 billion.
After completion of this offering, affiliates of Blackstone will continue to control a majority of the voting power of our outstanding common stock. For a discussion of certain risks, potential conflicts and other matters associated with Blackstone’s control, see “Risk Factors—Risks Related to this Offering and Ownership of Our Common Stock—We will be a ‘controlled company’ within the meaning of the NYSE rules and the rules of the SEC. As a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements that provide protection to stockholders of other companies,” “Risk Factors—Risks Related to Our Business and Our Industry—Affiliates of Blackstone control us and their interests may conflict with ours or yours in the future” and “Description of Capital Stock.”

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THE OFFERING
 
Common stock offered by SeaWorld Entertainment, Inc.	             shares.	
 
Common stock offered by the selling stockholders	             shares.	
 
Common stock to be outstanding immediately after this offering	             shares.	
 
Option to purchase additional shares of common stock from the selling stockholders	             shares.	
 
Use of proceeds	We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $         million, based on the assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus. For a sensitivity analysis as to the initial public offering price and other information, see “Use of Proceeds.”	
 
 	We intend to use a portion of the net proceeds received by us from this offering to redeem $         million in aggregate principal amount of our 11% Senior Notes due 2016 (the “Senior Notes”) at a redemption price of 111.0% pursuant to a provision in the indenture governing the Senior Notes that permits us to redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of certain equity offerings and to pay estimated premiums and accrued interest thereon.	
Approximately $                 million of the net proceeds received by us from this offering will be used to make a one-time payment to an affiliate of Blackstone in connection with the termination of the 2009 Advisory Agreement as described in “Use of Proceeds.”
We intend to use the remaining proceeds received by us from this offering for other general corporate purposes.
 
 	We will not receive any proceeds from the sale of shares of common stock offered by the selling stockholders, including upon the sale of shares if the underwriters exercise their option to purchase additional shares from the selling stockholders in this offering. The selling stockholders will distribute all of the net proceeds they receive to investment funds affiliated with Blackstone and other members of the Investor Group in accordance with the agreements governing the Partnerships. See “Use of Proceeds” and “Certain Relationships and Related Party Transactions—Limited Partnership Agreements and Equityholders Agreement.”	

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Risk factors	See “Risk Factors” beginning on page 18 and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.	
 
Dividend policy	We intend to pay cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant. Our ability to pay dividends on our common stock is limited by the covenants of our senior secured credit facilities (the “Senior Secured Credit Facilities”) and the indenture governing the Senior Notes and may be further restricted by the terms of any future debt or preferred securities. See “Dividend Policy” and “Description of Indebtedness.”	
 
Proposed NYSE ticker symbol	“SEAS.”	
 
Conflicts of interest	Affiliates of Goldman, Sachs & Co. hold $300.0 million in aggregate principal amount of the Senior Notes. As described under “Use of Proceeds,” a portion of the net proceeds from this offering will be used to redeem $                 million in aggregate principal amount of the Senior Notes and such affiliates of Goldman, Sachs & Co. will receive their pro rata share of such redemption amount. Affiliates of Goldman, Sachs & Co. also own Class A Units and Class B Units in certain of the Partnerships that collectively own 100% of our common stock and such affiliates will receive a portion of the net proceeds to the selling stockholders. Because Goldman, Sachs & Co. is an underwriter in this offering and its affiliates are expected to receive more than 5% of the net proceeds of this offering due to the redemption and the proceeds to the selling stockholders, Goldman, Sachs & Co. is deemed to have a “conflict of interest” under Rule 5121 (“Rule 5121”) of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Accordingly, this offering will be conducted in accordance with Rule 5121, which requires, among other things, that a “qualified independent underwriter” has participated in the preparation of, and has exercised the usual standards of “due diligence” with respect to, the registration statement and this prospectus. Citigroup Global Markets Inc. has agreed to act as qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act of 1933, as amended (the “Securities Act”), specifically including those inherent in Section 11 of the Securities Act. See “Underwriting (Conflicts of Interest).”	

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The number of shares of our common stock to be outstanding immediately after the consummation of this offering is based on              shares of common stock outstanding as of             , and does not give effect to              shares of common stock reserved for future issuance under the new incentive plan (the “2013 Omnibus Incentive Plan”).
Unless we indicate otherwise or the context otherwise requires, all information in this prospectus:
 
 	Ÿ 	 	assumes (1) no exercise of the underwriters’ option to purchase additional shares and (2) an initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus;	
 
 	Ÿ 	 	reflects a      for one stock split of our common stock, to be effected prior to the consummation of this offering; and	
 
 	Ÿ 	 	assumes the filing and effectiveness of our amended and restated certificate of incorporation immediately prior to the consummation of this offering.	

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables set forth our summary historical consolidated financial and operating data for the periods and as of the dates indicated.
We derived the summary consolidated statements of operations data for the years ended December 31, 2011 and December 31, 2010 and the one month period ended December 31, 2009 from our audited consolidated financial statements included elsewhere in this prospectus. The financial information for the one month period ended December 31, 2009 is presented because the Company became a stand-alone entity on December 1, 2009 in connection with the 2009 Transactions. See “Basis of Presentation.”
We derived the unaudited statement of operations data for the nine months ended September 30, 2012 and September 30, 2011 and the balance sheet data as of September 30, 2012 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. In the opinion of management, such unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of our results for those periods. The results of operations for these interim periods are not necessarily indicative of the results to be expected for a full year or any future period. Our historical operating results are not necessarily indicative of future operating results.
The consolidated balance sheet data as of September 30, 2012 is presented:
 
 	Ÿ 	 	on an actual basis;	
 
 	Ÿ 	 	on an as adjusted basis to reflect (i) the issuance and sale of              shares of our common stock in this offering based on the assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, (ii) the redemption of $         million in aggregate principal amount of the Senior Notes at a redemption price of 111.0% and (iii) the payment of $         million to Blackstone in connection with the termination of the 2009 Advisory Agreement as described in “Use of Proceeds.”	
The summary historical consolidated financial data set forth below should be read in conjunction with “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included elsewhere in this prospectus.

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 	 	Nine Months
Ended September 30,	 	 	Year Ended
December 31,	 	 	One Month
Period Ended
December 31,	 	
 	 	2012	 	 	2011	 	 	2011	 	 	2010	 	 	2009 (1)	 	
 	 	(Amounts in thousands, except per share and per capita
amounts)	 	
Statement of operations data:	 	 	(unaudited)	  	 				 				 				
Net revenues	 				 				 				 				
Admissions	 	$	715,842	  	 	$	666,097	  	 	$	824,937	  	 	$	730,368	  	 	$	45,060	  	
Food, merchandise and other	 	 	444,737	  	 	 	412,637	  	 	 	505,837	  	 	 	465,735	  	 	 	27,918	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	 	 	1,160,579	  	 	 	1,078,734	  	 	 	1,330,774	  	 	 	1,196,103	  	 	 	72,978	  	
Costs and expenses	 				 				 				 				
Cost of food, merchandise and other revenues	 	 	99,109	  	 	 	89,736	  	 	 	112,498	  	 	 	97,871	  	 	 	5,472	  	
Operating expenses	 	 	560,145	  	 	 	521,390	  	 	 	687,999	  	 	 	673,829	  	 	 	51,957	  	
Selling, general and administrative	 	 	150,571	  	 	 	142,447	  	 	 	172,368	  	 	 	159,506	  	 	 	11,544	  	
Depreciation and amortization	 	 	122,085	  	 	 	154,862	  	 	 	213,592	  	 	 	207,156	  	 	 	17,973	  	
Acquisition-related expenses	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	67,966	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	 	 	931,910	  	 	 	908,435	  	 	 	1,186,457	  	 	 	1,138,362	  	 	 	154,912	  	
Operating income (loss)	 	 	228,669	  	 	 	170,299	  	 	 	144,317	  	 	 	57,741	  	 	 	(81,934	) 	
Other income (expense), net	 	 	2,110	  	 	 	(1,661	) 	 	 	(1,679	) 	 	 	1,937	  	 	 	30	  	
Interest expense	 	 	86,263	  	 	 	83,960	  	 	 	110,097	  	 	 	134,383	  	 	 	11,501	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	 	 	144,516	  	 	 	84,678	  	 	 	32,541	  	 	 	(74,705	) 	 	 	(93,405	) 	
Provision for (benefit from) income taxes	 	 	58,273	  	 	 	34,719	  	 	 	13,428	  	 	 	(29,241	) 	 	 	(35,664	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	86,243	  	 	$	49,959	  	 	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to common stockholders	 	$	86,243	  	 	$	49,959	  	 	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Per share data:	 				 				 				
Basic net income (loss) per share	 	$	8.36	  	 	$	4.93	  	 	$	1.88	  	 	$	(4.50)	  	 	$	(5.72)	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted net income (loss) per share	 	$	8.28	  	 	$	4.90	  	 	$	1.86	  	 	$	(4.50)	  	 	$	(5.72)	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pro forma basic net income per share	 	$ 	   	(2)  	 				 	$ 	   	(2)  	 				 				
	 	 	 	 	 				 	 	 	 	 				 				
Pro forma diluted net income per share	 	$ 	   	(2)  	 				 	$ 	   	(2)  	 				 				
	 	 	 	 	 				 	 	 	 	 				 				
Weighted-average number of shares used in per share amounts	 				 				 				 				 				
Basic	 	 	10,310	  	 	 	10,138	  	 	 	10,174	  	 	 	10,100	  	 	 	10,100	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	 	10,413	  	 	 	10,205	  	 	 	10,253	  	 	 	10,100	  	 	 	10,100	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other financial and operating data:	 				 				 				 				
Adjusted EBITDA (3)	 	$	365,749	  	 	$	337,893	  	 	$	382,059	  	 	$	343,276	  	 	$	8,379	  	
Capital expenditures	 	 	154,976	  	 	 	163,551	  	 	 	225,316	  	 	 	120,196	  	 	 	3,149	  	
Attendance	 	 	19,862	  	 	 	19,040	  	 	 	23,631	  	 	 	22,433	  	 	 	1,402	  	
Total revenue per capita	 	$	58.43	  	 	$	56.66	  	 	$	56.31	  	 	$	53.32	  	 	$	52.05	  	

 	  	As of September 30, 2012	 	
 	  	Actual	 	  	  As adjusted  	 	
Consolidated balance sheet data (at end of period):	  	 	(unaudited)	  	  				
Cash and cash equivalents	  	$	142,843	  	  	 	     	(4)  	
Total assets	  	 	2,611,240	  	  				
Total long-term debt	  	 	1,827,665	  	  				
Total equity	  	 	458,410	  	  				

(1)	Reflects our financial results from December 1, 2009 to December 31, 2009, which is the period in which we first became an independent, stand-alone entity following the 2009 Transactions.	
(2)	Calculated using the number of shares that would be required to be sold at the initial public offering price to fund the portion of the $500.0 million dividend declared in March 2012 that exceeds net income for such period and the repayment of the Senior Notes. See “Use of Proceeds.”	
(3)	Under the indenture governing the Senior Notes and under our Senior Secured Credit Facilities, our ability to engage in activities such as incurring additional indebtedness, making investments, refinancing certain indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on Adjusted EBITDA.	

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The Senior Notes and our Senior Secured Credit Facilities generally define “Adjusted EBITDA” as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, as further adjusted to exclude certain unusual, non-cash, and other items permitted in calculating covenant compliance under the indenture governing the Senior Notes and our Senior Secured Credit Facilities.
We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants in the indenture governing the Senior Notes and in our Senior Secured Credit Facilities. Adjusted EBITDA is a material component of these covenants. In addition, investors, lenders, financial analysts and rating agencies have historically used EBITDA-related measures in our industry, along with other measures to evaluate a company’s ability to meet its debt service requirement, to estimate the value of a company and to make informed investment decisions. We also use Adjusted EBITDA in connection with certain components of our executive compensation program as described under “Management—Compensation Discussion and Analysis.”
Adjusted EBITDA is not a recognized term under generally accepted accounting principles in the United States (“GAAP”), and should not be considered in isolation or as a substitute for a measure of our liquidity or performance prepared in accordance with GAAP and is not indicative of income from operations as determined under GAAP. Adjusted EBITDA and other non-GAAP financial measures have limitations which should be considered before using these measures to evaluate our liquidity or financial performance. Adjusted EBITDA, as presented by us, may not be comparable to similarly titled measures of other companies due to varying methods of calculation.
We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income (loss). The following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA:

 	  	Nine Months Ended
September 30,	 	  	Years Ended December 31,	 	 	One Month
Period Ended
December 31,	 	
 	  	2012	 	  	2011	 	  	        2011        	 	  	        2010        	 	 	          2009           	 	
 	  	(Dollars in thousands)	 	
Net income (loss)	  	$	86,243	  	  	$	49,959	  	  	$	19,113	  	  	$	(45,464	) 	 	$	(57,741	) 	
Provision for (benefit from) income taxes	  	 	58,273	  	  	 	34,719	  	  	 	13,428	  	  	 	(29,241	) 	 	 	(35,664	) 	
Interest expense	  	 	86,263	  	  	 	83,960	  	  	 	110,097	  	  	 	134,383	  	 	 	11,501	  	
Depreciation and amortization expense	  	 	122,085	  	  	 	154,862	  	  	 	213,592	  	  	 	207,156	  	 	 	17,973	  	
Deferred revenue write-downs (a)	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	17,348	  	 	 	2,678	  	
Non-cash compensation expense (b)	  	 	1,361	  	  	 	437	  	  	 	823	  	  	 	—  	  	 	 	—  	  	
Acquisition-related adjustments (c)	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	67,966	  	
Advisory fee (d)	  	 	5,075	  	  	 	4,948	  	  	 	6,012	  	  	 	4,704	  	 	 	290	  	
Carve-out costs (e)	  	 	—  	  	  	 	5,679	  	  	 	6,085	  	  	 	45,330	  	 	 	1,376	  	
Non-cash expenses (f)	  	 	5,282	  	  	 	2,888	  	  	 	12,468	  	  	 	9,060	  	 	 	—  	  	
Debt refinancing costs (g)	  	 	1,000	  	  	 	441	  	  	 	441	  	  	 	—  	  	 	 	—  	  	
Chula Vista acquisition (h)	  	 	167	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Adjusted EBITDA	  	$	365,749	  	  	$	337,893	  	  	$	382,059	  	  	$ 	343,276 	(i)  	 	$	8,379	  	

 	(a)	Reflects amortization of deferred revenue that would have occurred absent purchase accounting relating to the 2009 Transactions.	
 	(b)	Reflects non-cash compensation expense associated with the grants of partnership interests in the Partnerships recorded under “Equity-based Compensation” in our consolidated financial statements.	
 	(c)	Reflects charges related to the 2009 Transactions, including third-party professional fees relating to the purchase of the Company by the Investor Group and related financing transactions.	
 	(d)	Reflects historical fees paid to an affiliate of the Sponsor under the 2009 Advisory Agreement. In connection with this offering, we intend to terminate the 2009 Advisory Agreement in accordance with its terms. See “Certain Relationships and Related Party Transactions—Advisory Agreement and Support and Services Agreement.”	
 	(e)	Reflects certain carve-out costs and savings related to our separation from ABI and the establishment of certain operations at the Company on a stand-alone basis. These amounts primarily consist of the cost of third-party professional services, relocation expenses, severance costs and cost savings related to the termination of certain employees.	
 	(f)	Reflects non-cash expenses related to miscellaneous asset write-offs and non-cash gains/losses on foreign currencies.	
 	(g)	Reflects certain costs related to the 2012 and 2011 amendments to our Senior Secured Credit Facilities.	
 	(h)	Reflects certain costs related to our acquisition of the Knott’s Soak City Chula Vista water park.	

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 	(i)	The adjustments for the year ended December 31, 2010 include approximately $20.9 million of adjustments permitted under our debt covenants related to our separation from ABI and certain restructuring costs. As we established some of the services provided to us by ABI at the Company, such services became part of our ongoing cost structure and accordingly, we did not use these adjustments for any periods subsequent to the year ended December 31, 2010. Adjusted EBITDA excluding such adjustments would have been $322,376 for the year ended December 31, 2010.	
(4)	The as adjusted amount is calculated based on the mid-point of the range set forth on the cover of this prospectus and reflects the receipt of the net proceeds to us from this offering, the payment of $         million to Blackstone in connection with the termination of the 2009 Advisory Agreement and the redemption of $         million in aggregate principal amount of the Senior Notes as described in “Use of Proceeds.”	

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 RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider each of the following risks as well as the other information included in this prospectus, including “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, before investing in our common stock. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. In such a case, the trading price of the common stock could decline and you may lose all or part of your investment in the Company.
Risks Related to Our Business and Our Industry
We could be adversely affected by a decline in discretionary consumer spending or consumer confidence.
Our success depends to a significant extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability of discretionary income. The recent severe economic downturn, coupled with high volatility and uncertainty as to the future global economic landscape, has had and continues to have an adverse effect on consumers’ discretionary income and consumer confidence.
Difficult economic conditions and recessionary periods may adversely impact attendance figures, the frequency with which guests choose to visit our theme parks and guest spending patterns at our theme parks. The actual or perceived weakness in the economy could also lead to decreased spending by our guests. For example, in 2009 and 2010, we experienced a decline in attendance as a result of the global economic crisis, which in turn adversely affected our revenue and profitability. Both attendance and total per capita spending at our theme parks are key drivers of our revenue and profitability, and reductions in either can materially adversely affect our business, financial condition and results of operations.
Various factors beyond our control could adversely affect attendance and guest spending patterns at our theme parks.
Various factors beyond our control could adversely affect attendance and guest spending patterns at our theme parks. These factors could also affect our suppliers, vendors, insurance carriers and other contractual counterparties. Such factors include:
 
 	Ÿ 	 	war, terrorist activities or threats and heightened travel security measures instituted in response to these events;	
 
 	Ÿ 	 	outbreaks of pandemic or contagious diseases or consumers’ concerns relating to potential exposure to contagious diseases;	
 
 	Ÿ 	 	natural disasters, such as hurricanes, fires, earthquakes, tsunamis, tornados, floods and volcanic eruptions and man-made disasters such as the oil spill in the Gulf of Mexico, which may deter travelers from scheduling vacations or cause them to cancel travel or vacation plans;	
 
 	Ÿ 	 	bad weather and even forecasts of bad weather, including abnormally hot, cold and/or wet weather;	
 
 	Ÿ 	 	changes in the desirability of particular locations or travel patterns of our guests;	
 
 	Ÿ 	 	low consumer confidence;	
 
 	Ÿ 	 	oil prices and travel costs and the financial condition of the airline, automotive and other transportation-related industries, any travel-related disruptions or incidents and their impact on travel; and	
 
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 	Ÿ 	 	actions or statements by U.S. and foreign governmental officials related to travel and corporate travel-related activities (including changes to the U.S. visa rules) and the resulting public perception of such travel and activities.	
Any one or more of these factors could adversely affect attendance and total per capita spending at our theme parks, which could materially adversely affect our business, financial condition and results of operations.
Our intellectual property rights are valuable, and any inability to protect them could adversely affect our business.
Our intellectual property, including our trademarks, service marks, domain names, copyrights, patent and other proprietary rights, constitutes a significant part of the value of the Company. To protect our intellectual property rights, we rely upon a combination of trademark, copyright, patent, trade secret and unfair competition laws of the United States and other countries, as well as contract provisions and third-party policies and procedures governing internet/domain name registrations. However, there can be no assurance that these measures will be successful in any given case, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States. We may be unable to prevent the misappropriation, infringement or violation of our intellectual property rights, breaching any contractual obligations to us, or independently developing intellectual property that is similar to ours, any of which could reduce or eliminate any competitive advantage we have developed, adversely affect our revenues or otherwise harm our business.
We have obtained and applied for numerous U.S. and foreign trademark and service mark registrations and will continue to evaluate the registration of additional trademarks and service marks or other intellectual property, as appropriate. We cannot guarantee that any of our pending applications will be approved by the applicable governmental authorities. Moreover, even if the applications are approved, third parties may seek to oppose or otherwise challenge these registrations. A failure to obtain registrations for our intellectual property in the United States and other countries could limit our ability to protect our intellectual property rights and impede our marketing efforts in those jurisdictions.
We are actively engaged in enforcement and other activities to protect our intellectual property rights. If it became necessary for us to resort to litigation to protect these rights, any proceedings could be burdensome, costly and divert the attention of our personnel, and we may not prevail. In addition, any repeal or weakening of laws or enforcement in the United States or internationally intended to protect intellectual property rights could make it more difficult for us to adequately protect our intellectual property rights, negatively impacting their value and increasing the cost of enforcing our rights.
We may be subject to claims for infringing the intellectual property rights of others, which could be costly and result in the loss of significant intellectual property rights.
We cannot be certain that we do not and will not infringe the intellectual property rights of others. We have been in the past, and may be in the future, subject to litigation and other claims in the ordinary course of our business based on allegations of infringement or other violations of the intellectual property rights of others. Regardless of their merits, intellectual property claims can divert the efforts of our personnel and are often time-consuming and expensive to litigate or settle. In addition, to the extent claims against us are successful, we may have to pay substantial money damages or discontinue, modify, or rename certain products or services that are found to be in violation of another party’s rights. We may have to seek a license (if available on acceptable terms, or at all) to continue offering products and services, which may significantly increase our operating expenses.
 
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Incidents or adverse publicity concerning our theme parks or the theme park industry generally could harm our brands or reputation as well as negatively impact our revenues and profitability.
Our brands and our reputation are among our most important assets. Our ability to attract and retain customers depends, in part, upon the external perceptions of the Company, the quality of our theme parks and services and our corporate and management integrity. The operation of theme parks involves the risk of accidents, illnesses, environmental incidents and other incidents which may negatively affect the perception of guest and employee safety, health, security and guest satisfaction and which could negatively impact our brands or reputation and our business and results of operations. An accident or an injury at any of our theme parks or at theme parks operated by competitors, particularly an accident or an injury involving the safety of guests and employees, that receives media attention, is the topic of a book, film, documentary or is otherwise the subject of public discussions, may harm our brands or reputation, cause a loss of consumer confidence in the Company, reduce attendance at our theme parks and negatively impact our results of operations. Such incidents have occurred in the past and may occur in the future. In addition, other types of adverse publicity concerning our business or the theme park industry generally could harm our brands, reputation and results of operations. The considerable expansion in the use of social media over recent years has compounded the impact of negative publicity.
Animals in our care are important to our theme parks, and they could be exposed to infectious diseases.
Many of our theme parks are distinguished from those of our competitors in that we offer guest interactions with animals. Individual animals, specific species of animals or groups of animals in our collection could be exposed to infectious diseases. While we have never had any such experiences, an outbreak of an infectious disease among any animals in our theme parks or the public’s perception that a certain disease could be harmful to human health may materially adversely affect our animal collection, our business, financial condition and results of operations.
We are subject to complex federal and state regulations governing the treatment of animals which can change and to claims and lawsuits by activist groups before government regulators and in the courts.
We operate in a complex and evolving regulatory environment and are subject to various federal and state statutes and regulations and international treaties implemented by federal law. The states in which we operate also regulate zoological activity involving the import and export of exotic and native wildlife, endangered and/or otherwise protected species, zoological display and anti-cruelty statutes. We incur significant compliance costs in connection with these regulations and violation of such regulations could subject us to fines and penalties and result in the loss of our licenses and permits, which, if occurred, could impact our ability to display certain animals. Future amendments to existing statutes, regulations and treaties or new statutes, regulations and treaties may potentially restrict our ability to maintain our animals, or to acquire new ones to supplement or sustain our breeding programs or otherwise adversely affect our business.
Additionally, from time to time, animal activist and other third-party groups may make claims before government agencies and/or bring lawsuits against us. Such claims and lawsuits sometimes are based on allegations that we do not properly care for some of our marquee animals. On other occasions, such claims and/or lawsuits are specifically designed to change existing law or enact new law in order to impede our ability to retain, exhibit, acquire or breed animals. While we seek to structure our operations to comply with all applicable federal and state laws and vigorously defend ourselves when sued, there are no assurances as to the outcome of future claims and lawsuits that could be brought against us. In addition, associated negative publicity could adversely affect our reputation and results of operations.
 
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Featuring animals at our theme parks involves risks.
Our theme parks feature numerous displays and interactions that include animals. All animal enterprises involve some degree of risk. All animal interaction by our employees and our guests in attractions in our theme parks, where offered, involves risk. While we maintain strict safety procedures for the protection of our employees and guests, injuries or death, while rare, have occurred in the past. For example, in February 2010, a trainer was killed while engaged in an interaction with a killer whale. Following this incident, we were subject to an inspection by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA), which resulted in three citations concerning alleged violations of the Occupational Safety and Health Act and certain regulations thereunder. We have appealed certain of these citations and the appeal process is ongoing. In connection with this incident, we reviewed and revised our safety protocols and made certain safety-related facility enhancements. In addition, this incident has been the subject of significant media attention, including television and newspaper coverage, a documentary and a book, as well as discussions in social media. This incident and similar events that may occur in the future may harm our reputation, reduce attendance and negatively impact our business, financial condition and results of operations.
We maintain insurance of the type and in amounts that we believe is commercially reasonable and that is available to animal enterprise related businesses in the theme park industry. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention applicable thereto, the level of aggregate coverage available, or the availability of coverage for specific risks.
If we lose licenses and permits required to exhibit animals and/or violate laws and regulations, our business will be adversely affected.
We are required to hold government licenses and permits, some of which are subject to yearly or periodic renewal, for purposes of possessing, exhibiting and maintaining animals. Although our theme parks’ licenses and permits have always been renewed in the past, in the event that any of our licenses or permits are not renewed or any of our licenses or permits are revoked, portions of the affected theme park might not be able to remain open for purpose of displaying or retaining the animals covered by such license or permit. Such an outcome could materially adversely affect our business, financial condition and results of operations.
In addition, we are subject to periodic inspections by federal and state agencies and the subsequent issuance of inspection reports. While we believe that we comply with, or exceed, requisite care and maintenance standards that apply to our animals, government inspectors can cite us for alleged statutory or regulatory violations. In unusual instances when we are cited for an alleged deficiency, we are most often given the opportunity to correct any purported deficiencies without penalty. It is possible, however, that in some cases a federal or state regulator could seek to impose monetary fines on us. In the past, when we have been subjected to governmental claims for fines, the amounts involved were not material to our business, financial condition or results of operations. However, while highly unlikely, we cannot predict whether any future fines that regulators might seek to impose would materially adversely affect our business, financial condition or results of operations.
Moreover, many of the statutes under which we operate allow for the imposition of criminal sanctions. While neither of the foregoing situations are likely to occur, either could negatively affect the business, financial condition or results of operations at our theme parks.
A significant portion of our revenues are generated in the State of Florida and in the Orlando market.
Approximately 56% of our revenues are generated in the State of Florida. In addition, our revenues and results of operations depend significantly on the results of our Orlando theme parks. The
 
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Orlando theme park market is extremely competitive, with a high concentration of theme parks operated by several companies. As a result, any risks described in this prospectus affecting the State of Florida generally or our Orlando theme parks in particular may materially adversely affect our business, financial condition or results of operations. For example, in 2004, the State of Florida was impacted by Hurricanes Charley, Frances and Jeanne, which caused extensive physical damage and power outages in various parts of the State of Florida. Although we attempted to manage our exposure to such events by implementing our hurricane preparedness plan, our theme parks located in Orlando and Tampa, Florida experienced closures of several days as a result of these storms.
Because we operate in a highly competitive industry, our revenues, profits or market share could be harmed if we are unable to compete effectively.
The entertainment industry, and the theme park industry in particular, is highly competitive. Our theme parks compete with other theme, water and amusement parks and with other types of recreational facilities and forms of entertainment, including movies, home entertainment options, sports attractions, restaurants and vacation travel.
Principal direct competitors of our theme parks include theme parks operated by The Walt Disney Company, Universal Studios, Six Flags, Cedar Fair, Merlin Entertainments and Hershey Entertainment and Resorts Company. The principal competitive factors of a theme park include location, price, originality and perceived quality of the rides and attractions, the atmosphere and cleanliness of the theme park, the quality of its food and entertainment, weather conditions, ease of travel to the theme park (including direct flights by major airlines), and availability and cost of transportation to a theme park. Certain of our direct competitors have substantially greater financial resources than we do, and they may be able to adapt more quickly to changes in guest preferences or devote greater resources to promotion of their offerings and attractions than us. Our competitors may be able to attract guests to their theme parks in lieu of our own through the development or acquisition of new rides, attractions or shows that are perceived by guests to be of a higher quality and entertainment value. As a result, we may not be able to compete successfully against such competitors.
If we lose key personnel, our business may be adversely affected.
Our success depends in part upon a number of key employees, including members of our senior management team who have extensive experience in the industry. The loss of the services of our key employees could have a materially adverse effect on our business. Presently, we do not have employment agreements with any of our key employees.
Increased labor costs and employee health and welfare benefits may reduce our results of operations.
Labor is a primary component in the cost of operating our business. We devote significant resources to recruiting and training our managers and employees. Increased labor costs due to competition, increased minimum wage or employee benefit costs or otherwise, would adversely impact our operating expenses. The Patient Protection and Affordable Care Act of 2010 and proposed amendments thereto contain provisions which could materially impact our future healthcare costs. While the legislation’s ultimate impact is not yet known, it is possible that these changes could significantly increase our compensation costs, which would reduce our net income and adversely affect our cash flows.
Unionization activities or labor disputes may disrupt our operations and affect our profitability.
Although none of our employees are currently covered under collective bargaining agreements, we cannot guarantee that our employees will not elect to be represented by labor unions in the future.
 
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If some or all of our employees were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements, it could adversely affect our business, financial condition or results of operations. In addition, a labor dispute involving some or all of our employees may disrupt our operations and reduce our revenues, and resolution of disputes may increase our costs.
Although we maintain binding policies that require employees to submit to a mandatory alternative dispute resolution procedure in lieu of other remedies, as employers, we may be subject to various employment-related claims, such as individual or class actions or government enforcement actions relating to alleged employment discrimination, employee classification and related withholding, wage-hour, labor standards or healthcare and benefit issues. Such actions, if brought against us and successful in whole or in part, may affect our ability to compete or materially adversely affect our business, financial condition or results of operations.
Our business depends on our ability to meet our workforce needs.
Our success depends on our ability to attract, train, motivate and retain qualified employees to keep pace with our needs, including employees with certain specialized skills in the field of animal training and care. If we are unable to do so, our results of operations and cash flows may be adversely affected.
In addition, we employ a significant seasonal workforce. We recruit year-round to fill thousands of seasonal staffing positions each season and work to manage seasonal wages and the timing of the hiring process to ensure the appropriate workforce is in place. There is no assurance that we will be able to recruit and hire adequate seasonal personnel as the business requires or that we will not experience material increases in the cost of securing our seasonal workforce in the future. Increased seasonal wages or an inadequate workforce could materially adversely affect our business, financial condition or results of operations.
Our growth strategy may not achieve the anticipated results.
Our future success will depend on our ability to grow our business, including through capital investments to improve existing and create new theme parks, rides, attractions and shows, as well as in-park product offerings and product offerings outside of our theme parks. Our growth and innovation strategies require significant commitments of management resources and capital investments and may not grow our revenues at the rate we expect or at all. As a result, we may not be able to recover the costs incurred in developing our new projects and initiatives or to realize their intended or projected benefits, which could materially adversely affect our business, financial condition or results of operations.
We may not be able to fund theme park capital expenditures and investment in future attractions and projects.
A principal competitive factor for a theme park is the originality and perceived quality of its rides and attractions. We need to make continued capital investments through maintenance and the regular addition of new rides and attractions. Our ability to fund capital expenditures will depend on our ability to generate sufficient cash flow from operations and to raise capital from third parties. We cannot assure you that our operations will be able to generate sufficient cash flow to fund such costs, or that we will be able to obtain sufficient financing on adequate terms, or at all, which could cause us to delay or abandon certain projects or plans.
 
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The high fixed cost structure of theme park operations can result in significantly lower margins if revenues decline.
A large portion of our expenses is relatively fixed because the costs for full-time employees, maintenance, animal care, utilities, advertising and insurance do not vary significantly with attendance. These fixed costs may increase at a greater rate than our revenues and may not be able to be reduced at the same rate as declining revenues. If cost-cutting efforts are insufficient to offset declines in revenues or are impracticable, we could experience a material decline in margins, revenues, profitability and reduced or negative cash flows. Such effects can be especially pronounced during periods of economic contraction or slow economic growth, such as the recent economic recession.
If we are unable to maintain certain commercial licenses, our business, reputation and brand could be adversely affected.
We rely on licenses from Sesame Workshop to use the Sesame Place tradename and trademark and certain other intellectual property rights, including titles, marks, characters, logos and designs from the Sesame Street television series within our Sesame Place theme park and with respect to Sesame Street themed areas within certain areas of some of our other theme parks, as well as in connection with the sales of certain Sesame Street themed products. Our use of these intellectual property rights is subject to the approval of Sesame Workshop and the licenses may be terminated in certain limited circumstances or in the event of our bankruptcy. Furthermore, the current term of both the Sesame Place theme park license and the multi-park license expire on December 31, 2021, and there is no assurance that we will be able to renegotiate the use of such intellectual property on commercially acceptable terms or at all. The new terms of the licenses may significantly increase our operating expenses, or otherwise adversely affect our business.
ABI is the owner of the Busch Gardens trademarks and domain names. ABI has granted us a perpetual, exclusive, worldwide, royalty-free license to use the Busch Gardens trademark and certain related domain names in connection with the operation, marketing, promotion and advertising of certain of our theme parks, as well as in connection with the production, use, distribution and sale of merchandise sold in connection with such theme parks. Under the license, we are required to indemnify ABI against losses related to our use of the marks. If we were to lose or have to renegotiate this license, our business may be adversely affected.
Changes in consumer tastes and preferences for entertainment and consumer products could reduce demand for our entertainment offerings and products and adversely affect the profitability of our business.
The success of our business depends on our ability to consistently provide, maintain and expand theme park attractions as well as create and distribute media programming, online material and consumer products that meet changing consumer preferences. In addition, consumers from outside the United States constitute an increasingly important portion of our theme park attendance, and our success depends in part on our ability to successfully predict and adapt to tastes and preferences of this consumer group. If our entertainment offerings and products do not achieve sufficient consumer acceptance or if consumer preferences change, our business, financial condition or results of operations could be materially adversely affected.
Our existing debt agreements contain, and future debt agreements may contain, restrictions that may limit our flexibility in operating our business.
Our existing debt agreements contain, and documents governing our future indebtedness may contain, numerous financial and operating covenants that limit the discretion of management with respect to certain business matters. These covenants place restrictions on, among other things, our
 
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ability to incur additional indebtedness, pay dividends and other distributions, make capital expenditures, make certain loans, investments and other restricted payments, enter into agreements restricting our subsidiaries’ ability to pay dividends, engage in certain transactions with stockholders or affiliates, sell certain assets or engage in mergers, acquisitions and other business combinations, amend or otherwise alter the terms of our indebtedness, alter the business that we conduct, guarantee indebtedness or incur other contingent obligations and create liens. Our existing debt agreements also require, and documents governing our future indebtedness may require, us to meet certain financial ratios and tests. Our ability to comply with these and other provisions of the existing debt agreements is dependent on our future performance, which will be subject to many factors, some of which are beyond our control. The breach of any of these covenants or non-compliance with any of these financial ratios and tests could result in an event of default under the existing debt agreements, which, if not cured or waived, could result in acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration or cross-default provisions. Variable rate indebtedness subjects us to the risk of higher interest rates, which could cause our future debt service obligations to increase significantly.
Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our indebtedness.
We are highly leveraged. As of September 30, 2012, as adjusted to give effect to the completion of this offering and the use of proceeds therefrom to repay a portion of the Senior Notes, our total indebtedness would have been approximately $         million. Our high degree of leverage could have important consequences, including the following: (i) a substantial portion of our cash flow from operations is dedicated to the payment of principal and interest on indebtedness, thereby reducing the funds available for operations, future business opportunities and capital expenditures; (ii) our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate purposes in the future may be limited; (iii) certain of the borrowings are at variable rates of interest, which will increase our vulnerability to increases in interest rates; (iv) we are at a competitive disadvantage to lesser leveraged competitors; (v) we may be unable to adjust rapidly to changing market conditions; (vi) the debt service requirements of our other indebtedness could make it more difficult for us to satisfy our financial obligations; and (vii) we may be vulnerable in a downturn in general economic conditions or in our business and we may be unable to carry out activities that are important to our growth.
Our ability to make scheduled payments of the principal of, or to pay interest on, or to refinance indebtedness depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital markets. If unable to generate sufficient cash flow to service our debt or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our debt, which could cause us to default on our obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations. We from time to time may increase the amount of our indebtedness, modify the terms of our financing arrangements, issue dividends, make capital expenditures and take other actions that may substantially increase our leverage.
Despite our significant leverage, we may be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our significant leverage.
 
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Our operating results are subject to seasonal fluctuations.
We have historically experienced and expect to continue to experience seasonal fluctuations in our annual theme park attendance and revenue, which are typically higher in our second and third quarters, partly because six of our theme parks are only open for a portion of the year. Approximately two-thirds of our attendance and revenues are generated in the second and third quarters of the year and we typically incur a net loss in the first and fourth quarters. In addition, school vacations and school start dates also cause fluctuations in our quarterly theme park attendance and revenue.
Furthermore, the operating season at some of our theme parks, including Adventure Island, Aquatica San Diego, Busch Gardens Williamsburg, Water Country USA and Sesame Place, is of limited duration. In addition, most of our expenses for maintenance and costs of adding new attractions at our seasonal theme parks are incurred when the operating season is over, which may increase the need for borrowing to fund such expenses during such periods.
When conditions or events described in this section occur during the operating season, particularly during the second and third quarters, there is only a limited period of time during which the impact of those conditions or events can be mitigated. Accordingly, such conditions or events may have a disproportionately adverse effect on our revenues and cash flow.
We may not realize the benefits of acquisitions or other strategic initiatives.
Our business strategy may include selective expansion, both domestically and internationally, through acquisitions of assets or other strategic initiatives, such as joint ventures, that allow us to profitably expand our business and leverage our brands. The success of our acquisitions depends on effective integration of acquired businesses and assets into our operations, which is subject to risks and uncertainties, including realization of anticipated synergies and cost savings, the ability to retain and attract personnel, the diversion of management’s attention from other business concerns, and undisclosed or potential legal liabilities of an acquired businesses or assets. Additionally, any international transactions are subject to additional risks, including the impact of economic fluctuations in economies outside of the United States, difficulties and costs of staffing and managing foreign operations due to distance, language and cultural differences, as well as political instability and lesser degree of legal protection in certain jurisdictions, currency exchange fluctuations and potentially adverse tax consequences of overseas operations.
Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved in the normal course of our business could reduce our profits or limit our ability to operate our business.
We are subject to allegations, claims and legal actions arising in the ordinary course of our business, which may include claims by third parties, including guests who visit our theme parks, our employees or regulators. The outcome of many of these proceedings cannot be predicted. If any of these proceedings were to be determined adversely to us, a judgment, a fine or a settlement involving a payment of a material sum of money were to occur, or injunctive relief were issued against us, our business, financial condition and results of operations could be materially adversely affected.
Our insurance coverage may not be adequate to cover all possible losses that we could suffer and our insurance costs may increase.
We seek to maintain comprehensive insurance coverage at commercially reasonable rates. Although we maintain various safety and loss prevention programs and carry property and casualty insurance to cover certain risks, our insurance policies do not cover all types of losses and liabilities. There can be no assurance that our insurance will be sufficient to cover the full extent of all losses or
 
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liabilities for which we are insured, and we cannot guarantee that we will be able to renew our current insurance policies on favorable terms, or at all. In addition, if we or other theme park operators sustain significant losses or make significant insurance claims, then our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected.
We may be unable to purchase or contract with third-party manufacturers for our theme park rides and attractions.
We may be unable to purchase or contract with third parties to build high quality rides and attractions and to continue to service and maintain those rides and attractions at competitive or beneficial prices, or to provide the replacement parts needed to maintain the operation of such rides. In addition, if our third-party suppliers’ financial condition deteriorates or they go out of business, we may not be able to obtain the full benefit of manufacturer warranties or indemnities typically contained in our contracts or may need to incur greater costs for the maintenance, repair, replacement or insurance of these assets.
Our operations and our ownership of property subject us to environmental requirements, and to environmental expenditures and liabilities.
We incur costs to comply with environmental requirements, such as those relating to water use, wastewater and storm water management and disposal, air emissions control, hazardous materials management, solid and hazardous waste disposal, and the clean-up of properties affected by regulated materials.
We have been required and continue to investigate and clean-up hazardous or toxic substances or chemical releases, and other releases, from current or formerly owned or operated facilities. In addition, in the ordinary course of our business, we generate, use and dispose of large volumes of water, including saltwater, which requires us to comply with a number of federal, state and local regulations and to incur significant expenses. Failure to comply with such regulations could subject us to fines and penalties and/or require us to incur additional expenses. Although we are not now classified as a large quantity generator of hazardous waste, we do store and handle hazardous materials to operate and maintain our equipment and facilities and have done so historically.
We cannot assure you that we will not be required to incur substantial costs to comply with new or expanded environmental requirements in the future or to investigate or clean-up new or newly identified environmental conditions, which could also impair our ability to use or transfer the affected properties and to obtain financing.
Cyber security risks and the failure to maintain the integrity of internal or guest data could result in damages to our reputation and/or subject us to costs, fines or lawsuits.
We collect and retain large volumes of internal and guest data, including credit card numbers and other personally identifiable information, for business purposes, including for transactional or target marketing and promotional purposes, and our various information technology systems enter, process, summarize and report such data. We also maintain personally identifiable information about our employees. The integrity and protection of our guest, employee and Company data is critical to our business and our guests and employees have a high expectation that we will adequately protect their personal information. The regulatory environment, as well as the requirements imposed on us by the credit card industry, governing information, security and privacy laws is increasingly demanding and continue to evolve. Maintaining compliance with applicable security and privacy regulations may increase our operating costs and/or adversely impact our ability to market our theme parks, products and services to our guests. Furthermore, a penetrated or compromised data system or the intentional,
 
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inadvertent or negligent release or disclosure of data could result in theft, loss, fraudulent or unlawful use of guest, employee or Company data which could harm our reputation or result in remedial and other costs, fines or lawsuits.
The suspension or termination of any of our business licenses may have a negative impact on our business.
We maintain a variety of business licenses issued by federal, state and local authorities that are renewable on a periodic basis. We cannot guarantee that we will be successful in renewing all of our licenses on a periodic basis. The suspension, termination or expiration of one or more of these licenses could materially adversely affect our revenues and profits. In addition, any changes to the licensing requirements for any of our licenses could affect our ability to maintain the licenses.
We have a limited operating history as a stand-alone company, which makes it difficult to predict our future prospects and financial performance.
We began operating as a stand-alone company in December 2009, following the 2009 Transactions, and, as a result, have a limited operating history as an independent company. Accordingly, you should consider our future prospects in light of the risks and challenges encountered by a company with a limited operating history. There can be no assurance that we will be able to successfully meet the challenges, uncertainties, expenses and difficulties encountered by us or that we will be successful in accomplishing our objectives. Our limited operating history as a stand-alone company makes it difficult to predict our future prospects and financial performance.
Affiliates of Blackstone control us and their interests may conflict with ours or yours in the future.
Immediately following this offering of common stock, affiliates of Blackstone will beneficially own approximately     % of our common stock, or approximately     % if the underwriters exercise in full their option to purchase additional shares. As a result, investment funds associated with or designated by affiliates of Blackstone will have the ability to elect all of the members of our Board of Directors and thereby control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, the incurrence or modification of debt by us, amendments to our amended and restated certificate of incorporation and amended and restated bylaws and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with your interests. In addition, Blackstone may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you. For example, Blackstone could cause us to make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets. Additionally, in certain circumstances, acquisitions of debt at a discount by purchasers that are related to a debtor can give rise to cancellation of indebtedness income to such debtor for U.S. federal income tax purposes.
Blackstone is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. For example, Blackstone owns a substantial stake in Merlin Entertainments Group, which operates the Legoland theme parks, and certain other investments in the leisure and hospitality industries.
Our amended and restated certificate of incorporation will provide that none of Blackstone, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar
 
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business activities or lines of business in which we operate. Blackstone also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. So long as affiliates of Blackstone continue to own a significant amount of our combined voting power, even if such amount is less than 50%, Blackstone will continue to be able to strongly influence or effectively control our decisions and, so long as Blackstone and its affiliates collectively own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, it will be able to appoint individuals to our Board of Directors under a stockholders agreement which we expect to adopt in connection with this offering. In addition, Blackstone will be able to determine the outcome of all matters requiring stockholder approval and will be able to cause or prevent a change of control of the Company or a change in the composition of our Board of Directors and could preclude any unsolicited acquisition of the Company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of the Company and ultimately might affect the market price of our common stock.
Risks Related to this Offering and Ownership of Our Common Stock
No market currently exists for our common stock, and an active, liquid trading market for our common stock may not develop, which may cause our common stock to trade at a discount from the initial offering price and make it difficult for you to sell the common stock you purchase.
Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in the Company will lead to the development of a trading market on the NYSE or otherwise or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling any of our common stock that you purchase. The initial public offering price for the shares will be determined by negotiations between us, the selling stockholders and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.
You will incur immediate and substantial dilution in the net tangible book value of the shares you purchase in this offering.
Prior stockholders have paid substantially less per share of our common stock than the price in this offering. The initial public offering price of our common stock will be substantially higher than the net tangible book value per share of outstanding common stock prior to completion of the offering. Based on our net tangible book value as of September 30, 2012 and upon the issuance and sale of              shares of common stock by us at an assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, if you purchase our common stock in this offering, you will pay more for your shares than the amounts paid by our existing stockholders for their shares and you will suffer immediate dilution of approximately $         per share in net tangible book value. Dilution is the amount by which the offering price paid by purchasers of our common stock in this offering will exceed the pro forma net tangible book value per share of our
 
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common stock upon completion of this offering. If the underwriters exercise their option to purchase additional shares, you will experience additional dilution. You may experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees, executive officers and directors under our current and future stock incentive plans, including our 2013 Omnibus Incentive Plan. See “Dilution.”
Our stock price may change significantly following the offering, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.
The trading price of our common stock is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. We, the selling stockholders and the underwriters will negotiate to determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price due to a number of factors such as those listed in “—Risks Related to Our Business and Our Industry” and the following:
 
 	Ÿ 	 	results of operations that vary from the expectations of securities analysts and investors;	
 
 	Ÿ 	 	results of operations that vary from those of our competitors;	
 
 	Ÿ 	 	changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;	
 
 	Ÿ 	 	declines in the market prices of stocks generally, or those of amusement and theme parks companies;	
 
 	Ÿ 	 	strategic actions by us or our competitors;	
 
 	Ÿ 	 	announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;	
 
 	Ÿ 	 	changes in general economic or market conditions or trends in our industry or markets;	
 
 	Ÿ 	 	changes in business or regulatory conditions;	
 
 	Ÿ 	 	future sales of our common stock or other securities;	
 
 	Ÿ 	 	investor perceptions or the investment opportunity associated with our common stock relative to other investment alternatives;	
 
 	Ÿ 	 	the public’s response to press releases or other public announcements by us or third parties, including our filings with the Securities and Exchange Commission (the “SEC”);	
 
 	Ÿ 	 	announcements relating to litigation;	
 
 	Ÿ 	 	guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;	
 
 	Ÿ 	 	the development and sustainability of an active trading market for our stock;	
 
 	Ÿ 	 	changes in accounting principles; and	
 
 	Ÿ 	 	other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.	
These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.
 
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In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
We cannot assure you that we will pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.
After completion of this offering, we intend to pay cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant. For more information, see “Dividend Policy.” There can be no assurance that we will pay a dividend in the future or continue to pay any dividend if we do commence paying dividends.
If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts ceases coverage of the Company or fail to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline.
After this offering, the sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
Upon consummation of this offering we will have a total of              shares of common stock outstanding. Of the outstanding shares, the              shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”), including our directors, executive officers and other affiliates (including affiliates of Blackstone) may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale.”
The remaining              shares, representing     % of our total outstanding shares of common stock following this offering, will be “restricted securities” within the meaning of Rule 144 and subject to certain restrictions on resale following the consummation of this offering. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in “Shares Eligible for Future Sale.”
In connection with this offering, we, our directors and executive officers, and holders of substantially all of our common stock prior to this offering have each agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this
 
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prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives of the underwriters. See “Underwriting (Conflicts of Interest)” for a description of these lock-up agreements.
Upon the expiration of the lock-up agreements described above, the remaining              shares will be eligible for resale, of which              would be subject to volume, manner of sale and other limitations under Rule 144. In addition, pursuant to a registration rights agreement entered into in connection with the 2009 Transactions, we granted the Partnerships the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act. By exercising their registration rights and selling a large number of shares, the Partnerships could cause the prevailing market price of our common stock to decline. Following completion of this offering, the shares covered by registration rights would represent approximately     % of our outstanding common stock (or     %, if the underwriters exercise in full their option to purchase additional shares). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”
As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.
In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.
Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
These provisions provide for, among other things:
 
 	Ÿ 	 	a classified Board of Directors with staggered three-year terms;	
 
 	Ÿ 	 	the ability of our Board of Directors to issue one or more series of preferred stock;	
 
 	Ÿ 	 	advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;	
 
 	Ÿ 	 	certain limitations on convening special stockholder meetings;	
 
 	Ÿ 	 	the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66  2 / 3 % in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if Blackstone and its affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors; and	
 
 	Ÿ 	 	that certain provisions may be amended only by the affirmative vote of the holders of at least 66  2 / 3 % in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if Blackstone and its affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors.	
 
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These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See “Description of Capital Stock.”
We will be a “controlled company” within the meaning of the NYSE rules and the rules of the SEC. As a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.
After completion of this offering, affiliates of Blackstone will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:
 
 	Ÿ 	 	the requirement that a majority of our Board of Directors consist of “independent directors” as defined under the rules of the NYSE;	
 
 	Ÿ 	 	the requirement that our director nominees be selected, or recommended for our Board of Directors’ selection, either (1) by a majority of independent directors in a vote by independent directors, pursuant to a nominations process adopted by a Board of Directors resolution, or (2) by a nominating/governance committee comprised solely of independent directors with a written charter addressing the nominations process;	
 
 	Ÿ 	 	the requirement that the compensation of our executive officers be determined, or recommended to our Board of Directors for determination, by a majority of independent directors in a vote by independent directors, or a compensation committee comprised solely of independent directors; and	
 
 	Ÿ 	 	the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.	
Following this offering, we intend to utilize these exemptions. As a result, we will not have a majority of independent directors, our nominating/corporate governance committee, if any, and compensation committee will not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.
In addition, on June 20, 2012, the SEC passed final rules implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 pertaining to compensation committee independence and the role and disclosure of compensation consultants and other advisers to the compensation committee. The SEC’s rules directed each of the national securities exchanges (including the NYSE on which we intend to list our common stock) to develop listing standards requiring, among other things, that:
 
 	Ÿ 	 	compensation committees be composed of fully independent directors, as determined pursuant to new independence requirements;	
 
 	Ÿ 	 	compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel and other committee advisors; and	
 
 	Ÿ 	 	compensation committees be required to consider, when engaging compensation consultants, legal counsel or other advisors, certain independence factors, including factors that examine the relationship between the consultant or advisor’s employer and us.	
On January 11, 2013, the SEC approved the proposed listing standards of the national securities exchanges.
 
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As a “controlled company,” we will not be subject to these compensation committee independence requirements.
We may be unsuccessful in implementing required internal controls over financial reporting.
We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act of 2002, and are therefore not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that purpose. Upon becoming a public company, our management will be required to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal controls over financial reporting.
In connection with the audit for the year ended December 31, 2011, we identified certain significant deficiencies in our internal controls over financial reporting. If we fail to remediate the significant deficiencies identified, fail to remediate any significant deficiencies or material weaknesses that may be identified in the future, or encounter problems or delays in the implementation of internal controls over financial reporting, we may be unable to conclude that our internal controls over financial reporting are effective. Any failure to develop or maintain effective controls or any difficulties encountered in our implementation of our internal controls over financial reporting could result in material misstatements that are not prevented or detected on a timely basis, which could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. Ineffective internal controls could cause investors to lose confidence in us and the reliability of our financial statements and cause a decline in the price of our common stock.
Non-U.S. holders who own or owned more than a certain ownership threshold may be subject to United States federal income tax on gain realized on the disposition of our common stock.
We believe that we are currently a U.S. real property holding corporation for U.S. federal income tax purposes. So long as our common stock continues to be regularly traded on an established securities market, a non-U.S. holder (as defined in “Material United States Federal Income and Estate Tax Consequences to Non-U.S. Holders”) who purchases common stock in this offering and holds or held (at any time during the shorter of the five year period preceding the date of disposition or the holder’s holding period) more than 5% of our common stock will be subject to United States federal income tax on the disposition of our common stock. Non-U.S. holders should consult their own tax advisors concerning the consequences of disposing of shares of our common stock.
 
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 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts included in this prospectus, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position and our business outlook, business trends and other information referred to under “Prospectus Summary,” “Risk Factors,” “Dividend Policy,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” are forward-looking statements. When used in this prospectus, the words “estimates,” “expects,” “contemplates,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “may,” “should” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.
There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this prospectus. Such risks, uncertainties and other important factors include, among others, the risks, uncertainties and factors set forth above under “Risk Factors,” and the following risks, uncertainties and factors:
 
 	Ÿ 	 	a decline in discretionary consumer spending or consumer confidence;	
 
 	Ÿ 	 	various factors beyond our control adversely affecting attendance and guest spending at our theme parks;	
 
 	Ÿ 	 	inability to protect our intellectual property or the infringement on intellectual property rights of others;	
 
 	Ÿ 	 	incidents or adverse publicity concerning our theme parks;	
 
 	Ÿ 	 	outbreak of infectious disease affecting our animals;	
 
 	Ÿ 	 	change in federal and state regulations governing the treatment of animals;	
 
 	Ÿ 	 	featuring animals at our theme parks;	
 
 	Ÿ 	 	the loss of licenses and permits required to exhibit animals;	
 
 	Ÿ 	 	significant portion of revenues generated in the State of Florida and the Orlando market;	
 
 	Ÿ 	 	inability to compete effectively;	
 
 	Ÿ 	 	loss of key personnel;	
 
 	Ÿ 	 	increased labor costs;	
 
 	Ÿ 	 	unionization activities or labor disputes;	
 
 	Ÿ 	 	inability to meet workforce needs;	
 
 	Ÿ 	 	inability to execute our growth strategy;	
 
 	Ÿ 	 	inability to fund theme park capital expenditures;	
 
 	Ÿ 	 	high fixed cost structure of theme park operations;	
 
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 	Ÿ 	 	inability to maintain certain commercial licenses;	
 
 	Ÿ 	 	changing consumer tastes and preferences;	
 
 	Ÿ 	 	restrictions in our debt agreements limiting flexibility in operating our business;	
 
 	Ÿ 	 	our substantial leverage;	
 
 	Ÿ 	 	seasonal fluctuations;	
 
 	Ÿ 	 	inability to realize the benefits of acquisitions or other strategic initiatives;	
 
 	Ÿ 	 	adverse litigation judgments or settlements;	
 
 	Ÿ 	 	inadequate insurance coverage;	
 
 	Ÿ 	 	inability to purchase or contract with third-party manufacturers for rides and attractions;	
 
 	Ÿ 	 	environmental regulations, expenditures and liabilities;	
 
 	Ÿ 	 	cyber security risks;	
 
 	Ÿ 	 	suspension or termination of any of our business licenses;	
 
 	Ÿ 	 	our limited operating history as a stand-alone company; and	
 
 	Ÿ 	 	Blackstone’s control of us.	
There may be other factors that may cause our actual results to differ materially from the forward-looking statements, including factors disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.
We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this prospectus apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this prospectus. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
 
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 USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $         million from the sale of              shares of our common stock in this offering, based on the assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses. Pursuant to the registration rights agreement entered into in connection with the 2009 Transactions, we will pay all expenses (other than underwriting discounts and commissions) of the selling stockholders in connection with this offering. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.
We intend to use a portion of the net proceeds received by us from this offering to redeem $         million in aggregate principal amount of the Senior Notes at a redemption price of 111.0% pursuant to a provision in the indenture governing the Senior Notes that permits us to redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of certain equity offerings and to pay estimated premiums and accrued interest thereon. As of September 30, 2012, $400.0 million aggregate principal amount of the Senior Notes was outstanding. The Senior Notes mature on December 1, 2016 and have an interest rate of 11.0%. See “Description of Indebtedness.”
In connection with this offering, we intend to terminate the 2009 Advisory Agreement in accordance with its terms. We will use approximately $                 million of the net proceeds to us from this offering to pay a one-time termination fee to an affiliate of Blackstone in connection with the termination of the 2009 Advisory Agreement. See “Certain Relationships and Related Party Transactions—Advisory Agreement and Support and Services Agreement.”
We intend to use the remaining proceeds received by us from this offering for other general corporate purposes.
An increase (decrease) of 1,000,000 shares from the expected number of shares to be sold by us in this offering, assuming no change in the assumed initial public offering price per share, which is the mid-point of the range set forth on the cover page of this prospectus, would increase (decrease) our net proceeds from this offering by $         million. A $1.00 increase (decrease) in the assumed initial public offering price of $         per share, based on the mid-point of the range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by $         million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
 
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 DIVIDEND POLICY
In 2011 and 2012, we paid special dividends of $110.1 million and $500.0 million, respectively, to our stockholders (net of required withholdings).
After completion of this offering, we intend to pay cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant.
Our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur. In particular, the ability of our subsidiaries to distribute cash to SeaWorld Entertainment, Inc. to pay dividends is limited by covenants in our Senior Secured Credit Facilities and the indenture governing the Senior Notes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Indebtedness” for a description of the restrictions on our ability to pay dividends.
 
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 CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2012:
 
 	Ÿ 	 	on an actual basis; and	
 
 	Ÿ 	 	on an as adjusted basis to give effect to (1) the sale by us of approximately              shares of our common stock in this offering, after deducting estimated underwriting discounts and commissions and offering expenses payable by us, and (2) the application of the estimated net proceeds from the offering, as described in “Use of Proceeds,” at an assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus.	
You should read this table in conjunction with the information contained in “Use of Proceeds,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Indebtedness,” as well as the consolidated financial statements and the notes thereto included elsewhere in this prospectus.

 	  	            As of September 30,  2012            	 	
 	  	Actual	 	 	As adjusted for
this offering (1)	 	
 	  	(Dollars in thousands, except per share
amounts)	 	
Cash and cash equivalents	  	$	142,843	  	 	$	            	  	
	  	 	 	 	 	 	 	 	
Long-term debt, including current portion of long-term debt:	  				 				
Senior Secured Credit Facility:	  				 				
Revolving Credit Facility	  	 	—  	  	 				
Tranche A Term Loans	  	 	153,875	  	 				
Tranche B Term Loans	  	 	1,297,128	  	 				
Senior Notes	  	 	400,000	  	 				
Unamortized discount on long term-debt	  	 	(23,338	) 	 				
	  	 	 	 	 				
Total debt	  	 	1,827,665	  	 				
	  	 	 	 	 				
Stockholders’ equity:	  				 				
Common stock, $0.01 par value, 12,000,000 shares authorized, actual; 10,310,266 shares issued and outstanding, actual;              shares authorized, as adjusted; and              shares issued and outstanding, as adjusted)	  	 	103	  	 				
Additional paid-in capital	  	 	457,328	  	 				
Accumulated other comprehensive loss	  	 	(1,172	) 	 				
Retained earnings	  	 	2,151	  	 				
	  	 	 	 	 				
Total stockholders’ equity (deficit)	  	 	458,410	  	 				
	  	 	 	 	 				
Total capitalization	  	$	2,286,075	  	 				

(1)	To the extent we change the number of shares of common stock sold by us in this offering from the shares we expect to sell or we change the initial public offering price from the assumed initial offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, or any combination of these events occurs, the net proceeds to us from this offering and each of total stockholders’ equity deficit and total capitalization may increase or decrease. A $1.00 increase (decrease) in the assumed initial public offering price per share of the common stock, assuming no change in the number of shares of common stock to be sold, would increase (decrease) the net proceeds that we receive in this offering and each of total stockholders’ equity deficit and total capitalization by approximately $         million. An increase (decrease) of 1,000,000 shares in the expected number of shares to be sold in the offering, assuming no change in the assumed initial offering price per share, would increase (decrease) our net proceeds from this offering and our total stockholders’ equity and total capitalization by approximately $         million. To the extent we raise less than $         million of proceeds in this offering, we will reduce the amount of indebtedness that will be repaid.	
 
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 DILUTION
If you invest in our common stock in this offering, your ownership interest in us will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock as adjusted to give effect to this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the shares of common stock held by existing stockholders.
Our net tangible book value as of September 30, 2012 was approximately $         million, or $         per share of our common stock. We calculate net tangible book value per share by taking the amount of our total tangible assets, reduced by the amount of our total liabilities, and then dividing that amount by the total number of shares of common stock outstanding.
After giving effect to our sale of the shares in this offering at an assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us, our pro forma net tangible book value per share of our common stock as adjusted to give effect to this offering on September 30, 2012 would have been $         million, or $         per share of our common stock. This amount represents an immediate increase in net tangible book value (or a decrease in net tangible book deficit) of $         per share to existing stockholders and an immediate and substantial dilution in net tangible book value of $         per share to new investors purchasing shares in this offering at the assumed initial public offering price.
The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share	  	$	            	  	
Net tangible book value (deficit) per share as of September 30, 2012	  				
Increase in net tangible book value per share attributable to new investors purchasing shares in this offering	  				
Pro forma net tangible book value (deficit) per share of common stock, as adjusted to give effect to this offering	  				
	  	 	 	 	
Dilution per share to new investors in this offering	  	$	 	  	
	  	 	 	 	
Dilution is determined by subtracting pro forma net tangible book value per share of common stock, as adjusted to give effect to this offering, from the initial public offering price per share of common stock.
Assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting estimated underwriting discounts and commissions and offering expenses payable by us, a $1.00 increase or decrease in the assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, would increase or decrease the net tangible book value attributable to new investors purchasing shares in this offering by $         per share and the dilution to new investors by $         per share and increase or decrease the pro forma net tangible book value per share, as adjusted to give effect to this offering, by $         per share.
 
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The following table summarizes, as of September 30, 2012, the differences between the number of shares purchased from us, the total consideration paid to us, and the average price per share paid by existing stockholders and by new investors. As the table shows, new investors purchasing shares in this offering will pay an average price per share substantially higher than our existing stockholders paid. The table below assumes an initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, for shares purchased in this offering and excludes underwriting discounts and commissions and estimated offering expenses payable by us:

 	  	Shares Purchased	 	 	Total Consideration	 	 	Average
Price Per
Share	 	
 	  	  Number  	  	  Percent  	 	 	  Amount  	 	  	  Percent  	 	 			
Existing stockholders	  		  	 	    	% 	 	$	            	  	  	 	    	% 	 	$	            	  	
New investors	  		  				 				  				 				
Total	  		  	 	    	% 	 	$	 	  	  	 	    	% 	 	$	 	  	
If the underwriters were to fully exercise the underwriters’ option to purchase              additional shares of our common stock, the percentage of shares of our common stock held by existing stockholders who are directors, officers or affiliated persons would be     % and the percentage of shares of our common stock held by new investors would be     %.
Assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting estimated underwriting discounts and commissions and offering expenses payable by us, a $1.00 increase or decrease in the assumed initial public offering price of $         per share, which is the mid-point of the range set forth on the cover page of this prospectus, would increase or decrease total consideration paid by new investors and total consideration paid by all stockholders by approximately $         million.
 
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 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables set forth our selected historical consolidated financial and operating data as of the dates and for the periods indicated:
 
 	Ÿ 	 	for each of the fiscal years ended December 31, 2011 and December 31, 2010 and for the one month period ended December 31, 2009;	
 
 	Ÿ 	 	as of and for the nine months ended September 30, 2012; and	
 
 	Ÿ 	 	for the nine months ended September 30, 2011.	
The selected financial data for each of the fiscal years ended December 31, 2011 and December 31, 2010 and for the one month period ended December 31, 2009 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected financial data as of September 30, 2012 and for the nine months ended September 30, 2012 and September 30, 2011 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. In the opinion of management, such unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for those periods. The results of operations for these interim periods are not necessarily indicative of the results to be expected for a full year or any future period. Our historical operating results are not necessarily indicative of future operating results.
On December 1, 2009, investment funds affiliated with Blackstone and certain co-investors, through SeaWorld Entertainment, Inc. and its wholly-owned subsidiary, SWPEI, acquired 100% of the equity interests of Sea World LLC and SeaWorld Parks & Entertainment LLC (f/k/a Busch Entertainment Corporation) from subsidiaries of Anheuser-Busch Companies, Inc. The Predecessor Financial Information is not presented in this prospectus because it is not comparable and therefore not meaningful to a prospective investor. The Predecessor Financial Information does not fully reflect our operations on a stand-alone basis and we believe would not materially contribute to an investor’s understanding of our historical financial performance. The Predecessor Financial Information prepared on a basis comparable with our consolidated financial statements included in this prospectus is not available and cannot be provided without unreasonable effort and expense. We believe that the omission of the Predecessor Financial Information would not have a material impact on an investor’s understanding of our financial results and condition, cash flows and related trends.
The following tables should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included elsewhere in this prospectus.
 
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 	 	Nine Months Ended
September  30,	 	 	Year Ended
December 31,	 	 	One Month
Period Ended
December 31,	 	
 	 	2012	 	 	2011	 	 	2011	 	 	2010	 	 	       2009 (1)       	 	
 	 	(Amounts in thousands, except per share and per capita
amounts)	 	
 	 	(Unaudited)	 	 	 	 	 	 	 	 	 	 	
Statement of operations data:	 				 				 				 				 				
Net revenues	 				 				 				 				 				
Admissions	 	$	715,842	  	 	$	666,097	  	 	$	824,937	  	 	$	730,368	  	 	$	45,060	  	
Food, merchandise and other	 	 	444,737	  	 	 	412,637	  	 	 	505,837	  	 	 	465,735	  	 	 	27,918	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	 	 	1,160,579	  	 	 	1,078,734	  	 	 	1,330,774	  	 	 	1,196,103	  	 	 	72,978	  	
Costs and expenses	 				 				 				 				 				
Cost of food, merchandise and other revenues	 	 	99,109	  	 	 	89,736	  	 	 	112,498	  	 	 	97,871	  	 	 	5,472	  	
Operating expenses	 	 	560,145	  	 	 	521,390	  	 	 	687,999	  	 	 	673,829	  	 	 	51,957	  	
Selling, general and administrative	 	 	150,571	  	 	 	142,447	  	 	 	172,368	  	 	 	159,506	  	 	 	11,544	  	
Depreciation and amortization	 	 	122,085	  	 	 	154,862	  	 	 	213,592	  	 	 	207,156	  	 	 	17,973	  	
Acquisition-related expenses	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	67,966	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	 	 	931,910	  	 	 	908,435	  	 	 	1,186,457	  	 	 	1,138,362	  	 	 	154,912	  	
Operating income (loss)	 	 	228,669	  	 	 	170,299	  	 	 	144,317	  	 	 	57,741	  	 	 	(81,934	) 	
Other income (expense), net	 	 	2,110	  	 	 	(1,661	) 	 	 	(1,679	) 	 	 	1,937	  	 	 	30	  	
Interest expense	 	 	86,263	  	 	 	83,960	  	 	 	110,097	  	 	 	134,383	  	 	 	11,501	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	 	 	144,516	  	 	 	84,678	  	 	 	32,541	  	 	 	(74,705	) 	 	 	(93,405	) 	
Provision for (benefit from) income taxes	 	 	58,273	  	 	 	34,719	  	 	 	13,428	  	 	 	(29,241	) 	 	 	(35,664	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	86,243	  	 	$	49,959	  	 	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to common stockholders	 	$	86,243	  	 	$	49,959	  	 	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Per share data :	 				 				 				 				 				
Basic net income (loss) per share	 	$	8.36	  	 	$	4.93	  	 	$	1.88	  	 	$	(4.50)	  	 	$	(5.72)	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted net income (loss) per share	 	$	8.28	  	 	$	4.90	  	 	$	1.86	  	 	$	(4.50)	  	 	$	(5.72)	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pro forma basic net income per share	 	$ 	   	(2)  	 				 	$ 	   	(2)  	 				 				
	 	 	 	 	 				 	 	 	 	 				 				
Pro forma diluted net income per share	 	$ 	   	(2)  	 				 	$ 	   	(2)  	 				 				
	 	 	 	 	 				 	 	 	 	 				 				
Weighted-average number of shares used in per share amounts	 				 				 				 				 				
Basic	 	 	10,310	  	 	 	10,138	  	 	 	10,174	  	 	 	10,100	  	 	 	10,100	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	 	10,413	  	 	 	10,205	  	 	 	10,253	  	 	 	10,100	  	 	 	10,100	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other financial and operating data:	 				 				 				 				 				
Capital expenditures	 	$	154,976	  	 	$	163,551	  	 	$	225,316	  	 	$	120,196	  	 	$	3,149	  	
Attendance	 	 	19,862	  	 	 	19,040	  	 	 	23,631	  	 	 	22,433	  	 	 	1,402	  	
Total revenue per capita	 	$	58.43	  	 	$	56.66	  	 	$	56.31	  	 	$	53.32	  	 	$	52.05	  	

 	  	As of
September 30, 2012	 	
 	  	(In thousands)
(Unaudited)	 	
Consolidated balance sheet data (at end of period):	  				
Cash and cash equivalents	  	$	142,843	  	
Total assets	  	 	2,611,240	  	
Total long-term debt	  	 	1,827,665	  	
Total equity	  	 	458,410	  	

(1)	Reflects our financial results from December 1, 2009 to December 31, 2009, which is the period in which we first became an independent, stand-alone entity in connection with the 2009 Transactions.	
(2)	Calculated using the number of shares that would be required to be sold at the initial public offering price to fund the portion of the $500.0 million dividend declared in March 2012 that exceeds net income for such period and the repayment of the Senior Notes. See “Use of Proceeds.”	
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with “Selected Historical Consolidated Financial Data” and the historical consolidated financial statements and the notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” section of this prospectus. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”
Business Overview
We are a leading theme park and entertainment company delivering personal, interactive and educational experiences that blend imagination with nature and enable our customers to celebrate, connect with and care for the natural world we share. We own or license a portfolio of globally recognized brands with broad demographic appeal including such iconic brands as SeaWorld, Shamu and Busch Gardens. Over our more than 50 year history, we have built a diversified portfolio of 11 destination and regional theme parks that are grouped in key markets across the United States, many of which showcase our one-of-a-kind collection of approximately 67,000 marine and terrestrial animals. Our theme parks feature a diverse array of rides, shows and other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for our guests. In addition to our theme parks, we have recently begun to leverage our brands into media, entertainment and consumer products. During the 12 months ended September 30, 2012, we hosted more than 24 million guests in our theme parks, including approximately 2.7 million international guests from over 55 countries and six continents, and generated an estimated 5.6 billion impressions through television, digital and other media platforms. In the year ended December 31, 2011 and the nine months ended September 30, 2012, we had total revenues of $1,330.8 million and $1,160.6 million, respectively, and net income of $19.1 million and $86.2 million, respectively.
Key Business Metrics Evaluated by Management
Attendance
We define attendance as the number of guest visits to our theme parks. Increased attendance drives increased admission revenue to our theme parks as well as total in-park spending. The level of attendance at our theme parks is a function of many factors, including the opening of new attractions and shows, weather, global and regional economic conditions, competitive offerings and overall consumer confidence in the economy.
Total Revenue Per Capita
Total revenue per capita consists of admission per capita and in-park per capita spending:
 
 	Ÿ 	 	Admission Per Capita.     We calculate admission per capita for any period as total admission revenue divided by total attendance. Theme park admissions accounted for approximately 62% of our revenue for the nine months ended September 30, 2012. Over the same period of time, we reported $36.04 in admission per capita, representing an increase of 3.0%. Admission per capita is driven by ticket pricing, the mix of tickets purchased (such as single day, multi-day and annual pass) and the mix of attendance by theme parks visited.	
 
 	Ÿ 	 	In-Park Per Capita Spending.     In-park per capita spending represents the amount each guest spends on purchases of food, merchandise and other spending. For the nine months ended September 30, 2012, in-park per capita spending accounted for approximately 38% of our revenue. Over the same time period, we reported $22.39 of in-park per capita spending,	
 
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 	representing an increase of 3.3%. In-park per capita spending is driven by pricing changes, penetration levels (percentage of guests purchasing), new product offerings, the mix of guests and the mix of in-park spending.	
Trends Affecting Our Results of Operations
Our success depends to a significant extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability of discretionary income. The recent severe economic downturn, coupled with high volatility and uncertainty as to the future global economic landscape, has had and continues to have an adverse effect on consumers’ discretionary income and consumer confidence. Difficult economic conditions and recessionary periods may adversely impact attendance figures, the frequency with which guests choose to visit our theme parks and guest spending patterns at our theme parks. Historically, our revenue and attendance growth have been highly correlated with domestic economic growth, as reflected in the gross domestic product (GDP) and the overall level of growth in domestic consumer spending. For example, in 2009 and 2010, we experienced a decline in attendance as a result of the global economic crisis, which in turn adversely affected our revenue and profitability. We expect that forecasted moderate improvements in GDP and growth in domestic consumer spending will have a positive impact on our future performance. Both attendance and total per capita spending at our theme parks are key drivers of our revenue and profitability, and reductions in either can materially adversely affect our business, financial condition, results of operations and cash flows.
Seasonality
The theme park industry is seasonal in nature. Based upon historical results, we generate the highest revenues in the second and third quarters of each year, in part because six of our theme parks are only open for a portion of the year. Approximately two-thirds of our attendance and revenues are generated in the second and third quarters of the year and we typically incur a net loss in the first and fourth quarters. The mix of revenues by quarter is relatively constant, but revenues can shift between the first and second quarters due to the timing of Easter or between the first and fourth quarters due to the timing of Christmas and New Year’s. Even for our five theme parks open year-round, attendance patterns have significant seasonality, driven by holidays, school vacations and weather conditions. One of our goals in managing our business is to continue to generate cash flow throughout the year and minimize the effects of seasonality. In recent years, we have begun to encourage attendance during non-peak times by offering a variety of seasonal programs and events, such as a winter kids festival, spring concert series, and Halloween and Christmas events. In addition, during seasonally slow times, operating costs are controlled by reducing operating hours and show schedules. Employment levels required for peak operations are met largely through part-time and seasonal hiring.
Principal Factors Affecting Our Results of Operations
Revenues
Our revenues are driven primarily by attendance in our theme parks and the level of per capita spending for admission to the theme parks and per capita spending inside the theme parks for culinary, merchandise and other in-park experiences. The level of attendance in our theme parks is a function of many factors, including the opening of new attractions and shows, weather, global and regional economic conditions, competitive offerings and consumer confidence. The per capita spending for admission to the theme parks is driven by ticket pricing, the mix of ticket type purchased (such as single day, multi-day, and annual pass) and the mix of attendance by theme parks visited. In-park per capita spending is driven by pricing changes, penetration levels (percentage of guests purchasing), new product offerings, the mix of guests and the mix of in-park spending. For other factors affecting our revenues, see “Risk Factors—Risks Related to Our Business and Our Industry.”
In addition to the theme parks, we are also involved in entertainment, media, and consumer product businesses that leverage our intellectual property. While these businesses currently do not represent a
 
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material percentage of our revenue, they are important strategic drivers in terms of consumer awareness and brand building. We aim to expand these businesses into a greater source of revenue in the future.
Costs and Expenses
The principal costs of our operations are employee salaries, employee benefits, advertising, maintenance, animal care, utilities and insurance. Factors that affect our costs and expenses include commodity prices, costs for construction, repairs and maintenance, other inflationary pressures and attendance levels. A large portion of our expenses is relatively fixed because the costs for full-time employees, maintenance, animal care, utilities, advertising and insurance do not vary significantly with attendance. For factors affecting our costs and expenses, see “Risk Factors—Risks Related to Our Business and Our Industry.”
We barter theme park admission products for advertising and various other products and services. The fair value of the admission products is recognized into revenue and related expenses at the time of the exchange and approximates the fair value of the goods or services received, and such amounts are included within the theme park admission revenue and selling, general, and administrative expenses of our consolidated statements of operations related to bartered ticket transactions.
Results of Operations
The following discussion provides an analysis of our operating results for the nine months ended September 30, 2012 and 2011 and our audited consolidated financial data for the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009. This data should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus.
Comparison of the Nine Months Ended September 30, 2012 and 2011
The following table presents key operating and financial information for the nine months ended September 30, 2012 and 2011:

 	  	Nine Months Ended September 30,	 	
 	  	          2012           	 	 	          2011           	 	
 	  	(Amounts in thousands, except
per capita amounts)
(Unaudited)	 	
Statement of operations data:	  				 				
Net revenues	  				 				
Admissions	  	$	715,842	  	 	$	666,097	  	
Food, merchandise and other	  	 	444,737	  	 	 	412,637	  	
	  	 	 	 	 	 	 	 	
Total revenues	  	 	1,160,579	  	 	 	1,078,734	  	
			
Costs and expenses	  				 				
Cost of food, merchandise and other revenues	  	 	99,109	  	 	 	89,736	  	
Operating expenses	  	 	560,145	  	 	 	521,390	  	
Selling, general and administrative	  	 	150,571	  	 	 	142,447	  	
Depreciation and amortization	  	 	122,085	  	 	 	154,862	  	
	  	 	 	 	 	 	 	 	
Total costs and expenses	  	 	931,910	  	 	 	908,435	  	
Operating income	  	 	228,669	  	 	 	170,299	  	
Other income (expense), net	  	 	2,110	  	 	 	(1,661	) 	
Interest expense	  	 	86,263	  	 	 	83,960	  	
	  	 	 	 	 	 	 	 	
Income before income taxes	  	 	144,516	  	 	 	84,678	  	
Provision for income taxes	  	 	(58,273	) 	 	 	(34,719	) 	
	  	 	 	 	 	 	 	 	
Net income	  	$	86,243	  	 	$	49,959	  	
	  	 	 	 	 	 	 	 	
Other data:	  				 				
Attendance	  	 	19,862	  	 	 	19,040	  	
Total revenue per capita	  	$	58.43	  	 	$	56.66	  	
 
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Admission revenue.     Admission revenue for the nine months ended September 30, 2012 increased $49.7 million (7%) to $715.8 million as compared to $666.1 million for the nine months ended September 30, 2011. The increase in revenue was a result of a 4% increase in attendance and a 3% increase in per capita spending from $34.98 in 2011 to $36.04 in 2012. The increase in admission revenue per capita was primarily a result of higher ticket pricing and reduced discounts corresponding with the opening of the Manta rollercoaster at SeaWorld San Diego and the Aquatica attraction at SeaWorld San Antonio, as well as increased real consumer spending growth from improved macroeconomic conditions. Increased attendance was primarily driven by increased real consumer spending, as well as the opening of the Manta rollercoaster at SeaWorld San Diego, the Aquatica attraction at SeaWorld San Antonio, the TurtleTrek attraction at SeaWorld Orlando and the Verbolten rollercoaster at Busch Gardens Williamsburg.
Food, merchandise and other revenue.     Food, merchandise and other revenue for the nine months ended September 30, 2012 increased $32.1 million (8%) to $444.7 million as compared to $412.6 million for the nine months ended September 30, 2011. The increase in revenue was a result of a 4% increase in attendance and a 3% increase in per capita spending from $21.67 in 2011 to $22.39 in 2012. The increase in food, merchandise and other revenue per capita was driven primarily by price increases and product promotion.
Costs of food, merchandise and other revenues.     Costs of food, merchandise and other revenues for the nine months ended September 30, 2012 increased $9.4 million (10%) to $99.1 million as compared to $89.7 million for the nine months ended September 30, 2011. These costs represent 22.3% of related revenue earned for the nine months ended September 30, 2012 and 21.7% of related revenue earned for the nine months ended September 30, 2011. The increase in these costs as a percentage of revenue is primarily due to general commodity price increases and the impact of inflation.
Operating expenses.     Operating expenses for the nine months ended September 30, 2012 increased $38.7 million (7%) to $560.1 million as compared to $521.4 million for the nine months ended September 30, 2011. These expenses reflected 48.3% of total revenues for the nine months ended September 30, 2012 and the nine months ended September 30, 2011. The increase was primarily driven by increased operating costs relating to new attractions and increased variable costs due to our higher sales volume.
Selling, general and administrative.     Selling, general and administrative expenses for the nine months ended September 30, 2012 increased $8.2 million (6%) to $150.6 million as compared to $142.4 million for the nine months ended September 30, 2011. This increase primarily reflects an increase in marketing expenditures and higher corporate expenses resulting from the build-out of our corporate office staff.
Depreciation and amortization.     Depreciation and amortization expense for the nine months ended September 30, 2012 decreased $32.8 million (21%) to $122.1 million as compared to $154.9 million for the nine months ended September 30, 2011. The decrease was primarily attributable to the partial year impact of assets designated with two-year lives at the December 1, 2009 transaction date, which are now fully depreciated, partially offset by asset additions.
Other income (expense), net.     Other income for the nine months ended September 30, 2012 was $2.1 million as compared to other expense of $1.7 million for the nine months ended September 30, 2011. This primarily reflects the net gain or loss resulting from capital expenditures denominated in a foreign currency for the nine months ended September 30, 2012.
Interest expense.     Interest expense for the nine months ended September 30, 2012 increased $2.3 million (3%) to $86.3 million as compared to $84.0 million for the nine months ended September 30, 2011, primarily reflecting the effects of our March 2012 debt refinancing, which
 
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increased the amount of our outstanding principal balance of our long-term debt and reduced the interest rates on our long-term debt. See our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this prospectus for a further description of the terms of the refinancing.
Provision for income taxes.     Provision for income taxes for the nine months ended September 30, 2012 increased $23.6 million (68%) to $58.3 million as compared to $34.7 million for the nine months ended September 30, 2011, which primarily reflects an increase in taxable earnings and was partially offset by a 70 basis point decrease in our effective income tax rate (from 41.0% to 40.3%).
Comparison of the Years Ended December 31, 2011 and 2010
The following table presents key operating and financial information for the years ended December 31, 2011 and 2010:

 	  	Years Ended December 31,	 	
 	  	        2011        	 	 	        2010        	 	
 	  	(Amounts in thousands, except per
capita amounts)	 	
Statement of operations data:	  				 				
Net revenues	  				 				
Admissions	  	$	824,937	  	 	$	730,368	  	
Food, merchandise and other	  	 	505,837	  	 	 	465,735	  	
	  	 	 	 	 	 	 	 	
Total revenues	  	 	1,330,774	  	 	 	1,196,103	  	
Costs and expenses	  				 				
Cost of food, merchandise and other revenues	  	 	112,498	  	 	 	97,871	  	
Operating expenses	  	 	687,999	  	 	 	673,829	  	
Selling, general and administrative	  	 	172,368	  	 	 	159,506	  	
Depreciation and amortization	  	 	213,592	  	 	 	207,156	  	
	  	 	 	 	 	 	 	 	
Total costs and expenses	  	 	1,186,457	  	 	 	1,138,362	  	
Operating income	  	 	144,317	  	 	 	57,741	  	
Other (expense) income, net	  	 	(1,679	) 	 	 	1,937	  	
Interest expense	  	 	110,097	  	 	 	134,383	  	
	  	 	 	 	 	 	 	 	
Income (loss) before income taxes	  	 	32,541	  	 	 	(74,705	) 	
Provision for (benefit from) income taxes	  	 	13,428	  	 	 	(29,241	) 	
	  	 	 	 	 	 	 	 	
Net income (loss)	  	$	19,113	  	 	$	(45,464	) 	
	  	 	 	 	 	 	 	 	
Other data:	  				 				
Attendance	  	 	23,631	  	 	 	22,433	  	
Total revenue per capita	  	$	56.31	  	 	$	53.32	  	
Admission revenue.     Admission revenue in 2011 increased $94.5 million (13%) to $824.9 million as compared to $730.4 million in 2010. The increase in revenue was a result of a 5% increase in attendance and a 7% increase in per capita spending from $32.56 in 2010 to $34.91 in 2011. The increase in admission revenue per capita was primarily a result of higher ticket pricing and reduced discounts corresponding with increased real consumer spending growth from improved macroeconomic conditions and the opening of the One Ocean show at SeaWorld Orlando, the Cheetah Hunt rollercoaster at Busch Gardens Tampa and Sesame Bay of Play at SeaWorld San Antonio. Increased attendance was primarily driven by increased real consumer spending, as well as
 
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the opening of the One Ocean show at SeaWorld Orlando, the Cheetah Hunt rollercoaster at Busch Gardens Tampa, Sesame Bay of Play at SeaWorld San Antonio and the Turtle Reef attraction at SeaWorld San Diego.
Food, merchandise and other revenue.     Food, merchandise and other revenue in 2011 increased $40.1 million (9%) to $505.8 million as compared to $465.7 million in 2010. The increase in revenue was a result of a 5% increase in attendance and a 3% increase in food, merchandise and other revenue per capita from $20.76 in 2010 to $21.41 in 2011. The increase in food, merchandise and other revenue per capita was driven primarily by an increased focus on product promotion at our theme parks and strategic price increases in both food and merchandise.
Costs of food, merchandise and other revenues.     Costs of food, merchandise and other revenues in 2011 increased $14.6 million to $112.5 million as compared to $97.9 million in 2010. These costs represent 22.2% of related revenue earned in 2011 as compared to 21.0% of related revenue in 2010 driven primarily by commodity price increases and the impact of inflation.
Operating expenses.     Operating expenses for 2011 increased $14.2 million (2%) to $688.0 million as compared to $673.8 million in 2010. These expenses represent 51.7% of total revenues in 2011 as compared to 56.3% in 2010. The year-over-year dollar increase was primarily driven by increased operating costs relating to new attractions and increases in compensation expense, partially offset by strategic cost reductions, such as staffing and scheduling changes and streamlined operating hours at our theme parks. The reduction in operating expenses as a percentage of total revenues year-over-year represents increased operating leverage.
Selling, general and administrative.     Selling, general and administrative expenses for 2011 increased $12.9 million (8%) to $172.4 million as compared to $159.5 million in 2010. This increase primarily reflects the separation from ABI and establishment of certain stand-alone corporate operations, including legal, payroll, and procurement, partially offset by a reduction in marketing expenditures.
Depreciation and amortization.     Depreciation and amortization expense for 2011 increased $6.4 million (3%) to $213.6 million as compared to $207.2 million in 2010. The increase was primarily attributable to asset additions related to the introduction of several new attractions at our theme parks.
Interest expense.     Interest expense for 2011 decreased $24.3 million (18%) to $110.1 million as compared to $134.4 million in 2010, driven primarily by a reduction in our interest rates on our long-term debt as a result of our refinancings in February and April 2011. See our consolidated financial statements and the notes thereto included elsewhere in this prospectus for a further description of the terms of the refinancing.
Provision for (benefit from) income taxes.     Provision for income taxes was $13.4 million for 2011 as compared to an income tax benefit of $29.2 million for 2010, which primarily reflects an increase in taxable earnings increasing our effective income tax rate from 39.1% to 41.3%.
 
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One Month Period Ended December 31, 2009
The following table presents key operating and financial information for the period from December 1, 2009 to December 31, 2009:

 	  	One Month Period
Ended
December  31, 2009	 	
 	  	(Amounts in
thousands, except
per capita amounts)	 	
Statement of operations data:	  				
Net revenues	  				
Admissions	  	$	45,060	  	
Food, merchandise and other	  	 	27,918	  	
	  	 	 	 	
Total revenues	  	 	72,978	  	
Costs and expenses	  				
Cost of food, merchandise and other revenues	  	 	5,472	  	
Operating expenses	  	 	51,957	  	
Selling, general and administrative	  	 	11,544	  	
Depreciation and amortization	  	 	17,973	  	
Acquisition-related expenses	  	 	67,966	  	
	  	 	 	 	
Total costs and expenses	  	 	154,912	  	
Operating loss	  	 	(81,934	) 	
Other income, net	  	 	30	  	
Interest expense	  	 	11,501	  	
	  	 	 	 	
Loss before income taxes	  	 	(93,405	) 	
Benefit from income taxes	  	 	(35,664	) 	
	  	 	 	 	
Net loss	  	$	(57,741	) 	
	  	 	 	 	
Other data:	  				
Attendance	  	 	1,402	  	
Total revenue per capita	  	$	52.05	  	
Liquidity and Capital Resources
Overview
Our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, debt service, investments in theme parks (including capital projects), and common stock dividends. We operated with a working capital deficit in 2010 and 2011 and the nine months ended September 30, 2012 and we expect that we will continue to have working capital deficits in the future. The working capital deficits are due in part to a significant deferred revenue balance from revenues paid in advance for our theme park admissions products and high turnover of in-park products that results in a limited inventory balance. Our cash flow from operations, along with our revolving credit facilities, have allowed us to meet our liquidity needs while maintaining a working capital deficit.
As market conditions warrant and subject to our contractual restrictions and liquidity position, we, our affiliates and/or our major stockholders, including Blackstone and its affiliates, may from time to time repurchase our outstanding equity and/or debt securities, including the Senior Notes and/or our outstanding bank loans in privately negotiated or open market transactions, by tender or otherwise.
 
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Any such repurchases may be funded by incurring new debt, including additional borrowings under our Senior Secured Credit Facilities. Any new debt may also be secured debt. We may also use available cash on our balance sheet. The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, since some of our debt may trade at a discount to the face amount, any such purchases may result in our acquiring and retiring a substantial amount of any particular series, with the attendant reduction in the trading liquidity of any such series.
The following table presents a summary of our cash flows provided by (used in) operating, investing, and financing activities for the periods indicated:

 	  	Nine Months Ended
September 30,	 	 	Years Ended December 31,	 	 	One Month
Period
Ended
December 31,	 	
 	  			 			 			
 	  	2012	 	 	2011	 	 	2011	 	 	2010	 	 	2009	 	
 	  	(Unaudited)	 	 	 	 	 	 	 	 	 	 	
 	  	(Dollars in thousands)	 	
Net cash provided by (used in) operating activities	  	$	302,648	  	 	$	271,793	  	 	$	268,249	  	 	$	202,281	  	 	$	(31,864	) 	
Net cash used in investing activities	  	 	(154,976	) 	 	 	(163,551	) 	 	 	(225,316	) 	 	 	(120,196	) 	 	 	(2,285,500	) 	
Net cash (used in) provided by financing activities	  	 	(71,492	) 	 	 	(127,766	) 	 	 	(99,967	) 	 	 	(20,500	) 	 	 	2,379,476	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	$	76,180	  	 	$	(19,524	) 	 	$	(57,034	) 	 	$	61,585	  	 	$	62,112	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash Flows from Operating Activities
Net cash provided by operating activities increased during the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 primarily as a result of the following: (i) an increase in cash generated from theme park operations due to increased theme park attendance, increased theme park admission fees and higher in-park spending per capita on food, merchandise and other in-park spending, (ii) lower costs and expenses as a percentage of sales due to our labor efficiency initiatives and greater economies of scale and (iii) changes in our deferred income tax provision. The increase in net cash provided by operating activities was partially offset by unfavorable changes in our working capital accounts.
Net cash provided by operating activities increased during the year ended December 31, 2011 as compared to the year ended December 31, 2010 primarily as a result of the following: (i) an increase in cash generated from theme park operations due to increased theme park attendance, increased theme park admission fees and higher in-park spending per capita on food, merchandise and other in-park spending; (ii) lower costs and expenses as a percentage of sales due to our labor efficiency initiatives and greater economies of scale; and (iii) changes in our deferred income tax provision. The increase in net cash provided by operating activities was partially offset by unfavorable changes in our working capital accounts.
Cash Flows from Investing Activities
Investing activities consist principally of capital investments we make in our theme parks for future attractions and infrastructure. Net cash used in investing activities during the nine months ended September 30, 2012 consisted of capital expenditures of $155.0 million largely related to future attractions and zoological safety infrastructure. Net cash used in investing activities during the nine months ended September 30, 2011 consisted of $163.6 million of capital expenditures largely related to future attractions and infrastructure.
 
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Net cash used in investing activities during the year ended December 31, 2011 consisted of capital expenditures of $225.3 million. The level of spending in 2011 was elevated as a result of costs related to building out our corporate infrastructure as a stand-alone company following our separation from ABI, one-time in-park infrastructure enhancements, and catch-up spending due to under-investment in our theme parks prior to the acquisition by Blackstone on December 1, 2009. We do not expect the level of spending in 2011 to be indicative of our capital needs in future years.
Net cash used in investing activities during the year ended December 31, 2010 consisted of capital expenditures of $120.2 million. Our most significant capital expenditure items during the period included future attractions, exhibits and corporate infrastructure projects.
The amount of our capital expenditures may be affected by general economic and financial conditions, among other things, including restrictions imposed by our borrowing arrangements. We generally expect to fund our 2012 capital expenditures through our operating cash flow.
Cash Flows from Financing Activities
In 2011 and 2012, we declared special dividends of $110.1 million and $500.0 million, respectively, to our stockholders.
Net cash used in financing activities during the nine months ended September 30, 2012 was attributable to the following: (i) the payment of a $463.2 million portion of our dividends described above (net of required withholdings), (ii) repayment of $88.5 million of debt under our Senior Secured Credit Facilities and (iii) costs of $7.0 million related to an amendment to the indenture governing our Senior Notes and an amendment to our Senior Secured Credit Facilities. This was partially offset by proceeds of $487.2 million from the term loan borrowings under our Senior Secured Credit Facilities.
Net cash used in financing activities during the nine months ended September 30, 2011 was attributable to the following: (i) repayment of $582.1 million of our long-term debt in connection with a refinancing of our Senior Secured Credit Facilities, (ii) the payment of a $103.1 million portion of our $110.1 million dividend described above (net of required withholdings) and (iii) costs of $5.9 million related to an amendment to the indenture governing our Senior Notes and an amendment to our Senior Secured Credit Facilities. This was partially offset by the proceeds of $550.3 million from the term loan borrowings under our Senior Secured Credit Facilities and $13.0 million of proceeds from the issuance of common stock to the Partnerships.
Net cash used in financing activities during the year ended December 31, 2011 was primarily attributable to the following: (i) repayment of $586.2 million of our long-term debt in connection with a refinancing of our Senior Secured Credit Facilities, (ii) the payment of a $106.9 million portion of our $110.1 million dividend (net of required withholdings) and (iii) debt issuance costs of $5.9 million related to an amendment to the indenture governing our Senior Notes and an amendment to our Senior Secured Credit Facilities. This was partially offset by the proceeds of $550.3 million from the term loan borrowings under our Senior Secured Credit Facilities, a draw on our revolving credit facility of $36.0 million and $12.8 million of proceeds (net of issuance costs) from the issuance of common stock to the Partnerships described above.
Net cash used in financing activities during the year ended December 31, 2010 consisted of repayment of long-term debt of $20.5 million.
 
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Our Indebtedness
The Issuer is a holding company and conducts its operations through its subsidiaries, which have incurred or guaranteed indebtedness as described below.
Senior Secured Credit Facilities
SWPEI is the borrower under our Senior Secured Credit Facilities. The obligations under our Senior Secured Credit Facilities are fully, unconditionally and irrevocably guaranteed by each of the Issuer, any subsidiary of the Issuer that directly or indirectly owns 100% of the issued and outstanding equity interests of SWPEI, and, subject to certain exceptions, each of SWPEI’s existing and future material domestic wholly-owned subsidiaries (collectively, the “Guarantors”). Our Senior Secured Credit Facilities are collateralized by first priority or equivalent security interests in (i) all the capital stock of, or other equity interests in, substantially all SWPEI’s direct or indirect domestic subsidiaries (other than a domestic subsidiary that is a subsidiary of a foreign subsidiary) and 65% of the capital stock of, or other equity interests in, any of SWPEI’s foreign subsidiaries and any of SWPEI’s domestic subsidiaries that are treated as disregarded entities for U.S. federal income tax purposes if substantially all the assets of such domestic subsidiary consist of equity interests of one or more “controlled foreign corporations” within the meaning of the Code and (ii) certain tangible and intangible assets of SWPEI and those of the Guarantors (subject to certain exceptions and qualifications).
Our Senior Secured Credit Facilities consist of:
 
 	Ÿ 	 	a $153.9 million senior secured term loan facility (the “Tranche A Term Loans”), which will mature on February 17, 2016;	
 
 	Ÿ 	 	a $1,297.1 million senior secured term loan facility (the “Tranche B Term Loans”), which will mature on the earlier of (i) August 17, 2017 and (ii) the 91st day prior to the maturity of the Senior Notes, if more than $50 million of debt with respect to the Senior Notes is outstanding as of such date; and	
 
 	Ÿ 	 	a $172.5 million senior secured revolving credit facility (the “Revolving Credit Facility”), which will mature on February 17, 2016, including borrowing capacity available for letters of credit and for short-term borrowings referred to as the swingline borrowings. As of September 30, 2012, we had approximately $11.6 million of outstanding letters of credit.	
In addition, our Senior Secured Credit Facilities also provide us with the option to raise incremental credit facilities, refinance the loans with debt incurred outside our Senior Secured Credit Facilities and extend the maturity date of the revolving loans and term loans, subject to certain limitations.
Borrowings under our Senior Secured Credit Facilities, other than swingline loans, bear interest at a rate per annum equal to, at SWPEI’s option, (a) a base rate determined by reference to the higher of either (1) the administrative agent’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1%; subject to a base rate floor of 2.00% and a LIBOR floor of 1.00% for Tranche B Term Loans or (b) a LIBOR rate determined by reference to the BBA LIBOR rate for the interest period relevant to such borrowing, in each case plus an applicable margin. Swingline loans bear interest at the interest rate applicable to base rate loans. The applicable margin for (i) Tranche A Term Loans and the revolving credit facility (to include letter of credit fees) is (a) 1.75% for base rate loans and (b) 2.75% for LIBOR rate loans and (ii) Tranche B Term Loans is (a) 2.00% for base rate loans and (b) 3.00% for LIBOR rate loans.
In addition to paying interest on outstanding principal under our Senior Secured Credit Facilities, SWPEI is required to pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee rate is 0.50% per annum. SWPEI is also required to pay customary letter of credit fees.
 
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SWPEI is required to prepay outstanding term loans, subject to certain exceptions, with:
 
 	Ÿ 	 	50% of SWPEI’s annual “excess cash flow” (with step-downs to 25% and 0%, as applicable, based upon SWPEI’s total leverage ratio), subject to certain exceptions;	
 
 	Ÿ 	 	100% of the net cash proceeds of certain non-ordinary course asset sales or other dispositions subject to reinvestment rights and certain exceptions; and	
 
 	Ÿ 	 	100% of the net cash proceeds of any incurrence of debt by SWPEI or any of its restricted subsidiaries, other than debt permitted to be incurred or issued under our Senior Secured Credit Facilities.	
SWPEI may voluntarily repay amounts outstanding under our Senior Secured Credit Facilities at any time without premium or penalty, other than prepayment premium on voluntary prepayment of Tranche B Term Loans on or prior to March 30, 2013 and customary “breakage” costs with respect to LIBOR loans.
SWPEI is currently required to repay installments on the term loans in quarterly installments equal to approximately $1.9 million with respect to Tranche A Term Loans and approximately $3.5 million with respect to Tranche B Term Loans, with the remaining amount payable on the applicable maturity date with respect to such term loans.
Our Senior Secured Credit Facilities contain a number of significant affirmative and negative covenants. Such covenants, among other things, restrict, subject to certain exceptions, the ability of SWPEI and its restricted subsidiaries to:
 
 	Ÿ 	 	incur additional indebtedness, make guarantees and enter into hedging arrangements;	
 
 	Ÿ 	 	create liens on assets;	
 
 	Ÿ 	 	enter into sale and leaseback transactions;	
 
 	Ÿ 	 	engage in mergers or consolidations;	
 
 	Ÿ 	 	sell assets;	
 
 	Ÿ 	 	make fundamental changes;	
 
 	Ÿ 	 	pay dividends and distributions or repurchase SWPEI’s capital stock;	
 
 	Ÿ 	 	make investments, loans and advances, including acquisitions;	
 
 	Ÿ 	 	engage in certain transactions with affiliates;	
 
 	Ÿ 	 	make changes in nature of the business; and	
 
 	Ÿ 	 	make prepayments of junior debt.	
Our Senior Secured Credit Facilities also contain covenants requiring SWPEI to maintain a specified maximum net total leverage ratio and a minimum interest coverage ratio. In addition, our Senior Secured Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default.
As of September 30, 2012, we were in compliance in all material respects with all covenants in the provisions contained in the documents governing our Senior Secured Credit Facilities.
See “Description of Indebtedness—Senior Secured Credit Facilities” for further information on our Senior Secured Credit Facilities.
 
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The Senior Notes
On December 1, 2009, SWPEI issued $400.0 million aggregate principal amount of 13.5% Senior Notes due 2016. On March 30, 2012, pursuant to an amendment to the indenture governing the Senior Notes, the interest rate was reduced from 13.5% to 11.0%. As of September 30, 2012, we had $400.0 million aggregate principal amount in 11.0% Senior Notes due 2016 outstanding. Interest on the Senior Notes is payable semi-annually in arrears. The obligations under the Senior Notes are guaranteed by the same entities as those that guarantee our Senior Secured Credit Facilities.
The Senior Notes are senior unsecured obligations and:
 
 	Ÿ 	 	rank senior in right of payment to all existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Notes;	
 
 	Ÿ 	 	rank equally in right of payment to all existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Senior Notes; and	
 
 	Ÿ 	 	are effectively subordinated in right of payment to all existing and future secured debt (including obligations under our Senior Secured Credit Facilities), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the Senior Notes.	
The indenture governing the Senior Notes contains a number of covenants that, among other things, restrict SWPEI’s ability and the ability of its restricted subsidiaries to, among other things:
 
 	Ÿ 	 	dispose of certain assets;	
 
 	Ÿ 	 	incur additional indebtedness;	
 
 	Ÿ 	 	pay dividends;	
 
 	Ÿ 	 	prepay subordinated indebtedness;	
 
 	Ÿ 	 	incur liens;	
 
 	Ÿ 	 	make capital expenditures;	
 
 	Ÿ 	 	make investments or acquisitions;	
 
 	Ÿ 	 	engage in mergers or consolidations; and	
 
 	Ÿ 	 	engage in certain types of transactions with affiliates.	
These covenants are subject to a number of important limitations and exceptions.
The indenture governing the Senior Notes provides for certain events of default which, if any of them were to occur, would permit or require the principal of and accrued interest, if any, on the Senior Notes to become or be declared due and payable (subject, in some cases, to specified grace periods).
We intend to use a portion of the net proceeds received by us from this offering to redeem $         million in aggregate principal amount of the Senior Notes at a redemption price of 111.0% pursuant to a provision in the indenture governing the Senior Notes that permits us to redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of certain equity offerings and to pay estimated premiums and accrued interest thereon. See “Use of Proceeds.”
As of September 30, 2012, we were in compliance in all material respects with all covenants and the provisions contained in the indenture governing the Senior Notes. See “Description of Indebtedness” for further information on the Senior Notes.
 
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Covenant Compliance
Under the indenture governing the Senior Notes and under our Senior Secured Credit Facilities, our ability to engage in activities such as incurring additional indebtedness, making investments, refinancing certain indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on Adjusted EBITDA.
The Senior Notes and our Senior Secured Credit Facilities generally define “Adjusted EBITDA” as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, as further adjusted to exclude certain unusual, non-cash, and other items permitted in calculating covenant compliance under the indenture governing the Senior Notes and our Senior Secured Credit Facilities.
We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants in the indenture governing the Senior Notes and in our Senior Secured Credit Facilities. Adjusted EBITDA is a material component of these covenants. In addition, investors, lenders, financial analysts and rating agencies have historically used EBITDA related measures in our industry, along with other measures, to evaluate a company’s ability to meet its debt service requirements to estimate the value of a company and to make informed investment decisions. We also use Adjusted EBITDA in connection with certain components of our executive compensation program as described under “Management—Compensation Discussion and Analysis.” Adjusted EBITDA eliminates the effect of certain non-cash depreciation of tangible assets and amortization of intangible assets, along with the effects of interest rates and changes in capitalization which management believes may not necessarily be indicative of a company’s underlying operating performance.
Adjusted EBITDA is not a recognized term under GAAP, and should not be considered in isolation or as a substitute for a measure of our liquidity or performance prepared in accordance with GAAP and is not indicative of income from operations as determined under GAAP. Adjusted EBITDA and other non-GAAP financial measures have limitations which should be considered before using these measures to evaluate our liquidity or financial performance. Adjusted EBITDA, as presented by us, may not be comparable to similarly titled measures of other companies due to varying methods of calculation.
The following table reconciles net income (loss) to Adjusted EBITDA:

 	 	Nine Months Ended
September  30,	 	 	Years Ended December 31,	 	 	One Month
Period Ended
December 31,	 	
 	 	2012	 	 	2011	 	 	        2011        	 	 	        2010        	 	 	2009	 	
 	 	(Dollars in thousands)	 	
Net income (loss)	 	$	86,243	  	 	$	49,959	  	 	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
Provision for (benefit from) income taxes	 	 	58,273	  	 	 	34,719	  	 	 	13,428	  	 	 	(29,241	) 	 	 	(35,664	) 	
Interest expense	 	 	86,263	  	 	 	83,960	  	 	 	110,097	  	 	 	134,383	  	 	 	11,501	  	
Depreciation and amortization expense	 	 	122,085	  	 	 	154,862	  	 	 	213,592	  	 	 	207,156	  	 	 	17,973	  	
Deferred revenue write-downs (a)	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	17,348	  	 	 	2,678	  	
Non-cash compensation expense (b)	 	 	1,361	  	 	 	437	  	 	 	823	  	 	 	—  	  	 	 	—  	  	
Acquisition-related adjustments (c)	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	67,966	  	
Advisory fee (d)	 	 	5,075	  	 	 	4,948	  	 	 	6,012	  	 	 	4,704	  	 	 	290	  	
Carve-out costs (e)	 	 	—  	  	 	 	5,679	  	 	 	6,085	  	 	 	45,330	  	 	 	1,376	  	
Non-cash expenses (f)	 	 	5,282	  	 	 	2,888	  	 	 	12,468	  	 	 	9,060	  	 	 	—  	  	
Debt refinancing costs (g)	 	 	1,000	  	 	 	441	  	 	 	441	  	 	 	—  	  	 	 	—  	  	
Chula Vista acquisition (h)	 	 	167	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	$	365,749	  	 	$	337,893	  	 	$	382,059	  	 	$	343,276	(i)  	 	$	8,379	  	
 
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(a)	Reflects amortization of deferred revenue that would have occurred absent purchase accounting relating to the 2009 Transactions.	
(b)	Reflects non-cash compensation expense associated with the grants of partnership interests in the Partnerships recorded under “Equity-based compensation” in our consolidated financial statements.	
(c)	Reflects charges related to the 2009 Transactions, including third-party professional fees relating to the purchase of the Company by the Investor Group and related financing transactions.	
(d)	Reflects historical fees paid to an affiliate of the Sponsor under the 2009 Advisory Agreement. In connection with this offering, we intend to terminate the 2009 Advisory Agreement in accordance with its terms. See “Certain Relationships and Related Party Transactions—Advisory Agreement and Support and Services Agreement.”	
(e)	Reflects certain carve-out costs and savings related to our separation from ABI and the establishment of certain operations at the Company on a stand-alone basis. These amounts primarily consist of the cost of third-party professional services, relocation expenses, severance costs and cost savings related to the termination of certain employees.	
(f)	Reflects non-cash expenses related to miscellaneous asset write-offs and non-cash gains/losses on foreign currencies.	
(g)	Reflects certain costs related to the 2012 and 2011 amendments to our Senior Secured Credit Facilities.	
(h)	Reflects certain costs related to our acquisition of the Knott’s Soak City Chula Vista water park.	
(i)	The adjustments for the year ended December 31, 2010 include approximately $20.9 million of adjustments permitted under our debt covenants, related to our separation from ABI and certain restructuring costs. As we established some of the services provided to us by ABI, such services became part of our ongoing cost structure and accordingly, we did not use these adjustments for any periods subsequent to the year ended December 31, 2010. Adjusted EBITDA excluding such adjustments would have been $322,376 for the year ended December 31, 2010.	
Contractual Obligations
The following table summarizes our principal contractual obligations as of December 31, 2011 (in thousands):

 	  	Total	 	  	Less than 1
Year	 	  	1-3 Years	 	  	3-5 Years	 	  	More than 5
Years	 	
Long-term debt (including current portion) (1)	  	$	1,439,543	  	  	$	52,500	  	  	$	33,000	  	  	$	1,354,043	  	  	$	—  	  	
Interest (2)	  	 	441,897	  	  	 	93,994	  	  	 	184,665	  	  	 	163,237	  	  	 	—  	  	
Operating leases (3)	  	 	357,544	  	  	 	13,393	  	  	 	21,900	  	  	 	20,035	  	  	 	302,216	  	
Purchase obligations (4)	  	 	148,494	  	  	 	146,683	  	  	 	1,811	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total contractual obligations	  	$	2,387,478	  	  	$	306,570	  	  	$	241,376	  	  	$	1,537,315	  	  	$	302,216	  	

(1)	The Senior Notes are reflected in this table at their principal amount. We intend to use a portion of the net proceeds received by us from this offering to redeem $         million in aggregate principal amount of the outstanding Senior Notes and pay approximately $         million of redemption premium, plus accrued interest thereon. As a result of the redemption, our annual interest expense is expected to be reduced by $         million.	
(2)	Estimated future interest payments for our Senior Secured Credit Facilities are based on interest rates in effect at December 31, 2011 and estimated future interest payments for the Senior Notes are based on interest rates in effect at December 31, 2011. Interest obligations also include letter of credit and commitment fees for the used and unused portions of our Revolving Credit Facility. In addition, interest expense associated with deferred financing fees was excluded from the table as the expense is non-cash in nature.	
 
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(3)	Represents commitments under long-term operating leases, primarily consisting of the lease for the land of our SeaWorld theme park in San Diego, California, requiring annual minimum lease payments.	
(4)	We have minimum purchase commitments with various vendors through May 2013. Outstanding minimum purchase commitments consist primarily of capital expenditures related to future attractions, infrastructure enhancements for existing facilities and information technology products and services.	
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of September 30, 2012.
Quantitative and Qualitative Disclosures about Market Risk
Inflation
The impact of inflation has affected, and will continue to affect, our operations significantly. Our costs of food, merchandise and other revenues are influenced by inflation and fluctuations in global commodity prices. In addition, costs for construction, repairs and maintenance are all subject to inflationary pressures.
Interest Rate Risk
We are exposed to market risks from fluctuations in interest rates, and to a lesser extent on currency exchange rates, from time to time, on imported rides and equipment. The objective of our financial risk management is to reduce the potential negative impact of interest rate and foreign currency exchange rate fluctuations to acceptable levels. We do not acquire market risk sensitive instruments for trading purposes.
We manage interest rate risk through the use of a combination of fixed-rate long-term debt and interest rate swaps that fix a portion of our variable-rate long-term debt.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, our estimate is that an additional $1.4 million will be reclassified as an increase to interest expense.
After considering the impact of interest rate swap agreements, at September 30, 2012, approximately $950.0 million of our outstanding long-term debt represents fixed-rate debt and approximately $901.0 million represents variable-rate debt. Assuming an average balance on our revolving credit borrowings of approximately $40.0 million, a hypothetical 100 bps increase in 30-day LIBOR on our variable-rate debt would lead to an increase of approximately $3.1 million in annual cash interest costs due to the impact of our fixed-rate swap agreements.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, revenues and expenses, and disclosure of contingencies during the reporting period. Significant estimates and
 
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assumptions include the valuation and useful lives of long-lived tangible and intangible assets, the valuation of goodwill and other indefinite-lived intangible assets, the accounting for income taxes, the accounting for self-insurance, revenue recognition and equity-based compensation. Actual results could differ from those estimates. We believe that the following discussion addresses our critical accounting policies which require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Property and Equipment
Property and equipment additions are recorded at cost and the carrying value is depreciated on a straight-line basis over the estimated useful lives of those assets. Internal development costs associated with rides and equipment are capitalized after feasibility studies have been completed and substantially all product development is complete. Interest is capitalized on all major construction projects. It is possible that changes in circumstances such as technological advances, changes to our business model or changes in capital strategy could result in the actual useful lives differing from estimates. In those cases in which we determine that the useful life of property and equipment should be shortened, we depreciate the remaining net book value in excess of the salvage value over the revised remaining useful life, thereby increasing depreciation expense evenly through the remaining expected life.
Impairment of Long-Lived Assets
All long-lived assets, including property and equipment and finite-lived intangible assets, are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. The impairment indicators considered important that may trigger an impairment review, if significant, include the following:
 
 	Ÿ 	 	underperformance relative to historical or projected future operating results;	
 
 	Ÿ 	 	changes in the manner of use of the assets;	
 
 	Ÿ 	 	changes in management, strategy or customers;	
 
 	Ÿ 	 	negative industry or economic trends; and	
 
 	Ÿ 	 	macroeconomic conditions.	
An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset. The measurement of the impairment loss to be recognized is based upon the difference between the fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available.
The determination of both undiscounted and discounted future cash flows requires management to make significant estimates and consider an anticipated course of action as of the balance sheet date. Subsequent changes in estimated undiscounted and discounted future cash flows arising from changes in anticipated actions could impact the determination of whether impairment exists, the amount of the impairment charge recorded and whether the effects could materially impact the consolidated financial statements included elsewhere in this prospectus.
Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill and other indefinite-lived intangible assets are reviewed for impairment annually for ongoing recoverability based on applicable reporting unit performance and consideration of significant events or changes in the overall business environment.
 
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In assessing goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We consider several factors, including macroeconomic conditions, industry and market conditions, overall financial performance of the reporting unit, changes in management, strategy or customers, and relevant reporting unit specific events such as a change in the carrying amount of net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, and the testing of recoverability of a significant asset group within a reporting unit. If the qualitative assessment is not conclusive, then the recorded value of the reporting unit is compared to the fair value of the reporting unit, which is determined using a discounted future cash flow analysis. If the recorded amount exceeds the fair value, the impairment write-down is quantified by comparing the current implied value of goodwill to the recorded goodwill balance.
Significant judgments required in this testing process may include projecting future cash flows, determining appropriate discount rates and other assumptions. Projections are based on management’s best estimates given recent financial performance, market trends, strategic plans and other available information which in recent years have been materially accurate. Although not currently anticipated, changes in these estimates and assumptions could materially affect the determination of fair value or impairment. It is possible that our assumptions about future performance, as well as the economic outlook and related conclusions regarding the valuation of our assets, could change adversely, which may result in impairment that would have a material effect on our financial position and results of operations in future periods. At December 1, 2011, a qualitative assessment was performed and we determined, after assessing the totality of relevant events and circumstances, that it was not more likely than not that the carrying value exceeded the fair value of the reporting units. Accordingly, based upon the qualitative assessment test that was performed in 2011 and the quantitative assessment that was performed as of December 1, 2010, we had no reporting units that were considered at risk of failing step one of the goodwill impairment test.
Our indefinite-lived intangible assets consist of certain trade names which, after considering legal, regulatory, contractual, and other competitive and economic factors, are determined to have indefinite lives and are valued annually using the relief from royalty method. Significant estimates required in this valuation method include estimated future revenues impacted by the trade names, royalty rate by park, appropriate discount rates, remaining useful life, and other assumptions. Projections are based on management’s best estimates given recent financial performance, market trends, strategic plans, brand awareness, operating characteristics by park, and other available information which in recent years have been materially accurate. Changes in these estimates and assumptions could materially affect the fair value determination used in the assessment of impairment. At December 1, 2011, the fair value of trade names was substantially in excess of their carrying values.
Accounting for Income Taxes
We are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation periods for property and equipment and deferred revenue, for tax and financial accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We must then assess the likelihood that deferred tax assets (primarily net operating and capital loss carryforwards) will be recovered from future taxable income. To the extent that we believe that recovery is not likely, a valuation allowance against those amounts is recognized. To the extent that we recognize a valuation allowance or an increase in the valuation allowance during a period, we recognize these amounts as income tax expense in the consolidated statements of operations. If we undergo an ownership change in the future, as described in Section 382(g) of the Code, our ability to recover certain deferred tax
 
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assets (including loss carryforwards) may be limited. This limitation may have the effect of reducing our after-tax cash flow in future years and may affect our need for a valuation allowance on our deferred tax assets.
Significant management judgment is required in determining our provision or benefit for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. Management has analyzed the positive and negative evidence and has determined that it is more likely than not that our deferred tax assets will be realized, and, therefore, no valuation allowances are needed.
Self-Insurance Reserves
Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. Reserves are established for both identified claims and incurred but not reported (“IBNR”) claims. Such amounts are accrued for when claim amounts become probable and estimable. Reserves for identified claims are based upon our own historical claims experience and third-party estimates of settlement costs. Reserves for IBNR claims are based upon our own claims data history, as well as industry averages. All reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary.
Revenue Recognition
We recognize revenue upon admission into a theme park or when products are delivered to customers. For season passes and other multiuse admissions, revenue is deferred and recognized based on the terms of the admission product and the estimated number of visits expected and is adjusted periodically.
We have entered into agreements with certain external theme park, zoo and other attraction operators, to jointly market and sell admission products. These joint products allow admission to both a Company park and an external park, zoo or other attraction. The agreements with the external parks specify the allocation of revenue to us from any jointly sold products. Deferred revenue is recorded based on the terms of the respective agreement and the related revenue is recognized upon admission.
Equity-Based Compensation
ASC 718, Stock Compensation , requires all share-based payments to employees, including the grants of employee units made by the Partnerships to certain of our key employees, to be recognized in the financial statements, based on their grant date fair value, over the requisite service period (generally the vesting period of the grant) or based upon the achievement of certain performance criteria. Because we are privately held and there is no public market for our common stock, management estimated the fair value of our employee units granted with assistance from a third party valuation firm. Such valuations were then approved by our Board of Directors at the time the employee units were awarded.
One of the key inputs utilized in calculating the fair value of share-based payments is the fair value of the underlying common stock on the grant date. For privately held companies, such valuation requires significant estimates and assumptions due to the lack of an active public market on which such stock trades.
During 2011, the fair value of our equity was estimated on the grant date using a composite of the income approach, which is based upon a discounted cash flow method, and the market approach,
 
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which is based upon a guideline public company method. The discounted cash flow method utilizes certain significant inputs that are not observable in the market. Key assumptions utilized in our discounted cash flow model included projected cash flows, a discount rate of 10.5%, and a terminal value. The guideline public company approach uses relevant public company valuation multiples to determine fair value, but requires judgment in selecting the appropriate multiple at which to value the company’s equity from the range of market multiples noted in the group of comparable public companies.
During 2012, the fair value of our equity was estimated on the date of grant using the market approach, which consisted of a composite of the guideline public company method and the guideline transactions method. The guideline transactions method involves determining valuation multiples from sales of enterprises with similar financial and operating characteristics and applying those multiples to the subject enterprise. Such approach requires judgment in selecting the appropriate multiple at which to value the company’s equity from the range of multiples noted in comparable market transactions. The guideline transactions method was not utilized in 2011 due to a lack of recent, comparable transactions that could be used in a comparable valuation at that time. The income approach was not utilized in 2012 due to the availability of the transactions method.
The fair value of the individual tranches of units granted to our employees was estimated based upon the option pricing method using the Option-Pricing Method model. Expected volatilities were based on historical volatilities of the stock, or implied volatilities of market-traded options, of comparable companies. The expected term of the units granted represented the period of time that such units are expected to be outstanding. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant over the expected term of the units. The discount for the lack of marketability of the underlying common stock was estimated using the Asian Put method, which is a widely used method that quantifies a discount based on the time to liquidity and expected volatility for the shares.
The fair value of all tranches of the employee units awarded in May 2011 and June 2012 approximated $9.2 million and $1.3 million, respectively, on the date of grant. The resulting compensation expense relating to the time-vesting units is recognized over the five year vesting period (20% per year), while the compensation expense for the performance vesting units will be recognized only when the performance criteria required for vesting of such units actually occurs. In the event of a change in control, all time vesting units will vest immediately and all unrecognized compensation cost will be recognized at the time of such change in control.
While management believes that the estimates and assumptions utilized in calculating the fair value of the employee units granted were reasonable and based upon accepted valuation techniques, valuation results can vary, sometimes significantly, depending on the assumptions applied within an option pricing model.
A 10% change in the fair value of employee units granted in 2011 and 2012 would have had an immaterial impact on our consolidated financial statements as of and for the year ended December 31, 2011 and on its condensed consolidated financial statements as of and for the nine month period ended September 30, 2012.
Recently Issued Financial Accounting Standards
In May 2011, the Financial Accounting Standards Board (“FASB”) issued guidance clarifying how to measure and disclose fair value. This guidance amends the application of the “highest and best use” concept to be used only in the measurement of fair value of nonfinancial assets, clarifies that the measurement of the fair value of equity-classified financial instruments should be performed from the
 
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perspective of a market participant who holds the instrument as an asset, clarifies that an entity that manages a group of financial assets and liabilities on the basis of its net risk exposure can measure those financial instruments on the basis of its net exposure to those risks, and clarifies when premiums and discounts should be taken into account when measuring fair value. The fair value disclosure requirements were also amended. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. We adopted the amended guidance effective January 1, 2012 and it did not have a material effect on our consolidated financial statements included elsewhere in this prospectus.
In June 2011, the FASB issued guidance that revises the manner in which entities present comprehensive income in their financial statements. The guidance requires entities to report the components of comprehensive income in either a single, continuous statement or two separate but consecutive statements. In December 2011, the FASB issued guidance which defers certain requirements set forth in June 2011. These amendments were made to allow the FASB time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income in all periods presented. Both sets of guidance were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and are required to be applied retrospectively. We adopted this guidance on January 1, 2012 and accordingly applied to the new guidance retrospectively. Such adoption only resulted in a change in how we present the components of comprehensive income.
In September 2011, the FASB issued guidance related to testing goodwill for impairment. Under the amended guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting units. If the entities determine, based on the qualitative assessment, that it is more likely than not an impairment has not occurred, no further quantitative testing is necessary. The guidance is effective for fiscal years beginning after December 15, 2011, with early adoption permitted. We early adopted the guidance and performed a qualitative assessment as our initial step for the 2011 annual review of goodwill impairment. The adoption of this guidance did not have a material impact on our consolidated financial statements.
In July 2012, the FASB issued new accounting guidance relating to impairment testing for indefinite-lived intangible assets. In accordance with this guidance, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If after such assessment an entity concludes that the indefinite-lived intangible asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test as required by existing standards. This guidance is effective for annual and interim impairment tests for fiscal years beginning after September 15, 2012 and early adoption is permitted. We are in the process of evaluating this guidance, which is not expected to have a material impact on our consolidated financial statements included elsewhere in this prospectus.
 
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 BUSINESS
Company Overview
We are a leading theme park and entertainment company delivering personal, interactive and educational experiences that blend imagination with nature and enable our customers to celebrate, connect with and care for the natural world we share. We own or license a portfolio of globally recognized brands, including such iconic brands as SeaWorld, Shamu and Busch Gardens. Over our more than 50 year history, we have built a diversified portfolio of 11 destination and regional theme parks that are grouped in key markets across the United States, many of which showcase our one-of-a-kind collection of approximately 67,000 marine and terrestrial animals. Our theme parks feature a diverse array of rides, shows and other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for our guests. In addition to our theme parks, we have recently begun to leverage our brands into media, entertainment and consumer products.
During the 12 months ended September 30, 2012, we hosted more than 24 million guests in our theme parks, including approximately 2.7 million international guests from over 55 countries and six continents, and generated an estimated 5.6 billion impressions through television, digital and other media platforms. In the year ended December 31, 2011 and the nine months ended September 30, 2012, we had total revenues of $1,330.8 million and $1,160.6 million, respectively, and net income of $19.1 million and $86.2 million, respectively. Our increasing revenue and growing profit margins, combined with our disciplined approach to capital expenditures and working capital management, enable us to generate strong and recurring cash flow.
Our legacy started in 1959 with the opening of our first Busch Gardens theme park in Tampa, Florida. Since then, we have built our portfolio of iconic brands and have strategically expanded our portfolio of theme parks across five states and approximately 2,000 acres of owned land, including through acquisitions. We most recently acquired Knott’s Soak City Chula Vista water park in California, which we are in the process of rebranding as Aquatica San Diego before it re-opens in 2013.
Our portfolio of branded theme parks includes the following marquee names:
 
 	Ÿ 	 	SeaWorld .     SeaWorld is widely recognized as the leading marine-life theme park brand in the world. Our SeaWorld theme parks, located in Orlando, San Antonio and San Diego, each rank among the most highly attended theme parks in the industry and offer up-close interactive experiences and a variety of live performances, including shows featuring Shamu in specially designed amphitheaters. We offer our guests numerous animal encounters, including the opportunity to work with trainers and feed marine animals, as well as themed thrill rides and theatrical shows that creatively incorporate our one-of-a-kind animal collection.	
 
 	Ÿ 	 	Busch Gardens .    Our Busch Gardens theme parks are family-oriented theme park destinations designed to immerse guests in foreign geographic settings. They are renowned for their beauty and award-winning landscaping and gardens and allow our guests to discover the natural side of fun by offering a family experience featuring a variety of attractions and world class rollercoasters in a richly-themed environment. Busch Gardens Tampa presents our collection of animals from Africa, Asia and Australia. Busch Gardens Williamsburg, which has been named the Most Beautiful Park in the World by the National Amusement Park Historical Association for 22 consecutive years, showcases European-themed cultural and culinary experiences, including high-quality theatrical productions.	
 
 	Ÿ 	 	Aquatica .    Our Aquatica branded water parks are premium, family-oriented destinations that are based in a South Seas-themed tropical setting. Aquatica water parks build on the aquatic theme of our SeaWorld brand and feature high-energy rides, water attractions, white-sand	
 
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 	beaches and an innovative and entertaining presentation of marine and terrestrial animals. We position our Aquatica water parks as companion water parks to our SeaWorld theme parks in Orlando and San Diego and we have an Aquatica water park situated within our SeaWorld San Antonio theme park.	
 
 	Ÿ 	 	Discovery Cove .     Discovery Cove is a reservations only, all-inclusive, marine-life day resort adjacent to SeaWorld Orlando. Discovery Cove offers guests personal, signature experiences, including the opportunity to swim and interact with dolphins, take an underwater walking reef tour and enjoy pristine white-sand beaches and landscaped private cabanas. Discovery Cove presently limits its attendance to approximately 1,300 guests per day and features premium culinary offerings in order to provide guests with a more relaxed, intimate and high-end luxury resort experience.	
 
 	Ÿ 	 	Sesame Place .     Sesame Place is the only U.S. theme park based entirely on the award-winning television show Sesame Street. Located between Philadelphia and New York City, Sesame Place is a destination where parents and children can share in the spirit of imagination and experience Sesame Street together through whirling rides, water slides, colorful shows and furry friends. In addition, we have introduced Sesame Street brands in our other theme parks through Sesame Street-themed rides, shows, children’s play areas and merchandise.	
We generate revenue primarily from selling admission to our theme parks and from purchases of food, merchandise and other spending. For the nine months ended September 30, 2012, theme park admissions accounted for approximately 62% of our revenue, and purchases of food, merchandise and other spending accounted for approximately 38% of our revenue. Over the same period of time, we reported $36.04 in admission per capita and $22.39 in-park per capita spending, representing an increase of 3.0% and 3.3%, respectively, compared to the same period of 2011. For more information, see “—Our Brands” and “—Our Products and Services” below.
As one of the world’s foremost zoological organizations and a global leader in animal welfare, training, husbandry and veterinary care, we are committed to helping protect and preserve the environment and the natural world. For more information, see “—Our Animals” and “—Philanthropy and Community Relations” below.
Our Competitive Strengths
 
 	Ÿ 	 	Iconic Brands That Consumers Know and Love.     We believe that our brands are internationally recognized cultural touch points representing the intersection of “where imagination meets nature.” Our brand portfolio is highly stable, reducing our exposure to changing consumer tastes. We use our brands and intellectual property to increase awareness of our theme parks, drive attendance to our theme parks and create “out-of-park” experiences for our guests as way to connect with them before they visit our theme parks and to stay connected with them after their visit. The popularity of our brands is evidenced by over 32 million unique visitors to our websites from January 2012 through December 2012. In addition to our theme parks, we have recently begun to leverage our brands into media, entertainment and consumer products, and our Sea Rescue television program was seen by more than 27 million viewers in its first season and has been extended for a second season.	
 
 	Ÿ 	 	World-Class, Differentiated Theme Parks.     We own and operate 11 theme parks, including five of the top 20 theme parks in the United States as measured by attendance. Our theme parks are beautifully themed and deliver high-quality entertainment, aesthetic appeal, shopping and dining and have won numerous awards, including Amusement Today’s Golden Ticket Awards for Best Landscaping. Our theme parks feature seven of the top 50 rated steel rollercoasters, led by Apollo’s Chariot, the #4 rated steel rollercoaster in the world. Our theme parks have won the top three spots in Amusement Today’s annual Golden Ticket Award for	
 
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 	Best Marine Life Park since the award’s inception in 2006. We have over 600 attractions that appeal to guests of all ages, including 93 animal habitats, 116 shows and 187 rides. In addition, we have over 300 restaurants and specialty shops . Our theme parks appeal to the entire family and offer a broad range of experiences, ranging from emotional and educational animal encounters to thrilling rides and exciting shows. 	
 
 	Ÿ 	 	Diversified Business Portfolio.     Our portfolio of theme parks is diversified in a number of important respects. Our theme parks are located across the United States, which helps protect us from the impact of localized events. Each theme park showcases a different mix of zoological, thrill-oriented and family-friendly attractions. This varied portfolio of entertainment offerings attracts guests from a broad range of demographics and geographies. Our theme parks appeal to both regional and destination guests, which provides us with a stable attendance base while allowing us to benefit from improvements in macroeconomic conditions, including increased consumer spending and international travel.	
 
 	Ÿ 	 	One of the World’s Largest Zoological Collections.     We believe we are attractively positioned in the industry due to our ability to display our extensive animal collection in a differentiated and interactive manner. We believe we have one of the world’s largest zoological collections with approximately 67,000 animals, including approximately 7,000 marine and terrestrial animals and approximately 60,000 fish. With 28 killer whales, we have the largest group of killer whales in human care. We have established successful and innovative breeding programs that have produced 29 killer whales, 151 dolphins and 115 sea lions, among other species, and our marine animal populations are characterized by their substantial genetic diversity. More than 80% of our marine mammals were born in human care.	
 
 	Ÿ 	 	Strong Competitive Position .     Our competitive position is protected by the combination of our powerful brands, extensive animal collection and expertise and premier in-park assets located on valuable real estate. Our animal collection and zoological expertise, which have evolved over our more than four decades of caring for animals, would be very difficult to replicate. Over the past two years, we have made extensive investments in new marketable attractions and infrastructure and we believe that our theme parks are well capitalized. The limited supply of real estate suitable for theme park development coupled with high initial capital investment, long development lead-times and zoning and other land use restrictions constrain the number of large theme parks that can be constructed. We estimate that the replacement value of our assets, including approximately 2,000 acres of owned land, exceeds $5 billion.	
 
 	Ÿ 	 	Proven and Experienced Management Team and Employees with Specialized Animal Expertise.     Our senior management team, led by Jim Atchison, our Chief Executive Officer and President, includes some of the most experienced theme park executives in the world, with an average tenure of more than 28 years in the industry. The management team is comprised of highly skilled and dedicated professionals with wide ranging experience in theme park operations, zoological operations, product development, business development and marketing. In addition, we are one of the world’s foremost zoological organizations with approximately 1,550 employees dedicated to animal welfare, training, husbandry and veterinary care.	
 
 	Ÿ 	 	Proximity of Complementary Theme Parks .    Our theme parks are grouped in key locations near large population centers across the United States, which allows us to realize revenue and operating expense efficiencies. Having theme parks located within close proximity to each other enables us to cross market and offer bundled ticket and travel packages. In addition, closely located theme parks provide operating efficiencies including sales, marketing, procurement and administrative synergies as overhead expenses are shared among the theme parks within each region. We intend to continue to capitalize on this strength through our recent acquisition of Knott’s Soak City Chula Vista water park in California, which will complement our SeaWorld San Diego theme park.	
 
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 	Ÿ 	 	Attractive, Stable Profit Margins and Strong Cash Flow Generation.     Our attractive, stable profit margins, combined with our disciplined approach to capital expenditures and working capital management, enable us to generate strong and recurring cash flow. Five of our 11 theme parks are open year-round, reducing our seasonal cash flow volatility. In addition, we have substantial tax assets which we expect to be available to defer a portion of our cash tax burden going forward.	
 
 	Ÿ 	 	Care for Our Community and the Natural World.     Caring for our community and the natural world is a core part of our corporate identity and resonates with our guests. We focus on three core philanthropic areas: children, environment, and education. Through the power of entertainment, we are able to inspire children and educate guests of all ages. We support numerous charities and organizations across the country. For example, we are the primary supporter and corporate member of the SeaWorld & Busch Gardens Conservation Fund, a non-profit conservation foundation, which makes grants to wildlife research and conservation projects that protect wildlife and wild places worldwide. In addition, in collaboration with the government and other members of accredited stranding networks, we operate one of the world’s most respected programs to rescue ill and injured marine animals, with the goal to rehabilitate and return them back to the wild. Our animal experts have helped more than 22,000 ill, injured, orphaned and abandoned animals for more than four decades.	
Our Strategies
We plan to grow our business by increasing our existing theme park revenues through strategies designed to drive higher attendance and increase in-park per capita spending, as well as by creating new sources of revenue through expansion of our theme parks, new theme park development and extending our brands into new media, entertainment and consumer products. We believe that our strategies complement each other as they lead to increased brand strength and awareness and drive revenue growth and profitability. Our strategies include the following components:
 
 	Ÿ 	 	Continue to Create Memorable Experiences for Our Guests.      Our mission is to use the power of educational entertainment to continue to inspire our guests to celebrate, connect with and care for the natural world we share. We provide our guests with innovative and immersive theme park experiences, such as our 3-D, 360-degree TurtleTrek attraction at SeaWorld Orlando, which opened in 2012. We also offer guests exciting rides, animal encounters and beautifully-themed entertainment that are difficult to replicate, such as in-water experiences opened in 2011 with beluga whales at SeaWorld Orlando and our Cheetah Hunt ride, which is a launch coaster that runs alongside a cheetah habitat at Busch Gardens Tampa. As a result of these distinctive offerings, our guest surveys routinely report very high “Overall Satisfaction” scores, with 97% of recent respondents in 2012 ranking their experience good or excellent. Going forward, we will continue to develop high-quality experiences for our guests, focused on integrating our impressive animal collection with creatively themed settings and products that our guests will remember long after they leave our theme parks.	
 
 	Ÿ 	 	Drive Increased Attendance to Our Theme Parks .     We plan to drive increased attendance to our theme parks by continually introducing new attractions, differentiated experiences and enhanced service offerings. Because of the historic correlation between capital investment and increased attendance, we plan to add to our award-winning portfolio of assets and spend capital in support of marketable events, such as SeaWorld’s 50th Anniversary Celebration. We also plan to increase awareness of our theme parks and brands through effective media and marketing campaigns, including the targeted use of online and social media platforms. For example, since their introduction in 2006, our YouTube channels have attracted approximately 16 million views, and we believe that we can continue to use traditional and new media to increase awareness of our brands and drive attendance to our theme parks.	
 
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 	Ÿ 	 	Expand In-Park Per Capita Spending through New and Enhanced Offerings.     We believe that by providing our guests additional and enhanced offerings at various price points, we can drive further spending in our theme parks. For example, we recently introduced an “all-day-dining deal” for a supplemental fee, which we believe has resulted in increased in-park per capita spending. In addition, we have developed iPhone and Android smartphone applications for our SeaWorld and Busch Gardens theme parks, which offer GPS navigation through the theme parks and interactive theme park maps that show the nearest dining locations, gift shops and ATMs and provide real-time updates on wait times for rides. Our guests have quickly adopted these products with over one million downloads of our smartphone applications from June 2011 through December 2012. We believe that going forward, there are significant avenues to expand guest offerings in ways that both increase guest satisfaction and provide us with incremental revenue.	
 
 	Ÿ 	 	Grow Revenue through Disciplined and Dynamic Pricing.     We are focused on increasing our revenues through a variety of ticket options and disciplined pricing and promotional strategies. We offer an array of tailored admission options, including season passes and multi-park tickets to motivate the purchase of higher value products and increase in-park per capita spending. In addition, to increase non-peak demand we offer seasonal and special events and concerts, some of which are separately priced. We have begun deploying a dynamic pricing model, which will enable us to adjust admission prices for our theme parks based on expected demand.	
 
 	Ÿ 	 	Increase Profitability through Operating Leverage and Rigorous Cost Management.     Adding incremental attendance and driving additional in-park per capita spending affords us with an opportunity to realize gains in profitability because of the fixed cost base and high operating leverage of our business. We also employ rigorous cost management techniques to drive additional operating efficiencies. For example, we utilize a centralized procurement and strategic sourcing team and participate in several cooperative buying organizations to leverage our purchases company-wide and have recently consolidated our marketing spending with a single agency to streamline our marketing efforts.	
 
 	Ÿ 	 	Pursue Disciplined Capital Deployment, Expansion and Acquisition Opportunities .    We pursue a disciplined capital deployment strategy focused on the development and improvement of rides, attractions and shows, as well as seek to leverage our strong brands and expertise to pursue selective domestic and international expansion and acquisition opportunities. As part of this strategy, we seek to replicate successful capital investments in particular attractions across multiple theme parks, as we did with our Journey to Atlantis watercoaster that premiered in SeaWorld Orlando and was later introduced in the other SeaWorld theme parks. We have been successful in grouping our theme parks and water parks near each other, which allows us to operate companion theme parks with reduced overhead costs and creates revenue opportunities through multi-park tickets and other joint marketing initiatives. For example, in November 2012, we acquired Knott’s Soak City Chula Vista water park, which is located near our SeaWorld San Diego theme park. We plan to re-launch the water park as Aquatica San Diego by mid-2013. We also evaluate new domestic theme park opportunities as well as potential joint venture opportunities that would allow us to expand internationally by combining our brands and zoological and operational expertise with third-party capital.	
 
 	Ÿ 	 	Leverage and Expand Our Brands to Increase Awareness and Create New Opportunities .     Our brands are highly regarded and are primarily based on our own intellectual property, which provides us with opportunities to leverage our intellectual property portfolio and develop new media, entertainment and consumer products. For example, in 2013 we will open Antarctica: Empire of the Penguin at our SeaWorld Orlando theme park that will feature a new animated penguin character, Puck, and coincide with the launch of new in-park merchandise, mobile gaming, and consumer products designed around the Puck character. In addition, we are able to expand into new media platforms by partnering with others to create	
 
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 	new, powerful entertainment opportunities. For example, in 2012, we launched Sea Rescue, a Saturday morning television show airing on the ABC Network featuring our work to rescue injured animals in coordination with various government agencies and other rescue organizations, which attracted over 27 million viewers in its first season and has been rated as the number one show in its timeslot in a number of major U.S. markets since its debut.	
 
 	Ÿ 	 	Continue our Support of Species Conservation, Sustainability and Animal Welfare.     Our zoological know-how and coast-to-coast presence provide us with significant opportunities to contribute to global species conservation, sustainability and animal welfare initiatives. For example, our employees regularly assist in animal rescue efforts, and the non-profit SeaWorld & Busch Gardens Conservation Fund, of which we are the primary supporter and corporate member, makes grants to wildlife research and species conservation projects worldwide. Our species conservation efforts and philanthropic activities generate positive awareness and goodwill for our business. These efforts are a core part of our corporate culture and identity and resonate with our customers.	
Our Industry
We believe that the theme park industry is an attractive sector characterized by a proven business model that generates significant cash flow and has clear avenues for growth. Theme parks offer a strong consumer value proposition, particularly when compared to other forms of out-of-home entertainment such as concerts, sporting events, cruises and movies. As a result, theme parks attract a broad range of guests and generally exhibit strong margins across regions, operators, park types and macroeconomic conditions.
According to the Freedonia Report, the U.S. theme park industry, which hosts approximately 315 million visitors per year, is comprised of a large number of venues ranging from a small group of high attendance, heavily-themed destination theme parks to a large group of lower attendance local theme parks and family entertainment centers. According to the TEA/AECOM Report, the United States is the largest theme park market in the world with six of the ten largest theme park operators and 12 of the 25 most-visited theme parks in the world. In 2011, the U.S. theme park industry generated approximately $11.0 billion in revenues, according to the IBISWorld Report, which represented a 3.0% compounded annual growth rate since 2003.
Our Brands
We own or license a portfolio of globally recognized brands, including SeaWorld, Shamu, Busch Gardens and Sesame Place. By focusing on nature-based themes, our theme parks distinguish themselves from traditional theme parks and are able to attract a diverse geographic and demographic mix of guests. Our brand portfolio is highly stable, reducing our exposure to changing consumer tastes.
Our strong brands allow us to command higher admissions prices, drive in-park per capita spending and generate out-of-park revenue. We are focused on developing proprietary brands and intellectual property that we can leverage through a variety of media and entertainment platforms and consumer products to drive attendance to our theme parks and create “out-of-park” experiences for our guests as a way to connect with them before they visit our theme parks and to stay connected with them after their visit. Our brands are among our most important assets, and we are actively engaged in enforcement and other activities to protect our intellectual property rights.
Our Theme Parks
We are best known for our theme parks, which hosted more than 24 million guests during the twelve months ended September 30, 2012. Our theme parks offer guests a variety of exhilarating experiences, from animal encounters that invite exploration and appreciation of the natural world, to thrilling rides and spectacular shows. The theme parks are beautifully themed venues that are consistently recognized
 
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among the top theme parks in the world and rank among the most highly attended in the industry. In 2011, SeaWorld Orlando, Busch Gardens Tampa and SeaWorld San Diego each ranked among the top 25 theme parks worldwide based on attendance, and Aquatica Orlando and Water Country USA each ranked among the top 20 water parks worldwide based on attendance. We generally locate our theme parks in geographical clusters, which improves our ability to serve guests by providing them with a varied, comprehensive vacation experience and valuable multi-park pricing packages, as well as improving our operating efficiency through shared overhead costs.
The following table summarizes our theme park portfolio:

Location	 	Theme
Park	 	Year
Opened	 	 	Season	 	Animal
Habitats (2)	 	Rides (3)	 	Shows (4)	 	Play
Areas (5)	 	Events (6)	 	Distinctive
Experiences (7)	
Orlando, FL	 	  	 	 	1973	  	 	Year-
round	 	19	 	14	 	18	 	2	 	7	 	17	
	 	  	 	 	2000	  	 	Year-
round	 	5	 	0	 	0	 	0	 	0	 	5	
	 	  	 	 	2008	  	 	Year-
round	 	5	 	13	 	0	 	2	 	0	 	2	
Tampa, FL	 	  	 	 	1959	  	 	Year-
round	 	16	 	30	 	18	 	11	 	9	 	20	
	 	  	 	 	1980	  	 	Mar-Oct	 	0	 	12	 	0	 	4	 	1	 	2	
San Diego,
CA	 	  	 	 	1964	  	 	Year-
round	 	26	 	10	 	20	 	2	 	4	 	11	
	 	  	 	 	1996 	(1)  	 	May-Sep	 	2	 	11	 	0	 	0	 	0	 	0	
San Antonio,
TX	 	  	 	 	1988	  	 	Feb-Dec	 	12	 	23	 	29	 	12	 	7	 	32	
Williamsburg,
VA	 	  	 	 	1975	  	 	Mar-Oct
& Dec	 	7	 	38	 	16	 	8	 	6	 	28	
	 	  	 	 	1984	  	 	May-Sep	 	1	 	14	 	1	 	4	 	0	 	6	
Langhorne,
PA	 	  	 	 	1980	  	 	May-Oct
& Dec	 	0	 	22	 	14	 	9	 	4	 	7	
Total (8)	 	  	 	 	 	 	 	 	 	93	 	187	 	116	 	54	 	38	 	130	

(1)	On November 20, 2012, we acquired the Knott’s Soak City Chula Vista water park from Cedar Fair, L.P. We plan to rebrand this water park as Aquatica San Diego before it re-opens in 2013.	
(2)	Represents animal habitats without a ride or show element, often adjacent to a similarly themed attraction.	
(3)	Represents rides, including mechanical rides and water slides.	
(4)	Represents annual and seasonal shows with live entertainment, animals, characters and/or 3-D or 4-D experiences.	
(5)	Represents pure play areas, typically designed for children or seasonal special event oriented, often without a queue (such as water splash areas and Halloween mazes).	
(6)	Represents special limited time events.	
(7)	Represents special experiences, such as educational tours, immersive dining experiences and swimming with animals, often limited to small groups and individuals and/or requiring a supplemental fee.	
(8)	The total number of animal habitats, rides, shows, play areas, events and distinctive experiences in our theme park portfolio varies seasonally.	
 
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 	Ÿ 	 	SeaWorld .     SeaWorld is globally recognized as the leading marine-life theme park brand in the world. Our SeaWorld theme parks offer a truly memorable experience for guests of all ages: up-close animal encounters, thrilling attractions and lavish performances that immerse guests in the marine-life theme. Each SeaWorld theme park showcases the iconic killer whale, Shamu, at Shamu Stadium, which features inspiring shows, underwater viewing and special dining experiences. We currently own and operate the following SeaWorld branded theme parks:	
 
 	Ÿ 	 	SeaWorld Orlando is a 279 acre theme park in Orlando, Florida and is open year-round. It is our largest theme park as measured by attendance and revenue. SeaWorld Orlando is home to the original Journey to Atlantis watercoaster ride and Kraken, a floorless rollercoaster. In 2009, SeaWorld Orlando opened Manta, integrating animals and a beautiful aquarium into the theming of a flying rollercoaster. In April 2012, we opened TurtleTrek, one of the first attractions with two extensive naturalistic habitats, home to manatees and sea turtles, and a 3-D, 360-degree dome theater, which allows a 3-D movie to be shown all around guests and even above them.	
 
 	Ÿ 	 	SeaWorld San Antonio is one of the world’s largest marine-life theme parks, encompassing 416 acres in San Antonio, Texas. Open 11 months of the year, SeaWorld San Antonio features thrilling rollercoasters, including the Steel Eel and The Great White, along with a collection of marine-themed shows and experiences, including the killer whale show One Ocean. Our guests can upgrade their experience for an additional fee to also enjoy our Aquatica water park located within SeaWorld San Antonio.	
 
 	Ÿ 	 	SeaWorld San Diego is the original SeaWorld theme park spanning 190 acres of waterfront property on Mission Bay in San Diego, California. SeaWorld San Diego is open year-round and is one of the most visited paid attractions in San Diego. Its newest attraction is Manta, built in 2012 and modeled on the successful Manta ride in SeaWorld Orlando, which includes animal habitats featuring bat rays and other marine-life as well as a launch rollercoaster shaped like a giant manta ray.	
Collectively, our theme parks have won the top three spots in Amusement Today’s annual Golden Ticket Award for Best Marine Life Park since the award’s inception in 2006. We have over 48 years of experience developing techniques for reproducing, maintaining and showing marine mammals.
 
 	Ÿ 	 	Busch Gardens .     Our Busch Gardens theme parks are family-oriented theme parks designed to immerse guests in foreign geographic settings and they feature a combination of world class rollercoasters, exotic animals and high-energy theatrical productions that appeal to all ages. Our Busch Gardens theme parks are renowned for their beauty and cleanliness with award-winning landscaping and gardens. We currently own and operate the following Busch Gardens theme parks:	
 
 	Ÿ 	 	Busch Gardens Tampa features exotic animals, thrill rides and shows on 306 acres of lush natural landscape. With more than 12,000 animals representing more than 300 species, Busch Gardens Tampa offers more opportunities to learn about and interact with amazing animals than any other of our theme parks. Our zoological collection is a marquee attraction for families, and its portfolio of rides, including three of the world’s top 30 steel rollercoasters, broaden the theme park’s appeal to teens and thrill seekers of all ages. Our newest attractions include the award winning Iceploration show, state-of-the-art Animal Care Center and Christmas Town, which opened in 2012.	
 
 	Ÿ 	 	Busch Gardens Williamsburg is regularly recognized as one of the highest quality theme parks in the world, capturing dozens of awards over its 37-year history for attraction and show quality, design, landscaping, culinary operations and theming. This 422 acre theme park has	
 
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 	been named the Most Beautiful Park in the World by the National Amusement Park Historical Association for 22 consecutive years and has earned the Golden Ticket for Best Landscaping each year since the category’s inception in 1998. It features some of the industry’s top thrill rides with three steel rollercoasters, Apollo’s Chariot, Alpengeist and Griffon, ranked in the top 50 in Amusement Today’s annual survey. Its newest steel rollercoaster, Verbolten, a multi-launch, indoor/outdoor rollercoaster that ends with an 88-foot drop toward the theme park’s Rhine River, opened in 2012.	
 
 	Ÿ 	 	Aquatica .    Aquatica are high-end water parks that place an equal emphasis on high-energy water rides and innovative presentations of marine and terrestrial animals, while leveraging our brand and aquatic mammal expertise. We position our Aquatica water parks as companions to our SeaWorld theme parks and currently own and operate the following Aquatica branded theme parks:	
 
 	Ÿ 	 	Aquatica Orlando is an 81 acre South Seas-themed water park adjacent to SeaWorld Orlando. It was the 3rd most attended water park in North America in 2011 and is open year-round. The theme park features state-of-the-art attractions for guests of all ages and swimming abilities, including some that pass by or through animal habitats, including the signature Dolphin Plunge that carries guests through a Commerson’s dolphin habitat.	
 
 	Ÿ 	 	Aquatica San Diego is the latest theme park to be added to our portfolio. This theme park was acquired from Cedar Fair in November 2012 and is being extensively renovated and rebranded as Aquatica San Diego before it re-opens in 2013.	
 
 	Ÿ 	 	Aquatica San Antonio is a newly-added water park located within SeaWorld San Antonio and accessible to guests for an additional fee. It features a variety of waterslides, rivers, lagoons, more than 42,000 square feet of beach area, private cabanas and more than 500 stingrays and tropical fish.	
 
 	Ÿ 	 	Discovery Cove.     Located next to SeaWorld Orlando, Discovery Cove is a reservations only, all-inclusive marine-life theme park that is open year-round to guests. The theme park restricts its attendance to approximately 1,300 guests per day in order to assure a more intimate experience. Discovery Cove provides guests with a full day of activities, including a 30-minute dolphin swim session and the opportunity to snorkel with thousands of tropical fish, wade in a lush lagoon with stingrays, and hand-feed birds in a free flight aviary. We opened new attractions at Discovery Cove in the last two years, The Grand Reef, which includes SeaVenture, an underwater walking tour where guests can get up close to exotic fish and sharks, and Freshwater Oasis, which offers wading adventures and face-to-face encounters with otters and marmosets.	
 
 	Ÿ 	 	Sesame Place .     Located between Philadelphia and New York City, Sesame Place is the only theme park in America entirely dedicated to Sesame Street’s spirit of imagination. The theme park shares SeaWorld’s “education and learning through entertainment” philosophy and allows parents to rediscover their own childhood. Our rights to the Sesame Street brand in the United States extend through 2021. Despite its small size and seasonal operating schedule, Sesame Place attracts more than one million guests annually due to its strong family appeal. Sesame Place debuted the Neighborhood Street Party Parade and an annual Christmas event in 2011.	
 
 	Ÿ 	 	Water Country USA.     Virginia’s largest family water play park, Water Country USA, features state-of-the-art water rides and attractions, all set to a 1950s and 1960s surf theme. Water Country USA is the sixth most attended water park in North America and features a 23,000 square-foot wave pool, a science fiction themed interactive children’s play area, kid-sized water slides, live shows and several other attractions. Its newest attraction is Vanish Point, a thrilling drop slide, which opened in 2011.	
 
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 	Ÿ 	 	Adventure Island.     Located adjacent to Busch Gardens Tampa, Adventure Island is a 56 acre water park that is filled with water rides, dining and other attractions that incorporate a Key West theme. The theme park is the seventh most attended water park in North America and features a friendly wave pool and children’s water playground that appeal to its core constituency, local families with young children.	
Our New Attractions
Our theme parks feature a variety of attractions for our guests, including the following attractions added in 2012:
 
 	Ÿ 	 	Animal Care Center (Busch Gardens Tampa): At our Animal Care Center guests have the opportunity to observe and take part in the animal care experience. From nutrition to x-rays and surgeries, much of the animal care is conducted within guest view in this state-of-the-art animal care facility.	
 
 	Ÿ 	 	Aquatica San Antonio (SeaWorld San Antonio): Aquatica San Antonio is a resort style water park opened inside SeaWorld San Antonio and available for an additional fee. It features thrilling water slides, rivers, lagoons, more than 42,000 square feet of beach area, private cabanas and more than 500 stingrays and tropical fish. The water park’s signature attraction, Stingray Falls, takes four-seat rafts down twists and turns to an underwater grotto, where guests view stingrays and tropical fish. In addition, Walhalla Wave, a family raft ride, sends guests to the top of a zero-gravity wall, giving riders the sense of weightlessness.	
 
 	Ÿ 	 	Christmas Town (Busch Gardens Tampa): Christmas Town allows guests to experience the Christmas season with a separate admission evening event offering more than a million holiday lights, special entertainment, shopping, dining and seasonal attractions.	
 
 	Ÿ 	 	Entwined: Tales of Good and Grimm (Busch Gardens Williamsburg): Entwined is Busch Gardens’ new storytelling show in Das Festhaus, a restaurant and entertainment venue.	
 
 	Ÿ 	 	Freshwater Oasis (Discovery Cove): Freshwater Oasis offers wading adventures and face-to-face encounters with otters and marmosets.	
 
 	Ÿ 	 	Iceploration (Busch Gardens Tampa): Iceploration is a new ice show set in the 1,100-seat Moroccan Palace Theater. It combines skaters, oversized puppets, atmospheric special effects, original music and animals to tell the story of a young boy and his grandfather exploring the world.	
 
 	Ÿ 	 	Just for Kids (SeaWorld Orlando): Just for Kids is an event that provides children with an opportunity to sing, dance and play. Guests experience live shows, kid-sized rides and some of today’s favorite children’s music artists at this popular festival.	
 
 	Ÿ 	 	Let’s Play Together (Sesame Place): Let’s Play Together is the newest addition to Sesame Place. Elmo, Cookie Monster, Grover, Rosita, Bert, Ernie and Abby Cadabby play, sing and dance while learning all about the wonderful things that friends do together.	
 
 	Ÿ 	 	Manta (SeaWorld San Diego): Manta is an attraction that includes animal habitats featuring bat rays and other marine-life, as well as a launch rollercoaster shaped like a giant manta ray.	
 
 	Ÿ 	 	TurtleTrek (SeaWorld Orlando): TurtleTrek is a realistic 3-D, 360 degree movie, providing guests with an opportunity to find out what it is like to “be a turtle” on an epic journey where they encounter hardships and challenges as they try to make it back to their home beach. TurtleTrek also features two large saltwater and freshwater habitats that are home to endangered sea turtles and manatees.	
 
 	Ÿ 	 	Verbolten (Busch Gardens Williamsburg): Verbolten is a multi-launch, indoor/outdoor rollercoaster that ends with an 88-foot drop toward the theme park’s Rhine River.	
 
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Capital Improvements
We make annual investments to support our existing theme park facilities and attractions, as well as enable the development of new theme park attractions and infrastructure. Maintaining and improving our theme parks, as well as opening new attractions, is critical to remain competitive and increase attendance and our guests’ length of stay.
In 2012, we opened new attractions in seven of our theme parks. In 2013, we will open one of our biggest new attractions: Antarctica: Empire of the Penguin, a realm within our SeaWorld Orlando park themed to the snowy continent that will include a new attraction with innovative industry-leading ride technology. Antarctica will immerse guests into a penguin’s habitat and will allow them to stroll with a colony of penguins. Also in 2013, we plan to re-open the Knott’s Soak City Chula Vista water park, which we acquired in November 2012, as Aquatica San Diego, after making capital investments to upgrade its facilities.
During 2014 and 2015, we plan to celebrate the 50th anniversary of the SeaWorld brand at all three of our SeaWorld theme parks with a variety of new events, attractions, decors and musical features that celebrate our leadership in the marine-life theme park segment. SeaWorld’s 50th Anniversary Celebration will be highlighted by major new attractions, such as Explorer’s Reef in SeaWorld San Diego, which features an opportunity for our guests to experience hands-on interactions with sea creatures. Beyond the new products and experiences that we will be offering to our guests, we believe that we will be able to capitalize on the strong brand recognition and widespread appeal of our theme parks by raising public awareness of the anniversary celebration across traditional and digital media.
Maintenance and Inspection
Maintenance at our theme parks is a key component of guest service and safety and includes two areas of focus: facilities and infrastructure and rides and attractions. Facilities and infrastructure consists of all functions associated with upkeep, repair, preventative maintenance, code compliance, and improvement of theme park infrastructure. This area is staffed with a combination of external contractors/suppliers and our employees.
Rides and attractions maintenance represents all functions dedicated to the inspection, upkeep, repair and testing of guest experiences, particularly rides. Rides and attractions maintenance is also staffed with a combination of external suppliers, inspectors and our employees, who work to assure that ride experiences are operating within the manufacturer’s criteria and that maintenance is conducted according to internal standards, industry best practice and standards (such as ASTM International), state or jurisdictional requirements, as well as the ride designer or manufacturer’s specifications. All ride maintenance personnel are trained to perform their duties according to internal training processes, in addition to recognized industry certification programs for maintenance leadership. Every ride at our theme parks is inspected regularly, according to daily, weekly, monthly, and annual schedules, by both park maintenance experts or external consultants. Additionally, all rides are inspected daily by maintenance personnel before use by guests to ensure proper and safe operation.
All maintenance activities are planned and tracked using a networked enterprise software system, in order to schedule and request work, track completion progress and manage costs of parts and materials.
 
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Our Animals
We are one of the world’s foremost zoological organizations and a global leader in animal welfare, training, husbandry and veterinary care. Our mission is to inspire guests through education and up-close experiences and to care for and protect animals. We believe we have one of the largest animal collections in the world, with approximately 67,000 animals, including 7,000 marine and terrestrial animals and 60,000 fish. Animals in our care include certain rare species such as the cheetah, Bengal tiger, West Indian manatee, black rhinoceros and polar bear.
The well-being of the animals in our care is a top priority. Our zoological staff has been caring for animals for more than five decades, and our expertise is a resource for zoos, aquariums and conservation organizations worldwide. Our expertise and innovation in animal husbandry have led to advances in the care of species in zoological facilities and in the conservation of wild populations.
We operate successful zoological breeding programs that help maintain a large and genetically-diverse animal collection. Those efforts have produced 29 killer whales, 151 dolphins and 115 sea lions, among other species. More than 80% of the marine mammals living in our zoological theme parks were born in human care.
Many of our programs represent pioneering contributions to the zoological community. Until the birth of our first killer whale calf in 1985, no zoological institution had successfully bred killer whales. With 28 killer whales, we care for the largest killer whale population in zoological facilities worldwide and today have the most genetically diverse killer whale and dolphin collection in our history. Seven of these killer whales are presently on loan to a third party.
Our commitment to animals also extends beyond our theme parks and throughout the world. We actively participate in species conservation and rescue efforts as discussed in “—Conservation Efforts” and “—Philanthropy and Community Relations” below.
Our Products and Services
Admission Tickets
We generate most of our revenue from selling admission to our theme parks. For the nine months ended September 30, 2012, theme park admissions accounted for approximately 62% of our revenue. We work with travel agents, ticket resellers and travel agencies, as well as maintain an online presence to promote advanced sales and provide guest convenience and ease of entry. Approximately 30% of our admission ticket purchases are made online.
Guests who visit our theme parks have the option of purchasing multiple types of admission tickets, from single and multi-day tickets to season, annual and two year passes. We also offer a Fun Card at select theme parks that allows additional visits throughout that calendar year. In addition, visitors can purchase vacation packages with preferred hotels, behind-the-scenes tours, specialty dining packages and front of the line access to enhance their experience.
We also participate in joint programs that are designed to provide visitors to Florida and Southern California with options, flexibility and value in creating their vacation itineraries. For example, we have partnered with several theme parks in Orlando to create the Orlando FlexTicket, which allows guests to purchase a ticket providing access to our theme parks in Orlando and Tampa as well as Universal Studios’ Universal Orlando, Islands of Adventure and Wet ‘n Wild. We also created the 2-Park FlexTicket in conjunction with Universal Studios, which allows guests to purchase a ticket providing access to SeaWorld San Diego and Universal Studios Hollywood. In addition, we partner with independent third parties who sell tickets and/or packages to our theme parks.
We provide discounts, actively run promotions and use dynamic pricing models to adjust to changes in demand during targeted periods to maximize revenue and manage capacity.
 
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Theme Park Operations
Our theme park operations strive to deliver a high level of service, safety and security at our theme parks. Comprised of rides, shows and attractions operations, safety, security, environmental, water park and guest arrival services (including parking, tolls, admissions, guest relations, entry and exit), the theme park operations team manages the planning and execution of the overall theme park experience on a daily basis. In pursuit of continuous improvement at our guest touch points, theme park operations identify and leverage internal best practices across all of our theme parks in order to create a seamless and enjoyable guest experience throughout the entire visit.
Culinary Offerings
We strive to deliver a variety of high quality, creative and memorable culinary experiences to our guests. Our culinary operations are strategically organized into five key guest-oriented disciplines designed to drive in-park per capita spending: restaurants, catering, carts and kiosks, specialty snacks and vending. Our culinary team focuses on providing creative menu offerings that appeal to our diverse guest base.
We offer a variety of dining programs that provide value to our guests while driving incremental revenues. While our menu offerings have broad appeal, they also cater to guests who desire healthy options and those with special allergy-related needs. Our successful all-day-dining program delivers convenience and value to our guests with numerous restaurant choices for one price. We also offer creative immersive dining experiences that allow guests to dine up-close with our animals and characters. Our commitment to care for the natural world extends to the food that we serve. Some of our menus feature sustainable, organic, seasonal and locally grown ingredients that aim to minimize environmental impacts to animals and their habitats. In addition, through culinary supply chain management initiatives, we are well-positioned to take advantage of changing economic and market conditions.
Merchandise
We offer guests the opportunity to capture memories through our products and services, including through traditional retail shops, game venues and customized photos and videos. We make a focused effort to leverage the emotional connection of the theme park experiences, capitalize on trends and optimize brand alignment with our merchandise product offerings.
We operate more than 200 specialty shops at our theme parks, and our retail business encompasses the entire value chain, from product design to production and sourcing, importing and logistics and visual presentation up to the point of sale. Our products encompass more than 55,000 unique SKUs across five divisions. Whether a plush toy, a stylish apparel item showcasing an attraction, a commemorative memento or a tote to carry it all, we create items both big and small so that every guest has a chance to find that perfect item that is a reminder of the memories made in our theme parks.
Through real time photo and video technologies, guests can purchase visual memories to commemorate their experience with us. Whether on a traditional ride or during one of our numerous animal experiences, we capture the moment through the use of state-of-the-art processes and technologies. We continue to explore and develop our photo and retail business to extend beyond the visit with online opportunities to further create customized products.
In-park games span from traditional theme park operations to arcade experiences, all with the goal of creating positive family experiences for guests of every age.
 
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Our merchandise teams also focus on making a visit to our theme parks easy, convenient and comfortable. This includes offering lockers or service vehicle rentals such as strollers, electric personal carts and wheelchairs.
Licensing and Consumer Products
To capitalize on our popular brands, we have begun to leverage our intellectual property and content through media and consumer strategic licensing arrangements. We extended the reach of our brands through outbound media licensing in areas such as films, television programs and digital e-books, as well as our first-ever multi-platform mobile app game, TurtleTrek, which launched on iTunes in November 2012. We have also expanded into the development of licensed consumer products to drive consumer sales through retail channels beyond our theme parks. Our licensed consumer product offerings currently include toys, books, apparel, and technology accessories, among many other product types. For example, we worked with Mattel to develop our first Barbie I Can Be: SeaWorld Trainer Doll playset, which debuted to the public in 2008. By 2013, we believe that our licensees will have an aggregate of over 250 SKUs across more than 25,000 retail stores. Upcoming new product launches in 2013 are anticipated for direct to retail products, consumer packaged goods, office supplies, puzzles, board games and pet products. We believe that by leveraging our brands and our intellectual property through media and consumer products, we will create new revenue streams and enhance the value of our brands through greater consumer awareness and increased consumer loyalty.
In addition, we have expanded our brand appeal through strategic alliances with well-known external brands, including Sesame Street and The Polar Express. Recently, we entered into an exclusive theme park license with Nelvana Enterprises, a division of Corus Entertainment, for the animated character and series Franklin and Friends, which includes in-park character appearances, DVD specials, custom publishing and co-branded merchandise.
Group Events and Conventions
We host a variety of different group events, meetings and conventions at our theme parks both during the day and at night. Our venues offer indoor and outdoor space for meetings, special events, entertainment shows, picnics, teambuilding events, group tours and special group ticket packages. Park buy-outs allow groups to enjoy exclusive itineraries, including meetings and shows, up-close encounters with animals and behind the scenes tours. Each of our theme parks offers attractive venues, such as SeaWorld Orlando’s Ports of Call, a 70,000 square foot dedicated special events complex and banquet facility at the theme park, which is themed as a nautical wharf-side warehouse district, complete with two miniature submarines. The facility offers more than 30,000 square feet of dining space, with a ballroom that provides seating for more than 750 guests and a larger outdoor garden reception area that can accommodate additional guests. In 2011, we hosted more than 1,200 group events at our theme parks across the country.
Corporate Sponsorships and Strategic Alliances
We seek to secure long-term corporate sponsorships and strategic alliances with leading companies and brands that share our core values, deliver significant brand marketing value and influence and drive mutual business gains. We identify prospective corporate sponsors based on their industry and industry-leading position among Fortune 1000 companies, and we select them based on their ability to deliver impactful marketing value to our theme parks and our brands, as well as to consumer products and various entertainment platforms. Our current corporate sponsors include, among others, Southwest Airlines, which has been a sponsor for over 20 years, and The Coca-Cola Company. Our corporate sponsors contribute to us in a multitude of ways, such as through direct
 
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marketing, advertising, media exposure and licensing opportunities, as well as through the non-for-profit SeaWorld & Busch Gardens Conservation Fund. For example, in 2012, The Coca-Cola Company and Southwest Airlines launched new channel marketing programs and consumer promotions on our behalf with Walmart, Wendy’s, Dunkin Donuts, Regal Cinemas, Cinemark, NASCAR, MyCokeRewards and Southwest Vacations.
Our Corporate Culture
Our corporate culture is built on our mission to deliver personal, interactive and educational experiences that enable our customers to celebrate, connect with and care for the natural world we share. Our management team and our employees are passionate about connecting people to nature and animals and are committed to working in a socially responsible and environmentally sustainable manner. We teach our employees to be welcoming, friendly and attentive and to create an environment that allows our guests to build lasting memories with their family and friends. Our consumer-oriented corporate culture is integral to our organization and the cornerstone of our success.
Conservation Efforts
We contribute to species conservation, wildlife rescue, education and environmental stewardship programs around the world. Through SeaWorld & Busch Gardens Conservation Fund, a non-profit organization, we support wildlife research, habitat protection, animal rescue and conservation education. We also work with and support environmental organizations, including the National Wildlife Federation, World Wildlife Fund and The Nature Conservancy and contribute funds in support of efforts to ensure the sustainability of animal species in the wild. Some of our animals also serve as ambassadors in helping raise awareness for species in danger through numerous national media and public appearances. Through our theme parks’ up-close animal encounters, educational exhibits and innovative entertainment, we strive to inspire each guest who visits one of our parks to care for and conserve the natural world.
In addition, in collaboration with federal, state and local governments, among others, we operate one of the world’s most respected rescue programs for ill and injured marine animals, with the goal of rehabilitating and returning them to the wild. Over four decades, our animal experts have helped more than 22,000 ill, injured, orphaned and abandoned animals.
Our commitment to research and conservation also has led to advances in the care of animals in both zoological facilities and in conserving wild populations. We have pioneered new ways to rehabilitate animals in need. For example, we helped to create nutritional formulas and custom nursing bottles to hand-feed orphaned animals and developed techniques to help save sea turtles with cracked shells, created prosthetic beaks for injured birds and outfitted injured manatees with an “animal wetsuit” allowing them to stay afloat and warm.
Most recently, we have undertaken major sustainability initiatives in our theme parks. For example, we are in the process of discontinuing the use of plastic bags in all our gift shops, and in 2013, we expect to be using only paper and reusable bags. In doing so, we will keep an estimated four million plastic bags from entering landfills and the environment each year.
Philanthropy and Community Relations
We focus our philanthropic efforts in three areas: children, education, and the environment. We are committed to the communities in which we live, learn, work, and play. We also partner with charities across the country whose values and missions are aligned with our own, including hospitals, organizations that serve children with disabilities and animal shelter and rescue groups. Through long-term strategic support to advance the missions of these groups, financial support, in-kind resources or hands-on volunteer work, service is an active part of the work we do.
 
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Our theme parks inspire and educate children and guests of all ages through the power of entertainment and our philanthropic efforts reflect this commitment. We extend educational outreach visits to inner-city schools, host “special wish” children to enjoy theme park adventures and create Skype visits with our animals for children too ill to travel.
Finally, a key component of our community outreach is our long-term commitment to honoring the service of members of the U.S. military and acknowledging the sacrifices that their families have made. Currently, we offer a free admission program, which provided approximately 735,000 free single day passes to active military personnel and their families in 2011.
Our Guests and Customers
Our theme parks are located near a number of large metropolitan areas, with a total population of over 55 million people located within 150 miles. Additionally, because our theme parks are divided between regional and destination theme parks, our guests are further diversified among a more stable base of local visitors, non-local domestic visitors and international tourists. Our theme parks are world-class entertainment venues and have broad demographic appeal. In 2011, families comprised 58% of our attendance with an average party size of 3.8 people. In addition to guests of our theme parks, our customers include consumers of our various “out-of-park” product and service offerings.
Seasonality
The theme park industry is seasonal in nature. Based upon historical results, we generate the highest revenues in the second and third quarters of each year, in part because six of our theme parks are only open for a portion of the year. Approximately two-thirds of the Company’s attendance and revenues are generated in the second and third quarters of the year. The percent mix of revenues by quarter is relatively constant each year, but revenues can shift between the first and second quarters due to the timing of Easter and between the first and fourth quarters due to the timing of Christmas and New Year’s. Even for our five theme parks open year-round, attendance patterns have significant seasonality, driven by holidays, school vacations, and weather conditions. One of our goals in managing our business is to continue to generate cash flow throughout the year and minimize the effects of seasonality. In recent years, we have begun to encourage attendance during non-peak times by offering a variety of seasonal programs and events, such as a winter kids festival, spring concert series, and Halloween and Christmas events. In addition, during seasonally slow times, operating costs are controlled by reducing operating hours and show schedules. Employment levels required for peak operations are met largely through part-time and seasonal hiring.
Marketing
Our marketing and sales efforts are focused on generating profitable attendance, in-park per capita spending and building the value of our brands. Through advertising, including local customization, promotions, retail and corporate partners, digital platforms, public relations and sales initiatives, we drive awareness of and intent to visit our theme parks, attendance and higher in-park per capita spending on an international, national and regional level. Our attractive destination locations and strategy of grouping parks together creates high appeal for multi-day visits. Our strategic priorities include: (i) building our brands, (ii) improving guest loyalty, (iii) expanding digital expertise and (iv) broadening appeal (among multi-cultural consumers, kids and domestic markets). With great brands and a diverse team, marketing and sales will play a significant role in driving future growth.
Intellectual Property
Our business is affected by our ability to protect against infringement of our intellectual property, including our trademarks, service marks, domain names, copyrights and other proprietary rights.
 
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Important intellectual property includes rights in names, logos, character likenesses, theme park attractions, content of television programs and systems related to the study and care of certain of our animals. In addition, we are party to key license agreements as licensee, including our agreements with Sesame Workshop and ABI as discussed below. To protect our intellectual property rights, we rely upon a combination of trademark, copyright, trade secret and unfair competition laws of the United States and other countries, as well as contract provisions and third-party policies and procedures governing internet/domain name registrations.
Busch Gardens License Agreement
Our subsidiary, SeaWorld Parks & Entertainment LLC, is a party to a trademark license agreement with ABI, which governs our use of the Busch Gardens name and logo. Under the license agreement, ABI granted to us a perpetual, exclusive, worldwide, royalty-free license to use the Busch Gardens trademark and certain related domain names in connection with the operation, marketing, promotion and advertising of our theme parks, as well as in connection with the production, use, distribution and sale of merchandise sold in connection with such theme parks.
The license extends to our Busch Gardens theme parks located in Williamsburg, Virginia and Tampa, Florida, and may also include any amusement or theme park anywhere in the world that we acquire, build or rebrand with the Busch Gardens name in the future, subject to certain conditions. ABI may not assign, transfer or sell the Busch Gardens mark without first granting us a reasonable right of first refusal to purchase such mark.
We have agreed to indemnify ABI from and against third party claims and losses arising out of or in connection with the operation of the theme parks and the related marketing or promotion thereof, any merchandise branded with the licensed marks and the infringement of a third party’s intellectual property. We are required to carry certain insurance coverage throughout the term of the license.
The license agreement can be terminated by ABI under certain limited circumstances, including in connection with certain types of change of control of SeaWorld Parks & Entertainment LLC.
Sesame Licenses
Sesame Place Theme Park License Agreements
Our subsidiary, SeaWorld Parks & Entertainment LLC (f/k/a SPI, Inc.), is a party to a license agreement with Sesame Workshop (f/k/a Children’s Television Workshop). Under the license agreement, we were granted the right to use titles, marks, names, and characters from the Sesame Street and The Electric Company television series, as well as certain characters and elements created by Muppets Inc. for the Sesame Street series, related marketing materials, and the Sesame Place design trademark in connection with the children’s play parks in Langhorne, Pennsylvania. We pay specified royalties based on receipts from business conducted on the premises of the theme park to Sesame Workshop. We are required to include Sesame Workshop and Muppets Inc. as insured parties under any relevant insurance policies, and have agreed to indemnify Sesame Workshop from and against certain claims and expenses arising out of any personal or property injury at our Sesame Place park or breach of the license agreement. The license agreement can be terminated by Sesame Workshop under certain circumstances, including in connection with a specified change of control of SeaWorld Parks & Entertainment LLC, specified uncured breaches of the license agreement or specified bankruptcy events.
Under a separate agreement, Sesame Workshop granted SeaWorld Parks & Entertainment LLC a license to develop, manufacture, and produce in the United States (and, in some circumstances, elsewhere in the world) and to distribute and sell at Sesame Place branded play parks, certain
 
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products bearing Sesame Place, Sesame Street, and Sesame Street Muppet characters, likenesses, logos, marks and materials, including apparel, flags, bags, mugs, buttons, pens, wristbands and other miscellaneous products. The parties have agreed to indemnify each other from and against claims and expenses in connection with our respective performance under the license agreement and any breach thereof. Sesame Workshop may terminate the license under certain circumstances, including our uncured breach or bankruptcy.
Both agreements are scheduled to remain in effect until December 31, 2021.
Multi-Park License
Under a separate agreement, Sesame Workshop granted SeaWorld Parks & Entertainment LLC rights to use the Sesame Place and Sesame Workshop names and logos, certain Sesame Street characters (including Elmo, Big Bird and Cookie Monster), and granted a limited term right of first negotiation to utilize characters from other Sesame Workshop television series at SeaWorld San Diego, SeaWorld San Antonio, SeaWorld Orlando, and our two Busch Gardens theme parks. Within these theme parks we have rights to use the marks and characters in connection with Sesame Street themed attractions, Sesame Street shows and character appearances, and the marketing, advertising and promotion of the theme parks.
Sesame Workshop has also granted us the right to develop, manufacture, distribute and sell products within our SeaWorld and Busch Gardens theme parks, but also other parks in the United States that are owned or operated by SeaWorld Parks & Entertainment LLC, its subsidiaries or affiliates.
Pursuant to this agreement we pay a specified annual license fee, as well as a specified royalty based on revenues earned in connection with sales of licensed products, all food and beverage items utilizing the licensed elements and any events utilizing such elements if a separate fee is paid for such event.
The parties have agreed to indemnify each other from and against third party claims and expenses arising from their respective performance under the agreement or any breach thereof. Sesame Workshop has the right to terminate the agreement under certain limited circumstances, including a change of control of SeaWorld Parks & Entertainment LLC, SeaWorld Parks & Entertainment LLC’s bankruptcy or uncured breach of the agreement, or the termination of the license agreement regarding our Sesame Place theme park.
The agreement is scheduled to remain in effect until December 31, 2021 unless earlier terminated or extended.
Competition
Our theme parks and other product and entertainment offerings compete directly for discretionary spending with other destination and regional theme parks and water and amusement parks and indirectly with other types of recreational facilities and forms of entertainment, including movies, home entertainment options, sports attractions, restaurants and vacation travel. Principal direct competitors of our theme parks include theme parks operated by The Walt Disney Company, Universal Studios, Six Flags, Cedar Fair, Merlin Entertainments and Hershey Entertainment and Resorts Company. Our highly differentiated products provide a complementary experience to those offered by fantasy-themed Disney and Universal parks. In addition, we benefit from the significant capital investments made in developing the tourism industry in the Orlando area. The Orlando theme park market is extremely competitive, with a high concentration of theme parks operated by several companies.
 
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Competition is based on multiple factors including location, price, the originality and perceived quality of the rides and attractions, the atmosphere and cleanliness of the theme park, the quality of food and entertainment, weather conditions, ease of travel to the theme park (including direct flights by major airlines), and availability and cost of transportation to a theme park. We believe we compete effectively, and our competitive position is protected, due to our strong brand recognition, extensive animal collection, high historical capital investment and valuable real estate. Additionally, we believe that our theme parks feature a sufficient quality and variety of rides and attractions, educational and interactive experiences, merchandise locations, restaurants and family orientation to make them highly competitive with other destination and regional theme parks, as well as other forms of entertainment.
Employees
We currently employ approximately 22,109 employees, approximately 4,400 of whom are employed on a full-time basis. The number of part-time and seasonal employees, many of whom are high school and college students, increases during our peak operating season. None of our employees are covered by a collective bargaining agreement, and we consider our employee relations to be good.
Regulatory
Our operations are subject to a variety of federal, state and local laws, regulations and ordinances including, but not limited to, those regulating the environmental, display, possession and care of our animals, amusement park rides, building and construction, health and safety, labor and employment, workplace safety, zoning and land use and alcoholic beverage and food service. Key statutes and treaties relating to the display, possession and care of our animal collection include the Endangered Species Act, Marine Mammal Protection Act, Animal Welfare Act, Convention on International Trade in Endangered Species and Fauna Protection Act and the Lacey Act. We must also comply with the Migratory Bird Treaty Act, Bald and Golden Eagle Protection Act, Wild Bird Conservation Act and National Environmental Policy Act, among other laws and regulations. We believe that we are in substantial compliance with applicable laws, regulations and ordinances; however, such requirements may change over time, and there can be no assurance that new requirements, changes in enforcement policies or newly discovered conditions relating to our properties or operations will not require significant expenditures in the future.
Insurance
We maintain insurance of the type and in the amounts that we believe to be commercially reasonable for businesses in our industry. We maintain primary and excess casualty coverage of up to $100 million. As part of this coverage, we retain deductible/self-insured retention exposures of $1 million per occurrence for general liability claims, $250,000 for property claims, $250,000 per accident for automobile liability claims, and $750,000 per occurrence for workers compensation claims. We maintain employers’ liability and all coverage required by law in the states in which we operate. Defense costs are included in the insurance coverage we obtain against losses in these areas. Based upon our historical experience of reported claims and an estimate for incurred-but-not-reported claims, we accrue a liability for our deductible/self-insured retention contingencies regarding general liability, automobile liability and workers compensation exposures. We maintain additional forms of special casualty coverage appropriate for businesses in our industry. We also maintain commercial property coverage against fire, natural perils, so-called “extended coverage” perils such as civil commotion, business interruption and terrorism exposures for protection of our real and personal properties (other than land). We generally renegotiate our insurance policies on an annual basis. We cannot predict the amounts of premium cost that we may be required to pay for future insurance coverage, the level of any deductibles/self-insured retentions we may retain applicable thereto, the level of aggregate excess coverage available or the availability of coverage for special or specific risks.
 
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Properties
The following table summarizes our principal properties, which includes undeveloped land.

Location	  	Size	 	Use	
Orlando, FL	  	76,360 sq ft	 	Leased Office Space (corporate headquarters)	
Orlando, FL	  	9,636 sq ft	 	Leased Office Space (call center)	
San Diego, CA	  	190 acres (1)	 	Leased Land	
Chula Vista, CA	  	66 acres	 	Owned Water Park	
Orlando, FL	  	279 acres	 	Owned Theme Park	
Orlando, FL	  	58 acres	 	Owned All-inclusive Interactive Park	
Orlando, FL	  	81 acres	 	Owned Water Park	
Tampa, FL	  	56 acres	 	Owned Water Park	
Tampa, FL	  	306 acres	 	Owned Theme Park	
Dade City, FL	  	109 acres	 	Owned Breeding Farm	
Langhorne, PA	  	55 acres	 	Owned Theme Park	
San Antonio, TX	  	416 acres	 	Owned Theme Park	
Williamsburg, VA	  	222 acres	 	Owned Water Park	
Williamsburg, VA	  	422 acres	 	Owned Theme Park	
Williamsburg, VA	  	5 acres	 	Owned Warehouse Space	
Williamsburg, VA	  	5 acres	 	Owned Seasonal Worker Lodging	
Our Senior Secured Credit Facilities are collateralized by first priority or equivalent security interests in, among other things, certain tangible and intangible assets, including our fee-owned properties. See “Description of Indebtedness—Senior Secured Credit Facilities.”

(1)	Includes approximately 17 acres of water in Mission Bay Park, California.	
Lease Agreement with City of San Diego
Our subsidiary, Sea World LLC (f/k/a Sea World Inc.), leases approximately 190 acres from the City of San Diego, including approximately 17 acres of water in Mission Bay Park, California (the “Premises”). The current lease term commenced on July 1, 1998 and extends for 50 years or the maximum period allowed by law. Under the lease, the Premises must be used as a marine park facility and related uses. In addition, we may not operate another marine park facility within a radius of 560 miles from the City of San Diego.
The annual rent under the lease is calculated on the basis of a specified percentage of Sea World LLC’s gross income from the Premises, or the minimum yearly rent, whichever is greater. The minimum yearly rent is adjusted every three years to an amount equal to 80% of the average accounting year rent actually paid for the three previous years. The current minimum yearly rent is approximately $9.6 million, which is subject to adjustment on January 1, 2014.
Legal Proceedings
We are subject to various allegations, claims and legal actions arising in the ordinary course of business. While it is impossible to determine with certainty the ultimate outcome of any of these proceedings, lawsuits and claims, management believes that adequate provisions have been made and insurance secured for all currently pending proceedings so that the ultimate outcomes will not have a material adverse effect on our financial position.
 
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 MANAGEMENT
Executive Officers and Directors
The following table sets forth certain information regarding our executive officers and directors as of December 1, 2012:

Name	  	Age	 	  	Position	
David F. D’Alessandro	  	 	61	  	  	Chairman of the Board of the Directors	
Jim Atchison	  	 	46	  	  	Chief Executive Officer and President, Director	
James M. Heaney	  	 	49	  	  	Chief Financial Officer	
Daniel B. Brown	  	 	58	  	  	Chief Operating Officer—SeaWorld & Discovery Cove	
Donald W. Mills Jr.	  	 	54	  	  	Chief Operating Officer—Busch Gardens & Sesame Place	
Scott D. Helmstedter	  	 	48	  	  	Chief Creative Officer	
G. Anthony (Tony) Taylor	  	 	47	  	  	Chief Legal Officer, General Counsel and Corporate Secretary	
Dave Hammer	  	 	52	  	  	Chief Administrative Officer	
Marc Swanson	  	 	41	  	  	Chief Accounting Officer	
Brad Andrews	  	 	63	  	  	Chief Zoological Officer	
Joseph P. Baratta	  	 	41	  	  	Director	
Bruce McEvoy	  	 	35	  	  	Director	
Peter F. Wallace	  	 	37	  	  	Director	
David F. D’Alessandro has been the chairman of the Board of Directors of the Company since 2010. He served as Chairman, President and Chief Executive Officer of John Hancock Financial Services from 2000 to 2004, having served as President and Chief Operating Officer of the same entity from 1996 to 2000, and guided the company through a merger with ManuLife Financial Corporation in 2004. Mr. D’Alessandro served as President and Chief Operating Officer of ManuLife in 2004. He is a former Partner of the Boston Red Sox. A graduate of Syracuse University, he holds honorary doctorates from three colleges and serves as vice chairman of Boston University.
Jim Atchison has been a director, Chief Executive Officer and President of the Company since 2009. He served as President and Chief Operating Officer of Busch Entertainment Corporation from 2007 to 2009, as Executive Vice President and General Manager of SeaWorld Orlando from 2003 to 2007 and as Vice President of Marketing of the same entity from 2002 to 2003. Prior to that, Mr. Atchison was the Vice President of Finance of Busch Gardens Tampa from 1998 to 2002. Mr. Atchison is also a member of the board of directors of the SeaWorld & Busch Gardens Conservation Fund and Hubbs-SeaWorld Research Institute, and he is also a member of the University of Central Florida Board of Trustees. Mr. Atchison holds a bachelor’s degree in marketing from the University of South Florida and a master’s degree in business administration from the University of Central Florida.
James M. Heaney has been our Chief Financial Officer since January 2012. Prior to that, he served as the Chief Financial Officer and Senior Vice President of Finance of the Walt Disney Company, and from 1990 to 1994 he was the Finance Manager and Financial Analyst of Royal Caribbean Cruises. From 1989 to 1990 he served as Financial Analyst of Pueblo Xtra International, and from 1988 to 1989 as Financial Systems Analyst of Gould, Inc CSD. Mr. Heaney holds a bachelor’s degree in operations management from Texas Tech University and a master’s degree in business administration with an academic emphasis in finance from University of Florida.
Daniel B. Brown has been the Chief Operating Officer—SeaWorld & Discovery Cove since 2010. Prior to that, Mr. Brown served as Park President of SeaWorld Orlando, Discovery Cove and Aquatica from 2007 to 2010, Park President of Busch Gardens Tampa and Adventure Island from 2003 to 2007, Park President of Busch Gardens Williamsburg from 1999 to 2003, and Vice President of Operations of Busch
 
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Entertainment Corporation from 1997 to 1999. Mr. Brown serves on the Dean’s Advisory Board of USF’s Rosen College of Hospitality Management, the executive board of Visit Orlando, the board of the Hubbs-SeaWorld Research Institute and the Orange County International Drive Community Development Area Advisory Committee. He holds a bachelor’s degree of Arts from Webster University.
Donald W. Mills Jr. has been the Chief Operating Officer—Busch Gardens & Sesame Place theme parks since 2010. Prior to that, Mr. Mills served as Executive Vice President and General Manager of Busch Gardens Tampa from 2007 to 2010, Executive Vice President and General Manager of Busch Gardens Williamsburg from 2003 to 2007, Vice President of Park Operations of Busch Gardens Williamsburg from 2002 to 2003, Vice President of Park Operations of SeaWorld San Diego from 1999 to 2002, Vice President of Park Operations of Busch Gardens Tampa and Vice President of Adventure Island from 1992 to 1994. Mr. Mills is a member of the advisory board of the University of South Florida College of Business. He holds a bachelor’s degree of Science and Marketing from the University of South Florida.
Scott D. Helmstedter has been our Chief Creative Officer since 2011. He served as Principal and Executive Producer of In Motion Entertainment from 2000 to 2011, and from 1997 to 1999 as a Producer at Universal Studios. Prior to that, from 1995 to 1997, Mr. Helmstedter was the Line Producer of Buena Vista Pictures of The Walt Disney Company, and from 1986 until 1995 he served as Production Manager of The Walt Disney Company. Mr. Helmstedter holds a bachelor’s degree of Arts from Azusa Pacific University and a master’s degree in business administration from Claremont Graduate University.
G. Anthony (Tony) Taylor has been our Chief Legal Officer, General Counsel and Corporate Secretary since 2010. He is also responsible for Industry & Government Affairs, Risk Management and Corporate Social Responsibility. Prior to that, Mr. Taylor held the position of Associate General Counsel of Anheuser-Busch Companies, Inc. from 2000 to 2010, and a Principal in Blumenfeld Kaplan in St. Louis from 1993 to 2000. He holds bachelors’ degrees in political science and speech communication from the University of Missouri and a juris doctor degree from Washington University. Mr. Taylor is a board member and serves as president of The Anthony Armstrong 88 Foundation.
Dave Hammer has been our Chief Administrative Officer since 2009. Prior to that, Mr. Hammer served as Corporate Vice President of Human Resources of Busch Entertainment Corporation from 2004 until 2009, Vice President of Human Resources of Sea World Florida and Corporate Manager of Human Resources for Busch Entertainment Corporation from 1999 to 2001, Director of Human Resources of Busch Properties, Inc. from 1995 to 1999 and as Vice President of Human Resources for Sesame Place from 1991 to 1995. Mr. Hammer is a member of the board of directors of the Florida Chamber of Commerce. He holds a bachelor’s degree in human resources from St. Leo College in Tampa, Florida.
Marc Swanson has been our Chief Accounting Officer since 2012. Prior to that, he has been Vice President Performance Management and Corporate Controller of SeaWorld Parks & Entertainment, Inc. from 2011 to 2012, the Corporate Controller of Busch Entertainment Corporation from 2008 to 2011 and the Vice President of Finance of Sesame Place from 2004 to 2008. He is a member of the board of directors of the SeaWorld & Busch Gardens Conservation Fund. Mr. Swanson holds a bachelor’s degree in accounting from Purdue University and a master’s degree in business administration from DePaul University.
Brad Andrews has been our Chief Zoological Officer since 2010. He served as Corporate Vice President of Zoological Operations of Busch Entertainment Corporation from 1991 to 2010, Vice President and Assistant Zoological Director of the same entity from 1990 to 1991. Prior to that, he served as Curator and Vice President Mammals of SeaWorld Orlando from 1988 until 1990. Mr. Andrews is also a member of the board of directors of the SeaWorld & Busch Gardens Conservation
 
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Fund, Hubbs-SeaWorld Research Institute, Wildlife Assistance, International Elephant Foundation, International Rhino Foundation, Cheetah Conservation Foundation, African Carnivore Research Association, Conservation Breeding Specialist Group and United States Rugby Foundation. Mr. Andrews holds a bachelor’s degree of Science from St. Mary’s College.
Joseph P. Baratta has been a director of the Company since 2009. Mr. Baratta is the Global Head of the Private Equity Group at Blackstone, which he joined in 1998. Before joining Blackstone, Mr. Baratta worked at Tinicum Incorporated, McCown De Leeuw & Company and Morgan Stanley. Mr. Baratta also currently serves on the board of directors of Center Parcs plc and he is also a trustee of the Private Equity Foundation. Mr. Baratta holds a bachelor’s degree from Georgetown University, where he currently serves on the University’s Board of Regents and the Advisory Board of the McDonough School of Business.
Bruce McEvoy has been a director of the Company since 2009. Mr. McEvoy is a Managing Director in the Private Equity Group at Blackstone, which he joined in 2006. Before joining Blackstone, Mr. McEvoy worked at General Atlantic and McKinsey & Company. Mr. McEvoy also currently serves on the board of directors of Catalent, GCA Services, Performance Food Group, RGIS Inventory Specialists and Vivint, and he was formerly a director of DJO Orthopedics. Mr. McEvoy graduated from Princeton University and Harvard Business School.
Peter F. Wallace has been a director of the Company since 2009. Mr. Wallace is a Senior Managing Director in Blackstone’s Private Equity Group, which he joined in 1997. Mr. Wallace also currently serves on the board of directors of AlliedBarton Security Services, GCA Services, Michaels Stores, Inc., Vivint and the Weather Channel Companies. Mr. Wallace was formerly a director of Crestwood Midstream Partners, New Skies Satellites and Pelmorex Media. Mr. Wallace graduated from Harvard College.
Composition of the Board of Directors
Our business and affairs are managed under the direction of our Board of Directors. Following the completion of this offering, we expect our Board of Directors to initially consist of      directors,      of whom will be independent. In connection with this offering, we will be amending and restating our certificate of incorporation to provide for a classified Board of Directors, with      directors in Class I (expected to be     ),      directors in Class II (expected to be     ) and      directors in Class III (expected to be     ). See “Description of Capital Stock—Anti-Takeover Effects of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law—Classified Board of Directors.” In addition, we intend to enter into a stockholders agreement with certain affiliates of Blackstone in connection with this offering. This agreement will grant Blackstone the right to designate nominees to our Board of Directors subject to the maintenance of certain ownership requirements in us. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.”
Background and Experience of Directors
When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board of Directors focused primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. Once appointed, directors serve until they resign or are terminated by the stockholders. In particular, the members of our Board of Directors considered the following important characteristics, among others: Messrs. Baratta, McEvoy
 
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and Wallace are representatives proposed by affiliates of Blackstone, our principal stockholder, and have significant financial, investment and operational experience from their involvement in Blackstone’s investment in numerous portfolio companies and have played active roles in overseeing those businesses.
In addition, each of Messrs. Baratta, McEvoy and Wallace have extensive experience working with companies across various business sectors, which enables each of them to provide valuable advice to our management and Board of Directors. Mr. Baratta is the Global Head of Private Equity at Blackstone and is knowledgeable about investing in and has experience advising several companies in the entertainment industry, which makes him a valued member of our Board of Directors. Mr. Wallace is a Senior Managing Director at Blackstone and his service on the boards of a diverse group of companies makes him an important asset of our Board of Directors. Mr. McEvoy’s experiences at Blackstone, coupled with his experience as a director of several companies and his management consulting experience, makes him a highly qualified member of our Board of Directors. Mr. D’Alessandro provides important contributions to our Board of Directors through his experience as Chairman, President and Chief Executive Officer of John Hancock Financial Services and his extensive financial and management expertise. Mr. Atchison’s 15-year history with the Company in various senior level positions and his thorough knowledge of our business and industry makes him a valued member of our Board of Directors.
Board Leadership Structure
Our Board of Directors is led by the Non-Executive Chairman. The Chief Executive Officer position is separate from the Chairman position. We believe that the separation of the Chairman and Chief Executive Officer positions is appropriate corporate governance for us at this time.
Role of Board in Risk Oversight
The Board of Directors has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting by the Audit Committee. The Audit Committee represents the Board of Directors by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the surveillance of administrative and financial controls and our compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal, and internal audit functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for the Board of Directors all areas of risk and the appropriate mitigating factors. In addition, our Board of Directors receives periodic detailed operating performance reviews from management.
Controlled Company Exception
After the completion of this offering, affiliates of Blackstone will continue to beneficially own more than 50% of our common stock and voting power. As a result, (x) under the terms of the Stockholders Agreement, Blackstone will be entitled to nominate      of the      members of our Board of Directors (see “Certain Relationships and Related Party Transactions—Stockholders Agreement”) and (y) we will be a “controlled company” within the meaning of the NYSE corporate governance standards. Under the NYSE corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including (1) the requirement that a majority of the Board of Directors consist of independent directors, (2) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that we have a nominating and corporate
 
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governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. Following this offering, we intend to utilize these exemptions. As a result, following this offering, we will not have a majority of independent directors on our Board of Directors; and we will not have a nominating and corporate governance committee or a compensation committee that is composed entirely of independent directors. Also, such committee will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements. In the event that we cease to be a “controlled company,” we will be required to comply with these provisions within the transition periods specified in the NYSE corporate governance rules.
Board Committees
After the completion of this offering, the standing committees of our Board of Directors will consist of an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.
Our president and chief executive officer and other executive officers will regularly report to the non-executive directors and the Audit, the Compensation and the Nomination and Corporate Governance Committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls. The vice president of internal audit will report functionally and administratively to our chief financial officer and directly to the Audit Committee. We believe that the leadership structure of our Board of Directors provides appropriate risk oversight of our activities given the controlling interests held by Blackstone.
Audit Committee
Upon the completion of this offering, we expect to have an Audit Committee, consisting of     ,      and     . Messrs.                      and      qualify as independent directors under the NYSE corporate governance standards and the independence requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We expect a new third independent member to be placed on the Audit Committee within one year of the completion of this offering so that all of our Audit Committee members will be independent as such term is defined in Rule 10A-3(b)(i) under the Exchange Act and under NYSE Rule 303(A). Following this offering, our Board of Directors will determine which member of our Audit Committee qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K.
The purpose of the Audit Committee will be to prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our Board of Directors in overseeing and monitoring (1) the quality and integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent registered public accounting firm’s qualifications and independence, (4) the performance of our internal audit function and (5) the performance of our independent registered public accounting firm.
Our Board of Directors will adopt a written charter for the Audit Committee which will be available on our website upon the completion of this offering.
Compensation Committee
Upon the completion of this offering, we expect to have a Compensation Committee, consisting of Messrs. D’Alessandro, Wallace and McEvoy.
 
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The purpose of the Compensation Committee is to assist our Board of Directors in discharging its responsibilities relating to (1) setting our compensation program and compensation of our executive officers and directors, (2) monitoring our incentive and equity-based compensation plans and (3) preparing the compensation committee report required to be included in our proxy statement under the rules and regulations of the SEC.
Our Board of Directors will adopt a written charter for the Compensation Committee which will be available on our website upon the completion of this offering.
Nominating and Corporate Governance Committee
Upon the completion of this offering, we expect to have a Nominating and Corporate Governance Committee, consisting of Messrs. D’Alessandro, Wallace, McEvoy and Atchison. The purpose of our Nominating and Corporate Governance Committee will be to assist our Board of Directors in discharging its responsibilities relating to (1) identifying individuals qualified to become new Board of Directors members, consistent with criteria approved by the Board of Directors, subject to the stockholders agreement with Blackstone; (2) reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that the Board of Directors select, the director nominees for the next annual meeting of stockholders; (3) identifying Board of Directors members qualified to fill vacancies on any Board of Directors committee and recommending that the Board of Directors appoint the identified member or members to the applicable committee, subject to the stockholders agreement with Blackstone; (4) reviewing and recommending to the Board of Directors corporate governance guidelines applicable to us; (5) overseeing the evaluation of the Board of Directors and management; and (6) handling such other matters that are specifically delegated to the committee by the Board of Directors from time to time.
Our Board of Directors will adopt a written charter for the Nominating and Corporate Governance Committee which will be available on our website upon completion of this offering.
Compensation Committee Interlocks and Insider Participation
Presently, our Board of Directors does not have a compensation committee; therefore, our Board of Directors makes all decisions about our executive compensation. Mr. Atchison does not participate in the Board of Directors’ discussions regarding his own compensation. None of our executive officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board of Directors or the Compensation Committee. We are parties to certain transactions with Blackstone described in “Certain Relationships and Related Party Transactions” section of this prospectus.
Code of Ethics
We will adopt a new Code of Business Conduct that applies to all of our officers and employees, including our principal executive officer, principal financial officer and principal accounting officer, which has been posted on our Internet website          on the “    ” link to the “    ” page. Our Code of Business Conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. Please note that our Internet website address is provided as an inactive textual reference only. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our Internet website.
 
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Compensation Discussion and Analysis
Introduction
Our executive compensation plan is designed to attract and retain individuals with the qualifications to manage and lead the Company as well as to motivate them to develop professionally and contribute to the achievement of our financial goals and ultimately create and grow our equity value.
Our named executive officers for 2012 are:
 
 	Ÿ 	 	Jim Atchison, our President and Chief Executive Officer;	
 
 	Ÿ 	 	James M. Heaney, our Chief Financial Officer; and	
 
 	Ÿ 	 	our three other most highly compensated executive officers who served in such capacities at December 31, 2012, namely,	
 
 	Ÿ 	 	Daniel B. Brown, our Chief Operating Officer—SeaWorld & Discovery Cove;	
 
 	Ÿ 	 	Donald W. Mills, Jr., our Chief Operating Officer—Busch Gardens & Sesame Place; and	
 
 	Ÿ 	 	Scott D. Helmstedter, our Chief Creative Officer.	
Executive Compensation Objectives and Philosophy
Our primary executive compensation objectives are to:
 
 	Ÿ 	 	attract, retain and motivate senior management leaders who are capable of advancing our mission and strategy and ultimately, create and maintain our long-term equity value. Such leaders must engage in a collaborative approach and possess the ability to execute our business strategy in an industry characterized by competitiveness, growth and a challenging business environment;	
 
 	Ÿ 	 	reward senior management in a manner aligned with our financial performance; and	
 
 	Ÿ 	 	align senior management’s interests with our equity owners’ long-term interests through equity participation and ownership.	
To achieve our objectives, we deliver executive compensation through a combination of the following components:
 
 	Ÿ 	 	Base salary;	
 
 	Ÿ 	 	Bonuses which are tied to company financial performance;	
 
 	Ÿ 	 	Long-term incentive compensation;	
 
 	Ÿ 	 	Broad-based employee benefits;	
 
 	Ÿ 	 	Supplemental executive perquisites; and	
 
 	Ÿ 	 	Severance benefits.	
Our total executive compensation plan is inclusive of base salaries and other benefits and perquisites, including severance benefits, which are designed to attract and retain senior management talent. We also use annual cash incentive compensation and long-term equity incentives to ensure a performance-based delivery of pay that aligns, as closely as possible, the rewards of our named executive officers with the long-term interests of our equity-owners while enhancing executive retention.
 
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Compensation Determination Process
Presently, our Board of Directors does not have a compensation committee; therefore, our Board of Directors makes all decisions about our executive compensation.
In making initial compensation determinations with respect to our named executive officers, our Board of Directors considered a number of variables, consistent with our executive compensation objectives, including individual circumstances related to each executive’s recruitment or retention and the position for which they were hired. For example, our Board of Directors granted to Mr. Atchison a substantially greater number of equity awards in light of his role as our President and Chief Executive Officer as compared to the other named executive officers. The specific terms of each of the equity grants to our named executive officers are discussed below under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards.” Our Board of Directors did not use any compensation consultants in making its compensation determinations and has not benchmarked any of its compensation determinations against a peer group.
Mr. Atchison generally participates in discussions and deliberations with our Board of Directors regarding the determinations of annual cash incentive awards for our executive officers. Specifically, he makes recommendations to our Board of Directors regarding the performance targets to be used under our annual bonus plan and the amounts of annual cash incentive awards. Mr. Atchison does not participate in discussions regarding his own compensation. In connection with this offering, we will establish a compensation committee that will be responsible for making all executive compensation determinations. We also intend to review, and may engage a compensation consultant to assist us in evaluating, the elements and levels of our executive compensation, including base salaries, annual cash incentive awards and annual equity-based incentives for our named executive officers.
Compensation Elements
The following is a discussion and analysis of each component of our executive compensation program.
Base Salary
Annual base salaries compensate our executive officers for fulfilling the requirements of their respective positions and provide them with a level of cash income predictability and stability with respect to a portion of their total compensation. Our Board of Directors believes that the level of an executive officer’s base salary should reflect such executive’s performance, experience and breadth of responsibilities, salaries for similar positions within our industry and any other factors relevant to that particular job. The Board of Directors utilized the experience, market knowledge and insight of its members in evaluating the competitiveness of current salary levels. Our Human Resources Department is also a resource for such information as needed.
In the sole discretion of our Board of Directors, base salaries for our executive officers may be periodically adjusted to take into account changes in job responsibilities or competitive pressures. Our Board of Directors did not make any adjustments to any of our named executive officers’ base salaries in 2012.
Bonuses
Annual Cash Incentive Compensation .    Annual cash incentive awards are available to all salaried exempt employees, including our named executive officers, under our annual bonus plan. The objectives of the bonus plan are to motivate these employees to achieve short-term performance goals and tie a portion of their cash compensation to our performance by rewarding them based on our overall performance.
 
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Under our SeaWorld Parks & Entertainment Bonus Plan (the “2012 Bonus Plan”), each employee eligible to participate in the 2012 Bonus Plan was eligible to earn an annual cash incentive award based on our achievement of such employee’s Adjusted EBITDA target for 2012. The Adjusted EBITDA target was determined by our Board of Directors early in the year, after taking into consideration management’s recommendations and our budget for the year.
Under our 2012 Bonus Plan, Adjusted EBITDA is defined in the same way as the definition of Adjusted EBITDA that is used for covenant calculations under the indenture governing our Senior Notes and the credit agreement governing our Senior Secured Credit Facilities, which define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, as further adjusted to exclude certain unusual, non-cash, and other items permitted under such covenants.
Each participant in the 2012 Bonus Plan had a bonus potential target, computed as a percentage of salary, based on job level. For fiscal 2012, the bonus potential target for Mr. Atchison was 100% of his 2012 base salary and the bonus potential target for each of Messrs. Heaney, Brown, Mills and Helmstedter was 75% of their respective 2012 base salaries.
As detailed in the following table, actual amounts paid under the 2012 Bonus Plan were calculated by multiplying each named executive officer’s base salary by his bonus potential percentage to obtain their bonus potential target, which was then adjusted by an achievement factor based on our actual achievement against the Adjusted EBITDA target.

Salary	  	X	  	Bonus
Potential
Percentage	  	=	  	Bonus
Potential
Target	
					
Bonus
Potential
Target	  	X	  	Achievement
Factor	  	=	  	Actual
Bonus Paid	
The achievement factor was determined by calculating our achievement against the Adjusted EBITDA target based on the pre-established scale set forth in the following table:

 	  	Adjusted EBITDA Target	 	
 	  	Threshold	 	 	Target	 	 	Maximum	 	
Performance Percentage of Target	  	 	95	% 	 	 	100	% 	 	 	105	% 	
Achievement Factor	  	 	33	% 	 	 	100	% 	 	 	130	% 	
Based on the pre-established scale set forth above, no cash incentive award would have been paid unless our Adjusted EBITDA for 2012 was at or above 95% of the Adjusted EBITDA target; provided, however, that if Adjusted EBITDA performance was below 95% of target, but no less than 83.3% of target, then the Board of Directors had the ability to award a special discretionary payment up to 25% of a named executive officer’s bonus potential target. If our actual performance was 100% of target, then the named executive officers would have been paid their respective bonus potential target amounts. If performance was 105% of target, then our named executive officers would have been eligible for a maximum cash incentive award equal to 130% of their respective bonus potential target amounts. For performance percentages between the specified threshold, target and maximum levels, the resulting achievement factor would have been adjusted on a linear basis. For performance above 105% of target, additional payments could have been awarded by our Board of Directors upon a determination that an additional discretionary payment was warranted.
Notwithstanding the establishment of the performance target and the formula for determining the cash incentive award payment amounts as illustrated in the tables above, our Board of Directors had
 
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the ability to exercise negative discretion and award a lesser amount to our named executive officers under our annual 2012 Bonus Plan than the amount determined by the bonus plan formula if, in the exercise of its business judgment, our Board of Directors determined that a lesser amount was warranted under the circumstances. In addition, with respect to Messrs. Heaney, Brown, Mills and Helmstedter, if Adjusted EBITDA performance exceeded target, then a cash incentive award above target could only be paid upon an initial recommendation from Mr. Atchison to our Board of Directors and a final determination by our Board of Directors that an award above target was warranted.
For fiscal 2012, our Board of Directors set an Adjusted EBITDA target of $               million and our actual Adjusted EBITDA was $             (or         % of target), which resulted in an achievement factor of         % based on the pre-established scale. The following table illustrates the calculation of the annual cash incentive awards payable to each of our named executive officers under our 2012 Bonus Plan in light of these performance results. Actual amounts awarded to each of the named executive officers are also reported under the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table under the “2012” designation.

 	  	2012
Salary	 	  	Bonus
Potential
Percentage	 	 	Bonus
Potential
Target	 	  	Achievement
Factor (2)	 	 	Actual
Bonus
Paid (2)	 	
Jim Atchison	  	$	395,000	  	  	 	100	% 	 	$	395,000	  	  	 	            	% 	 	$	              	  	
James M. Heaney (1)	  	$	275,000	  	  	 	75	% 	 	$	206,250	  	  	 	            	% 	 	$	              	  	
Daniel B. Brown	  	$	297,000	  	  	 	75	% 	 	$	222,750	  	  	 	            	% 	 	$	              	  	
Donald W. Mills, Jr.	  	$	280,008	  	  	 	75	% 	 	$	210,006	  	  	 	            	% 	 	$	              	  	
Scott D. Helmstedter	  	$	275,000	  	  	 	75	% 	 	$	206,250	  	  	 	            	% 	 	$	              	  	

(1)	Since Mr. Heaney commenced employment with us on January 20, 2012, his annual cash incentive award was pro-rated and calculated based on eleven months of his $300,000 annual base salary.	
(2)	Fiscal 2012 annual cash incentive awards for the named executive officers are expected to be determined upon the completion of the fiscal 2012 audit.	
Discretionary Bonuses . From time to time, our Board of Directors may award discretionary bonuses in addition to any annual bonus payable under our annual bonus plan. For fiscal 2012, our Board of Directors awarded Mr. Heaney a discretionary bonus of $50,000 in recognition of his significant contributions during the fourth quarter of fiscal 2012.
Long-Term Incentive Compensation
Our management employees, including our named executive officers, were granted long-term incentive awards that are designed to promote our interests by providing our management employees with the opportunity to participate in our equity, thereby incentivizing them to remain in our service. These long-term incentive awards were granted to our named executive officers in the form of Employee Units in the Partnerships. In addition, certain members of management, including Messrs. Atchison, Brown and Mills, purchased Class D Units of the Partnerships.
The Class D Units have economic characteristics that are similar to those of shares of common stock in a corporation and the Employee Units are profits interests having economic characteristics similar to stock appreciation rights (i.e., Employee Units only have value to the extent there is appreciation in the value of our business from and after the applicable date of grant).
Investment funds affiliated with Blackstone and other co-investors hold Class A Units and Class B Units of the Partnerships. In addition, ABI holds Class C Units in the Partnerships, which entitle ABI to receive, subject to certain conditions, a specified portion of distributions from the Partnerships. Under 
 
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the terms of the partnership agreements of the Partnerships, an affiliate of Blackstone determines any voting and disposition decisions with respect to the shares of our common stock held by the Partnerships. 
The Employee Units are divided into a time-vesting portion (one-third of the Employee Units granted), a 2.25x exit-vesting portion (one-third of the Employee Units granted), and a 2.75x exit-vesting portion (one-third of the Employee Units granted). Unvested Employee Units are not entitled to distributions from the Partnerships. For additional information regarding our Employee Units, see “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Employee Units.”
The Employee Units granted to our named executive officers are designed to motivate them to focus on efforts that will increase the value of our equity while enhancing their retention. The specific sizes of the equity grants made to our named executive officers were determined in light of Blackstone’s practices with respect to management equity programs at other private companies in its portfolio and the executive officer’s position and level of responsibilities with us.
In connection with this offering, our management employees and directors will surrender the Class D Units and the Employee Units to the Partnerships and will receive shares of our common stock with substantially equivalent intrinsic value to such Class D Units and the Employee Units. Shares of our common stock issued in respect of the unvested Employee Units will be subject to vesting terms substantially similar to those described below under “—Vesting Terms.”
Fiscal 2012 Grants.     On June 7, 2012, Mr. Heaney was granted 37,500 Employee Units and Mr. Brown was granted 10,000 Employee Units. Mr. Heaney commenced employment as our Chief Financial Officer on January 20, 2012 and his fiscal 2012 grant reflected an initial grant of Employee Units in connection with his hiring. In fiscal 2011, a portion of Mr. Brown’s initial grant of Employee Units was withheld. On June 7, 2012, Mr. Brown was granted the 10,000 Employee Units that had been withheld from his original allocation. Since the 10,000 Employee Units had been withheld from Mr. Brown’s initial fiscal 2011 grant, it was determined appropriate to compensate Mr. Brown for the taxes he incurred in connection with this grant.
Benefits and Perquisites
We provide to all our employees, including our named executive officers, broad-based benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. Broad-based employee benefits include:
 
 	Ÿ 	 	a 401(k) savings plan;	
 
 	Ÿ 	 	medical, dental, vision, life and accident insurance, disability coverage, dependent care and healthcare flexible spending accounts; and	
 
 	Ÿ 	 	employee assistance program benefits.	
Under our 401(k) savings plan, we match a portion of the funds set aside by the employee. All matching contributions by us become vested on the two-year anniversary of the participant’s hire date. At no cost to the employee, we provide an amount of basic life and accident insurance coverage valued at two times the employee’s annual base salary. The employee may also select supplemental life and accident insurance, for a premium to be paid by the employee.
We also provide our executive officers with limited perquisites and personal benefits that are not generally available to all employees, such as executive relocation assistance and complimentary
 
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access to our theme parks. In addition, all employees with at least three weeks of vacation have the opportunity to participate in our vacation sell benefit program and sell back vacation days to us in order to offset personal health insurance premiums. We provide these limited perquisites and personal benefits in order to further our goal of attracting and retaining our executive officers. These benefits and perquisites are reflected in the All Other Compensation column of the Summary Compensation Table and the accompanying footnote in accordance with SEC rules.
Severance Arrangements
Our Board of Directors believes that a Key Employee Severance Plan (the “Severance Plan”) is necessary to attract and retain the talent necessary for our long-term success. Our Board of Directors views our Severance Plan as a recruitment and retention device that helps secure the continued employment and dedication of our named executive officers, including when we are considering strategic alternatives.
Each of our named executive officers is eligible for the Severance Plan benefits. Under the terms of the Severance Plan, each named executive officer is entitled to severance benefits if his employment is terminated for any reason other than voluntary resignation or willful misconduct. The severance payments under the Severance Plan are contingent upon the affected executive’s execution of a release and waiver of claims, which contains non-compete, non-solicitation and confidentiality provisions. See “—Potential Payments Upon Termination” for descriptions of these arrangements.
 
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Summary Compensation Table
The following table provides summary information concerning compensation paid or accrued by us to or on behalf of our named executive officers for services rendered to us during 2012.

Name and Principal
Position	 	Year	 	 	Salary
($) (1)	 	 	Bonus
($) (2)	 	 	Stock
Awards
($) (3)	 	 	Option
Awards
($)	 	 	Non-Equity
Incentive Plan
Compensation
($) (4)	 	 	Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) (5)	 	 	All Other
Compensation
($) (6)	 	 	Total
($)	 	
Jim Atchison	 	 	2012	  	 	 	395,000	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 				 	 	—  	  	 	 	17,781	  	 	 	412,781	  	
Chief Executive Officer and President and Director	 	 	2011	  	 	 	395,000	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	497,700	  	 	 	—  	  	 	 	10,010	  	 	 	902,710	  	
										
James M. Heaney	 	 	2012	  	 	 	283,077	  	 	 	50,000	  	 	 	542,750	  	 	 	—  	  	 				 	 	—  	  	 	 	8,478	  	 	 	884,305	  	
Chief Financial Officer	 				 				 				 				 				 				 				 				 				
										
Daniel B. Brown	 	 	2012	  	 	 	297,000	  	 	 	—  	  	 	 	240,000	  	 	 	—  	  	 				 	 	—  	  	 	 	331,029	  	 	 	868,029	  	
Chief Operating Officer—SeaWorld & Discovery Cove	 	 	2011	  	 	 	297,000	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	280,665	  	 	 	—  	  	 	 	21,129	  	 	 	598,784	  	
										
Donald W. Mills, Jr.	 	 	2012	  	 	 	280,008	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 				 	 	—  	  	 	 	18,442	  	 	 	298,450	  	
Chief Operating Officer—Busch Gardens	 	 	2011	  	 	 	280,008	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	264,608	  	 	 	—  	  	 	 	20,420	  	 	 	565,036	  	
										
Scott D. Helmstedter	 	 	2012	  	 	 	275,000	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 				 	 	—  	  	 	 	9,802	  	 	 	284,802	  	
Chief Creative Officer	 	 	2011	  	 	 	206,250	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	194,906	  	 	 	—  	  	 	 	5,597	  	 	 	406,753	  	

(1)	Mr. Heaney commenced employment as our Chief Financial Officer on January 20, 2012 and the amount reported in this column for Mr. Heaney reflects the portion of his annual base salary earned in fiscal 2012 from such date.	
(2)	Amount reported represents the discretionary bonus paid to Mr. Heaney. See “Compensation Discussion and Analysis—Compensation Elements—Bonuses—Discretionary Bonuses.”	
(3)	Amounts included in this column reflect the aggregate grant date fair value of Employee Units in the Partnerships granted during 2012, calculated in accordance with FASB ASC Topic 718, utilizing the assumptions discussed in Note      to our consolidated financial statements for the year ended December 31, 2012.	
(4)	Fiscal 2012 annual cash incentive awards for the named executive officers are expected to be determined upon the completion of the fiscal 2012 audit. See “—Compensation Discussion and Analysis—Compensation Elements—Bonuses—Annual Cash Incentive Compensation.” The amount reported for Mr. Heaney in fiscal 2012 will reflect a pro-rated annual cash incentive award in connection with his January 20, 2012 employment commencement date. In addition, the amount reported for Mr. Helmstedter in fiscal 2011 reflects a pro-rated annual cash incentive award in connection with his April 1, 2011 employment commencement date.	
(5)	We have no pension benefits, nonqualified defined contribution or other nonqualified deferred compensation plans for executive officers.	
(6)	Amounts reported under All Other Compensation for fiscal 2012 include contributions to our 401(k) plan on behalf of our named executive officers as follows: Mr. Atchison $8,750; Mr. Heaney $7,437; Mr. Brown $8,750; Mr. Mills $8,750; and Mr. Helmstedter $8,750. Amounts reported also include life and long-term disability insurance premiums paid by us on behalf of our named executive officers as follows: Mr. Atchison $1,435; Mr. Heaney $1,041; Mr. Brown $1,131; Mr. Mills $1,076; and Mr. Helmstedter $1,052. Amounts reported for Messrs. Atchison, Brown and Mills also include the dollar value of vacation days sold to pay for personal health insurance premiums under our vacation sell benefit program as follows: Mr. Atchison $7,596; Mr. Brown $11,423; and Mr. Mills $8,616. Amount reported for Mr. Brown also includes a tax gross-up of $309,725 with respect to the taxable income on his June 7, 2012 Employee Unit grant. See “Compensation Discussion and Analysis—Long-Term Incentive Compensation—Fiscal 2012 Grants.” In addition, the named executive officers (and their spouses) each receive a Corporate Executive Card that entitles them and an unlimited number of guests to complimentary access to our theme parks. There is no incremental cost to us associated with the use of the Corporate Executive Card.	
 
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Grants of Plan-Based Awards in 2012
The following table provides supplemental information relating to grants of plan-based awards made to our named executive officers during 2012.

Name	 	Grant
Date	 	 	Estimated Possible
Payouts
Under Non-Equity
Incentive
Plan Awards (1)	 	 	Estimated Future
Payouts
Under Equity Incentive
Plan Awards	 	All  Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#) (2)	 	 	Grant
Date Fair
Value of
Stock and
Option
Awards
($) (3)	 	
	 			 	Threshold
($)	 	 	Target
($)	 	 	Maximum
($)	 	 	Threshold
(#)	 	Target
(#) (2)	 	 	Maximum
(#)	 			 			
Jim Atchison	 				 	 	130,350	  	 	 	395,000	  	 	 	513,500	  	 		 				 		 				 				
										
James M. Heaney	 				 	 	68,063	  	 	 	206,250	  	 	 	268,125	  	 		 				 		 				 				
	 	 	6/7/2012	  	 				 				 				 		 	 	25,000	  	 		 	 	12,500	  	 	 	542,750	  	
										
Daniel B. Brown	 				 	 	73,508	  	 	 	222,750	  	 	 	289,575	  	 		 				 		 				 				
	 	 	6/7/2012	  	 				 				 				 		 	 	6,667	  	 		 	 	3,333	  	 	 	240,000	  	
										
Donald W. Mills, Jr.	 				 	 	69,302	  	 	 	210,006	  	 	 	273,007	  	 		 				 		 				 				
										
Scott D. Helmstedter	 				 	 	68,063	  	 	 	206,250	  	 	 	268,125	  	 		 				 		 				 				

(1)	Reflects possible payouts under our 2012 Bonus Plan. See “—Compensation Discussion and Analysis—Compensation Elements—Bonuses—Annual Cash Incentive Compensation” for a discussion of threshold, target and maximum cash incentive compensation payouts. Since Mr. Heaney commenced employment with us on January 20, 2012, his annual cash incentive award was pro-rated and calculated based on eleven months of his $300,000 annual base salary. The actual amounts of cash incentive compensation paid to our named executive officers under our 2012 Bonus Plan are disclosed in the Summary Compensation Table under the Non-Equity Incentive Plan Compensation column.	
(2)	As described in more detail in the “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards-Terms of Equity Award Grants” section that follows, amounts reported reflect grants of Employee Units that are divided into three tranches for vesting purposes; one third are time-vesting and two-thirds are exit-vesting (of which one-third are 2.25x exit-vesting and one-third are 2.75x exit-vesting). The exit-vesting units are reported as an equity incentive plan award in the “Estimated Future Payouts Under Equity Incentive Plan Awards” column, while the time-vesting tranche of the awards are reported as an all other stock award in the “All Other Stock Awards: Number of Shares of Stock or Units” column.	
(3)	Represents the grant date fair value of the 37,500 Employee Units granted to Mr. Heaney and the 10,000 Employee Units granted to Mr. Brown, calculated in accordance with FASB ASC Topic 718 and utilizing the assumptions discussed in Note      to our consolidated financial statements for the year ended December 31, 2012.	
 
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards
Terms of Equity Award Grants
Employee Units
As a condition to receiving his Employee Units, each named executive officer was required to enter into a subscription agreement with us and the Partnerships and to become a party to the partnership agreements of each of the Partnerships as well as an equity holders agreement. These agreements generally govern the named executive officer’s rights with respect to the Employee Units. In connection with this offering, our management employees and directors will surrender the Class D Units and the Employee Units to the Partnerships and will receive shares of our common stock with substantially equivalent intrinsic value to such Class D Units and the Employee Units. Shares of our common stock issued in respect of the unvested Employee Units will be subject to vesting terms substantially similar to those described below under “—Vesting Terms.”
Vesting Terms
Only vested Employee Units are entitled to distributions from the Partnerships. The Employee Units are divided into a time-vesting portion (1/3 of the Employee Units granted), a 2.25x exit-vesting portion (1/3 of the Employee Units granted), and a 2.75x exit-vesting portion (1/3 of the Employee Units granted).
 
 	Ÿ 	 	Time-Vesting Units : 12 months after the initial “vesting reference date,” as defined in the applicable subscription agreement, 20% of the named executive officer’s time-vesting Employee Units will vest, subject to his continued employment through such date. Thereafter, an additional 20% of the named executive officer’s time-vesting Employee Units will vest every year until he is fully vested, subject to his continued employment through each vesting date. Notwithstanding the foregoing, the time-vesting Employee Units will become fully vested on an accelerated basis upon a change of control (as defined in the equity holders agreement) that occurs while the named executive officer is still employed by us.	
 
 	Ÿ 	 	2.25x Exit-Vesting Units : The 2.25x exit-vesting Employee Units vest if the named executive officer is employed by us when and if Blackstone receives cash proceeds in respect of its Partnership units equal to (x) a 20% annualized effective compounded return rate on its investment and (y) a 2.25x multiple on its investment.	
 
 	Ÿ 	 	2.75x Exit-Vesting Units : The 2.75x exit-vesting Employee Units vest if the named executive officer is employed by us when and if Blackstone receives cash proceeds in respect of its Partnership units equal to (x) a 15% annualized effective compounded return rate on its investment and (y) a 2.75x multiple on its investment.	
Employee Units will vest across all Partnerships pro rata with the named executive officer’s aggregate holdings in each Partnership, maintaining a constant ratio of Employee Units held in each Partnership throughout the period in which a named executive officer holds Employee Units, subject to the right of the Partnerships to adjust the number of a named executive officer’s Employee Units in a particular Partnership from time to time (which will not affect any vesting thereof).
Any Employee Units that have not vested as of the date of termination of a named executive officer’s employment will be immediately forfeited.
 
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Outstanding Equity Awards at 2012 Fiscal-Year End
The following table provides information regarding outstanding equity awards made to our named executive officers as of December 31, 2012. The equity awards held by the named executive officers are Employee Units, which represent an equity interest in the Partnerships.

 	  	Stock Awards	 	
Name	  	Grant Date	 	  	Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(1)	 	  	Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3)	 	  	Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)(2)	 	  	Equity
Incentive
Plan Awards:
Market or
Payout Value  of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(4)	 	
Jim Atchison	  	 	5/6/2011	  	  	 	15,000	  	  	 	810,000	  	  	 	75,000	  	  	 	—  	  	
						
James M. Heaney	  	 	6/7/2012	  	  	 	12,500	  	  	 	—  	  	  	 	25,000	  	  	 	—  	  	
						
Daniel B. Brown	  	 	5/6/2011	  	  	 	3,667	  	  	 	198,018	  	  	 	18,333	  	  	 	—  	  	
	  	 	6/7/2012	  	  	 	3,333	  	  	 	—  	  	  	 	6,667	  	  	 	—  	  	
						
Donald W. Mills, Jr.	  	 	5/6/2011	  	  	 	5,000	  	  	 	270,000	  	  	 	25,000	  	  	 	—  	  	
						
Scott D. Helmstedter	  	 	5/6/2011	  	  	 	6,000	  	  	 	324,000	  	  	 	15,000	  	  	 	—  	  	

(1)	Reflects time-vesting Employee Units that have not vested. The following provides information with respect to the vesting schedule of the time-vesting Employee Units that have not vested as of December 31, 2012:	
 
 	Ÿ 	 	Mr. Atchison—these units vest 20% a year over five years on each anniversary of the December 1, 2009 vesting reference date.	
 
 	Ÿ 	 	Mr. Heaney—these units vest 20% a year over five years on each anniversary of the April 1, 2012 vesting reference date.	
 
 	Ÿ 	 	Mr. Brown—the units granted to Mr. Brown on May 6, 2011 vest 20% a year over five years on each anniversary of the December 1, 2009 vesting reference date. The units granted to Mr. Brown on June 7, 2012 vest 20% a year over five years on each anniversary of the January 1, 2012 vesting reference date.	
 
 	Ÿ 	 	Mr. Mills—these units vest 20% a year over five years on each anniversary of the December 1, 2009 vesting reference date.	
 
 	Ÿ 	 	Mr. Helmstedter—these units vest 20% a year over five years on each anniversary of the April 1, 2011 vesting reference date.	
Vesting of the time-vesting Employee Units will be accelerated upon a change of control that occurs while the executive is still employed by us, as described under “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards-Terms of Equity Award Grants.”
 
(2)	Reflects exit-vesting Employee Units (of which one-half are 2.25x exit-vesting and one-half are 2.75x exit-vesting). Unvested exit-vesting Employee Units vest as described under the “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards-Terms of Equity Award Grants” section above.	
(3)	Based on the appreciation in the value of our business from and after the date of grant through June 7, 2012, the date of the Company’s most recent valuation.	
(4)	The value of our business had not appreciated to a level that would have created value in the exit-vesting Employee Units as of June 7, 2012, the date of the Company’s most recent valuation. Therefore, we believe the market value of the exit-vesting Employee Units was zero on that date.	
 
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Option Exercises and Stock Vested in 2012
The following table provides information regarding the number of Employee Units held by our named executive officers that vested during 2012.

 	  	Stock Awards	 	
Name	  	Number of Shares
Acquired on
Vesting (#)	 	  	Value
Realized on
Vesting
($) (1)	 	
Jim Atchison	  	 	7,500	  	  	 	405,000	  	
James M. Heaney	  	 	—  	  	  	 	—  	  	
Daniel B. Brown	  	 	1,833	  	  	 	98,982	  	
Donald W. Mills, Jr.	  	 	2,500	  	  	 	135,000	  	
Scott D. Helmstedter (2)	  	 	1,500	  	  	 	—  	  	

(1)	Based on the appreciation in the value of our business from and after the date of grant through June 7, 2012, the date of the Company’s most recent valuation.	
(2)	Based on the appreciation in the value of our business from and after the date of grant through May 6, 2011, the date of the Company’s most current valuation prior to Mr. Helmstedter’s April 1, 2012 vesting date.	
Pension Benefits
We have no pension benefits for the executive officers.
Nonqualified Deferred Compensation for 2012
We have no nonqualified defined contribution or other nonqualified deferred compensation plans for executive officers.
 
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Potential Payments Upon Termination
The following table describes the potential payments and benefits that would have been payable to our named executive officers under existing plans assuming a termination of their employment for reasons other than willful misconduct or a voluntary resignation on December 31, 2012.
The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the named executive officers. These include accrued but unpaid salary and distributions of plan balances under our 401(k) savings plan.

Name	  	Cash
Severance
Payment
($)(1)	 	 	Continuation
of Group
Health Plans
($)(2)	 	 	Accrued but
Unused
Vacation
($)(3)	 	 	Executive
Outplacement
Services
($)(4)	 	 	Value of
Employee Unit
Acceleration
($)(5)	 	 	Total
($)	 	
Jim Atchison	  				 				 				 				 				 				
Termination under the Severance Plan	  	 	1,185,000	  	 	 	71,540	  	 	 	10,635	  	 	 	10,000	  	 				 				
Change of Control	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	810,000	  	 	 	2,087,175	  	
							
James M. Heaney	  				 				 				 				 				 				
Termination under the Severance Plan	  	 	675,000	  	 	 	19,777	  	 	 	—  	  	 	 	10,000	  	 				 				
Change of Control	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	704,777	  	
							
Daniel B. Brown	  				 				 				 				 				 				
Termination under the Severance Plan	  	 	519,750	  	 	 	19,777	  	 	 	7,996	  	 	 	10,000	  	 				 				
Change of Control	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	198,018	  	 	 	755,541	  	
							
Donald W. Mills, Jr.	  				 				 				 				 				 				
Termination under the Severance Plan	  	 	490,014	  	 	 	24,199	  	 	 	21,539	  	 	 	10,000	  	 				 				
Change of Control	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	270,000	  	 	 	815,752	  	
							
Scott D. Helmstedter	  				 				 				 				 				 				
Termination under the Severance Plan	  	 	618,750	  	 	 	11,532	  	 	 	—  	  	 	 	10,000	  	 				 				
Change of Control	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	324,000	  	 	 	964,282	  	

(1)	Cash severance payment includes the following:	
 
 	Ÿ 	 	Mr. Atchison—two times the sum of his annual base salary ($395,000) plus his targeted bonus under the 2012 Bonus Plan ($395,000);	
 
 	Ÿ 	 	Mr. Heaney—eighteen months base salary ($450,000) plus his targeted bonus under the 2012 Bonus Plan ($225,000);	
 
 	Ÿ 	 	Mr. Brown—twelve months base salary ($297,000) plus his targeted bonus under the 2012 Bonus Plan ($222,750);	
 
 	Ÿ 	 	Mr. Mills—twelve months base salary ($280,008) plus his targeted bonus under the 2012 Bonus Plan ($210,006); and	
 
 	Ÿ 	 	Mr. Helmstedter—eighteen months base salary ($412,500) plus his targeted bonus under the 2012 Bonus Plan ($206,250).	
 
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(2)	Reflects the cost of providing the executive officer with continued health, dental, vision, prescription drug and mental health coverage as enrolled at the time of his termination for a period of twenty-four months for Mr. Atchison and for a period of twelve months for Messrs. Heaney, Brown, Mills and Helmstedter, in each case, assuming 2013 rates.	
(3)	Amounts shown represent the following number of accrued but unused vacation days: Mr. Atchison, 7 days; Mr. Heaney, 0 days; Mr. Brown, 7 days; Mr. Mills, 22 days; and Mr. Helmstedter, 0 days	
(4)	Amounts shown assume that executive outplacement services are provided to each of the named executive officers for a period of nine months.	
(5)	Upon a change of control, our named executive officers’ unvested time-vesting Employee Units would become immediately vested. The amounts reported are based on the appreciation in the value of our business from and after the applicable date of grant through June 7, 2012, the date of the Company’s most recent valuation. Amounts reported assume that the exit-vesting Employee Units do not vest upon a change of control since the value of our business had not appreciated to a level that would have created value in the exit-vesting Employee Units as of June 7, 2012, the date of the Company’s most recent valuation.	
Severance Arrangements and Restrictive Covenants
We have adopted the Severance Plan for the benefit of certain key employees. Each of the named executive officers is a member of our Strategy Committee and is eligible for severance pay and benefits under the Severance Plan. All severance pay and benefits must be approved by the Chief Administrative Officer and our Chairman of the Board of Directors.
Mr. Atchison
If Mr. Atchison’s employment terminates as a result of (1) job elimination resulting from a business reorganization, reduction in force, facility closure, business consolidation; (2) job elimination resulting from a sale or merger; (3) lack of an available position following a return from a certified medical leave of absence or work related injury or illness; or (4) unsatisfactory job performance, Mr. Atchison will be entitled to receive:
 
 	Ÿ 	 	a lump sum payment equal to two times his annual base pay at the time of termination;	
 
 	Ÿ 	 	any remaining accrued but unused vacation;	
 
 	Ÿ 	 	the targeted bonus for the plan year in which he is terminated;	
 
 	Ÿ 	 	continued health, dental, vision, prescription drug and mental health coverage as enrolled at the time of his termination for a period of twenty four months; and	
 
 	Ÿ 	 	executive outplacement services (as determined by us), which services must be engaged within thirty days of the termination of employment.	
Messrs. Heaney and Helmstedter
If the employment of Messrs. Heaney and Helmstedter terminates as a result of (1) job elimination resulting from a business reorganization, reduction in force, facility closure, business consolidation; (2) job elimination resulting from a sale or merger; (3) lack of an available position following a return from a certified medical leave of absence or work related injury or illness; or (4) unsatisfactory job performance, Messrs. Heaney and Helmstedter will be entitled to receive:
 
 	Ÿ 	 	a lump sum payment equal to eighteen months of his annual base pay at the time of termination;	
 
 	Ÿ 	 	any remaining accrued but unused vacation;	
 
 	Ÿ 	 	the targeted bonus for the plan year in which he is terminated;	
 
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 	Ÿ 	 	continued health, dental, vision, prescription drug and mental health coverage as enrolled at the time of his termination for a period of twelve months; and	
executive outplacement services (as determined by us), which services must be engaged within thirty days of the termination of employment.
Messrs. Brown and Mills
If the employment of Messrs. Brown and Mills terminates as a result of (1) job elimination resulting from a business reorganization, reduction in force, facility closure, business consolidation; (2) job elimination resulting from a sale or merger; (3) lack of an available position following a return from a certified medical leave of absence or work related injury or illness; or (4) unsatisfactory job performance, Messrs. Brown and Mills will be entitled to receive:
 
 	Ÿ 	 	a lump sum payment equal to twelve months of his annual base pay at the time of termination;	
 
 	Ÿ 	 	any remaining accrued but unused vacation;	
 
 	Ÿ 	 	the targeted bonus for the plan year in which he is terminated;	
 
 	Ÿ 	 	continued health, dental, vision, prescription drug and mental health coverage as enrolled at the time of his termination for a period of twelve months; and	
 
 	Ÿ 	 	executive outplacement services (as determined by us), which services must be engaged within thirty days of the termination of employment.	
In order to be eligible for the Severance Plan benefits, the employee must sign and return a release and waiver of claims that will include but is not limited to (1) a one-year non-compete covenant; (2) a two-year non-solicitation covenant; (3) a non-disparagement covenant; (4) an agreement to cooperate in any current or future legal matters relating to activities or matters occurring the employees term of employment; and (5) the release of any and all claims that the employee may have in connection with their employment with us or with the termination of employment.
No benefits are payable under the Severance Plan if (1) the eligible employee fails or refuses to return the release and waiver of claims; (2) the eligible employee voluntarily terminates their employment for “any” reason; or (3) the eligible employee engages in willful misconduct as determined at the discretion of the Chief Administrative Officer and our Chairman of the Board of Directors.
Director Compensation
The following table summarizes all compensation for our non-employee directors (other than Sponsor-affiliated directors) for fiscal year 2012. The employee directors and Sponsor-affiliated directors receive no additional compensation for serving on the Board of Directors or the Audit Committee and, as a result, are not listed in the table below. The compensation paid to Mr. Atchison, our President and Chief Executive Officer, is presented in the Summary Compensation Table and the related explanatory tables.

Name	 	Fees Earned
or Paid in
Cash
($)	 	 	Stock
Awards
($) (1)	 	 	Option
Awards
($)	 	 	Non-Equity
Incentive Plan
Compensation
($)	 	 	Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings	 	 	All Other
Compensation
($)	 	 	Total
($)	 	
David F. D’Alessandro	 	 	200,000	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	200,000	  	
Joseph P. Baratta	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Bruce McEvoy	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Peter F. Wallace	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	

(1)	As of December 31, 2012, Mr. D’Alessandro held 6,562 unvested time-vesting Employee Units and 35,000 unvested Employee Units subject to both time-vesting and exit-vesting criteria.	
 
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Description of Director Compensation
This section contains a description of the material terms of our compensation arrangements for Mr. D’Alessandro. As noted above, Messrs. Baratta, McEvoy and Wallace are employees of Blackstone and do not receive any compensation from us for their services on our Board of Directors. All of our directors, including Messrs. Baratta, McEvoy and Wallace, are reimbursed for the out-of-pocket expenses they incur in connection with their service as directors. Following the completion of this offering, we intend to continue to pay a cash retainer to our independent directors for serving as directors and an additional cash payment for serving as a committee chair, and we expect to grant equity-based awards to our independent directors under the 2013 Omnibus Incentive Plan (as defined herein).
Mr. D’Alessandro.     Mr. D’Alessandro, who serves as Chairman of the Board of Directors, receives an annual cash retainer of $200,000 a year. In addition, Mr. D’Alessandro was provided the opportunity to invest in Class D Units of the Partnerships and, in fiscal 2010, he was granted 52,500 Employee Units as part of his compensation. Similar to the Employee Units granted to our named executive officers, Mr. D’Alessandro’s Employee Units are divided into a time-vesting portion (one-third of the Employee Units granted), a 2.25x exit-vesting portion (one-third of the Employee Units granted), and a 2.75x exit-vesting portion (one-third of the Employee Units granted). In connection with this offering, Mr. D’Alessandro will surrender his Class D Units and Employee Units to the Partnerships and will receive shares of our common stock with substantially equivalent intrinsic value to such Class D Units and Employee Units. Shares of our common stock issued in respect of the unvested Employee Units will be subject to vesting terms substantially similar to those described below under “—Vesting Terms.” The vesting terms of Mr. D’Alessandro’s Employee Units are set forth below.
Vesting Terms
 
 	Ÿ 	 	Time-Vesting Units : 25% of the time-vesting Employee Units vested on Mr. D’Alessandro’s September 7, 2010 start date and the remaining 75% vest in equal annual installments on each of the first four anniversaries of his September 7, 2010 start date. Notwithstanding the foregoing, the time-vesting Employee Units will become fully vested on an accelerated basis upon a change of control (as defined in the equity holders agreement) that occurs while Mr. D’Alessandro is still serving as our Chairman of the Board of Directors.	
 
 	Ÿ 	 	2.25x Exit-Vesting Units : The 2.25x Employee Units vest based on a double trigger that includes both time-vesting and exit-vesting criteria. The time-vesting criteria are the same as the portion of his award that is solely time-vesting described above. 25% of the 2.25x Employee Units satisfied the time-vesting criteria on Mr. D’Alessandro’s September 7, 2010 start date and the remaining 75% will satisfy the time-vesting criteria in equal annual installments on each of the first four anniversaries of his September 7, 2010 start date. The exit-vesting criteria will be satisfied when and if Blackstone receives cash proceeds in respect of its Partnership units equal to (x) a 20% annualized effective compounded return rate on its investment and (y) a 2.25x multiple on its investment. Upon Mr. D’Alessandro’s departure as Chairman of the Board of Directors, all 2.25x Employee Units which have satisfied the time-vesting criteria, will remain outstanding subject to achievement of the exit-vesting criteria.	
 
 	Ÿ 	 	2.75x Exit-Vesting Units : The 2.75x Employee Units vest based on a double trigger that includes both time-vesting and exit-vesting criteria. The time-vesting criteria are the same as the portion of his award that is solely time-vesting described above. 25% of the 2.25x Employee Units satisfied the time-vesting criteria on Mr. D’Alessandro’s September 7, 2010 start date and the remaining 75% will satisfy the time-vesting criteria in equal annual installments on each of the first four anniversaries of his September 7, 2010 start date. The exit-vesting criteria will be satisfied when and if Blackstone receives cash proceeds in respect of its Partnership units equal to (x) a 15%	
 
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 	annualized effective compounded return rate on its investment and (y) a 2.75x multiple on its investment. Upon Mr. D’Alessandro’s departure as Chairman of the Board of Directors, all 2.75x Employee Units which have satisfied the time-vesting criteria, will remain outstanding subject to achievement of the exit-vesting criteria.	
Forfeiture Provisions
Generally, any Employee Units that have not vested upon Mr. D’Alessandro’s departure as Chairman of the Board of Directors will be immediately forfeited, except that the 2.25x Employee Units and the 2.75x Employee Units will, to the extent the applicable time-vesting criteria have been met, remain outstanding following Mr. D’Alessandro’s departure, subject to achievement of the applicable exit-vesting criteria. If Mr. D’Alessandro is terminated by us for cause (or he voluntarily resigns when grounds exist for cause) or in the event he breaches any of the restrictive covenants set forth in the subscription agreement, all of his Employee Units (whether vested or unvested) will be forfeited.
Compensation Arrangements to be Adopted in Connection with This Offering
2013 Omnibus Incentive Plan
In connection with this offering, our Board of Directors expects to adopt, and our stockholders expect to approve, the 2013 Omnibus Incentive Plan prior to the completion of the offering. The following description of the 2013 Omnibus Incentive Plan is not complete and is qualified by reference to the full text of the 2013 Omnibus Incentive Plan, which has been filed as an exhibit to the registration statement of which this prospectus forms a part.
Purpose .    The purpose of the 2013 Omnibus Incentive Plan is to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants and advisors (and prospective directors, officers, employees, consultants and advisors) can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders.
Administration .    The 2013 Omnibus Incentive Plan will be administered by the compensation committee of our Board of Directors or such other committee of our Board of Directors to which it has delegated power, or if no such committee or subcommittee thereof exists, the Board of Directors (as applicable, the “Committee”). The Committee has the sole and plenary authority to establish the terms and conditions of any award consistent with the provisions of the 2013 Omnibus Incentive Plan. The Committee is authorized to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the 2013 Omnibus Incentive Plan and any instrument or agreement relating to, or any award granted under, the 2013 Omnibus Incentive Plan; establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Committee deems appropriate for the proper administration of the 2013 Omnibus Incentive Plan; and to make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the 2013 Omnibus Incentive Plan. Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it in accordance with the terms of the 2013 Omnibus Incentive Plan. Any such allocation or delegation may be revoked by the Committee at any time. Unless otherwise expressly provided in the 2013 Omnibus Incentive Plan, all designations, determinations, interpretations, and other decisions under or with respect to the 2013 Omnibus
 
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Incentive Plan or any award or any documents evidencing awards granted pursuant to the 2013 Omnibus Incentive Plan are within the sole discretion of the Committee, may be made at any time and are final, conclusive and binding upon all persons or entities, including, without limitation, us, any holder or beneficiary of any award, and any of our stockholders.
Shares Subject to the 2013 Omnibus Incentive Plan .    The 2013 Omnibus Incentive Plan provides that the total number of shares of common stock that may be issued under the 2013 Omnibus Incentive Plan is            . Of this amount, the maximum number of shares for which incentive stock options may be granted is             ; the maximum number of shares for which options or stock appreciation right may be granted to any individual participant during any single fiscal year is             ; the maximum number of shares for which performance compensation awards denominated in shares may be granted to any individual participant in respect of a single fiscal year is             (or if any such awards are settled in cash, the maximum amount may not exceed the fair market value of such shares on the last day of the performance period to which such award relates); and the maximum amount that may be paid to any individual for a single fiscal year under a performance compensation award denominated in cash is $        . Except for substitute awards (as decribed below), in the event any award terminates, lapses, or is settled without the payment of the full number of shares subject to such award, including as a result of net set settlement of the award or as a result of the award being settled in cash, the undelivered shares may be granted again under the 2013 Omnibus Incentive Plan, unless the shares are surrendered after the termination of the 2013 Omnibus Incentive Plan, and only if stockholder approval is not required under the then-applicable rules of the exchange on which the shares of common stock are listed. Awards may, in the sole discretion of the Committee, be granted in assumption of, or in substitution for, outstanding awards previously granted by an entity directly or indirectly acquired by us or with which we combine (referred to as “substitute awards”), and such substitute awards shall not be counted against the total number of shares that may be issued under the 2013 Omnibus Incentive Plan, except that substitute awards intended to qualify as “incentive stock options” shall count against the limit on incentive stock options described above. No award may be granted under the 2013 Omnibus Incentive Plan after the tenth anniversary of the effective date (as defined therein), but awards theretofore granted may extend beyond that date.
Options .    The Committee may grant non-qualified stock options and incentive stock options, under the 2013 Omnibus Incentive Plan, with terms and conditions determined by the Committee that are not inconsistent with the 2013 Omnibus Incentive Plan; provided that all stock options granted under the 2013 Omnibus Incentive Plan are required to have a per share exercise price that is not less than 100% of the fair market value of our common stock underlying such stock options on the date an option is granted (other than in the case of options that are substitute awards), and all stock options that are intended to qualify as incentive stock options must be granted pursuant to an award agreement expressly stating that the option is intended to qualify as an incentive stock option, and will be subject to the terms and conditions that comply with the rules as may be prescribed by Section 422 of the Code. The maximum term for stock options granted under the 2013 Omnibus Incentive Plan will be ten years from the initial date of grant, or with respect to any stock options intended to qualify as incentive stock options, such shorter period as prescribed by Section 422 of the Code. However, if a non-qualified stock option would expire at a time when trading of shares of common stock is prohibited by the Company’s insider trading policy (or Company-imposed “blackout period”), the term will automatically be extended to the 30th day following the end of such period. The purchase price for the shares as to which a stock option is exercised may be paid to us, to the extent permitted by law (i) in cash or its equivalent at the time the stock option is exercised, (ii) in shares having a fair market value equal to the aggregate exercise price for the shares being purchased and satisfying any requirements that may be imposed by the Committee, or (iii) by such other method as the Committee may permit in its sole discretion, including without limitation (A) in other property having a fair market value on the date of exercise equal to the purchase price; (B) if there is a public market for the shares at such time, through the delivery of irrevocable instructions to a broker to sell the shares being acquired upon the
 
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exercise of the stock option and to deliver to us the amount of the proceeds of such sale equal to the aggregate exercise price for the shares being purchased, or (C) through a “net exercise” procedure effected by withholding the minimum number of shares needed to pay the exercise price and all applicable required withholding taxes. Any fractional shares of common stock will be settled in cash.
Stock Appreciation Rights .    The Committee may grant stock appreciation rights, with terms and conditions determined by the Committee that are not inconsistent with the 2013 Omnibus Incentive Plan. Generally, each stock appreciation right will entitle the participant upon exercise to an amount (in cash, shares or a combination of cash and shares, as determined by the Committee) equal to the product of (i) the excess of (A) the fair market value on the exercise date of one share of common stock, over (B) the strike price per share, times (ii) the numbers of shares of common stock covered by the stock appreciation right. The strike price per share of a stock appreciation right will determined by the Committee at the time of grant but in no event may such amount be less than the fair market value of a share of common stock on the date the stock appreciation right is granted (other than in the case of stock appreciation rights granted in substitution of previously granted awards). The Committee may in its sole discretion substitute, without the consent of the holder or beneficiary of such stock appreciation rights, stock appreciation rights settled in shares of common stock (or settled in shares or cash in the sole discretion of the Committee) for nonqualified stock options.
Restricted Stock and Restricted Stock Units .    The Committee may grant shares of restricted stock or restricted stock units, representing the right to receive, upon the expiration of the applicable restricted period, one share of common stock for each restricted stock unit, or, in its sole discretion of the Committee, the cash value thereof (or any combination thereof). As to restricted stock, subject to the other provisions of the 2013 Omnibus Incentive Plan, the holder will generally have the rights and privileges of a stockholder as to such restricted stock, including without limitation the right to vote such restricted stock (except, that if the lapsing of restrictions with respect to such restricted stock is contingent on satisfaction of performance conditions other than or in addition to the passage of time, any dividends payable on such shares of restricted stock will be retained, and delivered without interest to the holder of such shares when the restrictions on such shares lapse). To the extent provided in the applicable award agreement, the holder of outstanding restricted stock units will be entitled to be credited with dividend equivalent payments (upon the payment by us of dividends on shares of common stock) either in cash or, at the sole discretion of the Committee, in shares of common stock having a value equal to the amount of such dividends (and interest may, at the sole discretion of the Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Committee), which will be payable at the same time as the underlying restricted stock units are settled following the release of restrictions on such restricted stock units.
Other Stock-Based Awards .    The Committee may issue unrestricted common stock, rights to receive grants of awards at a future date, or other awards denominated in shares of common stock (including, without limitation, performance shares or performance units), under the 2013 Omnibus Incentive Plan, including performance-based awards.
Performance Compensation Awards .    The Committee may also designate any award as a “performance compensation award” intended to qualify as “performance-based compensation” under section 162(m) of the Code. The Committee also has the authority to make an award of a cash bonus to any participant and designate such award as a performance compensation award under the 2013 Omnibus Incentive Plan. The Committee has sole discretion to select the length of any applicable performance periods, the types of performance compensation awards to be issued, the applicable performance criteria and performance goals, and the kinds and/or levels of performance goals that are to apply. The performance criteria that will be used to establish the performance goals may be based on the attainment of specific levels of performance of the Company (and/or one or more affiliates, divisions or operational and/or business units, product lines, brands, business segments,
 
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administrative departments, or any combination of the foregoing) and are limited to the following: (i) net earnings or net income (before or after taxes); (ii) basic or diluted earnings per share (before or after taxes); (iii) net revenue or net revenue growth; (iv) gross revenue or gross revenue growth, gross profit or gross profit growth; (v) net operating profit (before or after taxes); (vi) return measures (including, but not limited to, return on investment, assets, capital, employed capital, invested capital, equity, or sales); (vii) cash flow measures (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital), which may but are not required to be measured on a per share basis; (viii) earnings before or after taxes, interest, depreciation and/or amortization (including EBIT and EBITDA); (ix) gross or net operating margins; (x) productivity ratios; (xi) share price (including, but not limited to, growth measures and total stockholder return); (xii) expense targets or cost reduction goals, general and administrative expense savings; (xiii) operating efficiency; (xiv) objective measures of customer satisfaction; (xv) working capital targets; (xvi) measures of economic value added or other ‘value creation’ metrics; (xvii) inventory control; (xviii) enterprise value; (xix) sales; (xx) stockholder return; (xxi) client retention; (xxii) competitive market metrics; (xxiii) employee retention; (xxiv) timely completion of new product rollouts; (xxv) timely launch of new facilities; (xxvi) measurements related to a new purchasing “co-op”; (xxvii) objective measures of personal targets, goals or completion of projects (including but not limited to succession and hiring projects, completion of specific acquisitions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional or project budgets); (xxviii) system-wide revenues; (xxix) royalty income; (xxx) comparisons of continuing operations to other operations; (xxxi) market share; (xxxii) cost of capital, debt leverage year-end cash position or book value; (xxxiii) strategic objectives, development of new product lines and related revenue, sales and margin targets, franchisee growth and retention, menu design and growth, co-branding or international operations; or (xxxiv) any combination of the foregoing. Any one or more of the performance criteria may be stated as a percentage of another performance criteria, or used on an absolute or relative basis to measure our performance as a whole or any of our divisions or operational and/or business units, product lines, brands, business segments, administrative departments or any combination thereof, as the Committee may deem appropriate, or any of the above performance criteria may be compared to the performance of a selected group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices. Unless otherwise determined by the Committee at the time a performance compensation award is granted, the Committee shall, during the first 90 days of a performance period (or, within any other maximum period allowed under Section 162(m) of the Code), or at any time thereafter to the extent the exercise of such authority at such time would not cause the performance compensation awards granted to any participant for such performance period to fail to qualify as “performance-based compensation” under Section 162(m) of the Code, specify adjustments or modifications to be made to the calculation of a performance goal for such performance period, based on and in order to appropriately reflect the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring items as described in Accounting Standards Codification Topic 225-20 (or any successor pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in our annual report to stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific, unusual or nonrecurring events, or objectively determinable category thereof; (viii) foreign exchange gains and losses; (ix) discontinued operations and nonrecurring charges; and (x) a change in our fiscal year.
Following the completion of a performance period, the Committee will review and certify in writing whether, and to what extent, the performance goals for the performance period have been achieved and, if so, calculate and certify in writing that amount of the performance compensation awards earned for the period based upon the performance formula. In determining the actual amount of an individual participant’s performance compensation award for a performance period, the Committee has the
 
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discretion to reduce or eliminate the amount of the performance compensation award consistent with Section 162(m) of the Code. Unless otherwise provided in the applicable award agreement, the Committee does not have the discretion to (A) grant or provide payment in respect of performance compensation awards for a performance period if the performance goals for such performance period have not been attained; or (B) increase a performance compensation award above the applicable limitations set forth in the 2013 Omnibus Incentive Plan.
Effect of Certain Events on 2013 Omnibus Incentive Plan and Awards .    In the event of (a) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of our shares of common stock or other securities, issuance of warrants or other rights to acquire our shares of common stock or other securities, or other similar corporate transaction or event (including, without limitation, a change in control, as defined in the 2013 Omnibus Incentive Plan) that affects the shares of common stock, or (b) unusual or nonrecurring events (including, without limitation, a change in control) affecting us, any affiliate, or the financial statements of us or any affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate, then the Committee must make any such adjustments in such manner as it may deem equitable, including without limitation, any or all of: (i) adjusting any or all of (A) the share limits applicable under the 2013 Omnibus Incentive Plan with respect to the number of awards which may be granted hereunder, (B) the number of our shares of common stock or other securities which may be delivered in respect of awards or with respect to which awards may be granted under the 2013 Omnibus Incentive Plan and (C) the terms of any outstanding award, including, without limitation, (1) the number of shares of common stock subject to outstanding awards or to which outstanding awards relate, (2) the exercise price or strike price with respect to any award or (3) any applicable performance measures; (ii) providing for a substitution or assumption of awards, accelerating the exercisability of, lapse of restrictions on, or termination of, awards or providing for a period of time for participants to exercise outstanding awards prior to the occurrence of such event; and (iii) cancelling any one or more outstanding awards and causing to be paid to the holders holding vested awards (including any awards that would vest as a result of the occurrence of such event but for such cancellation) the value of such awards, if any, as determined by the Committee (which if applicable may be based upon the price per share of common stock received or to be received by other stockholders of the Company in such event), including without limitation, in the case of options and stock appreciation rights, a cash payment equal to the excess, if any, of the fair market value of the shares of common stock subject to the option or stock appreciation right over the aggregate exercise price thereof. For the avoidance of doubt, the Committee may cancel any stock option or stock appreciation right for no consideration if the fair market value of the shares subject to such option or stock appreciation right is less than or equal to the aggregate exercise price or strike price of such stock option or stock appreciation right.
Nontransferability of Awards .    An award will not be transferable or assignable by a participant otherwise than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance will be void and unenforceable against us or any affiliate. However, the Committee may, in its sole discretion, permit awards (other than incentive stock options) to be transferred, including transfer to a participant’s family members, any trust established solely for the benefit of participant or such participant’s family members, any partnership or limited liability company of which participant, or participant and participant’s family members, are the sole member(s), and a beneficiary to whom donations are elibigle to be treated as “charitable contributions” for tax purposes.
 
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Amendment and Termination .    The Board of Directors may amend, alter, suspend, discontinue, or terminate the 2013 Omnibus Incentive Plan or any portion thereof at any time; provided, that no such amendment, alteration, suspension, discontinuation or termination may be made without stockholder approval if (i) such approval is necessary to comply with any regulatory requirement applicable to the 2013 Omnibus Incentive Plan or for changes in GAAP to new accounting standards, (ii) it would materially increase the number of securities which may be issued under the 2013 Omnibus Incentive Plan (except for adjustments in connection with certain corporate events), or (iii) it would materially modify the requirements for participation in the 2013 Omnibus Incentive Plan; provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any award shall not to that extent be effective without such individual’s consent. The Committee may also, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award granted or the associated award agreement, prospectively or retroactively, subject to the consent of the affected Participant if any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination would materially and adversely affect the rights of any Participant with respect to such award; provided , further, that without stockholder approval, except as otherwise permitted in the 2013 Omnibus Incentive Plan, (i) no amendment or modification may reduce the exercise price of any option or the strike price of any stock appreciation right, (ii) the Committee may not cancel any outstanding option or stock appreciation right and replace it with a new option or stock appreciation right (with a lower exercise price or strike price, as the case may be) or other award or cash payment that is greater than the value of the cancelled option or stock appreciation right, and (iii) the Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which our securities are listed or quoted.
Dividends and Dividend Equivalents .    The Committee in its sole discretion may provide part of an award with dividends or dividend equivalents, on such terms and conditions as may be determined by the Committee in its sole discretion; provided, that no dividend equivalents shall be payable in respect of outstanding (i) Options or stock appreciation right or (ii) unearned performance compensation awards or other unearned awards subject to performance conditions (other than or in addition to the passage of time) (although dividend equivalents may be accumulated in respect of unearned awards and paid within 15 days after such awards are earned and become earned, payable or distributable).
Clawback/Forfeiture .    An award agreement may provide that the Committee may in its sole discretion cancel such award if the participant, while employed by or providing services to us or any affiliate or after termination of such employment or service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise has engaged in or engages in other detrimental activity that is in conflict with or adverse to our interests or the interests of any affiliate, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Committee in its sole discretion. The Committee may also provide in an award agreement that if the participant otherwise has engaged in or engages in any activity referred to in the preceding sentence, the participant will forfeit any gain realized on the vesting or exercise of such award, and must repay the gain to us. The Committee may also provide in an award agreement that if the participant receives any amount in excess of what the participant should have received under the terms of the award for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then the participant shall be required to repay any such excess amount to us. Without limiting the foregoing, all awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with applicable law.
 
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 PRINCIPAL AND SELLING STOCKHOLDERS
The following table and accompanying footnotes set forth information with respect to the beneficial ownership of our common stock, as of September 30, 2012, for:
 
 	Ÿ 	 	each person known by us to own beneficially more than 5% of our outstanding shares of common stock;	
 
 	Ÿ 	 	each of our directors;	
 
 	Ÿ 	 	each of our named executive officers;	
 
 	Ÿ 	 	all of our directors and executive officers as a group; and	
 
 	Ÿ 	 	each selling stockholder.	
For further information regarding material transactions between us and the selling stockholders, see “Certain Relationships and Related Party Transactions.”
The number of shares and percentages of beneficial ownership prior to this offering set forth below are based on the number of shares of our common stock to be issued and outstanding immediately prior to the consummation of this offering. The number of shares and percentages of beneficial ownership after this offering set forth below are based on the number of shares of our common stock to be issued and outstanding immediately after the consummation of this offering.
Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. A person is a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment power,” which includes the power to dispose of or to direct the disposition of the security or has the right to acquire such powers within 60 days.
Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to their beneficially owned common stock.
Except as otherwise indicated in the footnotes below, the address of each beneficial owner is c/o SeaWorld Entertainment, Inc., 9205 South Park Center Loop, Suite 400, Orlando, Florida 32819.

 	 	Common  Stock
Beneficially
Owned
Prior to this
Offering	 	 	Shares of
Common
Stock
Offered	 	Common Stock Beneficially Owned After this
Offering	
 	 			 		 	Assuming the
Underwriters’
Option is not
Exercised	 	Assuming the Underwriters’
Option is Exercised
in Full	
Name of Beneficial Owner	 	Number	 	% (3)	 	 		 	Number	 	%	 	Number	 	%	
Principal and Selling Stockholders:	 		 				 		 		 		 		 		
The Partnerships affiliated with The Blackstone Group L.P. (1)(2)	 		 	 	100	% 	 		 		 		 		 		
Directors and Named Executive Officers:	 		 				 		 		 		 		 		
David F. D’Alessandro	 		 	 	—  	  	 		 		 		 		 		
Jim Atchison	 		 	 	—  	  	 		 		 		 		 		
Joseph P. Baratta (4)	 		 	 	—  	  	 		 		 		 		 		
Bruce McEvoy (4)	 		 	 	—  	  	 		 		 		 		 		
Peter Wallace (4)	 		 	 	—  	  	 		 		 		 		 		
James M. Heaney	 		 	 	—  	  	 		 		 		 		 		
Dan Brown	 		 	 	—  	  	 		 		 		 		 		
Donald Mills	 		 	 	—  	  	 		 		 		 		 		
Scott Helmstedter	 		 	 	—  	  	 		 		 		 		 		
All directors and executive officers as a group (9 persons) (3)	 		 	 	—  	  	 		 		 		 		 		
 
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(1)	As of September 30, 2012, the Partnerships owned 100% of our outstanding common stock and no other person or entity had a direct beneficial ownership interest in our common stock as of such date until the expiration of the lock-up period related to such common stock. The shares to be sold in this offering by the Partnerships, including any additional shares that the underwriters have the option to purchase, will be allocated among the Partnerships pro rata based on their current ownership percentages as follows:                                     .	
 
(2)	Reflects shares of our common stock held by the Partnerships as follows: 8,056,541.01 shares of our common stock held by SW Cayman L.P. (“SWC”), 251,474.43 shares of our common stock held by SW Cayman A L.P. (“SWCA”), 282,826.98 shares of our common stock held by SW Cayman B L.P. (“SWCB”), 258,035.64 shares of our common stock held by SW Cayman C L.P. (“SWCC”), 92,701.14 shares of our common stock held by SW Delaware D L.P. (“SWDD”), 290,513.04 shares of our common stock held by SW Cayman E L.P. (“SWCE”), 227,044.97 shares of our common stock held by SW Cayman F L.P. (“SWCF”), 345,800.96 shares of our common stock held by SW Cayman Co-Invest L.P. (“SWCCI”), 378,995.51 shares of our common stock held by SW Cayman (GS) L.P. (“SWCGS”) and 126,331.84 shares of our common stock held by SW Cayman (GSO) L.P. Blackstone and other members of the Investor Group own various classes of interests in the Partnerships as described under “Certain Relationships and Related Party Transactions—Limited Partnership Agreements.” Investors in SCWGS include certain affiliates of Goldman, Sachs & Co.	
 
    	Under the terms of the partnership agreements of the Partnerships, the general partner determines any voting and dispositions decisions with respect to the shares of our common stock held by the Partnerships. In certain circumstances, Blackstone and certain other members of the Investor Group are permitted to surrender their interests in the Partnerships to the Partnerships and receive shares of our common stock held by the Partnerships. The general partner of each of the Partnerships is SW Cayman Limited. SW Cayman Limited is wholly owned by Blackstone Capital Partners (Cayman III) V L.P. The general partner of Blackstone Capital Partners (Cayman III) V L.P. is Blackstone Management Associates (Cayman) V L.P. The general partner of Blackstone Management Associates (Cayman) V L.P. is BCP V GP L.L.C. The sole member of BCP V GP L.L.C. is Blackstone Holdings III L.P. The general partner of Blackstone Holdings III L.P. is Blackstone Holdings III GP L.P. The general partner of Blackstone Holdings III GP L.P. is Blackstone Holdings III GP Management L.L.C. The sole member of Blackstone Holdings III GP Management L.L.C. is The Blackstone Group L.P. The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of such Blackstone entities (other than the Partnerships to the extent of their direct holdings) and Mr. Schwarzman may be deemed to beneficially own the shares beneficially owned by the Partnerships directly or indirectly controlled by it or him, but each disclaims beneficial ownership of such shares. The address of each of Mr. Schwarzman and each of the other entities listed in this footnote is c/o The Blackstone Group L.P., 345 Park Avenue, New York, New York 10154.	
 
(3)	As of September 30, 2012, the Partnerships owned 100% of our outstanding common stock. Certain of our directors and officers own 29,240 Class D Units and 673,760 Employee Units in the Partnerships, as described under “Management—Compensation Discussion and Analysis,” and will receive a portion of the net proceeds to the selling stockholders as a result of their ownership of the Class D Units. Under the terms of the partnership agreements of the Partnerships, SW Cayman Limited, the general partner of the Partnerships, determines any voting and disposition decisions with respect to the shares of our common stock held by the Partnerships. SW Cayman Limited is an affiliate of Blackstone as described in footnote (2) above. In connection with this offering, our management employees and directors will surrender the Class D Units and the Employee Units to the Partnerships and will receive shares of our common stock with substantially equivalent intrinsic value to such Class D Units and the Employee Units. Shares of our common stock issued in respect of the unvested Employee Units will be subject to vesting terms substantially similar to those described above under “Management—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Terms of Equity Award Grants—Employee Units—Vesting Terms.”	
 
(4)	Messrs. Baratta, McEvoy and Wallace are each employees of Blackstone, but each disclaims beneficial ownership of the shares beneficially owned by the Partnerships. The address for Messrs. Baratta, McEvoy and Wallace is c/o The Blackstone Group L.P., 345 Park Avenue, New York, New York 10154.	
 
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 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Stockholders Agreement
In connection with this offering, we expect to enter into a stockholders agreement with affiliates of Blackstone. This agreement will grant affiliates of Blackstone the right to nominate to our Board of Directors a number of designees equal to: (i) at least a majority of the total number of directors comprising our Board of Directors as long as affiliates of Blackstone beneficially own at least 50% of the shares of our common stock entitled to vote generally in the election of our directors; (ii) at least 40% of the total number of directors comprising our Board of Directors at such time as long as affiliates of Blackstone beneficially own at least 40% but less than 50% of the shares of our common stock entitled to vote generally in the election of our directors; (iii) at least 30% of the total number of directors comprising our Board of Directors at such time as long as affiliates of Blackstone beneficially own at least 30% but less than 40% of the shares of our common stock entitled to vote generally in the election of our directors; (iv) at least 20% of the total number of directors comprising our Board of Directors at such time as long as affiliates of Blackstone beneficially own at least 20% but less 30% of the shares of our common stock entitled to vote generally in the election of our directors; and (v) at least 10% of the total number of directors comprising our Board of Directors at such time as long as affiliates of Blackstone beneficially own at least 5% but less than 20% of the shares of our common stock entitled to vote generally in the election of our directors. For purposes of calculating the number of directors that affiliates of Blackstone are entitled to nominate pursuant to the formula outlined above, any fractional amounts would be rounded up to the nearest whole number (e.g., one and one quarter directors shall equate to two directors) and the calculation would be made on a pro forma basis after taking into account any increase in the size of our Board of Directors.
In addition, in the event of a vacancy on the Board of Directors is caused by the death, disability, retirement or resignation of a Blackstone director-designee, affiliates of Blackstone shall, to the fullest extent permitted by law, have the right to have the vacancy filled by a new Blackstone director-designee.
Limited Partnership Agreements and Equityholders Agreement
Investment funds affiliated with Blackstone and other co-investors hold Class A Units and Class B Units of the Partnerships. In addition, ABI holds Class C Units in the Partnerships, which entitle ABI to receive, subject to certain conditions, a specified portion of distributions from the Partnerships.
As of September 30, 2012, Blackstone owned 8,000,000 Class A Units in the Partnerships consisting of 6,870,315.17 Class A Units in SWC, 248,783.61 Class A Units in SWCA, 279,799.84 Class A Units in SWCB, Blackstone owned 255,273.63 Class A Units in SWCC, 91,709.15 Class A Units in SWDD, 287,403.79 Class A Units in SWCE, 224,615.11 Class A Units in SWCF and 342,099.70 Class A Units in SWCCI. Other members of the Investor Group, including certain of our directors and officers, affiliates of Goldman, Sachs & Co. and other investors, own the remaining limited partnership units in the Partnerships, consisting of 101,000 Class B Units, ten Class C Units, 29,240.02 Class D Units and 673,760 Employee Units. In connection with this offering, our management employees and directors will surrender the Class D Units and the Employee Units to the Partnerships and will receive shares of our common stock with substantially equivalent intrinsic value to such Class D Units and the Employee Units. Shares of our common stock issued in respect of the unvested Employee Units will be subject to vesting terms substantially similar to those described above under “Management—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Terms of Equity Award Grants—Employee Units—Vesting Terms.”
Pursuant to the limited partnership agreements of each of the Partnerships (referred to herein as the “Partnership Agreements”), Blackstone, through its affiliate SW Cayman Limited, the general partner of the Partnerships, has the right to determine when dispositions of shares of our common
 
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stock held by the Partnerships will be made and, subject to certain exceptions, when distributions will be made to the limited partners of the Partnerships and the amount of any such distributions. If SW Cayman Limited authorizes a distribution, such distribution will be made to the partners of the Partnerships (1) in the case of a tax distribution (as described below), to the holders of limited partnerships units in proportion to the amount of taxable income of the Partnerships allocated to such holders and (2) in the case of other distributions, pro rata in accordance with the percentages of their respective partnership interests, subject to vesting requirements of certain Employee Units held by members of our management. ABI holds Class C Units in the Partnerships, which entitle ABI to receive, subject to certain conditions, a specified portion of distributions from the Partnerships. ABI has consent rights with respect to certain amendments to the Partnership Agreements.
The Partnership Agreements provide that SW Cayman Limited, as the general partner, will be entitled in its sole discretion and without the approval of the other partners to perform or cause to be performed all management and operational functions relating to the Partnerships and shall have the sole power to bind the Partnerships. The limited partners may not participate in the management or control of the Partnerships.
The Partnership Agreements provide that, subject to certain exceptions, the general partner will not withdraw from the Partnerships or resign as a general partner. The general partner is not permitted to transfer its general partnership interests except to an affiliate of the general partner. The Partnership Agreements also provide that, subject to certain exceptions, the limited partners will not transfer their limited partnership interests. Under the terms of the Partnership Agreements, an affiliate of Blackstone determines any voting and disposition decisions with respect to the shares of our common stock held by the Partnerships. In certain circumstances, Blackstone and certain other members of the Investor Group are permitted to surrender their interests in the Partnerships to the Partnerships and receive shares our common stock held by the Partnerships.
The Partnership Agreements contain a covenant limiting the Partnerships’ ability to enter into transactions with their affiliates, which is similar to the affiliate transactions covenant contained in the indenture governing the Senior Notes.
The Partnership Agreements provide that each of the Partnerships will be dissolved upon the earliest of (i) the determination of the general partner to dissolve the Partnerships, (ii) such date when there are no limited partners, (iii) at such times as all of the assets of the Partnership have been converted into cash and cash equivalents, (iv) the entry of a decree of judicial dissolution of the Partnership or (v) the dissolution, resignation, expulsion or bankruptcy of the general partner.
In connection with the 2009 Transactions, we entered into an equityholders agreement with the Partnerships and certain equity holders of the Partnerships. Pursuant to the agreement, in the event that we propose to redeem or repurchase any of our equity interests held by the Partnerships, we are required to offer each Partnership the right to participate in such redemption or repurchase on a pro rata basis. The agreement also requires us to issue a corresponding number of common equity interests to the Partnerships in connection with vesting of Employee Units.
Registration Rights Agreement
In connection with the 2009 Transactions, we entered into a registration rights agreement with the Partnerships and certain equity holders of the Partnerships. This agreement provides to the Partnerships an unlimited number of “demand” registrations and customary “piggyback” registration rights. The registration rights agreement also provides that we will pay certain expenses of the Partnerships and certain of its equity holders relating to such registrations and indemnify them against certain liabilities which may arise under the Securities Act.
 
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2009 Advisory Agreement and Support and Services Agreement
In connection with the 2009 Transactions, SWPEI, SeaWorld Parks & Entertainment LLC and Sea World LLC entered into the 2009 Advisory Agreement with Blackstone Management Partners L.L.C. (“BMP”) pursuant to which BMP provided certain strategic and structuring advice and assistance to us. In the year ended December 31, 2012, we paid approximately $6.2 million (excluding expense reimbursement) to Blackstone pursuant to the 2009 Advisory Agreement.
In connection with this offering, the parties intend to terminate the 2009 Advisory Agreement, and in connection with such termination we will pay BMP total fees of approximately $         million. The termination fee will be calculated by determining the present value (using a discount rate equal to the yield to maturity on the business day immediately preceding the date on which such termination fee is payable of the class of outstanding U.S. government bonds having a final maturity closest to the tenth anniversary of the date of 2009 Advisory Agreement) of all then-current and future monitoring fees payable under the agreement (assuming that the agreement terminated on its tenth anniversary).
Following termination of the 2009 Advisory Agreement and in connection with this offering, we expect to enter into a new Support and Services Agreement (the “Support and Services Agreement”) with BMP. Under the Support and Services Agreement, we will until the first to occur of (i) the tenth anniversary of the closing date of this offering and (ii) the date upon which the Partnerships or affiliates of Blackstone owns less than         % of our common stock and such common stock has a fair market value (as determined by Blackstone) of less than $             million (each of the events specified in clauses (i) through (ii) above, the “Exit Date”) (or an earlier date determined by BMP), engage BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined with reference to the actual services provided. In addition, BMP will make available to us the opportunity to participate in Blackstone’s group purchasing arrangements and, for a customary fee, the benefits of Blackstone’s equity health care program for participating portfolio companies.
Debt and Interest Payments
As of September 30, 2012, approximately $100.0 million of the Senior Notes and approximately $120.0 million of aggregate principal amount of Tranche B Term Loans under our Senior Secured Credit Facilities were owned by affiliates of Blackstone. We make periodic interest payments on such debt in accordance with its terms. See “Description of Indebtedness—Senior Notes.”
Repurchase of Securities
As market conditions warrant, we and our major stockholders, including Blackstone and its affiliates, may from time to time, depending upon market conditions, seek to repurchase our debt securities or loans in privately negotiated or open market transactions, by tender offer or otherwise.
Equity Investment by Directors and Executive Officers
Our management employees, including our named executive officers, received long-term incentive awards that are designed to promote our interests by providing our management employees with the opportunity to acquire an equity interest in the Partnerships as an incentive for the person to remain in our service. In fiscal 2011 and fiscal 2012, our named executive officers received grants of such awards in the form of Employee Units in the Partnerships. In addition, certain directors and members of management, including Messrs. Atchison, Brown and Mills, purchased Class D Units of the Partnerships.
 
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Equity Healthcare Program Agreement
Effective as of January 1, 2012, we entered into an employer health program agreement with Equity Healthcare LLC (“Equity Healthcare”), an affiliate of Blackstone, pursuant to which Equity Healthcare provides to us certain negotiating, monitoring and other services in connection with our health benefit plans. Because of the combined purchasing power of its client participants, Equity Healthcare is able to negotiate pricing terms for providers that are believed to be more favorable than the companies could obtain for themselves on an individual basis.
In consideration for Equity Healthcare’s services, we will pay Equity Healthcare a fee of $2.50 per participating employee per month for benefit plans beginning on or after January 1, 2012, $2.60 per participating employee per month for plans beginning on or after January 1, 2013, and $2.70 per participating employee per month for plans beginning on or after January 1, 2014. As of December 31, 2011, we had approximately 3,400 employees enrolled in Equity Healthcare health benefit plans.
Core Trust Purchasing Group Participation Agreement
Effective May 1, 2010, we entered into a five year participation agreement with Core Trust Purchasing Group (“CPG”), which designates CPG as our exclusive “group purchasing organization” for the purchase of certain products and services from third party vendors. CPG secures from vendors pricing terms for goods and services that are believed to be more favorable than participants in the group purchasing organization could obtain for themselves on an individual basis. Under the participation agreement, we must purchase 80% of the requirements of our participating locations for core categories of specified products and services, from vendors participating in the group purchasing arrangement with CPG or CPG may terminate the contract.
We do not pay any fees to participate in this group arrangement, and we can terminate participation in any category of products and services at any time prior to the expiration of the agreement without penalty with a reasonable business justification, including if pricing under the agreement becomes uncompetitive or uneconomical, customer service is not satisfactory or participation negatively impacts our corporate governance or compliance policies.
In connection with purchases by its participants (including us), CPG receives a commission from the vendors in respect of such purchases. Additionally, Blackstone entered into an agreement with CPG whereby Blackstone receives a portion of the gross fees vendors pay to CPG based on the volume of purchases made between us and other participants. Amounts paid for purchases through CPG were approximately $19.4 million and $29.0 million for the six months ended June 30, 2012 and the fiscal year ended December 31, 2011, respectively.
Other
Mr. Thomas J. Valley, the Director Domestic Sales of a subsidiary of the Company, is the brother-in-law of our Chief Executive Officer and President. Mr. Valley’s total compensation for fiscal 2012 was $            .
From time to time, we do business with a number of other companies affiliated with Blackstone. We believe that all such arrangements have been entered into in the ordinary course of business and have been conducted on an arms-length basis.
 
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Related Persons Transaction Policy
Our Board of Directors recognizes the fact that transactions with related persons present a heightened risk of conflicts of interests and/or improper valuation (or the perception thereof). Prior to the completion of this offering, our Board of Directors will adopt a written policy on transactions with related persons that is in conformity with the requirements upon issuers having publicly-held common stock that is listed on the NYSE. Under the new policy:
 
 	Ÿ 	 	any related person transaction, and any material amendment or modification to a related person transaction, must be reviewed and approved or ratified by a committee of the Board of Directors composed solely of independent directors who are disinterested or by the disinterested members of the Board of Directors; and	
 
 	Ÿ 	 	any employment relationship or transaction involving an executive officer and any related compensation must be approved by the compensation committee of the Board of Directors or recommended by the compensation committee to the Board of Directors for its approval.	
In connection with the review and approval or ratification of a related person transaction:
 
 	Ÿ 	 	management must disclose to the committee or disinterested directors, as applicable, the name of the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction;	
 
 	Ÿ 	 	management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction complies with the terms of our agreements governing our material outstanding indebtedness that limit or restrict our ability to enter into a related person transaction;	
 
 	Ÿ 	 	management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction will be required to be disclosed in our applicable filings under the Securities Act or the Exchange Act, and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with such Acts and related rules; and	
 
 	Ÿ 	 	management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act of 2002.	
In addition, the related person transaction policy provides that the committee or disinterested directors, as applicable, in connection with any approval or ratification of a related person transaction involving a non-employee director or director nominee, should consider whether such transaction would compromise the director or director nominee’s status as an “independent,” “outside,” or “non-employee” director, as applicable, under the rules and regulations of the SEC, the NYSE and the Code.
 
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 ORGANIZATIONAL STRUCTURE
The following diagram illustrates our organizational structure after giving effect to the consummation of this offering.

 

(1)	SWPEI is the borrower under our Senior Secured Credit Facilities and the issuer of the Senior Notes. We intend to use a portion of the net proceeds received by us from this offering to redeem $         million in aggregate principal amount of the Senior Notes and pay approximately $         million of redemption premium, plus accrued interest thereon. See “Description of Indebtedness” and “Use of Proceeds.”	
(2)	The obligations under our Senior Secured Credit Facilities and the Senior Notes are guaranteed by SeaWorld Entertainment, Inc. and substantially all of the existing subsidiaries of SeaWorld Entertainment, Inc.	
 
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 DESCRIPTION OF INDEBTEDNESS
Senior Secured Credit Facilities
In December 2009, SWPEI entered into Senior Secured Credit Facilities with Bank of America, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender, Banc of America Securities LLC and Deutsche Bank Securities Inc., as joint lead arrangers, and the other agents and lenders from time to time party thereto. In February and April 2011, we entered into amendments of our Senior Secured Credit Facilities with Bank of America, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender, and the other agents and lenders from time to time party thereto. In March 2012, SWPEI entered into an amendment of our Senior Secured Credit Facilities with Bank of America, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender, and the other agents and lenders from time to time party thereto.
Our Senior Secured Credit Facilities consist of:
 
 	Ÿ 	 	the $153.9 million Tranche A Term Loans, which will mature on February 17, 2016;	
 
 	Ÿ 	 	the $1,297.1 million Tranche B Term Loans, which will mature on the earlier of (i) August 17, 2017 and (ii) the 91st day prior to the maturity of the Senior Notes, if more than $50 million of debt with respect to the Senior Notes is outstanding as of such date; and	
 
 	Ÿ 	 	the $172.5 million Revolving Credit Facility, $160.9 million of which would have been available for borrowing as of September 30, 2012 after giving effect to $11.6 million of outstanding letters of credit, which will mature on February 17, 2016.	
The obligations under our Senior Secured Credit Facilities are fully, unconditionally and irrevocably guaranteed by each of the Issuer, any subsidiary of the Issuer that directly or indirectly owns 100% of the issued and outstanding equity interests of SWPEI, and, subject to certain exceptions, each of SWPEI’s existing and future material domestic wholly-owned subsidiaries.
The Revolving Credit Facility includes borrowing capacity available for letters of credit and for short-term borrowings referred to as the swingline borrowings. In addition, our Senior Secured Credit Facilities also provide us with the option to raise incremental credit facilities, refinance the loans with debt incurred outside our Senior Secured Credit Facilities and extend the maturity date of the revolving loans and term loans, subject to certain limitations.
Interest Rate and Fees
Borrowings for the Tranche A Term Loans bear interest, at SWPEI’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the administrative agent’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the BBA LIBOR rate for the interest period relevant to such borrowing. The margin for the Tranche A Term Loans is 1.75%, in the case of base rate loans, and 2.75%, in the case of LIBOR rate loans, subject to a step-down of 0.25% upon achievement of a secured leverage ratio less than or equal to 2.25 to 1.00.
Borrowings under the Tranche B Term Loans bear interest, at SWPEI’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the administrative agent’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the BBA LIBOR rate for the interest period relevant to such borrowing. The margin for the Tranche B Term Loans is 2.00%, in the case of base rate loans, and 3.00%, in the case of LIBOR rate loans, subject to a base rate floor of 2.00% and a LIBOR floor of 1.00%.
Borrowings under the Revolving Credit Facility bear interest, at SWPEI’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the administrative
 
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agent’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the BBA LIBOR rate for the interest period relevant to such borrowing. The margin for the Revolving Credit Facility is 1.75%, in the case of base rate loans, and 2.75%, in the case of LIBOR rate loans, subject to a step-down of 0.25% upon achievement of a secured leverage ratio less than or equal to 2.25 to 1.00.
In addition to paying interest on outstanding principal under the Senior Secured Credit Facilities, SWPEI is required to pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee rate is 0.50% per annum. SWPEI is also required to pay customary letter of credit fees.
Prepayments
Our Senior Secured Credit Facilities, as amended, requires SWPEI to prepay outstanding term loans, subject to certain exceptions, with:
 
 	Ÿ 	 	50% of SWPEI’s annual “excess cash flow” (with step-downs to 25% and 0%, as applicable, based upon SWPEI’s total leverage ratio), subject to certain exceptions;	
 
 	Ÿ 	 	100% of the net cash proceeds of certain non-ordinary course asset sales or other dispositions, subject to reinvestment rights and certain exceptions; and	
 
 	Ÿ 	 	100% of the net cash proceeds of any incurrence of debt by SWPEI or any of its restricted subsidiaries, other than debt permitted to be incurred or issued under our Senior Secured Credit Facilities.	
Notwithstanding any of the foregoing, each lender of term loans has the right to reject its pro rata share of mandatory prepayments described above, in which case we may retain the amounts so rejected.
The foregoing mandatory prepayments will be applied pro rata to installments of term loans in direct order of maturity.
SWPEI may voluntarily repay amounts outstanding under our Senior Secured Credit Facilities at any time without premium or penalty, other than prepayment premium on voluntary prepayment of Tranche B Term Loans on or prior to March 30, 2013 and customary “breakage” costs with respect to LIBOR loans.
Amortization
SWPEI is currently required to repay installments on the term loans in quarterly installments equal to approximately $1.9 million with respect to Tranche A Term Loans and approximately $3.5 million with respect to Tranche B Term Loans, with the remaining amount payable on the applicable maturity date with respect to such term loans.
Collateral
Our Senior Secured Credit Facilities are collateralized by first priority or equivalent security interests in (i) all the capital stock of, or other equity interests in, substantially all of SWPEI’s direct or indirect domestic subsidiaries (other than a domestic subsidiary that is a subsidiary of a foreign subsidiary) and 65% of the capital stock of, or other equity interests in, any of SWPEI’s direct foreign subsidiaries and any of SWPEI’s domestic subsidiaries that are treated as disregarded entities for U.S. federal income tax purposes if substantially all the assets of such domestic subsidiary consist of equity
 
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interests of one or more “controlled foreign corporations” within the meaning of the Code and (ii) certain tangible and intangible assets of SWPEI and those of the Guarantors (subject to certain exceptions and qualifications).
Certain Covenants and Events of Default
Our Senior Secured Credit Facilities contain a number of significant affirmative and negative covenants. Such covenants, among other things, restrict, subject to certain exceptions, the ability of SWPEI and its restricted subsidiaries to:
 
 	Ÿ 	 	incur additional indebtedness, make guarantees and enter into hedging arrangements;	
 
 	Ÿ 	 	create liens on assets;	
 
 	Ÿ 	 	enter into sale and leaseback transactions;	
 
 	Ÿ 	 	engage in mergers or consolidations;	
 
 	Ÿ 	 	sell assets;	
 
 	Ÿ 	 	make fundamental changes;	
 
 	Ÿ 	 	pay dividends and distributions or repurchase SWPEI’s capital stock;	
 
 	Ÿ 	 	make investments, loans and advances, including acquisitions;	
 
 	Ÿ 	 	engage in certain transactions with affiliates;	
 
 	Ÿ 	 	make changes in nature of the business; and	
 
 	Ÿ 	 	make prepayments of junior debt.	
Our Senior Secured Credit Facilities also contain covenants that (i) require SWPEI to maintain a (A) maximum net total leverage ratio and (B) minimum interest coverage ratio, and (ii) impose maximum annual capital expenditures requirements.
In addition, our Senior Secured Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under our Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under our Senior Secured Credit Facilities and all actions permitted to be taken by a secured creditor.
As of September 30, 2012, we were in compliance in all material respects with all covenants in the provisions contained in the documents governing our Senior Secured Credit Facilities.
Senior Notes
General
On December 1, 2009, SWPEI issued $400.0 million aggregate principal amount of 13.5% Senior Notes due 2016. On March 30, 2012, pursuant to an amendment to the indenture governing the Senior Notes, the interest rate was reduced from 13.5% to 11.0%. As of September 30, 2012, we had $400.0 million aggregate principal amount in Senior Notes outstanding. Interest on the Senior Notes is payable semi-annually in arrears. The obligations under the Senior Notes are guaranteed by the same entities as those that guarantee our Senior Secured Credit Facilities.
 
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Ranking
The Senior Notes are senior unsecured obligations and:
 
 	Ÿ 	 	rank senior in right of payment to all existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Notes;	
 
 	Ÿ 	 	rank equally in right of payment to all existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Senior Notes; and	
 
 	Ÿ 	 	are effectively subordinated in right of payment to all existing and future secured debt (including obligations under our Senior Secured Credit Facilities), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the Senior Notes.	
Optional Redemption
We may redeem some or all of the Senior Notes at any time prior to December 1, 2014 at a price equal to 100% of the principal amount of Senior Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date. The “Applicable Premium” is defined as the greater of (1) 1.0% of the principal amount of the Senior Notes and (2) the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of the Senior Notes at December 1, 2014 or plus (ii) all required interest payments due on the Senior Notes through December 1, 2014 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 50 basis points over (b) the principal amount of the Senior Notes.
After December 1, 2014, we may redeem the Senior Notes at the redemption prices listed below, if redeemed during the 12-month period beginning on December 1 of each of the years indicated below:

Year	  	Percentage	 	
2014	  	 	105.50	% 	
2015	  	 	102.75	% 	
In addition, until December 1, 2014, we may redeem up to 35% of the aggregate principal amount of the Senior Notes at a redemption price equal to 111.0% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, subject to the right of holders of the Senior Notes of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds received by us from one or more equity offerings; provided that (i) at least 65% of the sum of the aggregate principal amount of the Senior Notes originally issued under the indenture remains outstanding immediately after the occurrence of each such redemption and (ii) each such redemption occurs within 90 days of the date of closing of each such equity offering. Pursuant to such provisions, we intend to use a portion of the net proceeds received by us from this offering to redeem $         million in aggregate principal amount of the Senior Notes at a redemption price of 111.0% and to pay estimated premiums and accrued interest thereon. We intend to use the remaining proceeds received by us from this offering for other general corporate purposes. See “Use of Proceeds.”
Change of Control Offer
Upon the occurrence of a change of control (as defined in the indenture governing the Senior Notes), SWPEI will be required to offer to repurchase some or all of the Senior Notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.
 
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Covenants
The indenture governing the Senior Notes contains a number of covenants that, among other things, restrict SWPEI’s ability and the ability of its restricted subsidiaries to, among other things:
 
 	Ÿ 	 	dispose of certain assets;	
 
 	Ÿ 	 	incur additional indebtedness;	
 
 	Ÿ 	 	pay dividends;	
 
 	Ÿ 	 	prepay subordinated indebtedness;	
 
 	Ÿ 	 	incur liens;	
 
 	Ÿ 	 	make capital expenditures;	
 
 	Ÿ 	 	make investments or acquisitions;	
 
 	Ÿ 	 	engage in mergers or consolidations; and	
 
 	Ÿ 	 	engage in certain types of transactions with affiliates.	
These covenants are subject to a number of important limitations and exceptions.
Events of Default
The indenture governing the Senior Notes provides for certain events of default which, if any of them were to occur, would permit or require the principal of and accrued interest, if any, on the Senior Notes to become or be declared due and payable (subject, in some cases, to specified grace periods).
As of September 30, 2012, we were in compliance in all material respects with all covenants and the provisions contained in the indenture governing the Senior Notes.
 
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 DESCRIPTION OF CAPITAL STOCK
In connection with this offering, we will amend and restate our certificate of incorporation and our bylaws. The following is a description of the material terms of, and is qualified in its entirety by, our amended and restated certificate of incorporation and amended and restated bylaws, each of which will be in effect upon the consummation of this offering, the forms of which are filed as exhibits to the registration statement of which this prospectus is a part.
Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the General Corporation Law of the State of Delaware (the “DGCL”). Upon the consummation of this offering, our authorized capital stock will consist of              shares of common stock, par value $0.01 per share, and              shares of preferred stock, par value $0.01 per share. No shares of preferred stock will be issued or outstanding immediately after the public offering contemplated by this prospectus. Unless our Board of Directors determines otherwise, we will issue all shares of our capital stock in uncertificated form.
Common Stock
Holders of our common stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. The holders of our common stock do not have cumulative voting rights in the election of directors.
Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our common stock will be entitled to receive pro rata our remaining assets available for distribution. Holders of our common stock do not have preemptive, subscription, redemption or conversion rights. The common stock will not be subject to further calls or assessment by us. There will be no redemption or sinking fund provisions applicable to the common stock. All shares of our common stock that will be outstanding at the time of the completion of the offering will be fully paid and non-assessable. The rights, powers, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may authorize and issue in the future.
Preferred Stock
Our amended and restated certificate of incorporation authorizes our Board of Directors to establish one or more series of preferred stock (including convertible preferred stock). Unless required by law or by the NYSE, the authorized shares of preferred stock will be available for issuance without further action by you. Our Board of Directors is able to determine, with respect to any series of preferred stock, the powers (including voting powers), preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation:
 
 	Ÿ 	 	the designation of the series;	
 
 	Ÿ 	 	the number of shares of the series, which our Board of Directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);	
 
 	Ÿ 	 	whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;	
 
 	Ÿ 	 	the dates at which dividends, if any, will be payable;	
 
 	Ÿ 	 	the redemption rights and price or prices, if any, for shares of the series;	
 
 	Ÿ 	 	the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;	
 
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 	Ÿ 	 	the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Company;	
 
 	Ÿ 	 	whether the shares of the series will be convertible into shares of any other class or series, or any other security, of the Company or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;	
 
 	Ÿ 	 	restrictions on the issuance of shares of the same series or of any other class or series; and	
 
 	Ÿ 	 	the voting rights, if any, of the holders of the series.	
We could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of our common stock might believe to be in their best interests or in which the holders of our common stock might receive a premium for your common stock over the market price of the common stock. Additionally, the issuance of preferred stock may adversely affect the holders of our common stock by restricting dividends on the common stock, diluting the voting power of the common stock or subordinating the liquidation rights of the common stock. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock.
Dividends
The DGCL permits a corporation to declare and pay dividends out of “surplus” or, if there is no “surplus,” out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. “Surplus” is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by the Board of Directors. The capital of the corporation is typically calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assets equals the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of net profits if, after the payment of the dividend, remaining capital would be less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.
Declaration and payment of any dividend will be subject to the discretion of our Board of Directors. The time and amount of dividends will be dependent upon our financial condition, operations, cash requirements and availability, debt repayment obligations, capital expenditure needs and restrictions in our debt instruments, industry trends, the provisions of Delaware law affecting the payment of distributions to stockholders and any other factors our Board of Directors may consider relevant.
We intend to pay cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant. Our ability to pay dividends on our common stock is limited by the covenants of our Senior Secured Credit Facilities and the indenture governing the Senior Notes and may be further restricted by the terms of any future debt or preferred securities. See “Dividend Policy” and “Description of Indebtedness.”
Annual Stockholder Meetings
Our amended and restated certificate of incorporation and our amended and restated bylaws provide that annual stockholder meetings will be held at a date, time and place, if any, as exclusively selected by our Board of Directors. To the extent permitted under applicable law, we may conduct meetings by remote communications, including by webcast.
 
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Anti-Takeover Effects of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law
Our amended and restated certificate of incorporation, amended and restated bylaws and the DGCL, which are summarized in the following paragraphs, contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of our Board of Directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile change of control and enhance the ability of our Board of Directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of the Company by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of common stock held by stockholders.
Authorized but Unissued Capital Stock
Delaware law does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of the NYSE, which would apply if and so long as our common stock remains listed on the NYSE, require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of common stock. Additional shares that may be used in the future may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.
Our Board of Directors may generally issue preferred shares on terms calculated to discourage, delay or prevent a change of control of the Company or the removal of our management. Moreover, our authorized but unissued shares of preferred stock will be available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, to facilitate acquisitions and employee benefit plans.
One of the effects of the existence of unissued and unreserved common stock or preferred stock may be to enable our Board of Directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.
Classified Board of Directors
Our amended and restated certificate of incorporation provides that our Board of Directors will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors serving three-year terms. As a result, approximately one-third of our Board of Directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our Board of Directors. Our amended and restated certificate of incorporation and amended and restated bylaws provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by the Board of Directors.
 
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Business Combinations
We have opted out of Section 203 of the DGCL; however, our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:
 
 	Ÿ 	 	prior to such time, our Board of Directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;	
 
 	Ÿ 	 	upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or	
 
 	Ÿ 	 	at or subsequent to that time, the business combination is approved by our Board of Directors and by the affirmative vote of holders of at least 66  2 / 3 % of our outstanding voting stock that is not owned by the interested stockholder.	
Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our outstanding voting stock. For purposes of this section only, “voting stock” has the meaning given to it in Section 203 of the DGCL.
Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with the Company for a three-year period. This provision may encourage companies interested in acquiring the Company to negotiate in advance with our Board of Directors because the stockholder approval requirement would be avoided if our Board of Directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our Board of Directors and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.
Our amended and restated certificate of incorporation provides that Blackstone and its affiliates, and any of their respective direct or indirect transferees and any group as to which such persons are a party, do not constitute “interested stockholders” for purposes of this provision.
Removal of Directors; Vacancies
Under the DGCL, unless otherwise provided in our amended and restated certificate of incorporation, directors serving on a classified board may be removed by the stockholders only for cause. Our amended and restated certificate of incorporation provides that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class; provided, however, at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors, directors may only be removed for cause, and only by the affirmative vote of holders of at least 66  2 / 3 % in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class. In addition, our amended and restated certificate of incorporation also provides that, subject to the rights granted to one or more series of preferred stock then outstanding or the rights granted under the stockholders agreement with affiliates of Blackstone, any vacancies on our Board of Directors will be filled only by the affirmative vote of a majority of the remaining directors, even if less than a quorum, by a sole remaining director or by the stockholders; provided, however, at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors,
 
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any newly created directorship on the Board of Directors that results from an increase in the number of directors and any vacancy occurring in the Board of Directors shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director (and not by the stockholders).
No Cumulative Voting
Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our amended and restated certificate of incorporation does not authorize cumulative voting. Therefore, stockholders holding a majority in voting power of the shares of our stock entitled to vote generally in the election of directors will be able to elect all our directors.
Special Stockholder Meetings
Our amended and restated certificate of incorporation provides that special meetings of our stockholders may be called at any time only by or at the direction of the Board of Directors or the chairman of the Board of Directors; provided, however, at any time when Blackstone and its affiliates beneficially own, in the aggregate, at least 40% in voting power of the stock of the Company entitled to vote generally in the election of directors, special meetings of our stockholders shall also be called by the Board of Directors or the chairman of the Board of Directors at the request of Blackstone and its affiliates. Our amended and restated bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of the Company.
Requirements for Advance Notification of Director Nominations and Stockholder Proposals
Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the Board of Directors or a committee of the Board of Directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our amended and restated bylaws also specify requirements as to the form and content of a stockholder’s notice. Our amended and restated bylaws allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions will not apply to Blackstone and its affiliates so long as the stockholders agreement remains in effect. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of the Company.
Stockholder Action by Written Consent
Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation will preclude stockholder action by written consent at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors.
 
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Supermajority Provisions
Our amended and restated certificate of incorporation and amended and restated bylaws will provide that the Board of Directors is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, our bylaws without a stockholder vote in any matter not inconsistent with the laws of the State of Delaware and our amended and restated certificate of incorporation. For as long as Blackstone and its affiliates beneficially own, in the aggregate, at least 40% in voting power of the stock of the Company entitled to vote generally in the election of directors, any amendment, alteration, recission or repeal of our bylaws by our stockholders will require the affirmative vote of a majority in voting power of the outstanding shares of our stock present in person or represented by proxy at the meeting of stockholders and entitled to vote on such amendment, alteration, change, addition, recission or repeal. At any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 40% in voting power of all outstanding shares of the stock of the Company entitled to vote generally in the election of directors, any amendment, alteration, recission or repeal of our bylaws by our stockholders will require the affirmative vote of the holders of at least 66  2 / 3 % in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class.
The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of incorporation, unless the certificate of incorporation requires a greater percentage.
Our amended and restated certificate of incorporation provides that at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors, the following provisions in our amended and restated certificate of incorporation may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 66  2 / 3 % in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class:
 
 	Ÿ 	 	the provision requiring a 66  2 / 3 % supermajority vote for stockholders to amend our amended and restated bylaws;	
 
 	Ÿ 	 	the provisions providing for a classified Board of Directors (the election and term of our directors);	
 
 	Ÿ 	 	the provisions regarding resignation and removal of directors;	
 
 	Ÿ 	 	the provisions regarding competition and corporate opportunities;	
 
 	Ÿ 	 	the provisions regarding entering into business combinations with interested stockholders;	
 
 	Ÿ 	 	the provisions regarding stockholder action by written consent;	
 
 	Ÿ 	 	the provisions regarding calling special meetings of stockholders;	
 
 	Ÿ 	 	the provisions regarding filling vacancies on our Board of Directors and newly created directorships;	
 
 	Ÿ 	 	the provisions eliminating monetary damages for breaches of fiduciary duty by a director; and	
 
 	Ÿ 	 	the amendment provision requiring that the above provisions be amended only with a 66  2 / 3 % supermajority vote.	
The combination of the classification of our Board of Directors, the lack of cumulative voting and the supermajority voting requirements will make it more difficult for our existing stockholders to replace our Board of Directors as well as for another party to obtain control of us by replacing our Board of Directors. Because our Board of Directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management.
 
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These provisions may have the effect of deterring hostile takeovers or delaying or preventing changes in control of our management or the Company, such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of our Board of Directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of the Company. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions are also intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts.
Dissenters’ Rights of Appraisal and Payment
Under the DGCL, with certain exceptions, our stockholders will have appraisal rights in connection with a merger or consolidation of us. Pursuant to the DGCL, stockholders who properly request and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.
Stockholders’ Derivative Actions
Under the DGCL, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law.
Exclusive Forum
Our amended and restated certificate of incorporation will provide that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf, to the fullest extent permitted by law, of the Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director or officer of the Company to the Company or the Company’s stockholders, creditors or other constituents, (iii) action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or our amended and restated bylaws, or (iv) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.
Conflicts of Interest
Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our amended and restated certificate of incorporation will, to the maximum extent permitted from time to time by Delaware law, renounce any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to our officers, directors or stockholders or their respective affiliates, other than those officers, directors, stockholders or affiliates who are our or our subsidiaries’ employees. Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, none of Blackstone or any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have
 
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any duty to refrain from (i) engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates now engage or propose to engage or (ii) otherwise competing with us or our affiliates. In addition, to the fullest extent permitted by law, in the event that Blackstone or any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or its or his affiliates or for us or our affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and they may take any such opportunity for themselves or offer it to another person or entity. Our amended and restated certificate of incorporation will not renounce our interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of the Company. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for us unless we would be permitted, to undertake the opportunity under our amended and restated certificate of incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business.
Limitations on Liability and Indemnification of Officers and Directors
The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. Our amended and restated certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.
Our amended and restated bylaws provide that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We also are expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance are useful to attract and retain qualified directors and executive officers.
The limitation of liability, indemnification and advancement provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
We currently are party to indemnification agreements with certain of our directors and officers. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.
 
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Transfer Agent and Registrar
The transfer agent and registrar for our common stock is             .
Listing
We intend to apply to list our common stock on the NYSE under the symbol “SEAS.”
 
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 SHARES ELIGIBLE FOR FUTURE SALE
General
Prior to this offering, there has not been a public market for our common stock, and we cannot predict what effect, if any, market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of common stock, including shares issued upon the exercise of outstanding options, in the public market, or the perception that such sales could occur, could materially and adversely affect the market price of our common stock and could impair our future ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate. See “Risk Factors—Risks Related to this Offering and Ownership of Our Common Stock—Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline.”
Upon the consummation of this offering, we will have              shares of common stock outstanding, or             shares, if the underwriters exercise in full their option to purchase additional shares. Of these shares, only              shares of common stock sold in this offering by us will be freely tradable without registration under the Securities Act and without restriction by persons other than our “affiliates” (as defined under Rule 144). The              shares of common stock held by the Partnerships after this offering will be “restricted” securities under the meaning of Rule 144 and may not be sold in the absence of registration under the Securities Act, unless an exemption from registration is available, including the exemptions pursuant to Rule 144 under the Securities Act.
The restricted shares held by our affiliates will be available for sale in the public market as follows:
 
 	Ÿ 	 	             shares will be eligible for sale at various times after the date of this prospectus pursuant to Rule 144; and	
 
 	Ÿ 	 	             shares subject to the lock-up agreements described below will be eligible for sale at various times beginning 180 days after the date of this prospectus pursuant to Rule 144.	
Rule 144
In general, under Rule 144, as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to be or have been one of our affiliates for purposes of the Securities Act at any time during 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell such shares without registration, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of a prior owner other than an affiliate, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.
In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates, who have met the six month holding period for beneficial ownership of “restricted shares” of our common stock, are entitled to sell within any three-month period, a number of shares that does not exceed the greater of:
 
 	Ÿ 	 	1% of the number of shares of our common stock then outstanding, which will equal approximately              shares immediately after this offering; or	
 
 	Ÿ 	 	the average reported weekly trading volume of our common stock on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.	
 
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Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. The sale of these shares, or the perception that sales will be made, could adversely affect the price of our common stock after this offering because a great supply of shares would be, or would be perceived to be, available for sale in the public market.
Lock-Up Agreements
In connection with this offering, we, our officers, directors, and holders of substantially all of our common stock, including the selling stockholders, have agreed with the underwriters, subject to certain exceptions, not to sell, dispose of or hedge any shares of our common stock or securities convertible into or exchangeable for shares of common stock during the period ending 180 days after the date of this prospectus, except with the prior written consent of the representatives of the underwriters.
The 180-day restricted period described in the preceding paragraph will be automatically extended if:
 
 	Ÿ 	 	during the last 17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event; or	
 
 	Ÿ 	 	prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period,	
in which case the restrictions described in this paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event. See “Underwriting (Conflicts of Interest).”
Registration Rights
Pursuant to a registration rights agreement, we have granted the Partnerships and certain equity holders of the Partnerships the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our common stock held by them. Following completion of this offering, the shares covered by registration rights would represent approximately     % of our outstanding common stock (or     %, if the underwriters exercise in full their option to purchase additional shares). These shares also may be sold under Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of shares held by persons deemed to be our affiliates. For a description of rights the Partnerships and certain equity holders of the Partnerships have to require us to register the shares of common stock they own, see “Certain Relationships and Related Party Transactions—Registration Rights Agreement.”
 
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 MATERIAL UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following is a summary of the material United States federal income and estate tax consequences to a non-U.S. holder (as defined below) of the purchase, ownership and disposition of our common stock issued pursuant to this offering as of the date hereof. Except where noted, this summary deals only with common stock that is held as a capital asset.
A “non-U.S. holder” means a person (other than a partnership) that is not for United States federal income tax purposes any of the following:
 
 	Ÿ 	 	an individual citizen or resident of the United States;	
 
 	Ÿ 	 	a corporation (or any other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;	
 
 	Ÿ 	 	an estate the income of which is subject to United States federal income taxation regardless of its source; or	
 
 	Ÿ 	 	a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.	
This summary is based upon provisions of the Code and regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of United States federal income and estate taxes and does not deal with foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their particular circumstances. In addition, it does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws (including if you are a United States expatriate, “controlled foreign corporation,” “passive foreign investment company,” a person who holds or receives our common stock pursuant to the exercise of any employee stock option or otherwise as compensation or a partnership or other pass-through entity for United States federal income tax purposes). We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary.
If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, you should consult your tax advisors.
If you are considering the purchase of our common stock, you should consult your own tax advisors concerning the particular United States federal income and estate tax consequences to you of the ownership of the common stock, as well as the consequences to you arising under the laws of any other taxing jurisdiction.
Dividends
Distributions on our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s adjusted tax basis in the common stock, but not below zero. Any remaining excess will be treated as capital gain subject to the rules discussed under “—Gain on Disposition of Common Stock.”
 
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Dividends paid to a non-U.S. holder of our common stock generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if required by an applicable income tax treaty, are attributable to a United States permanent establishment) are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to United States federal income tax on a net income basis in the same manner as if the non-U.S. holder were a United States person as defined under the Code. Any such effectively connected dividends received by a foreign corporation may be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
A non-U.S. holder of our common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required (a) to complete Internal Revenue Service Form W-8BEN (or other applicable form) and certify under penalty of perjury that such holder is not a United States person as defined under the Code and is eligible for treaty benefits or (b) if our common stock is held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable United States Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals.
A non-U.S. holder of our common stock eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the Internal Revenue Service.
Gain on Disposition of Common Stock
Any gain realized on the disposition of our common stock generally will not be subject to United States federal income tax unless:
 
 	Ÿ 	 	the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment of the non-U.S. holder);	
 
 	Ÿ 	 	the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or	
 
 	Ÿ 	 	we are or have been a “United States real property holding corporation” for United States federal income tax purposes at any time during the shorter of the five-year period ending on the date of the disposition or such non-U.S. holder’s holding period for our common stock.	
An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the sale under regular graduated United States federal income tax rates. If a non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by United States source capital losses (even though the individual is not considered a resident of the United States) provided such a non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
We believe that we are currently a “United States real property holding corporation” for United States federal income tax purposes. So long as our common stock continues to be regularly traded on
 
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an established securities market, only a non-U.S. holder who holds or held (at any time during the shorter of the five year period preceding the date of disposition or the holder’s holding period) more than 5% of our common stock will be subject to United States federal income tax on the disposition of our common stock.
Federal Estate Tax
Common stock held by an individual non-U.S. holder at the time of death will be included in such holder’s gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding
We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty.
A non-U.S. holder will be subject to backup withholding for dividends paid to such holder unless such holder certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a United States person as defined under the Code), or such holder otherwise establishes an exemption.
Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our common stock within the United States or conducted through certain United States-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code), or such owner otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s United States federal income tax liability provided the required information is timely furnished to the Internal Revenue Service.
Additional Withholding Requirements
Under recently enacted legislation, proposed Treasury Regulations and recent administrative guidance, the relevant withholding agent may be required to withhold 30% of any dividends paid after December 31, 2013 and the proceeds of a sale of our common stock occurring after December 31, 2016 paid to (i) a foreign financial institution unless such foreign financial institution agrees to verify, report and disclose its U.S. accountholders and meets certain other specified requirements or (ii) a non-financial foreign entity that is the beneficial owner of the payment unless such entity certifies that it does not have any substantial United States owners or provides the name, address and taxpayer identification number of each substantial United States owner and such entity meets certain other specified requirements. The proposed Treasury Regulations will not be effective unless and until they are issued in final form. Prospective investors should consult their tax advisors regarding these withholding provisions.
 
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New Tax on Investment Income
Recent legislation would require certain taxpayers to pay a 3.8% tax on, among other things, dividends on and capital gains from the sale or other disposition of our common stock for taxable years beginning after December 31, 2012, but exempts from such tax non-resident alien individuals. Newly published proposed regulations, upon which, by their terms, taxpayers may rely until final regulations are promulgated, exempt from the tax non-U.S. trusts and estates all of whose beneficiaries are non-U.S. persons. Such proposed regulations reserve on the treatment of non-U.S. trusts and estates with U.S. beneficiaries. Prospective investors should consult their tax advisors regarding the tax consequences of the new legislation and the proposed regulations on the ownership and disposition of our common stock.
 
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 UNDERWRITING (CONFLICTS OF INTEREST)
We, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and J.P. Morgan Securities LLC are the representatives of the underwriters.

Underwriters	  	Number of Shares	
Goldman, Sachs & Co.	  		
J.P. Morgan Securities LLC	  		
Citigroup Global Markets Inc.	  		
Merrill Lynch, Pierce, Fenner & Smith
                   Incorporated	  		
Barclays Capital Inc.	  		
Wells Fargo Securities, LLC	  		
	  	 	
Total	  		
	  	 	
The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.
The underwriters have an option to buy up to an additional              shares from the selling stockholders to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase              additional shares.
Paid by Us

 	  	No Exercise	 	  	Full Exercise	 	
Per Share	  	$	            	  	  	$	            	  	
Total	  	$	 	  	  	$	 	  	
Paid by the Selling Stockholders

 	  	No Exercise	 	  	Full Exercise	 	
Per Share	  	$	            	  	  	$	            	  	
Total	  	$	 	  	  	$	 	  	
Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $         per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
We and our officers, directors, and holders of substantially all of our common stock, including the selling stockholders, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of
 
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common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.
The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period, we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release of the announcement of the material news or material event.
Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.
We intend to apply for the common stock on the NYSE under the symbol “SEAS.”
In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the NYSE, in the over-the-counter market or otherwise.
 
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In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, no offer of shares may be made to the public in that Relevant Member State other than:
(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b) to fewer than 100, or, if the Relevant Member State has implemented the relevant portion of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representative;
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares shall require the Company or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
Each underwriter has represented and agreed that:
 
 	(a)	it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and	
 
 	(b)	it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.	
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or
 
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distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.
The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
We estimate that the underwriters’ share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $        .
We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.
Conflicts of Interest
Affiliates of Goldman, Sachs & Co. hold $300.0 million in aggregate principal amount of the Senior Notes. As described under “Use of Proceeds,” a portion of the net proceeds from this offering will be used to redeem $             million in aggregate principal amount of the Senior Notes and such affiliates of Goldman, Sachs & Co. will receive their pro rata share of such redemption amount. Affiliates of Goldman, Sachs & Co. also own Class A Units and Class B Units in certain of the Partnerships that collectively own 100% of our common stock and such affiliates will receive a portion of the net proceeds to the selling stockholders. Because Goldman, Sachs & Co. is an underwriter in this offering and its affiliates are expected to receive more than 5% of the net proceeds of this offering due to the redemption and the proceeds to the selling stockholders, Goldman, Sachs & Co. is deemed to have a “conflict of interest” under FINRA Rule 5121. Accordingly, this offering will be conducted in accordance with Rule 5121, which requires, among other things, that a “qualified independent underwriter” has participated in the preparation of, and has exercised the usual standards of “due diligence” with respect to, the registration statement and this prospectus. Citigroup Global Markets Inc. has agreed to act as qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 of the Securities Act. Citigroup Global Markets Inc. will not receive any additional fees for serving as qualified independent underwriter in connection with this offering. We have agreed
 
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to indemnify Citigroup Global Markets Inc. against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act. Pursuant to Rule 5121, Goldman, Sachs & Co. will not confirm any sales to any account over which it exercises discretionary authority without the specific written approval of the account holder. See “Use of Proceeds” and “Certain Relationships and Related Party Transactions” for additional information.
Discretionary Sales
The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of shares offered by them.
Other Relationships
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and expenses. In particular, affiliates of each of Goldman, Sachs & Co., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc. are lenders under our Senior Secured Credit Facilities and have received and will receive fees from us.
In connection with their investments in the Senior Notes, affiliates of Goldman, Sachs & Co. have certain information rights, including the right to receive monthly updates on our financial and operational performance and copies of certain materials provided to our Board of Directors.
In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to our assets, securities and/or instruments (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
 
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 LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus will be passed upon for us by Simpson Thacher & Bartlett LLP, New York, New York. Certain legal matters relating to this offering will be passed upon for the underwriters by Latham & Watkins LLP, New York, New York. An investment vehicle comprised of selected partners of Simpson Thacher & Bartlett LLP, members of their families, related persons and others owns an interest representing less than 1% of the capital commitments of funds affiliated with The Blackstone Group L.P.
 EXPERTS
The financial statements of the Company as of December 31, 2011 and 2010, for each of the two years in the period ended December 31, 2011 and the one month period ended December 31, 2009, and the related financial statement schedule included elsewhere in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements and financial statement schedule have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
 WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered by this prospectus. This prospectus is a part of the registration statement and does not contain all of the information set forth in the registration statement and its exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information about us and our common stock, you should refer to the registration statement and its exhibits and schedules. Although we believe we summarized all material terms of the contracts, agreements or other documents referred to herein, statements in this prospectus about the contents of any contract, agreement or other document are not necessarily complete and in each instance that a copy of such contract, agreement or document has been filed as an exhibit to the registration statement, we refer you to the copy that we have filed as an exhibit.
We will file annual, quarterly and special reports and other information with the SEC. Our filings with the SEC will be available to the public on the SEC’s website at http://www.sec.gov . Those filings will also be available to the public on, or accessible through, our corporate website under the heading              at             . The information we file with the SEC or contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read and copy, at SEC prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of which this prospectus is a part, at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington D.C. 20549. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.
We intend to make available to our common stockholders annual reports containing consolidated financial statements audited by an independent registered public accounting firm.
 
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 INDEX TO FINANCIAL STATEMENTS

 	  	Page
Number	 	
Audited Consolidated Financial Statements as of December 31, 2011 and 2010 and for the years ended December 31, 2011 and 2010 and the one month period ended December 31, 2009	  				
Report of Independent Registered Public Accounting Firm	  	 	F-2  	  	
Consolidated Balance Sheets	  	 	F-3  	  	
Consolidated Statements of Operations and Comprehensive Income (Loss)	  	 	F-4  	  	
Consolidated Statements of Changes in Stockholders’ Equity	  	 	F-5  	  	
Consolidated Statements of Cash Flows	  	 	F-6  	  	
Notes to the Consolidated Financial Statements	  	 	F-7  	  	
Schedule I—Registrant’s Condensed Financial Statements	  	 	F-24	  	
		
Unaudited Condensed Consolidated Financial Statements as of September 30, 2012 and December 31, 2011 and for the nine months ended September 30, 2012 and 2011	  				
Condensed Consolidated Balance Sheets	  	 	F-28	  	
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	  	 	F-29	  	
Condensed Consolidated Statements of Changes in Stockholders’ Equity	  	 	F-30	  	
Condensed Consolidated Statements of Cash Flows	  	 	F-31	  	
Notes to the Condensed Consolidated Financial Statements	  	 	F-32	  	
 
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
SeaWorld Entertainment, Inc.
Orlando, Florida
We have audited the accompanying consolidated balance sheets of SeaWorld Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2011 and for the one month period ended December 31, 2009. Our audits also included the financial statement schedule listed in the Index at Page F-1. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion . An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of SeaWorld Entertainment, Inc. and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2011 and for the one month period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Certified Public Accountants
Tampa, Florida
December 26, 2012
 
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Table of Contents
 SeaWorld Entertainment, Inc. and Subsidiaries
Consolidated Balance Sheets
as of December 31, 2011 and 2010
(In thousands, except share and per share amounts)

 	  	2011	 	 	2010	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	66,663	  	 	$	123,697	  	
Accounts receivable—net	  	 	45,980	  	 	 	54,927	  	
Inventories	  	 	32,431	  	 	 	28,342	  	
Prepaid expenses and other current assets	  	 	12,252	  	 	 	9,775	  	
Deferred tax assets, net	  	 	9,529	  	 	 	1,744	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	166,855	  	 	 	218,485	  	
Property and equipment, net	  	 	1,747,878	  	 	 	1,742,789	  	
Goodwill	  	 	335,610	  	 	 	335,610	  	
Trade names, net	  	 	165,709	  	 	 	166,808	  	
Other intangible assets, net	  	 	33,837	  	 	 	37,056	  	
Deferred tax assets, net	  	 	52,566	  	 	 	72,547	  	
Other assets	  	 	44,640	  	 	 	47,986	  	
	  	 	 	 	 	 	 	 	
Total	  	$	2,547,095	  	 	$	2,621,281	  	
	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	104,915	  	 	$	104,389	  	
Current maturities on long-term debt	  	 	52,500	  	 	 	10,500	  	
Accrued salaries and wages	  	 	32,189	  	 	 	25,675	  	
Deferred revenue	  	 	82,233	  	 	 	84,136	  	
Other accrued expenses	  	 	8,399	  	 	 	7,213	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	280,236	  	 	 	231,913	  	
Long-term debt	  	 	1,365,387	  	 	 	1,400,029	  	
Other liabilities	  	 	29,005	  	 	 	39,544	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	1,674,628	  	 	 	1,671,486	  	
	  	 	 	 	 	 	 	 	
Commitments and contingencies (Note 13)	  				 				
Stockholders’ Equity:	  				 				
Common stock, $0.01 par value—authorized, 12,000,000 shares; issued and outstanding, 10,302,351 shares in 2011 and 10,100,000 in 2010	  	 	103	  	 	 	101	  	
Additional paid-in capital	  	 	956,456	  	 	 	1,052,899	  	
Accumulated deficit	  	 	(84,092	) 	 	 	(103,205	) 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	872,467	  	 	 	949,795	  	
	  	 	 	 	 	 	 	 	
Total	  	$	2,547,095	  	 	$	2,621,281	  	
	  	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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 SeaWorld Entertainment, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
for the Years Ended December 31, 2011 and 2010 and the One Month Period Ended December 31, 2009 
(In thousands, except per share amounts)

 	  	Year Ended
December 31,
2011	 	 	Year Ended
December 31,
2010	 	 	One Month
Period Ended
December 31,
2009	 	
Net revenues:	  				 				 				
Admissions	  	$	824,937	  	 	$	730,368	  	 	$	45,060	  	
Food, merchandise and other	  	 	505,837	  	 	 	465,735	  	 	 	27,918	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	1,330,774	  	 	 	1,196,103	  	 	 	72,978	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Costs and expenses:	  				 				 				
Cost of food, merchandise and other revenues	  	 	112,498	  	 	 	97,871	  	 	 	5,472	  	
Operating expenses	  	 	687,999	  	 	 	673,829	  	 	 	51,957	  	
Selling, general and administrative	  	 	172,368	  	 	 	159,506	  	 	 	11,544	  	
Depreciation and amortization	  	 	213,592	  	 	 	207,156	  	 	 	17,973	  	
Acquisition-related expenses	  	 	—  	  	 	 	—  	  	 	 	67,966	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	  	 	1,186,457	  	 	 	1,138,362	  	 	 	154,912	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income (loss)	  	 	144,317	  	 	 	57,741	  	 	 	(81,934	) 	
Other (expense) income, net	  	 	(1,679	) 	 	 	1,937	  	 	 	30	  	
Interest expense	  	 	110,097	  	 	 	134,383	  	 	 	11,501	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	  	 	32,541	  	 	 	(74,705	) 	 	 	(93,405	) 	
Provision for (benefit from) income taxes	  	 	13,428	  	 	 	(29,241	) 	 	 	(35,664	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss)	  	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings per share:	  				 				 				
Weighted average common shares outstanding	  	 	10,174	  	 	 	10,100	  	 	 	10,100	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) per share	  	$	1.88	  	 	$	(4.50	) 	 	$	(5.72	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share:	  				 				 				
Weighted average common shares outstanding	  	 	10,253	  	 	 	10,100	  	 	 	10,100	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) per share	  	$	1.86	  	 	$	(4.50	) 	 	$	(5.72	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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 SeaWorld Entertainment, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
for the Years Ended December 31, 2011 and 2010
and for the One Month Period Ended December 31, 2009
(In thousands, except share amounts)

 	 	Shares of
Common Stock	 	 	Common
Stock	 	 	Additional
Paid—In
Capital	 	 	Accumulated
Deficit	 	 	Total
Stockholders’
Equity	 	
Balance—December 1, 2009	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Issuance of common stock	 	 	10,100,000	  	 	$	101	  	 	$	1,009,899	  	 	 	—  	  	 	$	1,010,000	  	
Contributed capital—purchase price (Note 4)	 	 	—  	  	 	 	—  	  	 	$	38,000	  	 	 	—  	  	 	 	38,000	  	
Contributed capital—issuance of warrants (Note 11)	 	 	—  	  	 	 	—  	  	 	$	5,000	  	 	 	—  	  	 	 	5,000	  	
Net loss	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	$	(57,741	) 	 	 	(57,741	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance—December 31, 2009	 	 	10,100,000	  	 	 	101	  	 	 	1,052,899	  	 	 	(57,741	) 	 	 	995,259	  	
Net loss	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(45,464	) 	 	 	(45,464	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance—December 31, 2010	 	 	10,100,000	  	 	 	101	  	 	 	1,052,899	  	 	 	(103,205	) 	 	 	949,795	  	
Issuance of common stock	 	 	130,240	  	 	 	2	  	 	 	12,834	  	 	 	—  	  	 	 	12,836	  	
Equity-based compensation	 	 	72,111	  	 	 	—  	  	 	 	823	  	 	 	—  	  	 	 	823	  	
Dividend declared to stockholders	 	 	—  	  	 	 	—  	  	 	 	(110,100	) 	 	 	—  	  	 	 	(110,100	) 	
Net income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	19,113	  	 	 	19,113	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance—December 31, 2011	 	 	10,302,351	  	 	$	103	  	 	$	956,456	  	 	$	(84,092	) 	 	$	872,467	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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 SeaWorld Entertainment, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
for the Years Ended December 31, 2011 and 2010 and the One Month Period Ended December 31, 2009 
(In thousands)

 	  	2011	 	 	2010	 	 	One Month
Period Ended
December 31,
2009	 	
Cash Flows From Operating Activities:	  				 				 				
Net income (loss)	  	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	  				 				 				
Depreciation and amortization	  	 	213,592	  	 	 	220,695	  	 	 	17,973	  	
Amortization of debt issuance costs and discounts	  	 	18,446	  	 	 	20,814	  	 	 	1,706	  	
Loss on disposal of property and equipment	  	 	11,346	  	 	 	9,060	  	 	 	—  	  	
Deferred income tax provision (benefit)	  	 	12,197	  	 	 	(29,241	) 	 	 	(35,664	) 	
Equity-based compensation	  	 	823	  	 	 	—  	  	 	 	—  	  	
Changes in assets and liabilities:	  				 				 				
Accounts receivable	  	 	11,574	  	 	 	14,710	  	 	 	3,244	  	
Inventories	  	 	(4,089	) 	 	 	2,372	  	 	 	(37	) 	
Prepaid expenses and other current assets	  	 	(3,711	) 	 	 	1,038	  	 	 	(11,082	) 	
Accounts payable	  	 	(6,223	) 	 	 	(26,684	) 	 	 	35,115	  	
Accrued salaries and wages	  	 	6,514	  	 	 	14,778	  	 	 	3,232	  	
Deferred revenue	  	 	(13,983	) 	 	 	21,057	  	 	 	78	  	
Other accrued expenses	  	 	1,186	  	 	 	(5,879	) 	 	 	10,551	  	
Other assets and liabilities	  	 	1,464	  	 	 	5,025	  	 	 	761	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities	  	 	268,249	  	 	 	202,281	  	 	 	(31,864	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash Flows From Investing Activities:	  				 				 				
Purchase of Busch Entertainment LLC, net of cash acquired	  	 	—  	  	 	 	—  	  	 	 	(2,282,351	) 	
Capital expenditures	  	 	(225,316	) 	 	 	(120,196	) 	 	 	(3,149	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(225,316	) 	 	 	(120,196	) 	 	 	(2,285,500	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash Flows From Financing Activities:	  				 				 				
Repayment of long-term debt	  	 	(586,248	) 	 	 	(20,500	) 	 	 	—  	  	
Proceeds from the issuance of long-term debt	  	 	550,291	  	 	 	—  	  	 	 	1,426,050	  	
Net proceeds from issuance of common stock	  	 	12,836	  	 	 	—  	  	 	 	1,010,000	  	
Draw on revolving credit facility	  	 	36,000	  	 	 	—  	  	 	 	—  	  	
Dividend paid to stockholders	  	 	(106,920	) 	 	 	—  	  	 	 	—  	  	
Debt issuance costs	  	 	(5,926	) 	 	 	—  	  	 	 	(56,574	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in) provided by financing activities	  	 	(99,967	) 	 	 	(20,500	) 	 	 	2,379,476	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Change in Cash and Cash Equivalents	  	 	(57,034	) 	 	 	61,585	  	 	 	62,112	  	
Cash and Cash Equivalents—Beginning of year	  	 	123,697	  	 	 	62,112	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and Cash Equivalents—End of year	  	$	66,663	  	 	$	123,697	  	 	$	62,112	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Supplemental Disclosures of Noncash Investing and Financing Activities:	  				 				 				
Warrants and original issuance discounts issued in conjunction with the Senior Notes	  	$	—  	  	 	$	—  	  	 	$	38,950	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Contributed capital	  	$	—  	  	 	$	—  	  	 	$	38,000	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Dividends declared, but unpaid	  	$	3,180	  	 	$	—  	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Capital expenditures in accounts payable	  	$	28,441	  	 	$	24,872	  	 	$	7,758	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Debt financing fees in accounts payable	  	$	—  	  	 	$	—  	  	 	$	6,007	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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 SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND DECEMBER 31, 2010, AND THE
ONE MONTH PERIOD ENDED DECEMBER 31, 2009
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. DESCRIPTION OF THE BUSINESS
SeaWorld Entertainment, Inc. (f/k/a SW Holdco, Inc.) through its wholly-owned subsidiary SeaWorld Parks & Entertainment, Inc. (“SEA”) (collectively, the “Company”), owns and operates ten theme parks within the United States. The Company is owned by ten limited partnerships (the “Partnerships”), owned by affiliates of The Blackstone Group L.P. (“Blackstone”) and certain co-investors.
Prior to December 1, 2009, the Company did not have any operations. On December 1, 2009, the Company acquired all of the outstanding equity interests of Busch Entertainment LLC and affiliates (the “Predecessor”) from Anheuser-Busch Companies, Inc. and Anheuser-Busch InBev SA/NV (“A-B/InBev”). See Note 4.
The Company operates SeaWorld theme parks in Orlando, Florida; San Antonio, Texas; and San Diego, California, and Busch Gardens theme parks in Tampa, Florida, and Williamsburg, Virginia. The Company operates water park attractions in Orlando, Florida (Aquatica); Tampa, Florida (Adventure Island), and Williamsburg, Virginia (Water Country USA). The Company also operates a reservations-only attraction offering interaction with marine animals (Discovery Cove) and a seasonal park in Langhorne, Pennsylvania (Sesame Place).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation —The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of the Company beginning with the commencement of operations on December 1, 2009, as described in Note 1. All intercompany accounts have been eliminated in consolidation.
Use of Estimates —The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, revenues and expenses, and disclosure of contingencies during the reporting period. Significant estimates and assumptions include the accounting for self-insurance, deferred tax assets, deferred revenue, and valuation of goodwill and other indefinite-lived intangible assets. Actual results could differ from those estimates.
Cash and Cash Equivalents —Cash and cash equivalents include cash held at financial institutions as well as operating cash on-site at each theme park to fund daily operations and amounts due from third-party credit card companies. The cash balances in non-interest bearing accounts held at financial institutions are fully insured by the Federal Deposit Insurance Corporation (“FDIC”) through December 31, 2012. Interest bearing accounts are insured up to $250. At times, cash balances may exceed federally insured amounts and potentially subject the Company to a concentration of credit risk. Management believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions.
Accounts Receivable — Net —Accounts receivable are reported at net realizable value and consist primarily of amounts due from customers for the sale of admission products. The Company is not exposed to a significant concentration of credit risk. The Company does record an allowance for
 
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estimated uncollectible receivables, based on the amount and status of past-due accounts, contractual terms of the receivables, and the Company’s history of uncollectible accounts. For all periods presented, the allowance for uncollectible accounts and the related provision were insignificant.
Inventories —Inventories are stated at the lower of cost or market value with the cost being determined by the weighted average cost method. Inventories consist primarily of products for resale, including merchandise, culinary items, and miscellaneous supplies. Obsolete or excess inventories are recorded at their estimated realizable value.
Property and Equipment — Net —Property and equipment are recorded at cost; the cost of routine maintenance, repairs, spare parts and minor renewals is expensed as incurred. Internal development costs associated with rides and equipment are capitalized after feasibility studies have been completed and substantially all product development is complete. The cost of the assets is depreciated using the straight-line method based on the following estimated useful lives:

Land improvements	  	 	10–40 years	  	
Buildings	  	 	5–40 years	  	
Rides and equipment	  	 	3–15 years	  	
Animals	  	 	1–40 years	  	
Material costs to purchase animals exhibited in the theme parks are capitalized and amortized over their estimated remaining productive lives (1-40 years). In-house animal breeding costs are expensed as they are incurred since they are insignificant to the consolidated financial statements. All costs (including training) to maintain the animals after they are placed into service at the parks are expensed as incurred.
Construction in process assets consist primarily of rides and other attractions that are under construction and have not yet been placed in service. These assets are stated at cost and are not depreciated. Once construction of assets is completed and the assets are placed into service, assets are reclassified to the appropriate asset class based on their nature and depreciated in accordance with the useful lives above. Interest is capitalized on major construction projects. Total interest capitalized for the years ended December 31, 2011 and 2010, was $5,600 and $2,394, respectively.
Computer System Development Costs —The Company capitalizes computer system development costs that meet established criteria and amortizes those costs to expense on a straight-line basis over five years. The capitalized costs related to the computer system development costs were $2,009 and $661 for the years ended December 31, 2011 and 2010, respectively, and are recorded in other assets in the accompanying consolidated balance sheets. Computer system development costs not meeting the proper criteria for capitalization, including systems reengineering costs, are expensed as incurred.
Impairment of Long-Lived Assets —All long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset.
The measurement of the impairment loss to be recognized is based upon the difference between the fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (generally a theme park). No impairment losses were recognized during the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009.
 
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Goodwill and Indefinite-Lived Intangible Assets —Goodwill and indefinite-lived intangible assets are not amortized, but instead reviewed for impairment at least annually on December 1, with ongoing recoverability based on applicable reporting unit performance and consideration of significant events or changes in the overall business environment.
The following description of the Company’s policy and process for assessing goodwill for possible impairment reflects the adoption of Accounting Standards Update (ASU) 2011-08 in 2011. Prior to 2011, the Company performed the quantitative two-step process further described below.
In assessing goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We consider several factors, including macroeconomic conditions, industry and market conditions, overall financial performance of the reporting unit, changes in management, strategy or customers, and relevant reporting unit specific events such as a change in the carrying amount of net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, and the testing for recoverability of a significant asset group within a reporting unit. If this qualitative assessment results in a conclusion that it is more likely than not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.
If the qualitative assessment is not conclusive and it is necessary to calculate the fair value of a reporting unit, then the impairment analysis for goodwill is performed at the reporting unit level using a two-step approach. The first step is a comparison of the fair value of the reporting unit, determined using future cash flow analysis, to its recorded amount. If the recorded amount exceeds the fair value, the second step quantifies any impairment write-down by comparing the current implied value of goodwill to the recorded goodwill balance. The Company’s indefinite-lived intangible assets consist of certain trade names which, after considering legal, regulatory, contractual, and other competitive and economic factors, are determined to have indefinite lives and are valued annually using the relief from royalty method. The Company performed its annual impairment test of goodwill and indefinite lived assets on December 1, 2011 and 2010, and found no impairments.
Other Intangible Assets —The Company’s other intangible assets consist primarily of certain trade names, relationships with ticket resellers, and a favorable lease asset. These intangible assets are amortized on the straight-line basis over their estimated remaining lives.
Self-Insurance Reserves —Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. Reserves are established for both identified claims and incurred but not reported (“IBNR”) claims. Such amounts are accrued for when claim amounts become probable and estimable. Reserves for identified claims are based upon our own historical claims experience and third-party estimates of settlement costs. Reserves for IBNR claims are based upon our own claims data history, as well as industry averages. All reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary.
Debt Financing Costs —Direct costs incurred in issuance of long-term debt are being amortized to interest expense using the effective interest method over the term of the related debt.
Revenue Recognition —The Company recognizes revenue upon admission into a park or when products are delivered to customers. For season passes and other multi-use admissions, deferred revenue is recorded and the related revenue is recognized over the terms of the admission product and its related use. Deferred revenue includes a current and long-term portion. At December 31, 2011 and 2010, long-term deferred revenue of $8,109 and $20,189, respectively, is included in other liabilities in the accompanying consolidated balance sheets.
 
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The Company has entered into agreements with certain external theme park, zoo, and other attraction operators to jointly market and sell admission products. These joint products allow admission to both a Company park and an external park, zoo or other attraction. The agreements with the external parks, specify the allocation of revenue to the Company from any jointly sold products. The Company’s portion of revenue is deferred and recognized upon admission.
The Company barters theme park admission products for advertising, employee recognition awards, and various other services. The fair value of the admission products is recognized into revenue and related expense at the time of the exchange and approximates the fair value of the goods or services received. For the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009, $19,734, $17,149, and $693, respectively, were included within admissions revenue and selling, general, and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss) related to bartered ticket transactions.
Advertising and Promotional Costs —Advertising production costs are deferred and expensed the first time the advertisement is shown. Advertising and media costs are expensed as incurred and for the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009, totaled approximately $113,300, $122,600, and $9,700, respectively, and are included in selling, general, and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss).
Equity-Based Compensation —The Company measures the cost of employee services rendered in exchange for share-based compensation based upon the grant date fair market value. The cost is recognized over the requisite service period.
Income Taxes —Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.
A valuation allowance is established for deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization is dependent on generating future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible.
The Company evaluates its tax positions by determining if it is more likely than not a tax position is sustainable upon examination, based upon the technical merits of the position, before any of the benefit is recorded for financial statement purposes. Previously recorded benefits that no longer meet the more-likely than not threshold are charged to earnings in the period that the determination is made. Interest and penalties accrued related to uncertain positions are charged to the provision/benefit for income taxes.
Fair Value Measurements —Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
An entity is permitted to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company has not elected to use the fair value option for any of its financial assets and financial liabilities that are not already recorded at fair value. Carrying values of financial instruments classified as current assets and current liabilities approximate fair value, due to their short-term nature.
 
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A description of the Company’s policies regarding fair value measurement is summarized below.
Fair Value Hierarchy —Fair value is determined for assets and liabilities, which are grouped according to a hierarchy, based upon significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy:
Level 1 —Quoted prices for identical instruments in active markets.
Level 2 —Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 —Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Determination of Fair Value —The Company generally uses quoted market prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access to determine fair value, and classifies such items in Level 1. Fair values determined by Level 2 inputs utilize inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, and inputs other than quoted market prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest and currency rates, and the like. Assets or liabilities valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.
Segment Reporting —The Company maintains discrete financial information for each of its ten theme parks, which is used by the Chief Operating Decision Maker (“CODM”), identified as the Chief Executive Officer, as a basis for allocating resources. Each theme park has been identified as an operating segment and meets the criteria for aggregation due to similar economic characteristics. In addition, all of the theme parks provide similar products and services and share similar processes for delivering services. The theme parks have a high degree of similarity in the workforces and target the same consumer group. Accordingly, based on these economic and operational similarities and the way the CODM monitors the operations, the Company has concluded that its operating segments may be aggregated and that it has one reportable segment.
3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2011, the Financial Accounting Standards Board (“FASB”) issued guidance clarifying how to measure and disclose fair value. This guidance amends the application of the “highest and best use” concept to be used only in the measurement of fair value of nonfinancial assets, clarifies that the measurement of the fair value of equity-classified financial instruments should be performed from the perspective of a market participant who holds the instrument as an asset, clarifies that an entity that manages a group of financial assets and liabilities on the basis of its net risk exposure can measure those financial instruments on the basis of its net exposure to those risks, and clarifies when premiums and discounts should be taken into account when measuring fair value. The fair value disclosure requirements were also amended. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
 
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In June 2011, the FASB issued guidance that revises the manner in which entities present comprehensive income in their financial statements. The guidance requires entities to report the components of comprehensive income in either a single, continuous statement or two separate but consecutive statements. In December 2011, the FASB issued guidance which defers certain requirements set forth in June 2011. These amendments were made to allow the FASB time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income in all periods presented. Both sets of guidance are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and are required to be applied retrospectively. The Company adopted this guidance on January 1, 2012 and accordingly applied the new guidance retrospectively. The Company had no components of comprehensive income in any of the periods presented.
In September 2011, the FASB issued guidance related to testing goodwill for impairment. Under the amended guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting units. If the entities determine, based on the qualitative assessment, that it is more likely than not an impairment has not occurred, no further quantitative testing is necessary. The guidance is effective for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company early adopted the guidance and performed a qualitative assessment as its initial step for the 2011 annual review of goodwill impairment. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
In July 2012, the FASB issued new accounting guidance relating to impairment testing for indefinite-lived intangible assets. In accordance with this guidance, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If after such assessment an entity concludes that the indefinite-lived intangible asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test as required by existing standards. This guidance is effective for annual and interim impairment tests for fiscal years beginning after September 15, 2012 and early adoption is permitted. The Company is in the process of evaluating this guidance, which is not expected to have a material impact on its consolidated financial statements.
4. ACQUISITION OF BUSCH ENTERTAINMENT LLC AND AFFILIATES
On December 1, 2009, investment funds affiliated with Blackstone and certain co-investors, through SeaWorld Entertainment, Inc. and its wholly-owned subsidiary, SEA, acquired all of the outstanding equity interests of SeaWorld LLC and SeaWorld Parks & Entertainment LLC from Anheuser-Busch Companies, Inc. for approximately $2,300,000. The acquisition (and its related expenses) was financed by a capital contribution from the Partnerships of $1,010,000, and the issuance of $1,460,000 in long-term debt, net of $34,000 original issue discount (see Note 11).
In connection with the acquisition, Anheuser-Busch received from the Partnerships the right to receive, subject to certain conditions, distributions of up to $400,000 under the terms of the Partnership agreements. Such right has been included in the purchase price and included in additional paid-in capital at their aggregate fair value of $38,000 using a valuation technique referred to as a Monte Carlo simulation. The Monte Carlo simulation is based upon significant inputs that are not observable in the market. Key assumptions include the probability of a liquidation event, projected income before income taxes, amortization, depreciation, interest, and a discount rate of 16%. The estimated fair value of these instruments was measured on a nonrecurring basis as they were valued on the date of acquisition using significant unobservable (Level 3) inputs under the guidance for fair value measurements.
 
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Goodwill recognized in the acquisition, which is deductible for tax purposes, is attributed primarily to historical operating performance of the parks. Goodwill of $269,332 and $66,278 respectively, have been allocated to the SeaWorld Orlando and Discovery Cove theme parks and will be tested annually for impairment on December 1. There were no changes to the goodwill balance for the years ended December 31, 2011 or 2010.
5. EARNINGS PER SHARE
Earnings per share is computed as follows (in thousands, except per share data):

 	 	Year Ended December 31, 2011	 	 	Year Ended December 31, 2010	 	 	One Month Period
Ended December 31, 2009	 	
 	 	Net
Income	 	 	Shares	 	 	Per Share
Amount	 	 	Net
Loss	 	 	Shares	 	 	Per Share
Amount	 	 	Net
Loss	 	 	Shares	 	 	Per Share
Amount	 	
Basic earnings per share	 	$	19,113	  	 	 	10,174	  	 	$	1.88	  	 	$	(45,464	) 	 	 	10,100	  	 	$	(4.50	) 	 	$	(57,741	) 	 	 	10,100	  	 	$	(5.72	) 	
Effect of dilutive equity-based awards	 				 	 	79	  	 				 				 	 	—  	  	 				 				 	 	—  	  	 				
	 				 	 	 	 	 				 				 	 	 	 	 				 				 	 	 	 	 				
Diluted earnings per share	 	$	19,113	  	 	 	10,253	  	 	$	1.86	  	 	$	(45,464	) 	 	 	10,100	  	 	$	(4.50	) 	 	$	(57,741	) 	 	 	10,100	  	 	$	(5.72	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is determined based on the dilutive effect of warrants and incentive units using the treasury stock method.
Warrants to purchase 101,000 shares (not in thousands) of the Company’s common stock were outstanding at December 31, 2010 and 2009, but were not included in the computation of diluted earnings per share because the effect of exercising such warrants would be antidilutive. The warrants were exercised in 2011 and the resulting issued shares of common stock are included in the basic earnings per share calculation for the year ended December 31, 2011.
6. INVENTORIES
Inventories as of December 31, 2011 and 2010, consist of the following:

 	  	2011	 	  	2010	 	
Merchandise	  	$	27,937	  	  	$	23,753	  	
Food and beverage	  	 	4,461	  	  	 	4,555	  	
Supplies	  	 	33	  	  	 	34	  	
	  	 	 	 	  	 	 	 	
Total	  	$	32,431	  	  	$	28,342	  	
	  	 	 	 	  	 	 	 	
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets at December 31, 2011 and 2010, consist of the following:

 	  	2011	 	  	2010	 	
Prepaid insurance	  	$	7,152	  	  	$	8,386	  	
Prepaid marketing and advertising costs	  	 	3,365	  	  	 	1,275	  	
Other	  	 	1,735	  	  	 	114	  	
	  	 	 	 	  	 	 	 	
Total	  	$	12,252	  	  	$	9,775	  	

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8. PROPERTY AND EQUIPMENT—NET
The components of property and equipment—net as of December 31, 2011 and 2010, consist of the following:

 	  	2011	 	 	2010	 	
Land	  	$	274,100	  	 	$	274,100	  	
Land improvements	  	 	201,319	  	 	 	151,059	  	
Buildings	  	 	418,318	  	 	 	395,758	  	
Rides and equipment	  	 	977,233	  	 	 	899,246	  	
Animals	  	 	161,144	  	 	 	164,063	  	
Construction in process	  	 	140,770	  	 	 	76,474	  	
Less accumulated depreciation	  	 	(425,006	) 	 	 	(217,911	) 	
	  	 	 	 	 	 	 	 	
Total	  	$	1,747,878	  	 	$	1,742,789	  	
	  	 	 	 	 	 	 	 	
Depreciation expense was approximately $209,300, $202,800, and $17,700 for the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009, respectively.
9. TRADE NAMES AND OTHER INTANGIBLE ASSETS—NET
Trade names-net are comprised of the following at December 31, 2011:

 	  	Weighted Average
Amortization
Period	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	  	Net Carrying
Value	 	
Trade names—indefinite lives	  		  	$	157,000	  	  	$	 	  	  	$	157,000	  	
Trade names—definite lives	  	10 years	  	 	11,000	  	  	 	2,291	  	  	 	8,709	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	
Total	  		  	$	168,000	  	  	$	2,291	  	  	$	165,709	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	
Trade names-net are comprised of the following at December 31, 2010:

 	  	Weighted Average
Amortization
Period	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	  	Net Carrying
Value	 	
Trade names—indefinite lives	  		  	$	157,000	  	  	$	 	  	  	$	157,000	  	
Trade names—definite lives	  	10 years	  	 	11,000	  	  	 	1,192	  	  	 	9,808	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	
Total	  		  	$	168,000	  	  	$	1,192	  	  	$	166,808	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	
Other intangible assets-net at December 31, 2011, consist of the following:

 	  	Weighted Average
Amortization
Period	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	  	Net Carrying
Value	 	
Favorable lease asset	  	39 years	  	$	18,200	  	  	$	934	  	  	$	17,266	  	
Reseller agreements	  	8.11 years	  	 	22,300	  	  	 	5,729	  	  	 	16,571	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	
Total	  		  	$	40,500	  	  	$	6,663	  	  	$	33,837	  	

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Other intangible assets-net at December 31, 2010, consist of the following:

 	  	Weighted Average
Amortization
Period	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	  	Net Carrying
Value	 	
Favorable lease asset	  	39 years	  	$	18,200	  	  	$	467	  	  	$	17,733	  	
Reseller agreements	  	8.11 years	  	 	22,300	  	  	 	2,977	  	  	 	19,323	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	
Total	  		  	$	40,500	  	  	$	3,444	  	  	$	37,056	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	
Total amortization was approximately $4,300 for the years ended December 31, 2011 and 2010, and $321 for the one month period ended December 31, 2009. The total weighted average amortization period of all finite-lived intangibles is 19.4 years. Total expected amortization of the finite-lived intangible assets for the five succeeding years and thereafter is as follows:

Years Ending
December 31	  	 	 	
2012	  	$	4,318	  	
2013	  	 	4,318	  	
2014	  	 	4,318	  	
2015	  	 	4,318	  	
2016	  	 	4,318	  	
Thereafter	  	 	20,956	  	
	  	 	 	 	
	  	$	42,546	  	
	  	 	 	 	
10. OTHER ACCRUED EXPENSES
Other accrued expenses at December 31, 2011 and 2010, consist of the following:

 	  	2011	 	  	2010	 	
Accrued property taxes	  	$	1,644	  	  	$	1,720	  	
Accrued interest	  	 	4,908	  	  	 	4,996	  	
Other	  	 	1,847	  	  	 	497	  	
	  	 	 	 	  	 	 	 	
Total	  	$	8,399	  	  	$	7,213	  	
	  	 	 	 	  	 	 	 	
11. LONG-TERM DEBT
Long-term debt at December 31, 2011 and 2010, consists of the following:

 	  	2011	 	 	2010	 	
Term loan	  	$	—  	  	 	$	1,039,500	  	
Term Loan A	  	 	159,500	  	 	 	—  	  	
Term Loan B	  	 	844,043	  	 	 	—  	  	
Revolving credit agreement	  	 	36,000	  	 	 	—  	  	
Senior Notes	  	 	400,000	  	 	 	400,000	  	
	  	 	 	 	 	 	 	 	
	  	 	1,439,543	  	 	 	1,439,500	  	
Less discounts	  	 	(21,656	) 	 	 	(28,971	) 	
Less current maturities	  	 	(52,500	) 	 	 	(10,500	) 	
	  	 	 	 	 	 	 	 	
Total long-term debt, net of current maturities	  	$	1,365,387	  	 	$	1,400,029	  	

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In connection with the acquisition described in Note 4, on December 1, 2009, SEA both entered into senior secured credit facilities (“Senior Secured Credit Facilities”) and issued senior notes (the “Senior Notes”):
Senior Secured Credit Facilities
Effective on February 17 and April 15, 2011, SEA entered into Amendments No. 1 and 2, respectively, of the Senior Secured Credit Facilities (collectively, the “Amendments”). As a result of Amendment No. 1, the original term loan was refinanced into two tranches of term loans, Term A Loans (original balance of $150,000), and Term B Loans (original balance of $900,000). As a result of Amendment No. 2, $17,000 of Term Loan B was refinanced to Term Loan A. In addition, the revolving credit commitment availability under the Senior Secured Credit Facilities increased to $172,500. The amended credit agreement was not deemed to be substantially different, as defined in the authoritative accounting guidance, from the original agreement. At December 31, 2011, following the Amendments, the Senior Secured Credit Facilities consist of:
 
 	Ÿ 	 	Tranche A Term Loans, balance of $159,500, which will mature on February 17, 2016;	
 
 	Ÿ 	 	Tranche B Term Loans, balance of $844,043 in Tranche B Term Loans, which will mature on the earlier of (i) August 17, 2017 or (ii) the 91st day prior to the maturity of the Senior Notes, if more than $50 million of debt with respect to the Senior Notes is outstanding as of such date; and	
 
 	Ÿ 	 	Revolving Credit Facility, balance of $36,000, which will mature on February 17, 2016.	
Borrowings related to the Tranche A Term Loans and the revolving credit facility bear interest, at SEA’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) Bank of America’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the British Bankers Association (“BBA”) LIBOR rate for the interest period relevant to such borrowing. The margin for the Tranche A Term Loans is 1.75%, in the case of base rate loans, and 2.75%, in the case of LIBOR rate loans, subject to a step-down of 0.25% upon achievement of a secured leverage ratio less than or equal to 2.25 to 1.00. SEA selected the LIBOR rate at December 31, 2011, related to the Term A Term Loans and the revolving credit loans (interest rate of 3.046% and 2.99%, respectively).
Borrowings under the Tranche B Term Loans bear interest, at SEA’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the Bank of America’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the BBA LIBOR rate for the interest period relevant to such borrowing. The margin for the Tranche B Term Loans is 2.00%, in the case of base rate loans, and 3.00%, in the case of LIBOR rate loans, subject to a base rate floor of 2.00% and a LIBOR floor of 1.00%. SEA selected the LIBOR rate at December 31, 2011, related to the Term B Term Loans (interest rate of 4%).
The option selected and rate in effect at December 31, 2010, was the LIBOR rate (interest rate of 5.75% at December 31, 2010). Under the terms of the Senior Secured Credit Facilities at December 31, 2010, the LIBOR interest rate could be no lower than 5.75%.
SEA is required to repay installments on the term loans in quarterly installments equal to $1,875 with respect to Tranche A Term Loans and 0.25% of the original principal balance with respect to Tranche B Term Loans, with the remaining amount payable on the applicable maturity date with respect to such term loans.
 
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In addition, the Senior Secured Credit Facilities, as amended, requires the Company to prepay outstanding term loans, subject to certain exceptions, in an amount equal to:
 
 	Ÿ 	 	50% (which percentage will be reduced to 25% and 0%, as applicable, subject to SEA attaining certain total leverage ratios) of its annual excess cash flow, as defined;	
 
 	Ÿ 	 	100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property by SEA and its restricted subsidiaries (including insurance and condemnation proceeds, subject to de minimis thresholds), if SEA does not reinvest those net cash proceeds in assets to be used in its business or to make certain other permitted investments (a) within 12 months of the receipt of such net cash proceeds or (b) if SEA commits to reinvest such net cash proceeds within 12 months of the receipt thereof, within 180 days of the date of such commitment; and	
 
 	Ÿ 	 	100% of the net proceeds of any incurrence of debt by SEA or any of its restricted subsidiaries, other than debt permitted to be incurred or issued under the Senior Secured Credit Facilities.	
Notwithstanding any of the foregoing, each lender of term loans has the right to reject its pro rata share of mandatory prepayments described above, in which case SEA may retain the amounts so rejected. The foregoing mandatory prepayments will be applied pro rata to installments of term loans in direct order of maturity.
There were no mandatory prepayments during the year ended December 31, 2011 or 2010.
The obligations under the Senior Secured Credit Facilities are fully, unconditionally and irrevocably guaranteed by the Company, any subsidiary of the Company that directly or indirectly owns 100% of the issued and outstanding equity interests of SEA, and, subject to certain exceptions, each of SEA’s existing and future material domestic wholly-owned subsidiaries. The Senior Secured Credit Facilities are collateralized by first priority or equivalent security interests, subject to certain exceptions, in (i) all the capital stock of, or other equity interests in, substantially all of our direct or indirect domestic subsidiaries and 65% of the capital stock of, or other equity interests in, any foreign subsidiaries and (ii) certain tangible and intangible assets of SEA and the Company. Certain financial, affirmative and negative covenants, including a maximum total net leverage ratio and minimum interest coverage ratio, are included in the Senior Secured Credit Facilities. If an event of default occurs, the lenders under the Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under the Senior Secured Credit Facilities and all actions permitted to be taken by a secured creditor. SEA was in compliance with the covenants at December 31, 2011 and 2010.
Revolving credit available under the Senior Secured Credit Facilities as of December 31, 2011 and 2010, was $124,707 and $135,001, respectively. The revolving credit commitment includes up to $20,000 in short-term loans (five days in duration) and up to $50,000 in letters of credit. Any amounts borrowed under the short-term loans or as letters of credit reduce the total amount available under the revolving credit loan. All amounts outstanding under the revolving credit commitment are due on February 17, 2016, except for borrowings under the short-term loans, which are payable within five business days of the original borrowing.
Amounts outstanding at December 31, 2011, relating to the Revolving Credit Facility were $36,000 at an interest rate of 2.99%. No amounts were outstanding at December 31, 2010.
As of December 31, 2011, the Company had approximately $11.8 million of outstanding letters of credit.
Senior Notes
On December 1, 2009, SEA issued $400.0 million of 13.5% Senior Notes due December 1, 2016. SEA can redeem the Senior Notes at any time and the Senior Notes are unsecured. Interest is paid semi-annually in arrears. Prior to December 1, 2012, the redemption price is 100% of the principal
 
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amount of the Senior Notes, plus an applicable premium, as defined. However, in the case of an equity offering prior to December 1, 2012, SEA may redeem up to 35% of the Senior Notes for 113.5% of the principal amount. The Senior Notes may be redeemed by the Company at 110%, 106.75%, 104.5%, and 102.25% of the principal balance beginning on December 1, 2012, 2013, 2014, and 2015, respectively. The terms were amended on March 30, 2012. (See Note 18). The Senior Notes were issued at a discount of $80.72 per $1 or a total of $33,950. The discount is being amortized to interest expense using the weighted average interest method and the discount balance is $18,144 and $24,745 at December 31, 2011 and 2010, respectively. The obligations under the Senior Notes are guaranteed by the same entities as those that guarantee the Senior Secured Credit Facilities.
Cash paid for interest relating to the Senior Secured Credit Facilities and the Senior Notes discussed above was $97,575 and $121,239 during the years ended December 31, 2011 and 2010, respectively.
In connection with the issuance of the Senior Notes, the holders of the Senior Notes received warrants to purchase 101,000 (not in thousands) Partnerships units for $100 (not in thousands) per unit. The Partnerships, in turn, received warrants to acquire 101,000 (not in thousands) shares of the Company’s common stock. The total value of the warrants at December 1, 2009 was $5,000 and was recorded by the Company as additional paid-in capital and a discount on the Senior Notes. The additional discount is being amortized to interest expense over the term of the Senior Notes. The unamortized discount at December 31, 2011 and 2010, of $3,512 and $4,226, respectively, is presented as a reduction of the carrying value of the Senior Notes in the accompanying consolidated financial statements. During 2011, all the warrants were exercised for cash in accordance with the underlying warrant agreement, the holders of the Senior Notes received 101,000 (not in thousands) limited partnership units of the Partnerships and the Company issued a total of 101,000 (not in thousands) shares of common stock to the Partnerships.
The Company has deferred $62,500 in financing costs that were paid to issue the long-term debt. Deferred financing costs, net of accumulated amortization, were $39,232 and $44,437 as of December 31, 2011 and 2010, respectively, and are being amortized to interest expense using the effective interest method over the term of the Senior Notes and are included in other assets in the accompanying consolidated balance sheets. Financing costs paid to the creditors amounting to $5,926 directly related to the Amendments noted above were recorded as deferred financing costs.
The fair value of the term loans at December 31, 2011, approximates their carrying value due to the variable nature of the underlying interest rates. The fair value of the Senior Notes approximates $429,000 at December 31, 2011. The estimated fair value of the Senior Notes was computed using significant inputs that are not observable in the market including a discount rate of 12.5% and projected cash flows of the underlying Senior Notes.
Long-term debt at December 31, 2011, is repayable as follows, not including any possible prepayments described above:

Years Ending
December 31	  	 	 	
2012	  	$	52,500	  	
2013	  	 	16,500	  	
2014	  	 	16,500	  	
2015	  	 	16,500	  	
2016	  	 	1,337,543	  	
	  	 	 	 	
Total	  	$	1,439,543	  	

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12. INCOME TAXES
For the years ended December 31, 2011, and 2010, and the one month period ended December 31, 2009, the provision for (benefit from) income taxes is comprised of the following:

 	  	2011	 	 	2010	 	 	2009	 	
Current income tax expense (benefit)	  				 				 				
Federal	  	$	(70	) 	 	$	—  	  	 	$	—  	  	
State	  	 	1,277	  	 	 	—  	  	 	 	—  	  	
Foreign	  	 	24	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total current income tax provision	  	 	1,231	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Deferred income tax provision (benefit):	  				 				 				
Federal	  	 	11,429	  	 	 	(24,074	) 	 	 	(31,089	) 	
State	  	 	768	  	 	 	(5,167	) 	 	 	(4,575	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total deferred income tax provision (benefit)	  	 	12,197	  	 	 	(29,241	) 	 	 	(35,664	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total income tax provision (benefit)	  	$	13,428	  	 	$	(29,241	) 	 	$	(35,664	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
The deferred income tax provision (benefit) represents the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Cash paid for income taxes totaled $513, $0, and $0 for the years ended December 31, 2011 and 2010 and the one month period ended December 31, 2009, respectively.
The Company has determined that there are no positions currently taken that would rise to a level requiring an amount to be recorded or disclosed as an uncertain tax position. If such positions do arise, it is the Company’s intent that any interest or penalty amount related to such positions will be recorded as a component of tax expense to the applicable period.
The components of deferred income tax assets and liabilities as of December 31, 2011 and 2010, are as follows:

 	  	2011	 	 	2010	 	
Deferred income tax assets:	  				 				
Acquisition costs	  	$	23,866	  	 	$	25,157	  	
Net operating loss	  	 	197,241	  	 	 	152,319	  	
Self-insurance	  	 	7,507	  	 	 	2,127	  	
Deferred revenue	  	 	3,337	  	 	 	1,177	  	
Other	  	 	2,477	  	 	 	1,614	  	
	  	 	 	 	 	 	 	 	
Total deferred income tax assets	  	 	234,428	  	 	 	182,394	  	
	  	 	 	 	 	 	 	 	
Deferred income tax liabilities:	  				 				
Property and equipment	  	 	(146,002	) 	 	 	(93,330	) 	
Goodwill	  	 	(14,030	) 	 	 	(6,875	) 	
Other	  	 	(12,301	) 	 	 	(7,898	) 	
	  	 	 	 	 	 	 	 	
Total deferred income tax liabilities	  	 	(172,333	) 	 	 	(108,103	) 	
	  	 	 	 	 	 	 	 	
Net deferred income tax assets	  	$	62,095	  	 	$	74,291	  	
	  	 	 	 	 	 	 	 	
The Company has federal tax net operating loss carryforwards as of December 31, 2011, of approximately $507,600. The net operating loss carryforwards, if not used to reduce taxable income in future periods, will begin to expire in 2029, for both state and federal tax purposes. Realization of the net deferred income tax assets is dependent upon generating sufficient taxable income prior to expiration of the loss carryforwards, which may include reversal of the other deferred income tax
 
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components. Although realization is not assured, management believes it is more likely than not that all of the deferred income tax assets will be realized. The Company files federal and state income tax returns in various jurisdictions with varying statute of limitation expiration dates. The 2009 through 2011 tax years generally remain subject to examination by tax authorities.
The reconciliation between the U.S. federal statutory income tax rate and the Company’s effective income tax provision (benefit) rate for the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009, is as follows:

 	  	2011	 	 	2010	 	 	2009	 	
Income tax rate at federal statutory rates	  	 	35.00	% 	 	 	35.00	% 	 	 	35.00	% 	
State taxes, net of federal benefit	  	 	5.57	  	 	 	3.67	  	 	 	3.17	  	
Other	  	 	0.69	  	 	 	0.47	  	 	 	—  	  	
Income tax rate	  	 	41.26	% 	 	 	39.14	% 	 	 	38.17	% 	
13. COMMITMENTS AND CONTINGENCIES
At December 31, 2011, the Company has commitments under long-term operating leases requiring annual minimum lease payments as follows:

Years Ending December 31	  	 	 	
2012	  	$	13,393	  	
2013	  	 	11,501	  	
2014	  	 	10,399	  	
2015	  	 	10,398	  	
2016	  	 	9,637	  	
Thereafter	  	 	302,216	  	
	  	 	 	 	
Total	  	$	357,544	  	
	  	 	 	 	
Rental expense was $22,119, $19,719, and $1,332 for the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009, respectively.
The SeaWorld theme park in San Diego, California, leases the land for the theme park from the City of San Diego. The lease term is for 50 years ending on July 1, 2048. Lease payments are based upon gross revenue from the San Diego theme park subject to certain minimums. On January 1, 2011, the minimum annual rent payment was recalculated in accordance with the lease agreement and remained at $9,600 and is included in the table above for all periods presented. This annual rent will remain in effect until January 1, 2014, at which time the next recalculation will be completed in accordance with the lease agreement.
Pursuant to license agreements with Sesame Workshop, the Company pays a specified annual license fee, as well as a specified royalty based on revenues earned in connection with sales of licensed products, all food and beverage items utilizing the licensed elements and any events utilizing such elements if a separate fee is paid for such event.
The Company has commenced construction of certain new theme park attractions and other projects under contracts with various third parties. At December 31, 2011, additional capital payments of approximately $146,600 are necessary to complete these projects. These projects are expected to be completed during 2012 and 2013.
In addition, the Company is party to various claims and legal proceedings arising in the normal course of business. Matters where an unfavorable outcome to the Company is probable and which can
 
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be reasonably estimated are accrued. Such accruals, which are not material for any period presented, are based on information known about the matters, the Company’s estimate of the outcomes of such matters, and the Company’s experience in contesting, litigating, and settling similar matters. Matters that are considered reasonably possible to result in a material loss are not accrued for, but an estimate of the possible loss or range of loss is disclosed, if such amount or range can be determined. Management does not expect any known claims or legal proceedings to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.
14. RELATED-PARTY TRANSACTIONS
Certain affiliates of Blackstone provide monitoring, advisory, and consulting services to the Company under an advisory fee agreement. Fees related to these services, which are based upon a multiple of EBITDA, as defined in the advisory agreement, amounted to $6,012, $4,704, and $290 for the years ended December 31, 2011 and 2010, and the one month period ended December 31, 2009, respectively, are included in selling, general, and administrative expenses in the accompanying consolidated statements of operations and other comprehensive income (loss). In connection with the advisory agreement, a termination fee calculated based on the terms of the agreement will be assessed if certain triggering events occur, including, but not limited to, an initial public offering.
The Company had an arrangement with another former Blackstone portfolio theme park company to sell admission tickets on a combined basis. The Company earned revenue of approximately $7,400 (through June, 2011) and $18,400 during the years ended December 31, 2011 and 2010, respectively under the combined ticket arrangement. Blackstone sold its interest in such theme park company in June 2011.
The Company entered into a transition services agreement (“TSA”) with Anheuser-Busch Companies, Inc., effective December 1, 2009, to receive support in the areas of information technology, accounting, tax, human resources, and procurement. Services were provided for a term of six months. The services were at graduated rates that increased over the term and range from $10 to $190 per month, depending upon the type of service. Extensions were charged at the initial rates plus 33%. In addition, in February 2010, the Company elected to purchase certain one-time information technology support for $624. As of December 31, 2010, the Company no longer received services under the TSA. Total cost under the TSA for the year ended December 31, 2010 and the one month period ended December 31, 2009, was $4,860 and $700, respectively, and is included in selling, general, and administrative expenses in the accompanying consolidated statements of operations and other comprehensive income (loss).
15. RETIREMENT PLAN
The Company sponsors a defined contribution plan, under Section 401(k) of the Internal Revenue Code, that it established in March 2010. The plan is a qualified automatic contributions arrangement, which automatically enrolls employees, once eligible, unless they opt out. The Company makes matching cash contributions subject to certain restrictions, structured as a 100% match on the first 1% contributed by the employee and a 50% match on the next 5% contributed by the employee. Employer-matching contributions for the year ended December 31, 2011 and 2010 totaled $7,345 and $6,165, respectively.
 
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16. EQUITY-BASED COMPENSATION
In 2011, the Partnerships granted employee units to certain key employees of SEA. Upon vesting of the employee units, the Company issues the corresponding number of shares of common stock of the Company to the Partnerships.
The total number of employee units granted, (which are accounted for as equity awards) was 657,910 and they were divided into three equal tranches as follows:
Time-Vesting Units (TVUs) —One-third of the employee units (219,303) (not in thousands) granted vest over five years (20% per year). The vesting begins on the earlier of December 1, 2009, or the grant date. Vesting is contingent upon continued employment. In the event of a change of control (defined as a sale or disposition of the assets of the limited partnership to other than a Blackstone-affiliated group or, if any group other than a Blackstone-affiliated entity, becomes the general partner or the beneficial owner of more than 50% interest), the employee units immediately 100% vest. The TVUs were recorded at the fair market value at the date of grant and will be amortized to compensation expense over the vesting period. Total compensation expense related to the TVUs was $823 for the year ended December 31, 2011, and is included in selling, general, and administrative expenses in the accompanying consolidated statement of operations and other comprehensive income (loss) and as contributed capital in the accompanying statement of stockholders’ equity. The weighted-average grant date fair value of these grants was $21.34 and the total intrinsic value of the grants was approximately $4,700. Total unrecognized compensation cost related to the nonvested TVUs, expected to be recognized over the next four years, was approximately $3,580 as of December 31, 2011.
The activity related to the TVUs for the year ended December 31, 2011, is as follows:

 	  	Employee
Units	 	  	Weighted
Average Fair
Value	 	  	Weighted
Average
Remaining
Contractual
Term	 	  	Aggregate
Intrinsic Value	 	
 	  	(not in
thousands)	 	  	 	 	  	 	 	  	 	 	
Outstanding—January 1. 2011	  	 	—  	  	  	$	—  	  	  				  				
Granted	  	 	219,303	  	  	 	21.34	  	  				  				
Forfeited	  	 	13,083	  	  	 	21.34	  	  				  				
	  	 	 	 	  				  				  				
Outstanding—December 31, 2011	  	 	206,220	  	  	 	21.34	  	  	 	35 months	  	  	$	4.4 million	  	
	  	 	 	 	  				  				  				
Vested—December 31, 2011	  	 	72,111	  	  				  				  				
2.25x and 2.75x Performance Vesting Units (PVUs) —Two tranches of the employee units vest only if certain events occur. The 2.25x PVUs vest if the employee is employed by the Company when and if Blackstone receives cash proceeds (not subject to any clawback, indemnity or similar contractual obligation) in respect of its Partnerships units equal to (x) a 20% annualized effective compounded return rate on Blackstone’s investment and (y) a 2.25x on Blackstone’s investment. The 2.75x PVUs vest if the employee is employed by the Company when and if Blackstone receives cash proceeds (not subject to any clawback, indemnity or similar contractual obligation) in respect of its Partnerships units equal to (x) a 15% annualized effective compounded return rate on Blackstone’s investment and (y) a 2.75x multiple on Blackstone’s investment. The employee units have no termination date other than termination of employment from the Company. There are no service or period vesting conditions associated with the PVUs other than employment at the time the benchmark is reached. No compensation will be recorded related to these PVUs until their issuance is probable. There was no compensation expense recorded during 2011 for the PVUs. The 2.25x and the 2.75x PVUs had grant date fair values of $12.65 and $8.88, respectively. A total of 219,303 and 13,083 (not in thousands) were granted and forfeited, respectively, from each tranche during the year ended December 31, 2011,
 
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for a total of 206,220 (not in thousands) outstanding for each tranche. Total intrinsic value as of December 31, 2011, was approximately $2,610 and $1,800 for the 2.25x and the 2.75x PVUs, respectively. None of the PVUs were exercisable at December 31, 2011.
The fair value of each employee unit granted was estimated on the date of grant using a composite of the discounted cash flow model and the guideline public company approach to determine the underlying enterprise value. The discounted cash flow model is based upon significant inputs that are not observable in the market. Key assumptions include projected cash flows, a discount rate of 10.5%, and a terminal value. The guideline public company approach uses relevant public company valuation multiples to determine fair value. The value of the individual equity tranches was allocated based upon the Option-Pricing Method model. Significant assumptions include a holding period of 3.6 years, a risk free rate of 1.22%, volatility of approximately 49% and a discount for lack of marketability, depending upon the units, from 40% to 53%.
17. STOCKHOLDERS’ EQUITY
In 2011, the Company sold 29,240 shares of common stock to the Partnership (not in thousands) for net cash consideration of $2,736.
The Company declared a dividend in the amount of $110,100 to common stockholders on September 29, 2011. The dividend was accounted for as a return of capital.
18. SUBSEQUENT EVENTS
In connection with the preparation of the consolidated financial statements, the Company evaluated subsequent events after the consolidated balance sheet date of December 31, 2011, through December 26, 2012, the date the consolidated financial statements were issued, to determine whether any events occurred that required recognition or disclosure in the accompanying consolidated financial statements. The Company believes the following events require disclosure:
On March 30, 2012, pursuant to an amendment to the indenture governing the Senior Notes, the interest rate was changed from 13.5% to 11.0%. Until December 1, 2014, and in the case of an Equity Offering (as defined in the indenture), SEA may redeem up to 35% of the Senior Notes at a price of 111% of the aggregate principal balance plus accrued interest using the net cash proceeds from an Equity Offering. Except in the case of an Equity Offering, prior to December 1, 2014, the Senior Notes may be redeemed at 100% of the outstanding principal balance plus the greater of 1% of the principal balance of the Senior Notes or the excess of the present value of the Senior Notes as of December 1, 2014 plus required interest and redemption rates using the Treasury Rate plus 50 basis points over the principal balance of the Senior Notes. On or after December 1, 2014, the Senior Notes may be redeemed at 105.5% and 102.75% of the principal balance beginning on December 1, 2014 and 2015, respectively.
On March 30, 2012, the Company amended the terms of its Senior Secured Credit Facilities and increased borrowings under Term Loan B by $500,000. The Company used the proceeds from these borrowings to pay a dividend of the same amount to stockholders. The dividend of $500,000 to stockholders was paid in March 2012.
On November 20, 2012, the Company acquired Knott’s Soak City, a standalone Southern California water park, from an affiliate of Cedar Fair L.P. for $15,000, of which approximately $12,000 was paid at closing, and the remaining $3,000 will be paid on or before September 1, 2013. The Company plans to rebrand this water park as Aquatica San Diego before it re-opens in 2013.
 
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Schedule I—Registrant’s Condensed Financial Statements
 Seaworld Entertainment, Inc.
Parent Company Only
Condensed Balance Sheets
as of December 31, 2011 and 2010
(In thousands, except share and per share amounts)

 	  	2011	 	 	2010	 	
Assets	  				 				
Current assets:	  				 				
Cash	  	$	3,180	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	3,180	  	 	 	—  	  	
Investment in wholly owned subsidiary	  	 	872,467	  	 	 	949,795	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	875,647	  	 	$	949,795	  	
	  	 	 	 	 	 	 	 	
Liabilities and Stockholders' Equity	  				 				
			
Current liabilities:	  				 				
Accrued liabilities	  	$	3,180	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	3,180	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	3,180	  	 	 	—  	  	

Commitments and contingencies	  				 				
Stockholders' equity:	  				 				
Common stock $0.01 par value—authorized, 12,000,000 shares; issued and outstanding, 10,302,351 shares in 2011 and 10,100,000 shares in 2010	  	 	103	  	 	 	101	  	
Additional paid-in capital	  	 	956,456	  	 	 	1,052,899	  	
Accumulated deficit	  	 	(84,092	) 	 	 	(103,205	) 	
	  	 	 	 	 	 	 	 	
Total stockholders' equity	  	 	872,467	  	 	 	949,795	  	
	  	 	 	 	 	 	 	 	
Total liabilities and stockholders' equity	  	$	875,647	  	 	$	949,795	  	
	  	 	 	 	 	 	 	 	
See accompanying notes to condensed financial statements.
 
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Seaworld Entertainment, Inc.
Parent Company Only
Condensed Statements of Operations and Comprehensive Income (Loss)
for the Years Ended December 31, 2011 and 2010
and for the One Month Period Ended December 31, 2009
(In thousands)

 	  	2011	 	  	2010	 	 	2009	 	
Equity in net income (loss) of subsidiary	  	$	19,113	  	  	$	(45,464	) 	 	$	(57,741	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	
Net income (loss)	  	 	19,113	  	  	 	(45,464	) 	 	 	(57,741	) 	
Other comprehensive income (loss)	  	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Comprehensive income (loss)	  	$	19,113	  	  	$	(45,464	) 	 	$	(57,741	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	
See accompanying notes to condensed financial statements.
 
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Seaworld Entertainment, Inc.
Parent Company Only
Condensed Statements of Cash Flows
for the Years Ended December 31, 2011 and 2010
and for the One Month Period Ended December 31, 2009
(In thousands)

 	  	2011	 	 	2010	 	 	2009	 	
Cash Flows From Operating Activities	  				 				 				
Net income (loss)	  	$	19,113	  	 	$	(45,464	) 	 	$	(57,741	) 	
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	  				 				 				
Equity in net (income) loss of subsidiary	  	 	(19,113	) 	 	 	45,464	  	 	 	57,741	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities	  	 	—  	  	 	 	—  	  	 	 	—  	  	

Cash Flows From Investing Activities	  				 				 				
Capital contributed to subsidiary	  	 	(2,736	) 	 	 	—  	  	 	 	(1,010,000	) 	
Dividend received from subsidiary (return of capital)	  	 	100,000	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) investing activities	  	 	97,264	  	 	 	—  	  	 	 	(1,010,000	) 	

Cash Flows From Financing Activities	  				 				 				
Net proceeds from the issuance of common stock	  	 	12,836	  	 	 	—  	  	 	 	1,010,000	  	
Dividend paid to stockholders (return of capital)	  	 	(106,920	) 	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	(94,084	) 	 	 	—  	  	 	 	1,010,000	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash — Beginning of year	  	 	—  	  	 	 	—  	  	 	 	—  	  	
Change in cash	  	 	3,180	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash — End of year	  	$	3,180	  	 	$	—  	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Supplemental Disclosure of Noncash Investing and Financing Activities	  				 				 				
Capital contributed to subsidiary	  	$	—  	  	 	$	—  	  	 	$	43,000	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to condensed financial statements.
 
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Notes to Condensed Parent Company Only Financial Statements
 
1.	DESCRIPTION OF SEAWORLD ENTERTAINMENT, INC.	
SeaWorld Entertainment, Inc. (the “Parent”) was incorporated in Delaware on October 2, 2009 to effect the purchase of all the outstanding equity interests of Busch Entertainment LLC and affiliates from Anheuser-Busch Companies, Inc. The Parent has no operations or significant assets or liabilities other than its investment in SeaWorld & Parks Entertainment, Inc. (“SEA”). Accordingly, the Parent is dependent upon distributions from SEA to fund its obligations. However, under the terms of SEA’s various debt agreements, SEA’s ability to pay dividends or lend to the Parent is restricted, except that SEA may pay specified amounts to the Parent to fund the payment of the Company’s tax obligations.
 
2.	BASIS OF PRESENTATION	
The accompanying condensed financial statements (parent company only) include the accounts of the Parent and its investment in SEA accounted for in accordance with the equity method, and do not present the financial statements of the Parent and its subsidiary on a consolidated basis. These parent company only financial statements should be read in conjunction with the SeaWorld Entertainment, Inc. consolidated financial statements.
 
3.	ACQUISITION OF BUSCH ENTERTAINMENT LLC AND AFFILIATES	
On December 1, 2009, Parent and its subsidiary acquired all of the outstanding equity interests of Busch Entertainment LLC and affiliates from Anheuser-Busch Companies, Inc. The acquisition was partially financed by a capital contribution to Parent of $1,010,000. Upon receipt of the capital contribution, Parent contributed these funds to SEA as a $1,010,000 capital contribution.
 
4.	GUARANTEES	
In connection with the business combination described in Note 3 above, on December 1, 2009, SEA entered into senior secured credit facilities (the “Senior Secured Credit Facilities”) and issued senior notes (the “Senior Notes”). The Senior Secured Credit Facilities were amended on February 17, 2011 and April 15, 2011.
Under the terms of the Senior Secured Credit Facilities, the obligations of SEA are fully, unconditionally and irrevocably guaranteed by Parent, any subsidiary of Parent that directly or indirectly owns 100% of the issued and outstanding equity interest of SEA, and subject to certain exceptions, each of SEA’s existing and future material domestic wholly-owned subsidiaries (collectively, the “Guarantors”).
The obligations under the Senior Notes are guaranteed by the same Guarantors as under the Senior Secured Credit Facilities. In the event of a default under the Senior Notes, the principal and accrued interest would become immediately due and payable (subject to, in some cases, grace periods).
 
5.	DIVIDENDS FROM SUBSIDIARIES	
The Parent received a dividend in the amount of $100,000 from SEA on September 29, 2011 which has been reflected as a return of capital in the accompanying condensed financial statements. On that same date, the Parent declared a dividend (defined as a restricted payment in the Senior Secured Credit Facilities) of $110,100 to the Partnerships, of which $106,920 was paid as of December 31, 2011. This dividend has also been reflected as a return of capital in the accompanying condensed financial statements.
 
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 SeaWorld Entertainment, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
as of September 30, 2012 and December 31, 2011
(In thousands, except share and per share amounts)

 	  	September 30,
2012	 	 	December 31,
2011	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	142,843	  	 	$	66,663	  	
Accounts receivable, net	  	 	52,054	  	 	 	45,980	  	
Inventories	  	 	36,646	  	 	 	32,431	  	
Prepaid expenses and other current assets	  	 	8,761	  	 	 	12,252	  	
Deferred tax assets, net	  	 	12,675	  	 	 	9,529	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	252,979	  	 	 	166,855	  	
Property and equipment, at cost	  	 	2,309,917	  	 	 	2,172,884	  	
Accumulated depreciation	  	 	(528,172	) 	 	 	(425,006	) 	
	  	 	 	 	 	 	 	 	
Property and equipment, net	  	 	1,781,745	  	 	 	1,747,878	  	
Goodwill	  	 	335,610	  	 	 	335,610	  	
Trade names, net	  	 	164,883	  	 	 	165,709	  	
Other intangible assets, net	  	 	31,424	  	 	 	33,837	  	
Deferred tax assets, net	  	 	—  	  	 	 	52,566	  	
Other assets	  	 	44,599	  	 	 	44,640	  	
	  	 	 	 	 	 	 	 	
Total	  	$	2,611,240	  	 	$	2,547,095	  	
	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	134,491	  	 	$	104,915	  	
Current maturities on long-term debt	  	 	21,330	  	 	 	52,500	  	
Accrued salaries and wages	  	 	24,190	  	 	 	32,189	  	
Deferred revenue	  	 	95,702	  	 	 	82,233	  	
Other accrued expenses	  	 	28,560	  	 	 	8,399	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	304,273	  	 	 	280,236	  	
Long-term debt	  	 	1,806,335	  	 	 	1,365,387	  	
Other liabilities	  	 	42,222	  	 	 	29,005	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	2,152,830	  	 	 	1,674,628	  	
	  	 	 	 	 	 	 	 	
Stockholders’ Equity:	  				 				
Common stock, $0.01 par value—authorized, 12,000,000 shares; issued and outstanding, 10,310,266 shares in 2012 and 10,302,351 shares in 2011, respectively	  	 	103	  	 	 	103	  	
Additional paid-in capital	  	 	457,328	  	 	 	956,456	  	
Accumulated other comprehensive loss	  	 	(1,172	) 	 	 	—  	  	
Retained earnings (accumulated deficit)	  	 	2,151	  	 	 	(84,092	) 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	458,410	  	 	 	872,467	  	
	  	 	 	 	 	 	 	 	
Total	  	$	2,611,240	  	 	$	2,547,095	  	
	  	 	 	 	 	 	 	 	
See notes to unaudited condensed consolidated financial statements.
 
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 SeaWorld Entertainment, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
for the Nine Months Ended September 30, 2012 and 2011
(In thousands, except per share amounts)

 	  	For the Nine Months Ended
September 30, 2012 and 2011	 	
 	  	          2012           	 	 	          2011           	 	
Net revenues:	  				 				
Admissions	  	$	715,842	  	 	$	666,097	  	
Food, merchandise and other	  	 	444,737	  	 	 	412,637	  	
	  	 	 	 	 	 	 	 	
Total revenues	  	 	1,160,579	  	 	 	1,078,734	  	
	  	 	 	 	 	 	 	 	
Costs and expenses:	  				 				
Cost of food, merchandise and other revenues	  	 	99,109	  	 	 	89,736	  	
Operating expenses	  	 	560,145	  	 	 	521,390	  	
Selling, general and administrative	  	 	150,571	  	 	 	142,447	  	
Depreciation and amortization	  	 	122,085	  	 	 	154,862	  	
	  	 	 	 	 	 	 	 	
Total costs and expenses	  	 	931,910	  	 	 	908,435	  	
	  	 	 	 	 	 	 	 	
Operating income	  	 	228,669	  	 	 	170,299	  	
Other income (expense), net	  	 	2,110	  	 	 	(1,661	) 	
Interest expense	  	 	86,263	  	 	 	83,960	  	
	  	 	 	 	 	 	 	 	
Income before income taxes	  	 	144,516	  	 	 	84,678	  	
Provision for income taxes	  	 	(58,273	) 	 	 	(34,719	) 	
	  	 	 	 	 	 	 	 	
Net income	  	$	86,243	  	 	$	49,959	  	
	  	 	 	 	 	 	 	 	
Other comprehensive loss	  				 				
Unrealized loss from cash flow hedging derivatives, net of tax	  	 	(1,172	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Other comprehensive loss	  	$	(1,172	) 	 	$	—  	  	
	  	 	 	 	 	 	 	 	
Comprehensive income	  	$	85,071	  	 	$	49,959	  	
	  	 	 	 	 	 	 	 	
Basic earnings per share:	  				 				
Weighted average common shares outstanding	  	 	10,310	  	 	 	10,138	  	
	  	 	 	 	 	 	 	 	
Net income per share	  	$	8.36	  	 	$	4.93	  	
	  	 	 	 	 	 	 	 	
Diluted earnings per share:	  				 				
Weighted average common shares outstanding	  	 	10,413	  	 	 	10,205	  	
	  	 	 	 	 	 	 	 	
Net income per share	  	$	8.28	  	 	$	4.90	  	
	  	 	 	 	 	 	 	 	
Unaudited pro forma basic net income per common share (Note 3)	  	$	 	  	 				
Unaudited pro forma diluted net income per common share (Note 3)	  	$	 	  	 				
See notes to unaudited condensed consolidated financial statements.
 
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 SeaWorld Entertainment, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
for the Nine Months Ended September 30, 2012 and the Year Ended December 31, 2011
(In thousands, except share amounts)

 	 	Shares of
Common Stock	 	 	Common
Stock	 	 	Additional
Paid-In
Capital	 	 	Retained
Earnings
(Accumulated
Deficit)	 	 	Accumulated
Other
Comprehensive
Loss	 	 	Total
Stockholders’
Equity	 	
Balance at December 31, 2010	 	 	10,100,000	  	 	$	101	  	 	$	1,052,899	  	 	$	(103,205	) 	 	$	—  	  	 	$	949,795	  	
Issuance of common stock	 	 	130,240	  	 	 	2	  	 	 	12,834	  	 	 	—  	  	 	 	—  	  	 	 	12,836	  	
Equity-based compensation	 	 	72,111	  	 	 	—  	  	 	 	823	  	 	 	—  	  	 	 	—  	  	 	 	823	  	
Dividend declared to stockholders	 	 	—  	  	 	 	—  	  	 	 	(110,100	) 	 	 	—  	  	 	 	—  	  	 	 	(110,100	) 	
Net income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	19,113	  	 	 	—  	  	 	 	19,113	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2011	 	 	10,302,351	  	 	$	103	  	 	$	956,456	  	 	$	(84,092	) 	 	$	—  	  	 	$	872,467	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity-based compensation	 	 	7,915	  	 	 	—  	  	 	 	872	  	 	 	—  	  	 	 	—  	  	 	 	872	  	
Unrealized loss on derivatives, net of tax	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,172	) 	 	 	(1,172	) 	
Dividend declared to stockholders	 	 	—  	  	 	 	—  	  	 	 	(500,000	) 	 	 	—  	  	 	 	—  	  	 	 	(500,000	) 	
Net income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	86,243	  	 	 	—  	  	 	 	86,243	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at September 30, 2012	 	 	10,310,266	  	 	$	103	  	 	$	457,328	  	 	$	2,151	  	 	$	(1,172	) 	 	$	458,410	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to unaudited condensed consolidated financial statements.
 
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 SeaWorld Entertainment, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 2012 and 2011
(In thousands)

 	 	For the Nine Months Ended
September 30, 2012 and 2011	 	
 	 	        2012        	 	 	        2011        	 	
Cash Flows From Operating Activities:	 				 				
Net income	 	$	86,243	  	 	$	49,959	  	
Adjustments to reconcile net income to net cash provided by operating activities:	 				 				
Depreciation and amortization	 	 	122,085	  	 	 	154,862	  	
Amortization of debt issuance costs and discounts	 	 	14,757	  	 	 	13,933	  	
Loss on sale and disposal of property and equipment	 	 	6,139	  	 	 	1,799	  	
Deferred income tax provision	 	 	58,273	  	 	 	34,719	  	
Equity-based compensation	 	 	887	  	 	 	437	  	
Changes in assets and liabilities:	 				 				
Accounts receivable	 	 	(8,053	) 	 	 	(1,619	) 	
Inventories	 	 	(4,215	) 	 	 	(4,473	) 	
Other current assets	 	 	3,491	  	 	 	5,007	  	
Accounts payable	 	 	(8,238	) 	 	 	(17,452	) 	
Accrued salaries and wages	 	 	(8,014	) 	 	 	(3,291	) 	
Deferred revenue	 	 	16,131	  	 	 	11,725	  	
Other accrued expenses	 	 	20,161	  	 	 	24,316	  	
Other assets and liabilities	 	 	3,001	  	 	 	1,871	  	
	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	302,648	  	 	 	271,793	  	
	 	 	 	 	 	 	 	 	
Cash Flows From Investing Activities:	 				 				
Capital expenditures	 	 	(154,976	) 	 	 	(163,551	) 	
	 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(154,976	) 	 	 	(163,551	) 	
	 	 	 	 	 	 	 	 	
Cash Flows From Financing Activities:	 				 				
Repayment of long-term debt	 	 	(52,451	) 	 	 	(582,123	) 	
Proceeds from the issuance of debt	 	 	487,163	  	 	 	550,291	  	
Repayment of revolving credit facility	 	 	(36,000	) 	 	 	—  	  	
Dividend paid to stockholders	 	 	(463,180	) 	 	 	(103,078	) 	
Net proceeds from issuance of common stock	 	 	—  	  	 	 	13,024	  	
Debt issuance costs	 	 	(7,024	) 	 	 	(5,880	) 	
	 	 	 	 	 	 	 	 	
Net cash used in financing activities	 	 	(71,492	) 	 	 	(127,766	) 	
	 	 	 	 	 	 	 	 	
Change in Cash and Cash Equivalents	 	 	76,180	  	 	 	(19,524	) 	
Cash and Cash Equivalents —Beginning of period	 	 	66,663	  	 	 	123,697	  	
	 	 	 	 	 	 	 	 	
Cash and Cash Equivalents — End of period 	 	$	142,843	  	 	$	104,173	  	
	 	 	 	 	 	 	 	 	
Supplemental Disclosures of Noncash Investing and Financing Activities	 				 				
Capital expenditures in accounts payable	 	$	28,496	  	 	$	29,543	  	
	 	 	 	 	 	 	 	 	
Dividends declared, but unpaid	 	$	40,000	  	 	$	7,022	  	
	 	 	 	 	 	 	 	 	
See notes to unaudited condensed consolidated financial statements.
 
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 SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
SeaWorld Entertainment, Inc. (f/k/a SW Holdco, Inc.), through SeaWorld Parks & Entertainment, Inc. (“SEA”) (collectively, the “Company”), owns and operates ten theme parks within the United States. The Company is owned by ten limited partnerships (the “Partnerships”), ultimately controlled by affiliates of The Blackstone Group L.P. (“Blackstone”) and certain co-investors.
The Company operates SeaWorld theme parks in Orlando, Florida; San Antonio, Texas; and San Diego, California, and Busch Gardens theme parks in Tampa, Florida, and Williamsburg, Virginia. The Company operates water park attractions in Orlando, Florida (Aquatica); Tampa, Florida (Adventure Island), and Williamsburg, Virginia (Water Country USA). The Company also operates a reservations-only attraction offering interaction with marine animals (Discovery Cove) and a seasonal park in Langhorne, Pennsylvania (Sesame Place).
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2011. The unaudited condensed consolidated balance sheet as of December 31, 2011 has been derived from the audited consolidated financial statements at that date.
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the Company’s customary accounting practices. In the opinion of management, such unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations for the full 2012 fiscal year or any future period due to the seasonal nature of the Company’s operations.
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including SEA. All intercompany accounts have been eliminated in consolidation.
 
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Significant Accounting Policies
Derivative Instruments and Hedging Activities
During fiscal year 2012, the Company entered into certain derivative transactions, as detailed in Note 7, and elected the related derivative instruments and hedging activities accounting policy described herein. Accounting Standards Codification Topic (“ASC”) 815, Derivatives and Hedging , provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of, and gains and losses on, derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.
As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
Fair Value Measurements
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Carrying values of financial instruments classified as current assets and current liabilities approximate fair value, due to their short-term nature.
An entity is permitted to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company has not elected to use the fair value option for any of its financial assets and financial liabilities that are not already recorded at fair value.
A description of the Company’s policies regarding fair value measurement is summarized below.
Fair Value Hierarchy —Fair value is determined for assets and liabilities, which are grouped according to a hierarchy, based upon significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy:
Level 1 —Quoted prices for identical instruments in active markets.
 
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Level 2 —Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 —Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Determination of Fair Value —The Company generally uses quoted market prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access to determine fair value, and classifies such items in Level 1. Fair values determined by Level 2 inputs utilize inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, and inputs other than quoted market prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest and currency rates, and the like. Assets or liabilities valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.
Segment Reporting 
The Company maintains discrete financial information for each of its ten theme parks which is used by the Chief Operating Decision Maker (“CODM”), identified as the Chief Executive Officer, as a basis for allocating resources. Each theme park has been identified as an operating segment and meets the criteria for aggregation due to similar economic characteristics. In addition, all of the theme parks provide similar products and services and share similar processes for delivering services. The theme parks have a high degree of similarity in the workforces and target the same consumer group. Accordingly, based on these economic and operational similarities and the way the CODM monitors the operations, the Company has concluded that its operating segments may be aggregated and that it has one reportable segment.
Recently Issued Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (“FASB”) issued guidance clarifying how to measure and disclose fair value. This guidance amends the application of the “highest and best use” concept to be used only in the measurement of fair value of nonfinancial assets, clarifies that the measurement of the fair value of equity-classified financial instruments should be performed from the perspective of a market participant who holds the instrument as an asset, clarifies that an entity that manages a group of financial assets and liabilities on the basis of its net risk exposure can measure those financial instruments on the basis of its net exposure to those risks, and clarifies when premiums and discounts should be taken into account when measuring fair value. The fair value disclosure requirements were also amended. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company adopted the amended guidance effective January 1, 2012 and it did not have a material effect on the unaudited condensed consolidated financial statements.
In June 2011, the FASB issued guidance that revises the manner in which entities present comprehensive income in their financial statements. The guidance requires entities to report the components of comprehensive income in either a single, continuous statement or two separate but consecutive statements. In December 2011, the FASB issued guidance which defers certain requirements set forth in June 2011. These amendments were made to allow the FASB time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other
 
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comprehensive income in all periods presented. Both sets of guidance were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and are required to be applied retrospectively. The Company adopted this guidance on January 1, 2012 and such adoption only resulted in a change in how the Company presents the components of comprehensive income.
In July 2012, the FASB issued new accounting guidance relating to impairment testing for indefinite-lived intangible assets. In accordance with this guidance, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If after such assessment an entity concludes that the indefinite-lived intangible asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test as required by existing standards. This guidance is effective for annual and interim impairment tests for fiscal years beginning after September 15, 2012 and early adoption is permitted. The Company is in the process of evaluating this guidance, which is not expected to have a material impact on its consolidated financial statements.
3. EARNINGS PER SHARE
Earnings per share is computed as follows (in thousands, except per share data):

 	  	Nine Months Ended September 30, 2012	 	  	Nine Months Ended September, 2011	 	
 	  	Net
      Income      	 	  	Shares	 	  	Per Share
Amount	 	  	Net
Income	 	  	Shares	 	  	Per Share
      Amount      	 	
Basic earnings per share	  	$	86,243	  	  	 	10,310	  	  	$	8.36	  	  	$	49,959	  	  	 	10,138	  	  	$	4.93	  	
Effect of dilutive incentive-based awards	  				  	 	103	  	  				  				  	 	67	  	  				
	  				  	 	 	 	  				  	 	 	 	  	 	 	 	  	 	 	 	
Diluted earnings per share	  	$	86,243	  	  	 	10,413	  	  	$	8.28	  	  	$	49,959	  	  	 	10,205	  	  	$	4.90	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Unaudited pro forma basic net income per common share	  	$	 	  	  				  	$	 	  	  				  				  				
Unaudited pro forma diluted net income per common share	  	$	 	  	  				  	$	 	  	  				  				  				
Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is determined based on the dilutive effect of incentive units using the treasury stock method.
Unaudited pro forma net income per share was calculated using the number of shares that would be required to be sold at the initial public offering price to fund the $500.0 million dividend declared in March 2012, less the net income for the period ended September 30, 2012.
4. INCOME TAXES
Income tax expense is recognized based on the Company’s estimated annual effective tax rate which is based upon the tax rate expected for the full calendar year applied to the pre-tax income of the interim period. The Company’s consolidated effective tax rate for the nine months ended September 30, 2012 and 2011 was 40.32% and 41.0%, respectively, and differs from the statutory federal income tax rate primarily due to state income taxes.
The Company has determined that there are no positions currently taken that would rise to a level requiring an amount to be recorded or disclosed as an uncertain tax position. If such positions do arise, it is the Company’s intent that any interest or penalty amount related to such positions will be recorded as a component of tax expense to the applicable period.
 
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5. OTHER ACCRUED EXPENSES
Other accrued expenses at September 30, 2012 and December 31, 2011, consist of the following:

 	  	September 30,
2012	 	  	December 31,
2011	 	
Accrued property taxes	  	$	10,940	  	  	$	1,644	  	
Accrued interest	  	 	15,210	  	  	 	4,908	  	
Other	  	 	2,410	  	  	 	1,847	  	
	  	 	 	 	  	 	 	 	
Total	  	$	28,560	  	  	$	8,399	  	
	  	 	 	 	  	 	 	 	
6. LONG-TERM DEBT
Long-term debt as of September 30, 2012 and December 31, 2011 consists of the following:

 	  	September 30,
2012	 	 	December 31,
2011	 	
Term Loan A	  	$	153,875	  	 	$	159,500	  	
Term Loan B	  	 	1,297,128	  	 	 	844,043	  	
Revolving credit agreement	  	 	—  	  	 	 	36,000	  	
Senior Notes	  	 	400,000	  	 	 	400,000	  	
	  	 	 	 	 	 	 	 	
	  	 	1,851,003	  	 	 	1,439,543	  	
Less discounts	  	 	(23,338	) 	 	 	(21,656	) 	
Less current maturities	  	 	(21,330	) 	 	 	(52,500	) 	
	  	 	 	 	 	 	 	 	
Total long-term debt, net of current maturities	  	$	1,806,335	  	 	$	1,365,387	  	
	  	 	 	 	 	 	 	 	
Effective on March 30, 2012, SEA entered into Amendment No. 3 to the senior secured credit facilities (the “Senior Secured Credit Facilities”) to increase the amount of Term B Loans (“Additional Term B Loans”) by $500,000 for the purposes of financing a dividend payment to the stockholders in the same amount. The Additional Term B loans were issued at a discount of $6,245. The discount is being amortized to interest expense using the weighted average interest method. Borrowings under the Tranche B Term Loans bear interest, at SEA’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the Bank of America’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the British Bankers Association (“BBA”) LIBOR rate for the interest period relevant to such borrowing. The margin for the Tranche B Term Loans is 2.00%, in the case of base rate loans, and 3.00%, in the case of LIBOR rate loans, subject to a base rate floor of 2.00% and a LIBOR floor of 1.00%. SEA selected the LIBOR rate at September 30, 2012, related to the Term B loans (interest rate of 4%).
The Additional Term B Loans mature on the earlier of August 17, 2017 or the 91 st day prior to the maturity of any mezzanine debt with an aggregate principal amount greater than $50,000.
In conjunction with the issuance of the Additional Term B loans and the Revised Indenture (as defined below), SEA deferred $13,527 in financing costs.
In conjunction with the execution of Amendment No. 3 to the Senior Secured Credit Facilities, SEA also entered into the Second Supplemental Indenture (the “Revised Indenture”) dated March 30, 2012 relating to the Senior Notes. Among other matters, the Revised Indenture granted waivers to allow SEA to issue the additional $500,000 of Term B Loans to fund the dividend payment discussed above and decreased the interest rate on the Senior Notes from 13.5% per annum to 11% per annum. Until December 1, 2014, and in the case of an Equity Offering (as defined in the indenture), SEA may
 
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redeem up to 35% of the Senior Notes at a price of 111% of the aggregate principal balance plus accrued interest using the net cash proceeds from an Equity Offering. Except in the case of an Equity Offering, prior to December 1, 2014, the Senior Notes may be redeemed at 100% of the outstanding principal balance plus the greater of 1% of the principal balance of the Senior Notes or the excess of the present value of the notes as of December 1, 2014 plus required interest and redemption rates using the Treasury Rate plus 50 basis points over the principal balance of the Senior Notes. On or after December 1, 2014, the Senior Notes may be redeemed at 105.5% and 102.75% of the principal balance beginning on December 1, 2014 and 2015, respectively. The Revised Indenture also increased the minimum covenant leverage ratio from 2.75 to 1.00 to 3.0 to 1.0.
Additionally, on August 23, 2012, SEA executed two interest rate swap agreements to effectively fix the interest rate on $550,000 of the Term B Loans. Each interest rate swap has a notional amount of $275,000; matures on September 30, 2016, pays a fixed rate of interest of 1.247% per annum; receives a variable rate of interest based upon three month BBA LIBOR; and has interest settlement dates occurring on the last day of December, March, June and September through maturity. SEA has designated such interest rate swap agreements as qualifying cash flow hedge accounting relationships as further discussed in Note 7 below.
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.
As of September 30, 2012, the Company does not have any derivatives outstanding that are not designated in hedge accounting relationships. In addition, the Company did not have any material derivatives outstanding as of December 31, 2011.
As of September 30, 2012, the Company had approximately $11.6 million of outstanding letters of credit.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During the nine months ended September 30, 2012, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. As of September 30, 2012, the Company had two outstanding interest rate derivatives with a combined notional of $550,000 that were designated as cash flow hedges of interest rate risk.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently
 
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reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates that an additional $1,360 will be reclassified as an increase to interest expense.
Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of September 30, 2012:

 	  	Asset Derivatives
As of September 30, 2012	 	  	Liability Derivatives
As of September 30, 2012	 	
	  	Balance Sheet Location	 	  	Fair Value	 	  	Balance Sheet Location	 	  	Fair Value	 	
Derivatives designated as hedging instruments:	  				  				  				  				
Interest rate swaps	  	 	Other assets	  	  	$	—  	  	  	 	Other liabilities	  	  	$	1,964	  	
Total derivatives designated as hedging instruments	  				  	$	—  	  	  				  	$	1,964	  	
	  				  	 	 	 	  				  	 	 	 	
Tabular Disclosure of the Effect of Derivative Instruments on the Statement of Comprehensive Income (Loss)
The table below presents the pre-tax effect of the Company’s derivative financial instruments on the statement of comprehensive income (loss) for the nine months ended September 30, 2012:

 	  	Nine months ended
September 30, 2012	 	
Derivatives in Cash Flow Hedging Relationships:	  				
Gain (loss) related to effective portion of derivatives recognized in accumulated other comprehensive income	  	$	(1,964	) 	
Gain (loss) related to effective portion of derivatives reclassified from accumulated other comprehensive income to interest expense	  	$	(11	) 	
Gain (loss) related to ineffective portion of derivatives recognized in other income (expense)	  	$	—  	  	
Credit Risk-Related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.
As of September 30, 2012, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $2,002. As of September 30, 2012, the Company has posted no collateral related to these agreements. If the Company had breached any of these provisions at September 30, 2012, it could have been required to settle its obligations under the agreements at their termination value of $2,002.
 
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8. FAIR VALUE MEASUREMENTS
Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement is required to be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
The Company has determined that the majority of the inputs used to value its derivative financial instruments using the income approach fall within Level 2 of the fair value hierarchy. The Company uses readily available market data to value its derivatives, such as interest rate curves and discount factors. ASC 820 also requires consideration of credit risk in the valuation. The Company uses a potential future exposure model to estimate this credit valuation adjustment (“CVA”). The inputs to the CVA are largely based on observable market data, with the exception of certain assumptions regarding credit worthiness which make the CVA a Level 3 input. Based on the magnitude of the CVA, it is not considered a significant input and the derivatives are classified as Level 2. Of the Company’s long-term obligations, the Term A Loans and Term B Loans are classified in Level 2 of the fair value hierarchy. The fair value of the term loans as of September 30, 2012 approximates their carrying value due to the variable nature of the underlying interest rates and the frequent intervals at which such interest rates are reset. The Senior Notes are classified in Level 3 of the fair value hierarchy and have been valued using significant inputs that are not observable in the market including a discount rate of 10.83% and projected cash flows of the underlying Senior Notes. The Company does not have any assets measured at fair value as of September 30, 2012.

 	  	Quoted Prices in
Active Markets
for Identical
Assets and
Liabilities
(Level 1)	 	  	Significant
Other
Observable
Inputs
(Level 2)	 	  	Significant
Unobservable
Inputs
(Level 3)	 	  	Balance at
September 30,
2012	 	
Liabilities:	  				  				  				  				
Long-term obligations(a)	  	 	—  	  	  	$	1,451,003	  	  	$	412,581	  	  	$	1,863,584	  	
Derivative financial instruments(b)	  	 	—  	  	  	$	1,964	  	  	 	—  	  	  	$	1,964	  	

(a)	Reflected at carrying value in the unaudited condensed consolidated balance sheet as current maturities on long-term debt of $21,330 and long-term debt of $1,806,335. As of December 31, 2011, the carrying value and fair value of long-term obligations, including the current portion, was $1,417,887 and $1,468,543, respectively.	
(b)	Reflected at fair value in the unaudited condensed consolidated balance sheet as other liabilities of $1,964.	
9. RELATED-PARTY TRANSACTIONS
Certain affiliates of Blackstone provide monitoring, advisory, and consulting services to the Company under an advisory fee agreement. Fees related to these services, which are based upon a multiple of EBITDA as defined in the advisory agreement, amounted to $5,075 and $4,948 for the nine months ended September 30, 2012 and 2011, respectively, are included in selling, general, and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and other comprehensive income (loss).
In March 2012, the Company declared a $500,000 dividend to its stockholders. The dividend was accounted for as a return of capital in the September 30, 2012 condensed consolidated balance sheet as the Company was in a net accumulated deficit position at the time that such dividends were declared.
 
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10. SUBSEQUENT EVENTS
In connection with the preparation of the unaudited condensed consolidated financial statements, the Company evaluated subsequent events after the condensed consolidated balance sheet date of September 30, 2012, through December 26, 2012, the date the unaudited condensed consolidated financial statements were issued, to determine whether any events occurred that required recognition or disclosure in the accompanying unaudited condensed consolidated financial statements. The Company believes the following event requires disclosure:
On November 20, 2012, the Company acquired Knott’s Soak City, a standalone Southern California water park, from an affiliate of Cedar Fair L.P. for $15,000, of which approximately $12,000 was paid at closing, and the remaining $3,000 will be paid on or before September 1, 2013. The Company plans to rebrand this water park as Aquatica San Diego before it re-opens in 2013.
 
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             Shares
SeaWorld Entertainment, Inc.
Common Stock

 
 
Goldman, Sachs & Co.
J.P. Morgan
Citigroup
BofA Merrill Lynch
Barclays
Wells Fargo Securities

 

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses payable by the Registrant expected to be incurred in connection with the issuance and distribution of common stock being registered hereby (other than underwriting discounts and commissions). All of such expenses are estimates, except for the Securities and Exchange Commission (the “SEC”) registration fee, the Financial Industry Regulatory Authority Inc. (“FINRA”) filing fee and the NYSE filing fee and listing fee.

SEC registration fee	  	$	13,640	  	
FINRA filing fee	  	 	15,500	  	
NYSE filing fee and listing fee	  	 	            	* 	
Printing fees and expenses	  	 	500,000	  	
Legal fees and expenses	  	 	            	* 	
Registrar and transfer agent fees	  	 	            	* 	
Accounting fees and expenses	  	 	1,500,000	  	
Miscellaneous expenses	  	 	            	* 	
	  	 	 	 	
Total	  	$	            	* 	

*	To be completed by amendment.	
Item 14. Indemnification of Directors and Officers.
Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”) allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our amended and restated certificate of incorporation will provide for this limitation of liability.
Section 145 of the DGCL (“Section 145”), provides, among other things, that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. A Delaware corporation may indemnify any persons who were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests, provided further that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an
 
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officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses (including attorneys’ fees) which such officer or director has actually and reasonably incurred.
Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify such person under Section 145.
Our amended and restated bylaws will provide that we must indemnify and advance expenses to our directors and officers to the full extent authorized by the DGCL.
The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, any provision of our amended and restated certificate of incorporation, our amended and restated bylaws, agreement, vote of stockholders or disinterested directors or otherwise. Notwithstanding the foregoing, we shall not be obligated to indemnify a director or officer in respect of a proceeding (or part thereof) instituted by such director or officer, unless such proceeding (or part thereof) has been authorized by the Board of Directors pursuant to the applicable procedure outlined in the amended and restated bylaws.
Section 174 of the DGCL provides, among other things, that a director, who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption, may be held jointly and severally liable for such actions. A director who was either absent when the unlawful actions were approved or dissented at the time may avoid liability by causing his or her dissent to such actions to be entered in the books containing the minutes of the meetings of the Board of Directors at the time such action occurred or immediately after such absent director receives notice of the unlawful acts.
We expect to maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and officers.
The underwriting agreement provides for indemnification by the underwriters of us and our officers and directors and the selling stockholders, and by us and the selling stockholders of the underwriters, for certain liabilities arising under the Securities Act or otherwise in connection with this offering.
Item 15. Recent Sales of Unregistered Securities.
Following the 2009 Transactions, the Registrant issued an aggregate of 242,126 shares of its common stock to the Partnerships for aggregate proceeds to the Registrant of approximately $12.8 million. Such securities were issued in reliance on the exemption contained in Section 4(2) of the Securities Act as transactions by the issuer not involving a public offering. No underwriters were involved in any of these sales of securities.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits .    See the Exhibit Index immediately following the signature page hereto, which is incorporated by reference as if fully set forth herein.
(b) Financial Statement Schedules .    Schedule I—Registrant’s Condensed Financial Statements is included in the registration statement beginning on page F-24.
 
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Item 17. Undertakings.
(1) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
(2) The undersigned Registrant hereby undertakes that:
 
 	(A)	For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.	
 
 	(B)	For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.	
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Orlando, Florida, on February 11, 2013.

SeaWorld Entertainment, Inc.	
		
By:  	 	/ S /    J AMES A TCHISON	
	 	Name: James Atchison	
	 	Title: Chief Executive Officer and President	
POWER OF ATTORNEY
The undersigned director and officers of SeaWorld Entertainment, Inc. hereby constitute and appoint G. Anthony (Tony) Taylor, James M. Heaney and Paul B. Powers and each of them, any of whom may act without joinder of the other, the individual’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the person and in his or her name, place and stead, in any and all capacities, to sign this Registration Statement and any or all amendments, including post-effective amendments to the Registration Statement, including a prospectus or an amended prospectus therein and any Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act, and all other documents in connection therewith to be filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact as agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement and power of attorney have been signed by the following persons in the capacities indicated on February 11, 2013.

Signature	  	Capacity	
		
/ S /    J AMES A TCHISON        	  	Chief Executive Officer, President and Director (Principal Executive Officer)	
James Atchison	  		
		
/ S /     J AMES M. H EANEY        	  	Chief Financial Officer (Principal Financial Officer)	
James M. Heaney	  		
		
/ S /    M ARC G. S WANSON        	  	Chief Accounting Officer (Principal Accounting Officer)	
Marc G. Swanson	  		
		
*	  	Director	
David F. D’Alessandro	  		
		
*	  	Director	
Bruce McEvoy	  		
		
*	  	Director	
Peter Wallace	  		
		
/ S /     J OSEPH B ARATTA        
Joseph Baratta	  	Director	

*By:	 	/ S /    G. A NTHONY  (T ONY )  T AYLOR          	  		
					
 Name:	 	G. Anthony (Tony) Taylor	  		
 Title:	 	Attorney-in-Fact	  		
 
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EXHIBIT INDEX

Exhibit No.	 	Description	
		
  1.1*	 	Form of Underwriting Agreement	
		
  3.1*	 	Form of Amended and Restated Certificate of Incorporation of SeaWorld Entertainment, Inc.	
		
  3.2*	 	Form of Amended and Restated Bylaws of SeaWorld Entertainment, Inc.	
		
  5.1*	 	Opinion of Simpson Thacher & Bartlett LLP	
		
10.1**	 	Indenture, dated as of December 1, 2009, among SW Acquisitions Co., Inc., the guarantors named therein and Wilmington Trust FSB, as trustee	
		
10.2**	 	First Supplemental Indenture, dated as of August 30, 2011, among SeaWorld Parks & Entertainment, Inc. (f/k/a SW Acquisitions Co., Inc.), the guarantors named therein and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee	
		
10.3**	 	Second Supplemental Indenture, dated as of March 30, 2012, among SeaWorld Parks & Entertainment, Inc. (f/k/a SW Acquisitions Co., Inc.), the guarantors named therein and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee	
		
10.4**	 	Third Supplemental Indenture, dated as of December 17, 2012, among SeaWorld Parks & Entertainment, Inc., (f/k/a SW Acquisitions Co., Inc.), the guarantors named therein and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee	
		
10.5	 	Amendment No. 3, dated as of March 30, 2012, to the Credit Agreement, among SeaWorld Parks & Entertainment, Inc. (f/k/a SW Acquisitions Co., Inc.), the guarantors party thereto from time to time, Bank of America, N.A., as administrative agent, collateral agent, Letter of Credit issuer and swing line lender, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bank of America, N.A., as joint lead arrangers, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital, Deutsche Bank Securities Inc., Goldman Sachs Lending Partners LLC, J.P. Morgan Securities LLC, Macquarie Capital (USA) Inc. and Mizuho Corporate Banks, Ltd. as joint bookrunners, Deutsche Bank Securities Inc. and Barclays Bank plc, as co-syndication agents, and the other agents and lenders from time to time party thereto (the amended and restated Credit Agreement is included as Exhibit A hereto)	
		
10.6**	 	Joinder Agreement, dated as of December 17, 2012, under the Credit Agreement, among SeaWorld of Texas Holdings, LLC, SeaWorld of Texas Management, LLC, SeaWorld of Texas Beverage, LLC and Bank of America, N.A., as administrative agent and collateral agent	
		
10.7**	 	Security Agreement, dated as of December 1, 2009, among SW Acquisitions Co., Inc., the other grantors named therein and Bank of America, N.A., as collateral agent	
		
10.8**	 	Supplement No. 1, dated as of December 17, 2012, to the Security Agreement among the grantors identified therein and Bank of America, N.A., as collateral agent	
		
10.9	 	Pledge Agreement, dated as of December 1, 2009, between SeaWorld Entertainment, Inc. (f/k/a/SW Holdco, Inc.) and Bank of America, N.A., as collateral agent	
		
10.10	 	Patent Security Agreement, dated as of December 1, 2009, by SeaWorld Parks & Entertainment (f/k/a Busch Entertainment LLC) in favor of Bank of America, N.A., as collateral agent	
		
10.11	 	Trademark Security Agreement, dated as of December 1, 2009, by SeaWorld Parks & Entertainment (f/k/a Busch Entertainment LLC) in favor of Bank of America, N.A., as collateral agent	

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Exhibit No.	 	Description	
		
10.12	 	Trademark Security Agreement, dated as of December 1, 2009, by Sea World LLC in favor of Bank of America, N.A., as collateral agent	
		
10.13	 	Copyright Security Agreement, dated as of December 1, 2009, by SeaWorld Parks & Entertainment (f/k/a Busch Entertainment LLC) in favor of Bank of America, N.A., as collateral agent	
		
10.14	 	Copyright Security Agreement, dated as of December 1, 2009, by Sea World LLC in favor of Bank of America, N.A., as collateral agent	
		
10.15*	 	Form of Support and Services Agreement	
		
10.16*	 	Form of Stockholders Agreement	
		
10.17	 	Registration Rights Agreement, dated December 1, 2009, by and among SeaWorld Entertainment, Inc. (f/k/a SW Holdco, Inc.), SW Cayman L.P. and the equityholders named therein	
		
10.18**	 	Lease Amendment, dated January 9, 1978, by and between the City of San Diego and Sea World Inc.	
		
10.19**	 	Lease Amendment, dated March 6, 1979, by and between the City of San Diego and Sea World Inc.	
		
10.20**	 	Lease Amendment, dated December 12, 1983, by and between the City of San Diego and Sea World Inc.	
		
10.21	 	Lease Amendment, dated June 24, 1985, by and between the City of San Diego and Sea World Inc.	
		
10.22	 	Lease Amendment, dated September 22, 1986, by and between the City of San Diego and Sea World Inc.	
		
10.23	 	Lease Amendment, dated June 29, 1998, by and between the City of San Diego and Sea World Inc.	
		
10.24	 	Lease Amendment, dated July 9, 2002, by and between the City of San Diego and Sea World Inc.	
		
10.25**	 	Trademark License Agreement, dated December 1, 2009, by and between Anheuser-Busch Incorporated and Busch Entertainment LLC	
		
10.26	 	Amended and Restated Agreement, dated April 1, 1983, by and between SeaWorld Parks & Entertainment LLC (f/k/a SPI, Inc.) and Sesame Workshop (f/k/a Children’s Television Workshop) (Portions of this exhibit have been omitted pursuant to a request for confidential treatment)	
		
10.27	 	Amendment, dated August 24, 2006, to the Amended and Restated Agreement, dated April 1, 1983, by and between SeaWorld Parks & Entertainment LLC (f/k/a SPI, Inc.) and Sesame Workshop (f/k/a Children’s Television Workshop)	
		
10.28	 	License Agreement, dated August 24, 2006, by and between Sesame Workshop and SeaWorld Parks & Entertainment LLC (f/k/a Busch Entertainment Corporation) (Portions of this exhibit have been omitted pursuant to a request for confidential treatment)	
		
10.29	 	Change in Control Notification and Consent, dated October 6, 2009, pursuant to the license agreement, dated April 1, 1983, as amended on August 24, 2006, between SeaWorld Parks & Entertainment LLC (f/k/a Busch Entertainment Corporation) and Sesame Workshop	
		
10.30	 	Change in Control Notification and Consent, dated October 6, 2009, pursuant to the license agreement, dated August 24, 2006, between SeaWorld Parks & Entertainment LLC (f/k/a Busch Entertainment Corporation) and Sesame Workshop	
		
10.31†	 	Form of 2013 Omnibus Incentive Plan	
		
10.32	 	Form of Amended and Restated 2009 Advisory Agreement	
		
10.33†	 	Offer Letter to James M. Heaney, dated January 17, 2012	

Table of Contents

Exhibit No.	 	Description	
		
10.34†	 	Offer Letter to Scott D. Helmstedter, dated February 16, 2011	
		
10.35†	 	Offer Letter to David D’Alessandro, dated September 1, 2010	
		
10.36†	 	Summary Compensation Letter to Donald W. Mills Jr., dated April 22, 2010	
		
10.37†	 	SeaWorld Parks & Entertainment, Inc. Key Employee Severance Plan, effective August 1, 2010	
		
10.38	 	Second Amended and Restated Equityholders Agreement, dated as of April 11, 2011	
		
21.1**	 	List of Subsidiaries	
		
23.1*	 	Consent of Simpson Thacher & Bartlett LLP (included in exhibit 5.1)	
		
23.2	 	Consent of Deloitte & Touche LLP	
		
24.1	 	Power of Attorney (included in the signature page to this Registration Statement)	

*	To be filed by amendment.	
**	Previously filed.	
†	Identifies exhibits that consist of a management contract or compensatory plan or arrangement.	

Exhibit 10.5
AMENDMENT No. 3, dated as of March 30, 2012 (this “ Amendment ”), to the Credit Agreement, dated as of December 1, 2009, among SEAWORLD PARKS & ENTERTAINMENT, INC. (f/k/a SW ACQUISITIONS CO., INC.), a Delaware corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to the Credit Agreement (the “ Lenders ”), BANK OF AMERICA, N.A., as Administrative Agent (the “ Administrative Agent ”) and Collateral Agent (the “ Collateral Agent ”), BANK OF AMERICA, N.A., as L/C Issuer and Swing Line Lender, DEUTSCHE BANK SECURITIES INC. and BARCLAYS BANK PLC, as co-syndication agents (collectively, in such capacity, and together with their successors, the “ Syndication Agents ”), MIZUHO CORPORATE BANK, LTD., as documentation agent (the “ Documentation Agent ”), MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and DEUTSCHE BANK SECURITIES INC., as Joint Lead Arrangers and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, BARCLAYS CAPITAL and DEUTSCHE BANK SECURITIES INC., as Joint Bookrunners (as amended by Amendment No. 1, dated as of February 17, 2011, as further amended by Amendment No. 2, dated as of April 15, 2011, and as further amended, restated, modified and supplemented from time to time, the “ Credit Agreement ”); capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
WHEREAS, the Borrower desires to amend the Credit Agreement on the terms set forth herein;
WHEREAS, Section 10.01 of the Credit Agreement provides that the relevant Loan Parties and the Required Lenders may amend the Credit Agreement and the other Loan Documents for certain purposes including to permit additional extensions of credit to be included in the Credit Agreement;
WHEREAS, the Term B Increase Lender (as defined in Exhibit A ) has agreed to make Term B Loans (the “ Term B Increase Loans ”) in a principal amount equal to the Term B Increase Commitment (as defined in Exhibit A ), the proceeds of which shall be used (i) to finance the payment of the Amendment No. 3 Distribution (as defined in Exhibit A ) and (ii) to pay fees and expenses in connection with the Amendment No. 3 Distribution, the Mezzanine Debt Amendment (as defined in Exhibit A ) and this Amendment.
NOW, THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
Section 1. Amendment . The Credit Agreement is, effective as of the Amendment No. 3 Effective Date (as defined below), hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text ) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text ) as set forth in the pages of the Credit Agreement attached as Exhibit A hereto.
Section 2. Representations and Warranties, No Default . The Borrower hereby represents and warrants that as of the Amendment No. 3 Effective Date, after giving effect to the amendments set forth in this Amendment, (i) no Default or Event of Default exists and is continuing and (ii) all representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof, as though made on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they were true and correct in all material respects as of such earlier date ( provided that representations and warranties that are qualified by materiality are true and correct (after giving effect to any qualification thereof) in all respects on and as of the date hereof).

Section 3. Effectiveness . Section 1 of this Amendment shall become effective on the date (such date, if any, the “ Amendment No. 3 Effective Date ”) that the following conditions have been satisfied:
(i) Consents . The Administrative Agent shall have received executed signature pages hereto from Lenders constituting the Required Lenders (each such Lender a “ Consenting Lender ”) and each Loan Party;
(ii) Amendment No. 3 Joinder Agreement . The Administrative Agent, the Borrower and the Term B Increase Lender shall have entered into the Amendment No. 3 Joinder Agreement (as defined in Exhibit A );
(iii) Fees . The Administrative Agent shall have received (x) from the Borrower a non-refundable fee (the “ Consent Fee ”), for the account of each Consenting Lender that has delivered an executed signature page hereto prior to the Amendment No. 3 Effective Date, equal to 0.25% of the principal amount of Loans and Commitments, as applicable, held by Consenting Lenders on the Amendment No. 3 Effective Date, (y) from the Borrower a non-refundable upfront fee (the “ Term B Increase Loan Upfront Fee ”) equal to 1.249% of the amount of the Term B Increase Loans funded on the Amendment No. 3 Effective Date, for the account of the Term B Increase Lender (it being understood that such Term B Increase Upfront Fee may take the form of original issue discount on the aggregate principal amount of the Term B Increase Loans to be funded on the Amendment No. 3 Effective Date) and (z) all fees required to be paid, and all expenses for which reasonably detailed invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Amendment No. 3 Effective Date;
(iv) Legal Opinions . The Administrative Agent shall have received a favorable legal opinion of Simpson Thacher & Bartlett LLP, counsel to the Loan Parties, covering such matters as the Administrative Agent may reasonably request and otherwise reasonably satisfactory to the Administrative Agent;
(v) Officer’s Certificate . The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower dated the Amendment No. 3 Effective Date certifying that (a) all representations and warranties shall be true and correct in all material respects on and as of the Amendment No. 3 Effective Date (although any representations and warranties (i) which expressly relate to a given date or period shall be required to be true and correct in all material respects as of the respective date or for the respective period, as the case may be and (ii) that are qualified by materiality are true and correct (after giving effect to any qualification thereof) in all respects on and as of the date hereof), before and after giving effect to the borrowing and to the application of the proceeds therefrom, as though made on and as of such date and (b) no Event of Default or event which with the giving of notice or lapse of time or both would be an Event of Default, shall have occurred and be continuing;
(vi) Closing Certificates . The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation or organization, including all amendments thereto, of each Loan Party, certified, if applicable, as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing (where relevant) of each Loan Party as of a recent date, from such Secretary of State or similar Governmental Authority or a certification from each Loan Party that there have been no changes to the certificate or articles of
 
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incorporation or organization, including all amendments thereto that were delivered to the Administrative Agent on the Amendment No. 1 Effective Date and (ii) a certificate of a Responsible Officer of each Loan Party dated the Amendment No. 3 Effective Date and certifying (A) that (i) attached thereto is a true and complete copy of the by-laws or operating (or limited liability company) agreement of such Loan Party as in effect on the Amendment No. 3 Effective Date or (ii) there have been no changes to the by-laws or operating (or limited liability company) agreement of such Loan Party that were delivered to the Administrative Agent on the Amendment No. 1 Effective Date, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or equivalent governing body) of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation or organization of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document on behalf of such Loan Party and countersigned by another officer as to the incumbency and specimen signature of a Responsible Officer executing the certificate pursuant to clause (ii) above;
(vii) Notice of Borrowing . The Administrative Agent shall have received a notice of borrowing with respect to the Term B Increase Loans pursuant to Section 2.02 of the Credit Agreement;
(viii) Flood Certificates . The Administrative Agent shall have received (i) a completed “life of the loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to each Mortgaged Property (each a “ Flood Notice ”) and (ii) with respect to any Mortgaged Property which is designated as a “flood hazard area” in any Flood Insurance Rate Map established by the Federal Emergency Management Agency (or any successor agency), a duly executed and acknowledged Flood Notice by the appropriate Loan Parties, together with a copy of and a certificate as to coverage under the insurance policies required by Section 6.07 of the Credit Agreement with respect to flood insurance policies and the applicable provisions of the Collateral Documents, each of which shall be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable or mortgagee endorsement (as applicable) and shall name the Administrative Agent, on behalf of the Secured Parties, as additional insured, and such other evidence of compliance with applicable flood insurance regulations as the Administrative Agent may reasonably request, all in form and substance satisfactory to the Administrative Agent;
(ix) Mezzanine Debt Amendment . The Mezzanine Debt Amendment (as defined in Exhibit A ) shall have become effective or shall become effective substantially simultaneously with the Amendment No. 3 Effective Date; and
(x) Financial Statements . The Administrative Agent shall have received the Borrower’s audited financial statements for the fiscal year ended December 31, 2011 and such audited financial statements shall meet the requirement of Section 6.01 of the Credit Agreement.
Section 4. Post-Effectiveness Covenant . Not later than 60 days after the Amendment No. 3 Effective Date (or such later date as to which the Administrative Agent may agree), the Loan Parties shall take such actions and deliver such documentation with respect to the Mortgaged
 
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Properties as the Administrative Agent shall reasonably request (including, without limitation, if requested, (i) entering into amendments with respect to any existing Mortgages, (ii) obtaining title datedown endorsements with respect to any existing Title Policies or, to the extent such endorsements are not available under applicable law, a new title insurance policy, each dated the date of recording of the amendment and (iii) delivering customary opinions of counsel with respect to any Mortgaged Property, in each case in form and substance reasonably acceptable to the Administrative Agent) in order to ensure the Mortgages continue to secure all Obligations after giving effect to this Amendment with the same priority as was the case prior to giving effect to this Amendment and otherwise to confirm the enforceability, validity and perfection of the Liens in favor of the Secured Parties.
Section 5. Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or any other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
Section 6. Applicable Law .
(a) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING ARISING UNDER THIS AMENDMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AMENDMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND BY EXECUTION AND DELIVERY OF THIS AMENDMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AMENDMENT OR ANY OTHER DOCUMENT RELATED HERETO. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT IN THE MANNER PROVIDED FOR NOTICES (OTHER THAN TELECOPIER) IN SECTION 10.02 OF EXHIBIT A HERETO. NOTHING IN THIS AMENDMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
Section 7. Headings . The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
Section 8. Effect of Amendment . Except as expressly set forth herein, (i) this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders, the Administrative Agent, any other Agent or the Issuing Lenders,
 
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in each case under the Credit Agreement or any other Loan Document, and (ii) shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of either such agreement or any other Loan Document. Each and every term, condition, obligation, covenant and agreement contained in the Credit Agreement or any other Loan Document is hereby ratified and re-affirmed in all respects and shall continue in full force and effect. Each Loan Party reaffirms its obligations under the Loan Documents to which it is party and the validity of the Liens granted by it pursuant to the Security Documents. This Amendment shall constitute a Loan Document for purposes of the Credit Agreement and from and after the Amendment No. 3 Effective Date, all references to the Credit Agreement in any Loan Document and all references in the Credit Agreement to “this Agreement,” “hereunder”, “hereof” or words of like import referring to the Credit Agreement, shall, unless expressly provided otherwise, refer to the Credit Agreement as amended by this Amendment. Each of the Loan Parties hereby consents to this Amendment and confirms that all obligations of such Loan Party under the Loan Documents to which such Loan Party is a party shall continue to apply to the Credit Agreement as amended hereby.
Section 9. WAIVER OF RIGHT TO TRIAL BY JURY .
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AMENDMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AMENDMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AMENDMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.

[Signature]

By:	 	 	
Name:	 		
Title:	 		
[Form of Signature Page]

Exhibit A

CREDIT AGREEMENT
Dated as of December 1, 2009,
as Amended by Amendment No. 1 on February 17, 2011
as further Amended by Amendment No. 2 on April 15, 2011
as further Amended by Amendment No. 3 on March 30, 2012
among
SEAWORLD PARKS & ENTERTAINMENT, INC.,
as the Borrower,
THE GUARANTORS PARTY HERETO FROM TIME TO TIME,
BANK OF AMERICA, N.A.,
as Administrative and Collateral Agent,
BANK OF AMERICA, N.A.,
as L/C Issuer and Swing Line Lender,
THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME,
BANK OF AMERICA, N.A.
as Amendment No. 3 Lead Arranger,
and
BANK OF AMERICA, N.A.
BARCLAYS CAPITAL
DEUTSCHE BANK SECURITIES INC. and BARCLAYS BANK PLC,
as Amendment No. 1 Co-Syndication Agents,
GOLDMAN SACHS LENDING PARTNERS LLC
J.P. MORGAN SECURITIES LLC MACQUARIE
CAPITAL (USA) INC.
and
MIZUHO CORPORATE BANK, LTD. and BBVA COMPASS,
as Amendment No. 1 Co-Documentation Agents, 
and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
as Amendment No. 1 Lead Arranger 3 Joint Bookrunners ,
and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
BARCLAYS CAPITAL ,  
and
DEUTSCHE BANK SECURITIES INC. ,  
as Amendment No. 3 Co-Syndication Agents,
and
GOLDMAN SACHS LENDING PARTNERS LLC

MIZUHO CORPORATE JPMORGAN CHASE BANK LTD . , N.A.
and
MACQUARIE CAPITAL (USA) INC.
as Amendment No. 1 Joint Bookrunners 3 Co-Documentation Agents

 
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TABLE OF CONTENTS

 	 	 	  	Page	 	
			
	 	ARTICLE I.	  				
	 	DEFINITIONS AND ACCOUNTING TERMS	  				
			
Section 1.01.	 	Defined Terms	  	 	1	  	
Section 1.02.	 	Other Interpretive Provisions	  	 	46	  	
Section 1.03.	 	Accounting Terms	  	 	45 47	  	
Section 1.04.	 	Rounding	  	 	45 47	  	
Section 1.05.	 	References to Agreements, Laws, Etc.	  	 	47	  	
Section 1.06.	 	Times of Day	  	 	47	  	
Section 1.07.	 	Timing of Payment of Performance	  	 	46 47	  	
Section 1.08.	 	Cumulative Credit Transactions	  	 	46 48	  	
Section 1.09.	 	Pro Forma Calculations	  	 	46 48	  	
Section 1.10.	 	Letter of Credit Amounts	  	 	47 49	  	
			
	 	ARTICLE II.	  				
	 	THE COMMITMENTS AND CREDIT EXTENSIONS	  				
			
Section 2.01.	 	The Loans	  	 	49	  	
Section 2.02.	 	Borrowings, Conversions and Continuations of Loans	  	 	50	  	
Section 2.03.	 	Letters of Credit	  	 	50 52	  	
Section 2.04.	 	Swing Line Loans	  	 	57 59	  	
Section 2.05.	 	Prepayments	  	 	59 62	  	
Section 2.06.	 	Termination or Reduction of Commitments	  	 	67	  	
Section 2.07.	 	Repayment of Loans	  	 	65 68	  	
Section 2.08.	 	Interest	  	 	66 68	  	
Section 2.09.	 	Fees	  	 	66 69	  	
Section 2.10.	 	Computation of Interest and Fees	  	 	67 70	  	
Section 2.11.	 	Evidence of Indebtedness	  	 	67 70	  	
Section 2.12.	 	Payments Generally	  	 	68 71	  	
Section 2.13.	 	Sharing of Payments	  	 	69 72	  	
Section 2.14.	 	Incremental Credit Extensions	  	 	70 73	  	
Section 2.15.	 	Refinancing Term Loans	  	 	72 75	  	
Section 2.16.	 	Extended Term Loans	  	 	73 76	  	
Section 2.17.	 	Replacement Revolving Commitments	  	 	74 77	  	
			
	 	ARTICLE III.	  				
	 	TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY	  				
			
Section 3.01.	 	Taxes	  	 	79	  	
Section 3.02.	 	Illegality	  	 	78 81	  	
Section 3.03.	 	Inability to Determine Rates	  	 	78 81	  	
Section 3.04.	 	Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurocurrency Rate Loans	  	 	82	  	
Section 3.05.	 	Funding Losses	  	 	83	  	
Section 3.06.	 	Matters Applicable to All Requests for Compensation	  	 	80 83	  	
Section 3.07.	 	Replacement of Lenders Under Certain Circumstances	  	 	84	  	
Section 3.08.	 	Survival	  	 	82 85	  	
 
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 	 	 	  	Page	 	
			
	 	ARTICLE IV.	  				
	 	CONDITIONS PRECEDENT TO CREDIT EXTENSIONS	  				
			
Section 4.01.	 	All Credit Events After the Closing Date	  	 	82 85	  	
Section 4.02.	 	First Credit Event	  	 	86	  	
			
	 	ARTICLE V. REPRESENTATIONS AND
WARRANTIES	  				
			
Section 5.01.	 	Existence, Qualification and Power; Compliance with Laws	  	 	84 88	  	
Section 5.02.	 	Authorization; No Contravention	  	 	88	  	
Section 5.03.	 	Governmental Authorization; Other Consents	  	 	85 88	  	
Section 5.04.	 	Binding Effect	  	 	85 89	  	
Section 5.05.	 	Financial Statements; No Material Adverse Effect	  	 	89	  	
Section 5.06.	 	Litigation	  	 	86 90	  	
Section 5.07.	 	No Default	  	 	90	  	
Section 5.08.	 	Ownership of Property; Liens	  	 	90	  	
Section 5.09.	 	Environmental Matters	  	 	87 91	  	
Section 5.10.	 	Taxes	  	 	91	  	
Section 5.11.	 	ERISA Compliance	  	 	91	  	
Section 5.12.	 	Subsidiaries; Equity Interests	  	 	88 92	  	
Section 5.13.	 	Margin Regulations; Investment Company Act	  	 	88 92	  	
Section 5.14.	 	Disclosure	  	 	92	  	
Section 5.15.	 	Labor Matters	  	 	89 93	  	
Section 5.16.	 	Intellectual Property; Licenses, Etc	  	 	89 93	  	
Section 5.17.	 	Solvency	  	 	93	  	
Section 5.18.	 	Security Documents	  	 	93	  	
	 	ARTICLE VI. AFFIRMATIVE
COVENANTS	  				
			
Section 6.01.	 	Financial Statements	  	 	95	  	
Section 6.02.	 	Certificates; Other Information	  	 	97	  	
Section 6.03.	 	Notices	  	 	98	  	
Section 6.04.	 	Payment of Obligations	  	 	94 98	  	
Section 6.05.	 	Preservation of Existence, Etc	  	 	94 98	  	
Section 6.06.	 	Maintenance of Properties	  	 	94 98	  	
Section 6.07.	 	Maintenance of Insurance	  	 	99	  	
Section 6.08.	 	Compliance with Laws	  	 	95 99	  	
Section 6.09.	 	Books and Records	  	 	95 99	  	
Section 6.10.	 	Inspection Rights	  	 	95 100	  	
Section 6.11.	 	Additional Collateral; Additional Guarantors	  	 	100	  	
Section 6.12.	 	Compliance with Environmental Laws	  	 	97 102	  	
Section 6.13.	 	Further Assurances and Post-Closing Conditions	  	 	102	  	
Section 6.14.	 	Designation of Subsidiaries	  	 	98 102	  	
Section 6.15.	 	Maintenance of Ratings	  	 	103	  	
			
	 	ARTICLE VII. NEGATIVE
COVENANTS	  				
			
Section 7.01.	 	Liens	  	 	103	  	
Section 7.02.	 	Investments	  	 	102 107	  	
Section 7.03.	 	Indebtedness	  	 	109	  	
Section 7.04.	 	Fundamental Changes	  	 	107 111	  	
 
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 	 	 	  	Page	 	
			
Section 7.05.	 	Dispositions	  	 	108 113	  	
Section 7.06.	 	Restricted Payments	  	 	110 114	  	
Section 7.07.	 	Change in Nature of Business	  	 	117	  	
Section 7.08.	 	Transactions with Affiliates	  	 	113 117	  	
Section 7.09.	 	Burdensome Agreements	  	 	118	  	
Section 7.10.	 	Use of Proceeds	  	 	119	  	
Section 7.11.	 	Financial Covenants	  	 	119	  	
Section 7.12.	 	Accounting Changes	  	 	116 120	  	
Section 7.13.	 	Prepayments, Etc. of Indebtedness	  	 	116 121	  	
Section 7.14.	 	Permitted Activities	  	 	117 121	  	
			
	 	ARTICLE VIII.	  				
	 	EVENTS OF DEFAULT AND REMEDIES	  				
			
Section 8.01.	 	Events of Default	  	 	117 122	  	
Section 8.02.	 	Remedies upon Event of Default	  	 	119 124	  	
Section 8.03.	 	Exclusion of Immaterial Subsidiaries	  	 	124	  	
Section 8.04.	 	Application of Funds	  	 	124	  	
Section 8.05.	 	Borrower’s Right to Cure	  	 	125	  	
			
	 	ARTICLE IX. ADMINISTRATIVE AGENT AND
OTHER AGENTS	  				
			
Section 9.01.	 	Appointment and Authorization of Agents	  	 	121 126	  	
Section 9.02.	 	Delegation of Duties	  	 	122 126	  	
Section 9.03.	 	Liability of Agents	  	 	122 127	  	
Section 9.04.	 	Reliance by Agents	  	 	127	  	
Section 9.05.	 	Notice of Default	  	 	123 128	  	
Section 9.06.	 	Credit Decision; Disclosure of Information by Agents	  	 	123 128	  	
Section 9.07.	 	Indemnification of Agents	  	 	128	  	
Section 9.08.	 	Agents in Their Individual Capacities	  	 	124 129	  	
Section 9.09.	 	Successor Agents	  	 	124 129	  	
Section 9.10.	 	Administrative Agent May File Proofs of Claim	  	 	125 130	  	
Section 9.11.	 	Collateral and Guaranty Matters	  	 	131	  	
Section 9.12.	 	Other Agents; Arrangers and Managers	  	 	132	  	
Section 9.13.	 	Appointment of Supplemental Agents	  	 	127 132	  	
Section 9.14.	 	Withholding Tax Indemnity	  	 	133	  	
			
	 	ARTICLE X.
MISCELLANEOUS	  				
			
Section 10.01.	 	Amendments, Etc.	  	 	128 133	  	
Section 10.02.	 	Notices and Other Communications; Facsimile Copies	  	 	130 135	  	
Section 10.03.	 	No Waiver; Cumulative Remedies	  	 	137	  	
Section 10.04.	 	Attorney Costs and Expenses	  	 	137	  	
Section 10.05.	 	Indemnification by the Borrower	  	 	132 137	  	
Section 10.06.	 	Payments Set Aside	  	 	133 138	  	
Section 10.07.	 	Successors and Assigns	  	 	139	  	
Section 10.08.	 	Confidentiality	  	 	144	  	
Section 10.09.	 	Setoff	  	 	139 145	  	
Section 10.10.	 	Interest Rate Limitation	  	 	145	  	
Section 10.11.	 	Counterparts	  	 	140 145	  	
Section 10.12.	 	Integration; Termination	  	 	140 146	  	
Section 10.13.	 	Survival of Representations and Warranties	  	 	140 146	  	
Section 10.14.	 	Severability	  	 	146	  	
 
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 	 	 	  	Page	 	
			
Section 10.15.	 	GOVERNING LAW	  	 	146	  	
Section 10.16.	 	WAIVER OF RIGHT TO TRIAL BY JURY	  	 	141 147	  	
Section 10.17.	 	Binding Effect	  	 	141 147	  	
Section 10.18.	 	USA Patriot Act	  	 	147	  	
Section 10.19.	 	No Advisory or Fiduciary Responsibility	  	 	147	  	
			
	 	ARTICLE XI.
GUARANTEE	  				
			
Section 11.01.	 	The Guarantee	  	 	142 148	  	
Section 11.02.	 	Obligations Unconditional	  	 	148	  	
Section 11.03.	 	Reinstatement	  	 	150	  	
Section 11.04.	 	Subrogation; Subordination	  	 	150	  	
Section 11.05.	 	Remedies	  	 	144 150	  	
Section 11.06.	 	Instrument for the Payment of Money	  	 	144 150	  	
Section 11.07.	 	Continuing Guarantee	  	 	144 150	  	
Section 11.08.	 	General Limitation on Guarantee Obligations	  	 	150	  	
Section 11.09.	 	Release of Guarantors	  	 	151	  	
Section 11.10.	 	Right of Contribution	  	 	145 151	  	

SCHEDULES	  		  		
			
	  	1.01A	  	Commitments	
	  	1.01B	  	Unrestricted Subsidiaries	
	  	4.02(c)	  	Local Counsel Opinions	
	  	5.05	  	Certain Liabilities	
	  	5.08	  	Ownership of Property	
	  	5.09(a)	  	Environmental Matters	
	  	5.12	  	Subsidiaries and Other Equity Investments	
	  	7.01(b)	  	Existing Liens	
	  	7.02(f)	  	Existing Investments	
	  	7.03(b)	  	Existing Indebtedness	
	  	7.05(k)	  	Dispositions	
	  	7.08	  	Transactions with Affiliates	
	  	7.09	  	Certain Contractual Obligations	
	  	10.02	  	Administrative Agent’s Office, Certain Addresses for Notices	
			
EXHIBITS	  		  		
			
	  	Form of	  		
	  	A	  	Committed Loan Notice	
	  	B	  	Swing Line Loan Notice	
	  	C-1	  	Term Note	
	  	C-2	  	Revolving Credit Note	
	  	C-3	  	Swing Line Note	
	  	D	  	Compliance Certificate	
	  	E	  	Assignment and Assumption	
	  	F	  	Security Agreement	
	  	G	  	Intercompany Note	
	  	H	  	Holdings Pledge Agreement	
	  	I	  	United States Tax Compliance Certificate	
	  	J	  	Discounted Prepayment Option Notice	
	  	K	  	Lender Participation Notice	
	  	L	  	Discounted Voluntary Prepayment Notice	
	  	M	  	Affiliated Lender Assignment Assumption	
	  	N	  	First Lien Intercreditor Agreement	
 
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this “Agreement”) is entered into as of December 1, 2009 (as amended by Amendment No. 1 on February 17, 2011, as further amended by Amendment No. 2 on April 15, 2011 and as further amended by Amendment No. 2 3 on April 15, 2011 March 30, 2012 ), among SEAWORLD PARKS & ENTERTAINMENT, INC. (f/k/a SW ACQUISITIONS CO., INC.), a Delaware corporation (the “Borrower”), the Guarantors party hereto from time to time, BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent, each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), BANK OF AMERICA, N.A., as L/C Issuer and Swing Line Lender, DEUTSCHE BANK SECURITIES INC. and BARCLAYS BANK PLC, as Co-Syndication Agents, and MIZUHO CORPORATE BANK, LTD., as Documentation Agent.
PRELIMINARY STATEMENTS
Pursuant to the equity purchase agreement dated October 7, 2009, as amended on November 30, 2009 (together with schedules and exhibits thereto, the “Acquisition Agreement”) by and among the Borrower, each of the limited partnerships identified therein (collectively, “Parent”), and Anheuser-Busch InBev SA/NV, a Belgian corporation, and Anheuser-Busch Companies, Inc., a Delaware corporation (“Seller”), the Borrower has agreed to acquire (the “Acquisition”) all of the outstanding equity interests of (x) Busch Entertainment LLC, a Delaware limited liability company (“BEC”) and (y) Sea World LLC, a Delaware limited liability company (“SW” and, together with BEC, the “Acquired Company”).
To fund a portion of the Acquisition of the Acquired Company, the Investors and certain other investors (including certain providers of the Mezzanine Debt (as defined below)) and associated entities will make a cash equity contribution (the “Equity Contribution”) directly or indirectly to the Parent (which shall in turn contribute the same to SW Holdco, Inc., a Delaware corporation and the direct parent of the Borrower (“Holdings”), as cash common equity, which shall in turn contribute the same to the Borrower as cash common equity) in an aggregate amount equal to not less than 40% of the pro forma total consolidated debt and equity capitalization of the Borrower.
To consummate the transactions contemplated by the Acquisition Agreement, the Borrower will obtain unsecured senior mezzanine notes on the Closing Date in an aggregate initial principal amount not in excess of $400,000,000 pursuant to the terms of the Mezzanine Debt Documentation (as defined below).
The Borrower has requested that the Lenders extend credit to the Borrower in the form of (i) Original Term Loans in an initial aggregate amount of $1,050,000,000 and (ii) Revolving Credit Commitments in an initial aggregate amount of $140,000,000. The Revolving Credit Facility may include one or more Swing Line Loans and one or more Letters of Credit from time to time.
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I.
Definitions and Accounting Terms
Section 1.01. Defined Terms .
As used in this Agreement, the following terms shall have the meanings set forth below:
“Acceptable Price” has the meaning set forth in Section 2.05(c)(iii).
“Acceptance Date” has the meaning set forth in Section 2.05(c)(ii).

“Acquired Company” has the meaning set forth in the preliminary statements hereto.
“Acquisition” has the meaning set forth in the preliminary statements hereto.
“Acquisition Agreement” has the meaning set forth in the preliminary statements hereto.
“Additional Lender” has the meaning set forth in Section 2.14(a).
“Additional Revolving Credit Commitment” means, with respect to each Additional Revolving Credit Lender, such Additional Revolving Credit Lender’s Revolving Credit Commitment in the amount set forth in the Amendment No. 1 Joinder Agreement.
“Additional Revolving Credit Lenders” means the Persons identified as such in the Amendment No. 1 Joinder Agreement.
“Additional Term B Commitment” means, with respect to the Additional Term B Lender, its commitment to make a Term B Loan on the Amendment No. 1 Effective Date in an amount equal to the excess, if any of (i) the principal amount of Original Term Loans required to be repaid on the Amendment No. 1 Effective Date pursuant to Section 2.05(b)(ix) minus (ii) the amount of the Term A Commitment.
“Additional Term B Lender” means the Person identified as such in the Amendment No. 1 Joinder Agreement.
“Administrative Agent” means Bank of America, in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Agent-Related Persons” means the Agents, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.
“Agents” means, collectively, the Administrative Agent, the Collateral Agent, the Co-Syndication Agents, Documentation Agent and , the Supplemental Agents (if any) , the Amendment No. 1 Lead Arranger, the Amendment No. 1 Joint Bookrunners, the Amendment No. 3 Lead Arranger and the Amendment No. 3 Joint Bookrunners .
“Aggregate Commitments” means the Commitments of all the Lenders.
“Aggregate Term Loan Cap” has the meaning set forth in Section 2.05(b)(x).
“Agreement” means this Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time.
 
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“Amendment No. 1” means Amendment No. 1, dated as of February 17, 2011, to this Agreement.
“Amendment No. 1 Aggregate Term Loan Cap” has the meaning set forth in Section 2.05(b)(x).
“Amendment No. 1 Consenting Lender” means each Lender that provided the Administrative Agent with a counterpart to Amendment No. 1 executed by such Lender.
“Amendment No. 1 Effective Date” means February 17, 2011.
“Amendment No. 1 Joinder Agreement” means the joinder agreement, dated as of the Amendment No. 1 Effective Date, by and among the Borrower, the Administrative Agent, the Additional Term B Lender, the Initial Term A Lender and the Additional Revolving Credit Lenders.
“Amendment No. 1 Joint Bookrunners” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital, the investment banking division of Barclays Bank PLC, Deutsche Bank Securities Inc. and Mizuho Corporate Bank, LTD Ltd .
“Amendment No. 1 Lead Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
“Amendment No. 2” means Amendment No. 2, dated as of April 15, 2011, to this Agreement.
“Amendment No. 2 Effective Date” means April 15, 2011.
“Amendment No. 3” means Amendment No. 3, dated as of March 30, 2012, to this Agreement.
“Amendment No. 3 Distribution” means a distribution made by the Borrower to the holders of its outstanding Equity Interests on or after the Amendment No. 3 Effective Date in an amount up to the amount of the Term B Increase Commitment.
“Amendment No. 3 Effective Date” means March 30, 2012.
“Amendment No. 3 Joinder Agreement” means the joinder agreement, dated as of the Amendment No. 3 Effective Date, by and among the Borrower, the Administrative Agent and the Term B Increase Lender.
“Amendment No. 3 Joint Bookrunners” means Bank of America, N.A., Barclays Capital, the investment banking division of Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman Sachs Lending Partners LLC, J.P. Morgan Securities LLC, Macquarie Capital (USA) Inc. and Mizuho Corporate Bank, Ltd.
“Amendment No. 3 Lead Arranger” means Bank of America, N.A..
“Applicable Discount” has the meaning set forth in Section 2.05(c)(iii).
“Applicable ECF Percentage” means, for any fiscal year, (a) 50% if the Total Leverage Ratio as of the last day of the applicable Excess Cash Flow Period is greater than 3.25:1.00, (b) 25% if the Total Leverage Ratio as of the last day of the applicable Excess Cash Flow Period is less than or equal to 3.25:1.00 and greater than 2.75:1:00 and (c) 0% if the Total Leverage Ratio as of the last day of the applicable Excess Cash Flow Period is less than or equal to 2.75:1.00.
 
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“Applicable Rate” means a percentage per annum equal to:
(a) with respect to Term A Loans, (i) until delivery of financial statements for the first full fiscal quarter commencing after the Amendment No. 1 Effective Date pursuant to Section 6.01, (A) for Eurocurrency Rate Loans, 2.75% and (B) for Base Rate Loans, 1.75%, and (ii) thereafter, the following percentages per annum, based upon the Secured Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a):

Applicable Rate	 	
Pricing
Level	  	Secured
Leverage Ratio	  	Eurocurrency Rate and
Letter of Credit Fees	 	 	Base Rate	 	
1	  	>2.25:1	  	 	2.75	% 	 	 	1.75	% 	
2	  	£ 2.25:1	  	 	2.50	% 	 	 	1.50	% 	
(b) with respect to Term B Loans, ( i) until delivery of financial statements for the first full fiscal quarter commencing after the Amendment No. 1 Effective Date pursuant to Section 6.01, (A) for Eurocurrency Rate Loans, 3.00% and (B) for Base Rate Loans, 2.00% , and (ii) thereafter, the following percentages per annum, based upon the Secured Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a): ;

Applicable Rate	 	
Pricing
Level	  	Secured
Leverage Ratio	  	Eurocurrency Rate and
Letter of Credit Fees	 	 	Base Rate	 	
1	  	>2.25:1	  	 	3.00	%  	 	 	2.00	%  	
2	  	£ 2.25:1	  	 	2.75	%  	 	 	1.75	%  	
(c) with respect to Revolving Credit Loans, unused Revolving Credit Commitments and Letter of Credit fees, (i) until delivery of financial statements for the first full fiscal quarter commencing after the Amendment No. 1 Effective Date pursuant to Section 6.01, (A) for Eurocurrency Rate Loans, 2.75%, (B) for Base Rate Loans, 1.75%, (C) for Letter of Credit fees, 2.75% and (D) for unused commitment fees, 0.50% and (ii) thereafter, the following percentages per annum, based upon the Secured Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a):

Applicable Rate	 	
Pricing
Level	  	Secured
Leverage Ratio	  	Eurocurrency Rate and
Letter of Credit Fees	 	 	Base Rate	 	 	Unused
Commitment
Fee Rate	 	
1	  	>2.25:1	  	 	2.75	% 	 	 	1.75	% 	 	 	0.50	% 	
2	  	£ 2.25:1	  	 	2.50	% 	 	 	1.50	% 	 	 	0.50	% 	
Any increase or decrease in the Applicable Rate resulting from a change in the Secured Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(a); provided that, at the option of the Administrative Agent or the Required Lenders, the higher pricing level shall apply (x) as of the first Business Day after the date on which a Compliance Certificate was required to have been delivered but was not delivered, and shall continue to so apply to and including the date on which such Compliance Certificate is so delivered (and thereafter the pricing level otherwise determined in accordance with this definition shall apply) and (y) as of the first Business Day after an Event of Default under Section 8.01(a) shall have occurred and be continuing, and shall continue to so apply to but excluding the date on which such Event of Default is cured or waived (and thereafter the pricing level otherwise determined in accordance with this definition shall apply).
 
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In the event that any financial statements under Section 6.01 or a Compliance Certificate is shown to be inaccurate at any time that this Agreement is in effect and any Loans or Commitments are outstanding hereunder when such inaccuracy is discovered or within 91 days after the date on which all Loans have been repaid and all Commitments have been terminated, and such inaccuracy, if corrected, would have led to a higher Applicable Rate for any period (an “Applicable Period”) than the Applicable Rate applied for such Applicable Period, then (i) the Borrower shall promptly (and in no event later than five (5) Business Days thereafter) deliver to the Administrative Agent a correct Compliance Certificate for such Applicable Period, (ii) the Applicable Rate shall be determined by reference to the corrected Compliance Certificate (but in no event shall the Lenders owe any amounts to the Borrower), and (iii) the Borrower shall pay to the Administrative Agent promptly upon demand (and in no event later than five (5) Business Days after demand) any additional interest owing as a result of such increased Applicable Rate for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with the terms hereof. Notwithstanding anything to the contrary in this Agreement, any additional interest hereunder shall not be due and payable until demand is made for such payment pursuant to clause (iii) above and accordingly, any nonpayment of such interest as result of any such inaccuracy shall not constitute a Default (whether retroactively or otherwise), and no such amounts shall be deemed overdue (and no amounts shall accrue interest at the Default Rate), at any time prior to the date that is five (5) Business Days following such demand.
“Appropriate Lender” means, at any time, (a) with respect to Loans of any Class, the Lenders of such Class, (b) with respect to Letters of Credit, (i) the relevant L/C Issuer and (ii) the Revolving Credit Lenders and (c) with respect to the Swing Line Facility, (i) the relevant Swing Line Lender and (ii) if any Swing Line Loans are outstanding pursuant to Section 2.04(a), the Revolving Credit Lenders.
“Approved Bank” has the meaning set forth in clause (c) of the definition of “Cash Equivalents.”
“Approved Fund” means any Fund that is administered, advised or managed by a Lender or an Affiliate of the entity that administers, advises or manages any Fund that is a Lender.
“Arrangers” means Banc of America Securities LLC, Barclays Capital, the investment banking division of Barclays Bank PLC, and Deutsche Bank Securities Inc ., the Amendment No. 1 Lead Arranger, the Amendment No. 1 Joint Bookrunners, the Amendment No. 3 Lead Arranger and the Amendment No. 3 Joint Bookrunners .
“Assignees” has the meaning set forth in Section 10.07(b).
“Assignment and Assumption” means an Assignment and Assumption substantially in the form of Exhibit E .
“Attorney Costs” means and includes all reasonable fees, expenses and disbursements of any law firm or other external legal counsel.
“Attributable Indebtedness” means, on any date, in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.
“Audited Financial Statements” means the audited consolidated balance sheets of the Acquired Company and its Subsidiaries as of each of December 31, 2007 and 2008, and the related audited consolidated statements of operations and of cash flows for the Acquired Company and its Subsidiaries for the fiscal years ended December 31, 2006, 2007 and 2008.
 
-5-

“Auto-Extension Letter of Credit” has the meaning set forth in Section 2.03(b)(iii).
“Bank of America” means Bank of America, N.A. and its successors.
“Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”; provided that in no event shall the Base Rate with respect to the Term B Loans be less than 2.00% per annum. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
“Borrower” has the meaning set forth in the preamble hereto.
“Borrower Materials” has the meaning set forth in Section 6.01.
“Borrowing” means a Revolving Credit Borrowing, a Swing Line Borrowing, or a Term Borrowing of a particular Class, as the context may require.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and if such day relates to any Eurocurrency Rate Loan, means any such day on which dealings in deposits are conducted by and between banks in the London interbank eurodollar market.
“CapEx Pull-Forward Amount” has the meaning set forth on Section 7.11(c)(ii).
“Capital Expenditures” means, for any period, the aggregate, without duplication, of (a) all expenditures (whether paid in cash or accrued as liabilities) by the Borrower and its Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as additions during such period to property, plant or equipment and other deferred charges included in Capital Expenditures reflected in the consolidated balance sheet of the Borrower and its Restricted Subsidiaries, (b) the value of all assets under Capitalized Leases incurred by the Borrower and its Restricted Subsidiaries during such period (other than as a result of purchase accounting) and (c) Capitalized Software Expenditures; provided that the term “Capital Expenditures” shall not include (i) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (x) insurance proceeds paid on account of the loss of or damage to the assets being replaced, restored or repaired or (y) awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced, (ii) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment solely to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (iii) the purchase of plant, property or equipment or software to the extent financed with the proceeds of Dispositions outside the ordinary course of business that are not required to be applied to prepay Term Loans pursuant to Section 2.05(b), (iv) expenditures that are accounted for as capital expenditures by the Borrower or any Restricted Subsidiary and that actually are paid for by a Person other than the Borrower or any Restricted Subsidiary and for which neither the Borrower nor any Restricted Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such Person or any other Person (whether before, during or after such period), (v) expenditures that constitute any part of Consolidated Lease Expense, (vi) expenditures that constitute Permitted Acquisitions, (vii) any capitalized interest expense reflected as additions to property, plant or equipment in the consolidated balance sheet of the Borrower and the Restricted Subsidiaries or (viii) any non-cash compensation or other non-cash costs reflected as additions to property, plant or equipment in the consolidated balance sheet of the Borrower and the Restricted Subsidiaries.
 
-6-

“Capitalized Leases” means all leases that have been or are required to be, in accordance with GAAP, recorded as capitalized leases; provided that for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability on a balance sheet (excluding the notes thereto) in accordance with GAAP.
“Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Borrower and the Restricted Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of the Borrower and the Restricted Subsidiaries.
“Cash Collateral” has the meaning set forth in Section 2.03(g).
“Cash Collateral Account” means a blocked account at Bank of America (or another commercial bank selected in compliance with Section 9.09) in the name of the Administrative Agent and under the sole dominion and control of the Administrative Agent, and otherwise established in a manner satisfactory to the Administrative Agent.
“Cash Collateralize” has the meaning set forth in Section 2.03(g).
“Cash Equivalents” means any of the following types of Investments, to the extent owned by the Borrower or any Restricted Subsidiary:
(a) Dollars;
(b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of the United States having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;
(c) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) (A) is organized under the Laws of the United States, any state thereof, the District of Columbia or any member nation of the Organization for Economic Cooperation and Development or is the principal banking Subsidiary of a bank holding company organized under the Laws of the United States, any state thereof, the District of Columbia or any member nation of the Organization for Economic Cooperation and Development, and is a member of the Federal Reserve System, and (B) has combined capital and surplus of at least $250,000,000 (any such bank in the foregoing clauses (i) or (ii) being an “Approved Bank”), in each case with maturities not exceeding 12 months from the date of acquisition thereof;
(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation (other than structured investment vehicles and other than corporations used in structured financing transactions) rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(e) marketable short-term money market and similar funds having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower);
 
-7-

(f) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer, in each case, having capital and surplus in excess of $250,000,000 for direct obligations issued by or fully guaranteed or insured by the government or any agency or instrumentality of the United States, in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations;
(g) securities with average maturities of 12 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
(h) Investments (other than in structured investment vehicles and structured financing transactions) with average maturities of 12 months or less from the date of acquisition in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s;
(i) euros or any other foreign currency comparable in credit quality and tenor to those referred to above and instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above, in each case, customarily used by corporations for cash management purposes in any jurisdiction outside the United States in the ordinary course of business of the Borrower and its Restricted Subsidiaries;
(j) Investments, classified in accordance with GAAP as current assets of the Borrower or any Restricted Subsidiary, in money market investment programs which are registered under the Investment Company Act of 1940 or which are administered by financial institutions having capital of at least $250,000,000, and, in either case, the portfolios of which are limited such that substantially all of such Investments are of the character, quality and maturity described in clauses (a) through (h) of this definition; and
(k) investment funds investing at least 95% of their assets in securities of the types (including as to credit quality and maturity) described in clauses (a) through (j) above.
“Cash Management Obligations” means obligations owed by the Borrower or any Restricted Subsidiary to any Lender or any Affiliate of a Lender (or Person that was a Lender or an Affiliate of a Lender at the time such arrangement was entered into) (a “Cash Management Bank”) in respect of any overdraft and related liabilities arising from treasury, depository, credit card, debit card and cash management services or any automated clearing house transfers of funds.
“Casualty Event” means any event that gives rise to the receipt by the Borrower or any Restricted Subsidiary of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
“Change of Control” shall be deemed to occur if:
(a) at any time prior to a Qualified IPO, any combination of Permitted Holders shall fail to own beneficially (within the meaning of Rule 13d-5 of the Exchange Act as in effect on the Closing Date), directly or indirectly, in the aggregate Equity Interests representing at least a majority of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Holdings;
 
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(b) at any time after a Qualified IPO, (i) any person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date), other than any combination of the Investors or any “group” including any Permitted Holders (provided, that in the case of any such “group,” the Permitted Holders hold a majority of all voting interest in Holdings’ Equity Interests held by all members of such “group”), shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting interest in Holdings’ Equity Interests and the Permitted Holders shall own, directly or indirectly, less than such person or “group” on a fully diluted basis of the voting interest in Holdings’ Equity Interests or (ii) during each period of twelve consecutive months, the board of directors of Holdings shall not consist of a majority of the Continuing Directors;
(c) a “change of control” (or similar event) shall occur under the Mezzanine Debt or any Junior Financing with an aggregate principal amount in excess of the Threshold Amount or any Permitted Refinancing Indebtedness in respect of any of the foregoing with an aggregate principal amount in excess of the Threshold Amount; or
(d) Holdings shall cease to own 100% of the Equity Interests of the Borrower.
“Class” (a) when used with respect to Lenders, refers to whether such Lenders are Revolving Credit Lenders, Term B Lenders, Term A Lenders, Lenders holding Incremental Term Loans of a particular Incremental Series, Lenders holding Extended Term Loans under any Extended Term Facility or Lenders holding Refinancing Term Loans under a particular Refinancing Term Facility, (b) when used with respect to Commitments, refers to whether such Commitments are Revolving Credit Commitments, Additional Term B Commitments, Term A Commitments or a particular Replacement Revolving Commitment Series and (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Revolving Credit Loans, Term B Loans, Term A Loans, Extended Term Loans under a particular Extended Term Facility, Refinancing Term Loans under a particular Refinancing Term Facility, Incremental Term Loans of a particular Incremental Series, Replacement Term Loans established on a single date to replace a Class of Term Loans or Replacement Revolving Loans under a particular Replacement Revolving Commitment Series.
“Closing Date” means the first date on which all the conditions precedent in Section 4.02 are satisfied or waived in accordance with Section 4.02, which date is December 1, 2009.
“Closing Fee” has the meaning set forth in Section 2.09(c).
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means the “Collateral” as defined in the Security Agreement and all the “Collateral” or “Pledged Assets” as defined in any other Collateral Document and any other assets pledged or in which a Lien is granted pursuant to any Collateral Document, including, without limitation, the Mortgaged Property.
“Collateral Agent” means Bank of America, in its capacity as collateral agent or pledgee in its own name under any of the Loan Documents, or any successor collateral agent.
“Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) on the Closing Date the Administrative Agent shall have received each Collateral Document to the extent required to be delivered on the Closing Date pursuant to Section 4.02(e), subject to the limitations and exceptions of this Agreement, duly executed by each Loan Party thereto;
 
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(b) the Obligations shall have been secured by a first-priority security interest in (i) all the Equity Interests of the Borrower and (ii) all Equity Interests of each Restricted Subsidiary of the Borrower that is not an Excluded Subsidiary directly owned by any Loan Party, in each case, subject to exceptions and limitations otherwise set forth in this Agreement and the Collateral Documents (to the extent appropriate in the applicable jurisdiction);
(c) the Obligations shall have been secured by a perfected security interest in, and Mortgages on, substantially all tangible and intangible assets of the Borrower and each Subsidiary Guarantor (including Equity Interests and intercompany debt, accounts, inventory, equipment, investment property, contract rights, intellectual property in the United States, other general intangibles, Material Real Property and proceeds of the foregoing), in each case, subject to exceptions and limitations otherwise set forth in this Agreement and the Collateral Documents (to the extent appropriate in the applicable jurisdiction);
(d) subject to limitations and exceptions of this Agreement (for the avoidance of doubt, including the limitations and exceptions set forth in the proviso of Section 4.02(e)) and the Collateral Documents, to the extent a security interest in and Mortgages on any Material Real Property is required under Section 6.11 or 6.13 (together with any Material Real Property that is subject to a Mortgage on the Closing Date, each, a “Mortgaged Property”), the Administrative Agent shall have received (i) counterparts of a Mortgage with respect to such Mortgaged Property duly executed and delivered by the record owner of such property in form suitable for filing or recording in all filing or recording offices that the Administrative Agent may reasonably deem necessary or desirable in order to create a valid and subsisting perfected first-priority Lien (subject only to Liens described in clause (ii) below) on the property and/or rights described therein in favor of the Collateral Agent for the benefit of the Secured Parties, and evidence that all filing and recording taxes and fees have been paid or otherwise provided for in a manner reasonably satisfactory to the Administrative Agent (it being understood that if a mortgage tax will be owed on the entire amount of the indebtedness evidenced hereby, then the amount secured by the Mortgage shall be limited to 100% of the fair market value of the property at the time the Mortgage is entered into if such limitation results in such mortgage tax being calculated based upon such fair market value), (ii) fully paid policies of title insurance (or marked-up title insurance commitments having the effect of policies of title insurance) on the Mortgaged Property naming the Collateral Agent as the insured for its benefit and that of the Secured Parties and respective successors and assigns (the “Mortgage Policies”) issued by a nationally recognized title insurance company reasonably acceptable to the Administrative Agent in form and substance and in an amount reasonably acceptable to the Administrative Agent (not to exceed 100% of the fair market value of the real properties covered thereby), insuring the Mortgages to be valid subsisting first-priority Liens on the property described therein, free and clear of all Liens other than Liens permitted pursuant to Section 7.01 and other Liens reasonably acceptable to the Administrative Agent, each of which shall (A) to the extent reasonably necessary, include such reinsurance arrangements (with provisions for direct access, if reasonably necessary) as shall be reasonably acceptable to the Collateral Agent, (B) contain a “tie-in” or “cluster” endorsement, if available under applicable law (i.e., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount), (C) have been supplemented by such endorsements (or where such endorsements are not available, opinions of special counsel, architects or other professionals reasonably acceptable to the Collateral Agent) as shall be reasonably requested by the Collateral Agent (including endorsements on matters relating to usury, first loss, last dollar, zoning, contiguity, revolving credit (if available after the applicable Loan Party uses commercially reasonable efforts), doing business, non-imputation, public road access, variable rate, environmental lien, subdivision, mortgage recording tax, separate tax lot and so-called comprehensive coverage over covenants and restrictions; provided, however, the applicable Loan Party shall not be obligated to obtain a “creditor’s rights” endorsement), (iii) legal opinions, addressed to the Administrative Agent, the Collateral Agent and the other Secured Parties, reasonably acceptable to the Administrative Agent and the Collateral Agent as to such matters as the Administrative Agent and the Collateral Agent may reasonably request, and (iv) a completed “life of the loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to each Mortgaged Property duly executed and acknowledged by the appropriate Loan Parties; and
 
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(e) after the Closing Date, each Restricted Subsidiary of the Borrower that is not an Excluded Subsidiary shall become a Guarantor and signatory to this Agreement pursuant to a joinder agreement in accordance with Section 6.11 and a party to the applicable Collateral Documents in accordance with Section 6.11; provided that notwithstanding the foregoing provisions, any Subsidiary of the Borrower that Guarantees the Mezzanine Debt shall be a Guarantor hereunder for so long as it Guarantees such Indebtedness.
Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary:
(A) the foregoing definition shall not require, unless otherwise stated in this clause (A), the creation or perfection of pledges of, security interests in, Mortgages on, or the obtaining of title insurance or taking other actions with respect to, (i) any fee owned real property (other than Material Real Properties) and any leasehold rights and interests in real property that is not Material Real Property (including landlord waivers, estoppels and collateral access letters), (ii) motor vehicles and other assets subject to certificates of title, letters of credit with a face value of less than $5,000,000 and commercial tort claims where the amount of damages claimed by the applicable Loan Party is less than $5,000,000), (iii) any particular asset, if the pledge thereof or the security interest therein is prohibited by Law other than to the extent such prohibition is expressly deemed ineffective under the Uniform Commercial Code or other applicable Law notwithstanding such prohibition, (iv) Margin Stock and, solely to the extent prohibited by the Organization Documents or any shareholders agreement with shareholders that are not direct or indirect wholly owned Restricted Subsidiaries of the Borrower, Equity Interests in any Person other than wholly owned Restricted Subsidiaries, (v) any rights of any Loan Party with respect to any lease, license or other agreement to the extent a grant of security interest therein is prohibited by such lease, license or other agreement, would result in an invalidation thereof or would create a right of termination in favor of any other party thereto (other than a Loan Party) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code or other applicable Laws or principle of equity notwithstanding such prohibition, (vi) the creation or perfection of pledges of, security interests in, any property or assets that would result in material adverse tax consequences to Holdings, the Borrower or any of its Subsidiaries, as reasonably determined by the Borrower with the consent of the Administrative Agent (not to be unreasonably withheld or delayed) (it being understood that the Lenders shall not require the Borrower or any of its Subsidiaries to enter into any security agreements or pledge agreements governed under foreign law), (vii) intellectual property to the extent a security interest is not perfected by filing of a UCC financing statement or in respect of registered intellectual property, a filing in the USPTO (if required) or the U.S. Copyright Office (it being understood that such assets are intended to constitute Collateral, though perfection beyond UCC, USPTO and U.S. Copyright Office filings is not required) and (viii) any particular assets if, in the reasonable judgment of the Administrative Agent evidenced in writing, determined in consultation with the Borrower, the burden, cost or consequences of creating or perfecting such pledges or security interests in such assets or obtaining title insurance is excessive in relation to the benefits to be obtained therefrom by the Lenders under the Loan Documents;
(B) (i) the foregoing definition shall not require control agreements and perfection by “control” with respect to any Collateral ( including deposit accounts, securities accounts, etc.) other than certificated Equity Interests of the Borrower and, to the extent constituting Collateral, its Restricted Subsidiaries that are Domestic Subsidiaries; (ii) no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required in order to create any security interests in assets located or titled outside of the U.S. or to perfect such security interests (it being understood that there shall be no security agreements or pledge agreements governed under the laws of any non-U.S. jurisdiction); and (iii) except to the extent that perfection and priority may be achieved by the filing of a financing statement under the Uniform Commercial Code with respect to the Borrower or a Guarantor,
 
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or, with respect to real property and the recordation of Mortgages in respect thereof, as contemplated by clauses (c) and (d) above, the Loan Documents shall not contain any requirements as to perfection or priority with respect to any assets or property described in this clause (B);
(C) the Administrative Agent in its discretion may grant extensions of time for the creation or perfection of security interests in, and Mortgages on, or obtaining of title insurance or taking other actions with respect to, particular assets (including extensions beyond the Closing Date) or any other compliance with the requirements of this definition where it reasonably determines in writing, in consultation with the Borrower, that the creation or perfection of security interests and Mortgages on, or obtaining of title insurance or taking other actions, or any other compliance with the requirements of this definition cannot be accomplished without undue delay, burden or expense by the time or times at which it would otherwise be required by this Agreement or the Collateral Documents; provided that the Collateral Agent shall have received on or prior to the Closing Date, (i) UCC financing statements in appropriate form for filing under the UCC in the jurisdiction of incorporation or organization of each Loan Party, and (ii) any certificates or instruments representing or evidencing Equity Interests of the Borrower and any Subsidiary Guarantors accompanied by instruments of transfer and stock powers undated and endorsed in blank; and
(D) Liens required to be granted from time to time pursuant to the Collateral and Guarantee Requirement shall be subject to exceptions and limitations set forth in this Agreement and the Collateral Documents.
“Collateral Documents” means, collectively, the Security Agreement, the Holdings Pledge Agreement, each of the Mortgages, collateral assignments, security agreements, pledge agreements, intellectual property security agreements or other similar agreements delivered to the Administrative Agent pursuant to Section 4.02, Section 6.11 or Section 6.13, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.
“Commitment” means a Term Commitment or a Revolving Credit Commitment of any Class, as the context may require.
“Committed Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A .
“Company” means the Borrower, together with its successors and assigns.
“Company Material Adverse Effect” means a “Material Adverse Effect” as defined in the Acquisition Agreement.
“Compensation Period” has the meaning set forth in Section 2.12(c)(ii).
“Compliance Certificate” means a certificate substantially in the form of Exhibit D .
“Consolidated EBITDA” means, for any period, the Consolidated Net Income for such period, plus :
(a) without duplication and, except with respect to clauses (viii) and (x) below, to the extent deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts for such period with respect to the Borrower and its Restricted Subsidiaries:
(i) total interest expense determined in accordance with GAAP (including, to the extent deducted and not added back in computing Consolidated Net Income, (a) amortization
 
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of original issue discount resulting from the issuance of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers’ acceptances, (c) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in mark-to-market valuation of Swap Contracts or other derivative instruments pursuant to GAAP), (d) the interest component of capitalized lease obligations, (e) net payments, if any, pursuant to interest rate Swap Contracts with respect to Indebtedness, (f) amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses and (g) any expensing of bridge, commitment and other financing fees) and, to the extent not reflected in such total interest expense, any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations, and costs of surety bonds in connection with financing activities (whether amortized or immediately expensed),
(ii) provision for taxes based on income, profits or capital of the Borrower and the Restricted Subsidiaries, including, without limitation, federal, state, franchise and similar taxes (such as Delaware franchise tax, Pennsylvania capital tax or Texas margin tax) and foreign withholding taxes paid or accrued during such period including penalties and interest related to such taxes or arising from any tax examinations,
(iii) depreciation and amortization (including amortization of intangible assets, including Capitalized Software Expenditures),
(iv) (A) severance, relocation costs and expenses, Transaction Expenses, integration costs, transition costs (including any one-time information technology or other costs relating to the separation of the Borrower or its predecessor from Anheuser-Busch InBev NV/SA as part of the Transactions, to the extent incurred on or prior to the last day of the month immediately prior to the second anniversary of the Closing Date), pre-opening, opening, consolidation and closing costs for facilities, costs incurred in connection with any non-recurring strategic initiatives, costs incurred in connection with acquisitions and non-recurring product and intellectual property development after the Closing Date, other business optimization expenses (including costs and expenses relating to business optimization programs and new systems design and implementation costs), project start-up costs and other restructuring charges, accruals or reserves (including restructuring costs related to acquisitions after the Closing Date and to closure/consolidation of facilities, retention charges, systems establishment costs and excess pension charges) in an aggregate amount of all items deducted pursuant to this clause (iv) (other than Transaction Expenses incurred, accrued or paid no later than the end of the first full fiscal quarter ending after the Closing Date) not to exceed (I) with respect to the Transactions $50,000,000 and (II) otherwise, $10,000,000 in any period of four consecutive fiscal quarters (it being understood that unused amounts of the cap under clause (II) in any fiscal year (without giving effect to any amount carried over from a prior fiscal year) may be carried over to the next succeeding fiscal year (but not any other fiscal year) (provided that amounts deducted in any fiscal year shall first be deemed to be allocated against the cap for such fiscal year before giving effect to any carryover)), and (B) purchase price adjustments incurred prior to 150 days after the Closing Date;
(v) the amount of any minority interest expense consisting of Restricted Subsidiary income attributable to minority interests of third parties in any non-wholly owned Restricted Subsidiary except to the extent of any cash distributions in respect thereof,
(vi) the amount of management, monitoring, consulting and advisory fees and related expenses paid or accrued to the Investors or their Affiliates (or management companies) under the Investor Management Agreement (for avoidance of doubt, no termination fee paid under the Investor Management Agreement may be included in this clause (vi)),
 
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(vii) any costs or expenses incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are funded with cash proceeds contributed to the capital of the Borrower or net cash proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests),
(viii) the amount of cost savings, operating expense reductions and synergies projected by the Borrower in good faith to be realized as a result of specified actions taken or with respect to which substantial steps have been taken (in the good faith determination of the Borrower) during such period, including in connection with any Specified Transaction (calculated on a Pro Forma Basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such actions; provided that (A) a duly completed certificate signed by a Responsible Officer of the Borrower shall be delivered to the Administrative Agent together with the Compliance Certificate required to be delivered pursuant to Section 6.02(a), certifying that (x) such cost savings, operating expense reductions and synergies are reasonably expected and factually supportable in the good faith judgment of the Borrower, (y) such actions are to be taken within (I) in the case of any such cost savings, operating expense reductions and synergies in connection with the Transactions, 18 months after the Closing Date and (II) in all other cases, within 12 months after the consummation of the acquisition, Disposition, restructuring or the implementation of an initiative, which is expected to result in such cost savings, expense reductions or synergies, (B) no cost savings, operating expense reductions and synergies shall be added pursuant to this clause (viii) to the extent duplicative of any expenses or charges otherwise added to Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for such period, (C) the aggregate amount of cost savings and operating expense reductions added pursuant to this clause (viii) does not exceed (x) in the case of the Transaction, $35,000,000 and (y) in all other cases (1) $30,000,000 for any individual acquisition or Disposition and (2) for all other initiatives that do not result from acquisitions or Dispositions, $10,000,000 in the aggregate for any period of four-consecutive fiscal quarters; provided that amounts added back to Consolidated EBITDA pursuant to this clause (C)(y)(2) do not exceed $30,000,000 in the aggregate for all periods following the Closing Date and (D) projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this clause (viii) to the extent occurring more than four full fiscal quarters after the specified action taken in order to realize such projected cost savings, operating expense reductions and synergies,
(ix) any net loss from disposed, abandoned or discontinued operations,
(x) cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing Consolidated EBITDA or Consolidated Net Income in any period to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDA pursuant to paragraph (b) below for any previous period and not added back,
(xi) non-cash expenses, charges and losses (including impairment charges or asset write-offs, losses from investments recorded using the equity method, stock-based awards compensation expense), in each case other than (A) any non-cash charge representing amortization of a prepaid cash item that was paid and not expensed in a prior period and (B) any non-cash charge relating to write-offs, write-downs or reserves with respect to accounts receivable or inventory; provided that if any non-cash charges referred to in this clause (xi) represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA in such future period to such extent paid,
 
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less (b) without duplication and to the extent included in arriving at such Consolidated Net Income, (i) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated EBITDA in any prior period), (ii) any net gain from disposed, abandoned or discontinued operations and (iii) the amount of any minority interest income consisting of Restricted Subsidiary losses attributable to minority interests of third parties in any non-wholly owned Restricted Subsidiary; provided that, for the avoidance of doubt, any gain representing the reversal of any non-cash charge referred to in clause (a)(xi)(B) above for a prior period shall be added (together with, without duplication, any amounts received in respect thereof to the extent not increasing Consolidated Net Income) to Consolidated EBITDA in any subsequent period to such extent so reversed (or received);
provided that:
(A) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA (x) currency translation gains and losses related to currency remeasurements of Indebtedness (including the net loss or gain (i) resulting from Swap Contracts for currency exchange risk and (ii) resulting from intercompany indebtedness) and (y) gains or losses on Swap Contracts,
(B) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Statement of Financial Accounting Standards No. 133 and International Accounting Standard No. 39 and their respective related pronouncements and interpretations,
(C) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any income (loss) for such period attributable to the early extinguishment of (i) Indebtedness, (ii) obligations under any Swap Contracts or (iii) other derivative instruments, and
(D) there shall be excluded in determining Consolidated EBITDA for any period any after-tax effect of non-recurring items (including gains or losses and all fees and expenses relating thereto) relating to curtailments or modifications to pension and post-retirement employee benefit plans for such period.
Notwithstanding anything to the contrary contained herein, for purposes of determining Consolidated EBITDA under this Agreement for any period that includes (x) any of the fiscal quarters ended December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009, Consolidated EBITDA for such fiscal quarters shall be $21,983,510, $(87,000), $143,844.000 and $204,748.000, respectively or (y) any other period occurring prior to the Closing Date, Consolidated EBITDA shall be calculated on a Pro Forma Basis to give effect to the Transaction.
“Consolidated Interest Expense” means, for any period, the sum, without duplication, of (i) the cash interest expense (including that attributable to Capitalized Leases), net of cash interest income, of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, with respect to all outstanding Indebtedness of the Borrower and its Restricted Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net cash costs under Swap Contracts, and (ii) any cash payments made during such period in respect of obligations referred to in clause (b) below relating to Funded Debt that were amortized or accrued in a previous period, but excluding, however, (a) amortization of deferred financing costs and any other amounts of non-cash interest, (b) the accretion or accrual of discounted liabilities during such period, (c) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under Swap Contracts or other derivative instruments pursuant to Statement of Financial Accounting Standards No. 133, (d) any cash costs associated with breakage in respect of hedging agreements for interest rates, (e) all non-recurring cash interest
 
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expense consisting of liquidated damages for failure to timely comply with registration rights obligations and financing fees, all as calculated on a consolidated basis in accordance with GAAP, (f) fees and expenses associated with the consummation of the Transaction, (g) annual agency fees paid to the Administrative Agent and/or Collateral Agent, and (h) costs associated with obtaining Swap Contracts; provided that there shall be excluded from Consolidated Interest Expense for any period the cash interest expense (or income) of all Unrestricted Subsidiaries for such period to the extent otherwise included in Consolidated Interest Expense. Notwithstanding anything to the contrary contained herein, for purposes of determining Consolidated Interest Expense (i) for any period ending prior to the first anniversary of the Closing Date, Consolidated Interest Expense shall be an amount equal to actual Consolidated Interest Expense from the Closing Date through the date of determination multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from the Closing Date through the date of determination and (ii) shall exclude the purchase accounting effects described in the last sentence of the definition of “Consolidated Net Income.”
“Consolidated Net Income” means, for any period, the net income (loss) of the Borrower and the Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, provided, however, that, without duplication,
(a) any after-tax effect of extraordinary, non-recurring or unusual items (including gains or losses and all fees and expenses relating thereto) for such period shall be excluded,
(b) the cumulative effect of a change in accounting principles during such period to the extent included in Consolidated Net Income shall be excluded,
(c) any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with any acquisition, investment, asset disposition, issuance or repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction consummated on or prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt the effects of expensing all transaction related expenses in accordance with Financial Accounting Standards No. 141(R) and gains or losses associated with FASB Interpretation No. 45) shall be excluded,
(d) accruals and reserves that are established or adjusted within twelve months after the Closing Date that are so required to be established or adjusted as a result of the Transactions in accordance with GAAP or changes as a result of adoption or modification of accounting policies in accordance with GAAP shall be excluded,
(e) any net after-tax gains or losses on disposal of abandoned, disposed or discontinued operations shall be excluded,
(f) any net after-tax effect of gains or losses (less all fees, expenses and charges) attributable to asset dispositions or the sale or other disposition of any Equity Interests of any Person in each case other than in the ordinary course of business, as determined in good faith by the Borrower, shall be excluded,
(g) the net income (loss) for such period of any Person that is not a Subsidiary of the Borrower, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided that Consolidated Net Income of the Borrower shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash or Cash Equivalents (or to the extent subsequently converted into cash or Cash Equivalents) to the Borrower or a Restricted Subsidiary thereof in respect of such period,
 
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(h) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets, long-lived assets, investments in debt and equity securities or as a result of a change in law or regulation, in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded,
(i) any non-cash compensation charge or expense, including any such charge or expense arising from the grants of stock appreciation or similar rights, stock options, restricted stock or other rights or equity incentive programs shall be excluded, and any cash charges associated with the rollover, acceleration or payout of Equity Interests by management of the Borrower or any of its direct or indirect parents in connection with the Transactions, shall be excluded,
(j) any expenses, charges or losses that are covered by indemnification or other reimbursement provisions in connection with any Investment, Permitted Acquisition or any sale, conveyance, transfer or other disposition of assets permitted under this Agreement, to the extent actually reimbursed, or, so long as the Borrower has made a determination that a reasonable basis exists for indemnification or reimbursement and only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days), shall be excluded,
(k) to the extent covered by insurance and actually reimbursed, or, so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is in fact reimbursed within 365 days of the date of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so reimbursed within such 365 days), expenses, charges or losses with respect to liability or casualty events or business interruption shall be excluded,
(l) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of Statement of Financial Accounting Standards Nos. 87, 106 and 112, and any other items of a similar nature, shall be excluded, and
(m) the income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Subsidiaries or that Person’s assets are acquired by Borrower or any of its Restricted Subsidiaries shall be excluded (except to the extent required for any calculation of Consolidated EBITDA on a Pro Forma Basis in accordance with Section 1.09).
For the avoidance of doubt (1) revenue will be accounted for on a GAAP basis and the recognition of any deferred revenue will be included in Consolidated Net Income in the same period as recognized for GAAP and (2) any net gain or loss resulting in such period from mark-to-market adjustments to any liability recorded in connection with the contingent obligation owed to Anheuser Busch InBev NV/SA pursuant to the Acquisition Agreement will be excluded from Consolidated Net Income.
There shall be excluded from Consolidated Net Income for any period the purchase accounting effects of adjustments (including the effects of such adjustments pushed down to the Borrower and its Restricted Subsidiaries) in component amounts required or permitted by GAAP (including in the inventory, property and equipment, software, goodwill, intangible assets, in-process research and development, deferred revenue and debt line items thereof) and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and the Restricted Subsidiaries), as a result of the Transactions, any acquisition consummated prior to the Closing Date, any Permitted Acquisitions, or the amortization or write-off of any amounts thereof.
 
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“Consolidated Total Net Debt” means, as of any date of determination, the aggregate principal amount of Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on such date, in an amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP (but (x) excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with the Transactions or any Permitted Acquisition and (y) any Indebtedness that is issued at a discount to its initial principal amount shall be calculated based on the entire principal amount thereof), consisting of Indebtedness for borrowed money, Attributable Indebtedness, and debt obligations evidenced by promissory notes or similar instruments, minus the aggregate amount of cash and Cash Equivalents (other than Restricted Cash), in each case, that is held by the Borrower and its Restricted Subsidiaries as of such date free and clear of all Liens, other than nonconsensual Liens permitted by Section 7.01 and Liens permitted by Section 7.01(a), Section 7.01(p) and Section 7.01(q) and clauses (i) and (ii) of Section 7.01(r); provided that Consolidated Total Net Debt shall not include Indebtedness in respect of (i) letters of credit (including Letters of Credit), except to the extent of unreimbursed amounts thereunder; provided that any unreimbursed amount under commercial letters of credit shall not be counted as Consolidated Total Net Debt until 3 Business Days after such amount is drawn and (ii) Unrestricted Subsidiaries; it being understood, for the avoidance of doubt, that obligations under Swap Contracts entered into for non-speculative purposes do not constitute Consolidated Total Net Debt.
“Consolidated Working Capital” means, with respect to the Borrower and its Restricted Subsidiaries on a consolidated basis at any date of determination, Current Assets at such date of determination minus Current Liabilities at such date of determination; provided that, increases or decreases in Consolidated Working Capital shall be calculated without regard to any changes in Current Assets or Current Liabilities as a result of (a) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (b) the effects of purchase accounting.
“Continuing Directors” means the directors of the Borrower on the Closing Date, as elected or appointed after giving effect to the Transactions, and each other director, if, in each case, such other director’s nomination for election to the board of directors of the Borrower is recommended by a majority of the then Continuing Directors or such other director receives the vote of the Permitted Holders in his or her election by the stockholders of the Borrower.
“Contract Consideration” has the meaning set forth in the definition of “Excess Cash Flow.”
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” has the meaning set forth in the definition of “Affiliate.”
“Converted Term Loan” means each Original Term Loan held by an Amendment No. 1 Consenting Lender on the Amendment No. 1 Effective Date immediately prior to the effectiveness of Amendment No. 1.
“Co-Syndication Agents” means Deutsche Bank Securities Inc. and Barclays Bank PLC, as co-syndication agent under this Agreement.
“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.
“Cumulative Credit” means, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to, without duplication:
(a) the Cumulative Retained Excess Cash Flow Amount at such time, plus
 
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(b) the cumulative amount of cash and Cash Equivalent proceeds from (i) the sale of Equity Interests of the Borrower or of any direct or indirect parent of the Borrower after the Closing Date and on or prior to such time (including upon exercise of warrants or options) which proceeds have been contributed as common equity to the capital of the Borrower and (ii) the common Equity Interests of the Borrower (or of Holdings or of any direct or indirect parent of Holdings) (other than Disqualified Equity Interests of the Borrower) issued upon conversion of Indebtedness (other than Indebtedness that is contractually subordinated to the Obligations) of the Borrower or any Restricted Subsidiary of the Borrower owed to a Person other than a Loan Party or a Restricted Subsidiary of a Loan Party, in the case of each of subclause (i) and subclause (ii), not previously applied for a purpose (including a Specified Equity Contribution) other than use in the Cumulative Credit; plus
(c) 100% of the aggregate amount of contributions to the common capital of the Borrower (other than from a Restricted Subsidiary) received in cash and Cash Equivalents after the Closing Date other than from a Specified Equity Contribution; plus
(d) without duplication of any amounts that otherwise increased the amount available for Investments pursuant to Section 7.02, 100% of the aggregate amount received by the Borrower or any Restricted Subsidiary of the Borrower in cash and Cash Equivalents from:
(A) the sale (other than to the Borrower or any such Restricted Subsidiary) of any Equity Interests of an Unrestricted Subsidiary or any minority Investments, or
(B) any dividend or other distribution by an Unrestricted Subsidiary or received in respect of any minority Investments, or
(C) any interest, returns of principal, repayments and similar payments by such Unrestricted Subsidiary or received in respect of any minority Investments, plus
(e) in the event any Unrestricted Subsidiary has been re-designated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Borrower or a Restricted Subsidiary, the fair market value of the Investments of the Borrower and the Restricted Subsidiaries in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable) so long as such Investments were originally made pursuant to Section 7.02(n)(y), plus
(f) to the extent not utilized in connection with other transactions permitted pursuant to Section 7.11(c), the aggregate amount of Retained Declined Proceeds retained by the Borrower, plus
(g) an amount equal to any returns in cash and Cash Equivalents (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received by the Borrower or any Restricted Subsidiary in respect of any Investments made pursuant to Section 7.02(n)(y), minus
(h) any amount of the Cumulative Credit used to make Investments pursuant to Section 7.02(n)(y) after the Closing Date and prior to such time, minus
(i) any amount of the Cumulative Credit used to make Restricted Payments pursuant to Section 7.06(g)(y) or (j) after the Closing Date and prior to such time, minus
(j) any amount of the Cumulative Credit used to make payments or distributions in respect of Junior Financings pursuant to Section 7.13 after the Closing Date and prior to such time, minus
(k) any amount of the Cumulative Credit used to make Capital Expenditures pursuant to Section 7.11(c)(iii) after the Closing Date and prior to such time.
 
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“Cumulative Retained Excess Cash Flow Amount” means, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to the aggregate cumulative sum of the Retained Percentage of Excess Cash Flow, less the amount of Excess Cash Flow of Foreign Subsidiaries to the extent and for so long as such Excess Cash Flow is excluded from Excess Cash Flow prepayments pursuant to Section 2.05(b)(viii), for each Excess Cash Flow Period ending after the Closing Date and prior to such date.
“Current Assets” means, with respect to the Borrower and the Restricted Subsidiaries on a consolidated basis at any date of determination, all assets (other than cash and Cash Equivalents) that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries as current assets at such date of determination, other than amounts related to current or deferred Taxes based on income or profits (but excluding assets held for sale, loans (permitted) to third parties, Pension Plan assets, deferred bank fees and derivative financial instruments).
“Current Liabilities” means, with respect to the Borrower and the Restricted Subsidiaries on a consolidated basis at any date of determination, all liabilities that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries as current liabilities at such date of determination, other than (a) the current portion of any Indebtedness, (b) the current portion of interest, (c) accruals for current or deferred Taxes based on income or profits, (d) accruals of any costs or expenses related to restructuring reserves, (e) deferred revenue and (f) any Revolving Credit Exposure or Revolving Credit Loans.
“Debt Fund Affiliate” means (i) any fund managed by, or under common management with, GSO Capital Partners LP, (ii) any fund managed by GSO Debt Funds Management LLC, Blackstone Debt Advisors L.P., Blackstone Distressed Securities Advisors L.P., Blackstone Mezzanine Advisors L.P. or Blackstone Mezzanine Advisors II L.P. and (iii) any other Affiliate of Holdings that is a bona fide diversified debt fund.
“Debtor Relief Laws” means the Bankruptcy Code of the United States and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Declined Proceeds” has the meaning set forth in Section 2.05(b)(vi).
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2.0% per annum; provided that with respect to a Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2.0% per annum, in each case, to the fullest extent permitted by applicable Laws.
“Defaulting Lender” means any Lender whose acts or failure to act, whether directly or indirectly, cause it to meet any part of the definition of “Lender Default.”
“Designation Date” has the meaning set forth in Section 6.14.
“Discount Range” has the meaning set forth in Section 2.05(c)(ii).
“Discounted Prepayment Option Notice” has the meaning set forth in Section 2.05(c)(ii).
 
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“Discounted Voluntary Prepayment” has the meaning set forth in Section 2.05(c)(i).
“Discounted Voluntary Prepayment Notice” has the meaning set forth in Section 2.05(c)(v).
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction and any sale or issuance of Equity Interests in a Restricted Subsidiary) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is ninety-one (91) days after the Maturity Date of all then outstanding Term Loans; provided that if such Equity Interests are issued pursuant to a plan for the benefit of employees of Holdings (or any direct or indirect parent thereof), the Borrower or the Restricted Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because it may be required to be repurchased by the Borrower or if its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
“Documentation Agent” means Mizuho Corporate Bank, Ltd., as documentation agent under this Agreement.
“Dollar” and “$” mean lawful money of the United States.
“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of the United States, any state thereof or the District of Columbia.
“Eligible Assignee” has the meaning set forth in Section 10.07(a).
“Environment” means indoor air, ambient air, surface water, groundwater, drinking water, land surface, subsurface strata, and natural resources such as wetlands, flora and fauna.
“Environmental Laws” means the common law and any applicable Laws, in any case, relating to pollution or the protection of the Environment, or the protection of human health (to the extent relating to exposure to Hazardous Materials) and safety as it relates to the environment, including any applicable provisions of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., and the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., and all analogous state or local statutes, and the regulations promulgated pursuant thereto.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of investigation and remediation, fines, penalties or indemnities), of the Loan Parties or any Restricted Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the Environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
 
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“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.
“Equity Contribution” has the meaning set forth in the preliminary statements hereto.
“Equity Interests” means, with respect to any Person, all of the shares, interests, rights, participations or other equivalents (however designated) of capital stock of (or other ownership or profit interests or units in) such Person and all of the warrants, options or other rights for the purchase, acquisition or exchange from such Person of any of the foregoing (including through convertible securities).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that is under common control with a Loan Party or any Restricted Subsidiary within the meaning of Section 414 of the Code or Section 4001 of ERISA.
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by a Loan Party, any Restricted Subsidiary or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party, any Restricted Subsidiary or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) with respect to a Pension Plan, the failure to satisfy the minimum funding standard of Section 412 of the Code, whether or not waived; (g) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could result in liability to a Loan Party or any Restricted Subsidiary; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party, any Restricted Subsidiary or any ERISA Affiliate.
“Eurocurrency Rate” means, for any Interest Period with respect to any Eurocurrency Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “Eurocurrency Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurocurrency Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period; provided that the Eurocurrency Rate with respect to the Term B Loans shall not be less than 1.00% per annum.
“Eurocurrency Rate Loan” means a Loan that bears interest at a rate based on the Eurocurrency Rate.
 
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“Event of Default” has the meaning set forth in Section 8.01.
“Excess Cash Flow” means, for any period, an amount equal to (a) the sum, without duplication, of (i) Consolidated Net Income for such period, (ii) an amount equal to the amount of all non-cash charges (including depreciation and amortization) to the extent deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital and long-term accounts receivable of the Borrower and its Restricted Subsidiaries for such period (other than any such decreases arising from acquisitions or dispositions by the Borrower and its Restricted Subsidiaries completed during such period) and (iv) an amount equal to the aggregate net non-cash loss on Dispositions by the Borrower and its Restricted Subsidiaries during such period (other than sales in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income minus (b) the sum, without duplication, of (i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income and cash charges included in clauses (a) through (m) of the definition of Consolidated Net Income, (ii) without duplication of amounts deducted pursuant to clause (xi) below in prior fiscal years, the amount of Capital Expenditures or acquisitions of intellectual property to the extent not expensed and Capitalized Software Expenditures accrued or made in cash or accrued during such period, to the extent that such Capital Expenditures or acquisitions were financed with internally generated cash or borrowings under the Revolving Credit Facility and were not made by utilizing the Cumulative Retained Excess Cash Flow Amount, (iii) the aggregate amount of all principal payments of Indebtedness of the Borrower or its Restricted Subsidiaries (including (A) the principal component of payments in respect of Capitalized Leases, (B) the amount of any scheduled repayment of Term Loans pursuant to Section 2.07(a) and (C) any mandatory prepayment of Term Loans pursuant to Section 2.05(b)(ii) to the extent required due to a Disposition that resulted in an increase to Consolidated Net Income and not in excess of the amount of such increase but excluding (X) all other voluntary and mandatory prepayments of Term Loans, (Y) all prepayments of Revolving Credit Loans and Swing Line Loans made during such period and (Z) all payments in respect of any other revolving credit facility made during such period, except in the case of clause (Z) to the extent there is an equivalent permanent reduction in commitments thereunder), to the extent financed with internally generated cash, (iv) an amount equal to the aggregate net non-cash gain on Dispositions by the Borrower and its Restricted Subsidiaries during such period (other than Dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income, (v) increases in Consolidated Working Capital and long-term accounts receivable of the Borrower and its Restricted Subsidiaries for such period (other than any such increases arising from acquisitions or dispositions by the Borrower and its Restricted Subsidiaries during such period), (vi) cash payments by the Borrower and its Restricted Subsidiaries during such period in respect of long-term liabilities of the Borrower and its Restricted Subsidiaries other than Indebtedness, (vii) without duplication of amounts deducted pursuant to clause (xi) below in prior fiscal years, the amount of Investments and acquisitions made during such period by the Borrower and its Restricted Subsidiaries on a consolidated basis pursuant to Section 7.02 to the extent that such Investments and acquisitions were financed with internally generated cash and were not made by utilizing the Cumulative Retained Excess Cash Flow Amount, (viii) the amount of Restricted Payments paid during such period pursuant to Section 7.06(h), Section 7.06(g)(x) or Section 7.06(f) to the extent such Restricted Payments were financed with internally generated cash or borrowings under the Revolving Credit Facility, (ix) the aggregate amount of expenditures actually made by the Borrower and its Restricted Subsidiaries in cash during such period (including expenditures for the payment of financing fees) to the extent that such expenditures are not expensed during such period, (x) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and its Restricted Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, (xi) without duplication of amounts deducted from Excess Cash Flow in prior periods, the aggregate consideration required to be paid in cash by the Borrower and its Restricted Subsidiaries pursuant to binding contracts (the “Contract Consideration”) entered into prior to or during such period relating to Permitted Acquisitions or Capital Expenditures or acquisitions of intellectual property to the extent not expensed to be consummated or made, plus any restructuring cash expenses, pension payments or tax contingency payments that have been added to Excess Cash Flow pursuant to clause (a)(ii) above required to be made, in each case during the period of four consecutive fiscal quarters of the Borrower following the end of such period, provided that to the extent the aggregate amount of internally generated cash not utilizing the Cumulative Retained Excess Cash Flow Amount actually utilized to finance such Permitted Acquisitions, Capital Expenditures or acquisitions of intellectual property during such period of four consecutive fiscal quarters is less than the Contract Consideration, the
 
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amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such period of four consecutive fiscal quarters, (xii) the amount of cash taxes paid in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period, (xiii) cash expenditures in respect of Swap Contracts during such fiscal year to the extent not deducted in arriving at such Consolidated Net Income and (xiv) any payment of cash to be amortized or expensed over a future period and recorded as a long-term asset. Notwithstanding anything in the definition of any term used in the definition of Excess Cash Flow to the contrary, all components of Excess Cash Flow shall be computed for the Borrower and its Restricted Subsidiaries on a consolidated basis.
“Excess Cash Flow Period” means each fiscal year of the Borrower commencing with the fiscal year ending December 31, 2011 but in all cases for purposes of calculating the Cumulative Retained Excess Cash Flow Amount , such period shall commence with the fiscal year ending December 31, 2012 and shall only include such fiscal years for which financial statements and a Compliance Certificate have been delivered in accordance with Sections 6.01(a) and 6.02(a) and for which any prepayments required by Section 2.05(b)(i) (if any) have been made (it being understood that the Retained Percentage of Excess Cash Flow for any Excess Cash Flow Period shall be included in the Cumulative Retained Excess Cash Flow Amount regardless of whether a prepayment is required by Section 2.05(b)(i)).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Subsidiary” means (a) any Subsidiary that is not directly or indirectly a wholly owned Subsidiary of the Borrower, (b) any Subsidiary that does not have total assets or annual revenues in excess of $20,000,000 individually or in the aggregate with all other Subsidiaries excluded via this clause (b), (c) any Subsidiary acquired following the Closing Date that is prohibited by applicable Law or Contractual Obligations that are in existence at the time of acquisition and not entered into in contemplation thereof from guaranteeing the Obligations or if guaranteeing the Obligation would require governmental (including regulatory) consent, approval, license or authorization (unless such consent, approval license or authorization has been obtained), (d) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent, in consultation with the Borrower, the burden or cost or other consequences (including any material adverse tax consequences) of providing a Guarantee shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (e) any Foreign Subsidiary, (f) any non-for-profit Subsidiaries, (g) any Unrestricted Subsidiaries, (h) any special purpose securitization vehicle or a captive insurance subsidiary, (i) any direct or indirect Domestic Subsidiary (x) that is treated as a disregarded entity for federal income tax purposes and (y) substantially all of the assets of which include the Equity Interests of one or more Foreign Subsidiaries and (j) any Domestic Subsidiary that is a Subsidiary of a Foreign Subsidiary; provided that no Subsidiary that guarantees any Mezzanine Debt or other Junior Financing shall be deemed to be an Excluded Subsidiary at any time any such guarantee is in effect.
“Excluded Taxes” means, with respect to any Agent, any Lender (including any L/C Issuer), or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, (a) any Taxes imposed on (or measured by) its net income or net profits (or any franchise or similar Taxes in lieu thereof) by the jurisdiction under the laws of which such recipient is organized, in which its principal office is located or in which it is otherwise doing business (other than a business deemed to arise solely by virtue of any of the transactions contemplated by this Agreement) or, in the case of any Lender, in which its Lending Office is located, (b) any Taxes in the nature of branch profits tax within the meaning of section 884(a) of the Code imposed by any jurisdiction described in (a), (c) other than in the case of an assignee pursuant to a request by the Borrower under Section 3.07, any United States federal withholding tax that is imposed on any interest payable to such Person pursuant to any Law in effect at the time such Person becomes a party to this Agreement (or designates a new Lending Office), except to the extent that such Person (or its assignor, if any) was entitled, at the time of designation of a new applicable Lending Office (or assignment), to receive additional amounts with respect to such United States federal withholding Tax pursuant to Section 3.01(a), or (d) a United States federal withholding tax (including backup withholding tax) that is attributable to such Person’s failure to comply with Section 3.01(d).
 
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“Extended Term Facility” means the Extended Term Loans established pursuant to a specified Term Loan Extension Amendment.
“Existing Term Loan Facility” has the meaning set forth in Section 2.16(a).
“Extended Term Loans” has the meaning set forth in Section 2.16(a).
“Extending Term Lender” has the meaning set forth in Section 2.16(b).
“Extension Election” has the meaning set forth in Section 2.16(b).
“Extension Request” has the meaning set forth in Section 2.16(a).
“Facility” means the Term B Loans, the Term A Loans, any Extended Term Facility, any Refinancing Term Facility, the Revolving Credit Facility and any Replacement Revolving Facility, as the context may require.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
“First Lien Intercreditor Agreement” means an intercreditor agreement substantially in the form of Exhibit N between the Collateral Agent and one or more collateral agents or representatives for the holders of Permitted Notes issued pursuant to Section 7.03(s) that are intended to be secured on a pari passu basis with the Obligations.
“First Lien Secured Leverage Ratio” means, with respect to any Test Period, the ratio of (a) Consolidated Total Net Debt (but excluding for purposes of calculating Consolidated Total Net Debt any cash or Cash Equivalents representing proceeds of any Incremental Term Loans, borrowings under any Revolving Credit Commitments established pursuant to any Revolving Commitment Increase or proceeds of Permitted Notes that are secured on a pari passu basis with the Obligations) that is then secured by first priority Liens on property or assets of the Borrower or its Subsidiaries as of the last day of such Test Period to (b) Consolidated EBITDA for such Test Period.
“Foreign Disposition” has the meaning set forth in Section 2.05(b)(viii).
“Foreign Subsidiary” means any direct or indirect Restricted Subsidiary of the Borrower which is not a Domestic Subsidiary.
“Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course.
“Funded Debt” means all Indebtedness of the Borrower and the Restricted Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from
 
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such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including Indebtedness in respect of the Loans.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Granting Lender” has the meaning set forth in Section 10.07(h).
“GS Lenders” means GSLP I Offshore Holdings Fund A, L.P., GSLP I Offshore Holdings Fund B, L.P., GSLP I Offshore Holdings Fund C, L.P. and GSLP I Onshore Holdings Fund, L.L.C.
“Guarantee” means, as to any Person, without duplication, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other monetary obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance of such Indebtedness or other monetary obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other monetary obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other monetary obligation of any other Person, whether or not such Indebtedness or other monetary obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that the term “Guarantee” shall not include endorsements for collection or deposit, in either case in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guaranteed Obligations” has the meaning set forth in Section 11.01.
“Guarantors” means Holdings and the Subsidiaries of the Borrower (other than any Excluded Subsidiary) and any other Domestic Subsidiary that, at the option of the Borrower, issues a Guarantee of the Obligations after the Closing Date.
 
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“Guaranty” means, collectively, the guaranty of the Obligations by the Guarantors pursuant to this Agreement.
“Hazardous Materials” means all materials, pollutants, contaminants, chemicals, compounds, constituents, substances or wastes, in any form, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, mold, electromagnetic radio frequency or microwave emissions, that are regulated pursuant to, or which could give rise to liability under, applicable Environmental Law.
“Holdings” means SW Holdco, Inc. or any Domestic Subsidiary of SW Holdco, Inc. that directly owns 100% of the issued and outstanding Equity Interests in the Borrower, and issues a Guarantee of the Obligations and agrees to assume the obligations of “Holdings” pursuant to this Agreement and the other Loan Documents pursuant to one or more instruments in form and substance reasonably satisfactory to the Administrative Agent.
“Holdings Pledge Agreement” means the Holdings Pledge Agreement substantially in the form of Exhibit H .
“Honor Date” has the meaning set forth in Section 2.03(c)(i).
“Immaterial Subsidiary” has the meaning set forth in Section 8.03.
“Incremental Amendment” has the meaning set forth in Section 2.14(a).
“Incremental Facility Closing Date” has the meaning set forth in Section 2.14(a).
“Incremental Increase Period” has the meaning set forth in Section 2.14(a).
“Incremental Series” has the meaning set forth in Section 2.14(a).
“Incremental Term A Commitment” means, with respect to each Incremental Term A Lender, the commitment of such Incremental Term A Lender to make Incremental Term A Loans hereunder on the Amendment No. 2 Effective Date. The principal amount of each Incremental Term A Lender’s Incremental Term A Commitment is set forth on such Incremental Term A Lender’s signature page to Amendment No. 2. The aggregate principal amount of the Incremental Term A Commitments of all Incremental Term A Lenders as of the Amendment No. 2 Effective Date is $17,000,000.
“Incremental Term A Lender” means a Lender identified as an Incremental Term A Lender on its signature page to Amendment No. 2.
“Incremental Term A Loan” means a Term A Loan made pursuant to an Incremental Term A Commitment on the Amendment No. 2 Effective Date.
“Incremental Term Loans” has the meaning set forth in Section 2.14(a).
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following:
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) the maximum amount (after giving effect to any prior drawings or reductions which may have been reimbursed) of all outstanding letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person;
 
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(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade accounts payable in the ordinary course of business, (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and (iii) liabilities accrued in the ordinary course);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements and mortgage, industrial revenue bond, industrial development bond and similar financings), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f) all Attributable Indebtedness; and
(g) all obligations of such Person in respect of Disqualified Equity Interests;
if and to the extent that the foregoing would constitute indebtedness or a liability in accordance with GAAP; and
(h) to the extent not otherwise included above, all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall (A) include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner, except to the extent such Person’s liability for such Indebtedness is otherwise limited and only to the extent such Indebtedness would be included in the calculation of Consolidated Total Net Debt, and (B) in the case of the Borrower and its Restricted Subsidiaries, exclude all intercompany Indebtedness among the Borrower and its Restricted Subsidiaries having a term not exceeding 364 days (inclusive of any rollover or extensions of terms) and made in the ordinary course of business. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of Indebtedness of any Person for purposes of clause (e) shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.
“Indemnified Liabilities” has the meaning set forth in Section 10.05.
“Indemnified Taxes” means any Taxes other than Excluded Taxes.
“Indemnitees” has the meaning set forth in Section 10.05.
“Information” has the meaning set forth in Section 10.08.
“Initial Incremental Amount” has the meaning set forth in Section 2.14(a).
“Initial Lenders” means Bank of America, Barclays Bank PLC, Deutsche Bank Trust Company Americas, GSLP I Offshore Holdings Fund A, L.P., GSLP I Offshore Holdings Fund B, L.P., GSLP I Offshore Holdings Fund C, L.P., GSLP I Onshore Holdings Fund, L.L.C. and Mizuho Corporate Bank, Ltd.
 
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“Initial Term A Lender” means the Person identified as such in the Additional Term Loan Amendment No. 1 Joinder Agreement.
“Intellectual Property Security Agreement” has the meaning set forth in the Security Agreement.
“Intercompany Note” means a promissory note substantially in the form of Exhibit G .
“Interest Coverage Ratio” means, with respect to the Borrower and the Restricted Subsidiaries on a consolidated basis, as of the end of any fiscal quarter of the Borrower for the Test Period ending on such date, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense.
“Interest Payment Date” means, (a) as to any Eurocurrency Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date of the Facility under which such Loan was made; provided that if any Interest Period for a Eurocurrency Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each March, June, September and December and the Maturity Date of the Facility under which such Loan was made (with Swing Line Loans being deemed made under the Revolving Credit Facility for purposes of this definition).
“Interest Period” means, as to each Eurocurrency Rate Loan, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one, two, three or six months thereafter or, to the extent agreed by each Lender of such Eurocurrency Rate Loan, nine or twelve months or less than one month thereafter, as selected by the Borrower in its Committed Loan Notice; provided that:
(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity Date of the Facility under which such Loan was made.
“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in the case of the Borrower and its Restricted Subsidiaries, intercompany loans, advances or Indebtedness among the Borrower and its Restricted Subsidiaries having a term not exceeding 364 days (inclusive of any rollover or extensions of terms) and made in the ordinary course of business consistent with past practice) or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“Investor Management Agreement” means the Transaction and Advisory Fee Agreement among the Borrower, Holdings (or any direct or indirect parent entity of Holdings) and Affiliates of (or
 
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management entities associated with) one or more of the Investors as in effect on the Closing Date and as the same may be amended, supplemented or otherwise modified in a manner not materially adverse to the Lenders; provided that any management, monitoring, consulting and advisory fees payable in advance by the Borrower and its Restricted Subsidiaries shall not exceed an amount equal to (x) with respect to the period from the Closing Date to December 31, 2010, 1.5% of Consolidated EBITDA for such period (which shall initially be estimated to be $4,000,000) and (y) with respect to any fiscal year thereafter, 1.5% of Consolidated EBITDA for such fiscal year; provided further that in each case, such amounts shall be subject to any adjustments made pursuant to Section 4(c) of the Investor Management Agreement.
“Investors” means Blackstone Capital Partners V L.P., and its Affiliates and any investment funds advised or managed by any of the foregoing (other than any portfolio operating companies of Blackstone Capital Partners V L.P.).
“IP Rights” has the meaning set forth in Section 5.16.
“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.
“Joinder Agreement” means the joinder agreement, dated as of the Amendment No. 1 Effective Date, by and among the Borrowers, the Administrative Agent, the Additional Term B Lender, the Initial Term A Lender and the Additional Revolving Credit Lenders.
“Junior Financing” has the meaning set forth in Section 7.13(a).
“Junior Financing Documentation” means any documentation governing any Junior Financing.
“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.
“L/C Advance” means, with respect to each Revolving Credit Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Pro Rata Share.
“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit Borrowing.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.
“L/C Issuer” means Bank of America and any other Lender that becomes an L/C Issuer in accordance with Section 2.03(k) or 10.07(j), in each case, in its capacity as an issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.
“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all
 
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L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.10. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lender” has the meaning set forth in the introductory paragraph to this Agreement and, as the context requires, includes an L/C Issuer and a Swing Line Lender, and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a “Lender.”
“Lender Default” means (i) the refusal (which may be given verbally or in writing and has not been retracted) or failure of any Lender to make available its portion of any incurrence of Loans or reimbursement obligations under Section 2.03(c), which refusal or failure is not cured within one Business Day after the date of such refusal or failure; (ii) the failure of any Lender to pay over to the Administrative Agent, any L/C Issuer or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute; or (iii) a Lender has admitted in writing that it is insolvent or such Lender becomes subject to a Lender-Related Distress Event.
“Lender Participation Notice” has the meaning set forth in Section 2.05(c)(iii).
“Lender-Related Distress Event” mean, with respect to any Lender or any person that directly or indirectly controls such Lender (each, a “Distressed Person”), as the case may be, a voluntary or involuntary case with respect to such Distressed Person under any Debtor Relief Law, or a custodian, conservator, receiver or similar official is appointed for such Distressed Person or any substantial part of such Distressed Person’s assets, or such Distressed Person or any person that directly or indirectly controls such Distressed Person is subject to a forced liquidation, or such Distressed Person makes a general assignment for the benefit of creditors or is otherwise adjudicated as, or determined by any governmental authority having regulatory authority over such Distressed Person or its assets to be, insolvent or bankrupt; provided that a Lender-Related Distress Event shall not be deemed to have occurred solely by virtue of the ownership or acquisition of any Equity Interest in any Lender or any person that directly or indirectly controls such Lender by a Governmental Authority or an instrumentality thereof.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.
“Letter of Credit” means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.
“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
“Letter of Credit Expiration Date” means the day that is five (5) days prior to the scheduled Maturity Date then in effect for the Revolving Credit Facility (or, if such day is not a Business Day, the next preceding Business Day).
“Letter of Credit Sublimit” means an amount equal to the lesser of (a) $50,000,000 and (b) the aggregate amount of the Revolving Credit Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Credit Facility.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to Real Property, and any Capitalized Lease having substantially the same economic effect as any of the foregoing).
 
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“Loan” means an extension of credit by a Lender to the Borrower under Article II in the form of a Term Loan, a Revolving Credit Loan, a Swing Line Loan or a Replacement Revolving Loan (including any extensions of credit under any Revolving Commitment Increase).
“Loan Documents” means, collectively, (i) this Agreement, (ii) the Notes, (iii) the Collateral Documents, (iv) each Letter of Credit Application and (v) any amendment to any of the foregoing (including any Incremental Amendment).
“Loan Parties” means, collectively, the Borrower and each Guarantor.
“Management Stockholders” means the members of management of Holdings, the Borrower or any of its Subsidiaries who are investors in Holdings or any direct or indirect parent thereof.
“Margin Stock” has the meaning set forth in Regulation U.
“Master Agreement” has the meaning set forth in the definition of “Swap Contract.”
“Material Adverse Effect” means a (a) material adverse effect on the business, operations, assets, liabilities (actual or contingent) or financial condition of the Borrower and its Restricted Subsidiaries, taken as a whole; (b) material adverse effect on the ability of the Loan Parties (taken as a whole) to fully and timely perform any of their payment obligations under any Loan Document to which the Borrower or any of the Loan Parties is a party; or (c) material adverse effect on the rights and remedies available to the Lenders or the Collateral Agent under any Loan Document.
“Material Real Property” means any fee owned real property owned by any Loan Party (other than any owned real property subject to a Lien permitted by clause (u) or (w) of Section 7.01 to the extent and for so long as the documentation governing such Lien prohibits the granting of a Mortgage thereon to secure the Obligations) with a fair market value in excess of $5,000,000 (at the Closing Date or, with respect to real property acquired after the Closing Date, at the time of acquisition, in each case, as reasonably estimated by the Borrower in good faith); provided that if at any time the fair market value of all fee owned real properties that are not “Material Real Property” owned by the Loan Parties would exceed $25,000,000 in the aggregate, the Loan Parties shall designate additional fee owned real properties as “Material Real Property” and comply with the Collateral and Guarantee Requirement with respect thereto such that such threshold is no longer exceeded.
“Maturity Date” means (i) with respect to the Term A Loans, February 17, 2016, (ii) with respect to the Term B Loans, the earlier of (a) August 17, 2017 and (b) the 91st day prior to the maturity of any Mezzanine Debt with an aggregate principal amount greater than $50,000,000 outstanding, and (iii) with respect to the Revolving Credit Facility and the Swing Line Facility, February 17, 2016; provided that if any such day is not a Business Day, the Maturity Date shall be the Business Day immediately succeeding such day.
“Maximum Rate” has the meaning set forth in Section 10.10.
“Mezzanine Debt” means $400,000,000 in aggregate principal amount of 13  1 / 2 % senior notes due 2016 issued by the Borrower on or prior to the Closing Date , as amended by the Mezzanine Debt Amendment .
“Mezzanine Debt Amendment” means the Holder Consent Letter to the Mezzanine Debt Documentation as in effect on the Amendment No. 3 Effective Date.
 
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“Mezzanine Debt Documentation” means any indenture or other loan or purchase agreement governing the Mezzanine Debt and any other documents delivered pursuant thereto.
“Mezzanine Financing” means the issuance of the Mezzanine Debt pursuant to the Mezzanine Debt Documentation.
“Mezzanine Providers” means the holders of the Mezzanine Debt.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Mortgage Policies” has the meaning set forth in the definition of “Collateral and Guarantee Requirement.”
“Mortgaged Properties” has the meaning set forth in the definition of “Collateral and Guarantee Requirement.”
“Mortgages” means, collectively, the deeds of trust, trust deeds, hypothecs and mortgages made by the Loan Parties in favor or for the benefit of the Collateral Agent on behalf of the Secured Parties creating and evidencing a Lien on a Mortgaged Property, in form and substance reasonably satisfactory to the Collateral Agent, and any other mortgages executed and delivered pursuant to Sections 6.11 and 6.13.
“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Loan Party, any Restricted Subsidiary or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“Net Proceeds” means:
(a) 100% of the cash proceeds actually received by the Borrower or any of the Restricted Subsidiaries (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise and including casualty insurance settlements and condemnation awards, but in each case only as and when received) from any Disposition or Casualty Event, net of (i) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith, (ii) any amount required to repay (x) Indebtedness (other than pursuant to the Loan Documents) that is secured by a Lien on the assets disposed of and which ranks prior to the Lien securing the Obligations or (y) Indebtedness or other obligations of any Subsidiary that is disposed of in such transaction, (iii) in the case of any Disposition or Casualty Event by a non-wholly owned Restricted Subsidiary, the pro rata portion of the Net Proceeds thereof (calculated without regard to this clause (iii)) attributable to minority interests and not available for distribution to or for the account of the Borrower or a wholly owned Restricted Subsidiary as a result thereof, (iv) taxes paid or reasonably estimated to be payable as a result thereof, and (v) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to the sale price or any liabilities (other than any taxes deducted pursuant to clause (i) above) (x) related to any of the applicable assets and (y) retained by the Borrower or any of the Restricted Subsidiaries including, without limitation, Pension Plan and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations (however, the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Proceeds of such Disposition or Casualty Event occurring on the date of such reduction); provided that, if no Default exists, the Borrower or the applicable Restricted Subsidiary may reinvest any portion of such proceeds in assets useful for its business within 12 months of such receipt, such portion of such proceeds shall not constitute Net Proceeds except to the extent not,
 
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within 12 months of such receipt, so used or contractually committed to be so used (it being understood that if any portion of such proceeds are not so used within such 12 month period but within such 12-month period are contractually committed to be used, then upon the termination of such contract or if such Net Proceeds are not so used within 18 months of initial receipt, such remaining portion shall constitute Net Proceeds as of the date of such termination or expiry without giving effect to this proviso; it being understood that such proceeds shall constitute Net Proceeds notwithstanding any investment notice if there is a Specified Default at the time of a proposed reinvestment unless such proposed reinvestment is made pursuant to a binding commitment entered into at a time when no Specified Default was continuing); provided, further, that no proceeds realized in a single transaction or series of related transactions shall constitute Net Proceeds unless (x) such proceeds shall exceed $5,000,000 or (y) the aggregate net proceeds exceeds $15,000,000 in any fiscal year (and thereafter only net cash proceeds in excess of such amount shall constitute Net Proceeds under this clause (a)), and
(b) 100% of the cash proceeds from the incurrence, issuance or sale by the Borrower or any of the Restricted Subsidiaries of any Indebtedness, net of all taxes paid or reasonably estimated to be payable as a result thereof and fees (including investment banking fees and discounts), commissions, costs and other expenses, in each case incurred in connection with such issuance or sale.
For purposes of calculating the amount of Net Proceeds, fees, commissions and other costs and expenses payable to the Borrower or any Restricted Subsidiary shall be disregarded.
“non-cash charges” has the meaning set forth in the definition of the term “Consolidated EBITDA.”
“Non-Consenting Lender” has the meaning set forth in Section 3.07(d).
“Non-Debt Fund Affiliate” means an Affiliate of the Borrower that is not a Debt Fund Affiliate or a Purchasing Borrower Party.
“Non-extension Notice Date” has the meaning set forth in Section 2.03(b)(iii).
“Not Otherwise Applied” means, with reference to any amount of Net Proceeds of any transaction or event, that such amount (a) was not required to be applied to prepay the Loans pursuant to Section 2.05(b), and (b) was not previously applied in determining the permissibility of a transaction under the Loan Documents where such permissibility was (or may have been) contingent on receipt of such amount or utilization of such amount for a specified purpose. The Borrower shall promptly notify the Administrative Agent of any application of such amount as contemplated by (b) above.
“Note” means a Term Note, a Revolving Credit Note or a Swing Line Note, as the context may require.
“Obligations” means all (x) advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party and its Restricted Subsidiaries arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or Restricted Subsidiary of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding and (y) obligations of the Borrower or any Restricted Subsidiary arising under Cash Management Obligations or any Secured Hedge Agreement. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents (and of their Restricted Subsidiaries to the extent they have obligations under the Loan Documents) include (a) the obligation (including guarantee obligations) to pay principal, interest, Letter of Credit fees, reimbursement obligations, charges, expenses, fees, Attorney Costs, indemnities and other amounts payable by any Loan Party under any Loan Document and (b) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing that any Lender, in its sole discretion, may elect to pay or advance on behalf of such Loan Party.
 
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“Offered Loans” has the meaning set forth in Section 2.05(c)(iii).
“Organization Documents” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Original Term Commitment” means, as to each Term Lender, its obligation to make a Term Loan to the Borrower pursuant to Section 2.01(a) in an aggregate amount not to exceed the amount set forth opposite such Lender’s name on Schedule 1.01A under the caption “Term Commitment” or in the Assignment and Assumption pursuant to which such Term Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement (including Section 2.14). The initial aggregate amount of the Term Commitments is $1,050,000,000.
“Original Term Loans” means the loans made on the Closing Date under the Original Term Commitments pursuant to Section 2.01(a).
“Other Taxes” has the meaning set forth in Section 3.01(b).
“Outstanding Amount” means (a) with respect to Term Loans, Revolving Credit Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Term Loans, Revolving Credit Loans (including any refinancing of outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions as a Revolving Credit Borrowing) and Swing Line Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes thereto as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit (including any refinancing of outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions as a Revolving Credit Borrowing) or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.
“Participant” has the meaning set forth in Section 10.07(e).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five (5) plan years.
“Perfection Certificate” means a certificate in the form of Exhibit II to the Security Agreement or any other form reasonably approved by the Collateral Agent, as the same shall be supplemented from time to time.
 
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“Permitted Acquisition” has the meaning set forth in Section 7.02(i).
“Permitted Capital Expenditure Amount” has the meaning set forth in Section 7.11(c).
“Permitted Holders” means each of the Investors, the Management Stockholders and the Mezzanine Providers; provided that (a) if the Management Stockholders own beneficially or of record more than ten percent (10%) of the outstanding voting Equity Interests of Holdings in the aggregate, they shall be treated as Permitted Holders of only ten percent (10%) of the outstanding voting Equity Interests of Holdings at such time and (b) if the Mezzanine Providers own beneficially or of record more than ten percent (10%) of the outstanding voting Equity Interests of Holdings in the aggregate, they shall be treated as Permitted Holders of only ten percent (10%) of the outstanding voting Equity Interests of Holdings at such time.
“Permitted Notes” means (i) unsecured senior or senior subordinated debt securities of the Borrower, (ii) debt securities of the Borrower that are secured by a Lien on the Collateral ranking junior to the Liens securing the Obligations pursuant to a Second Lien Intercreditor Agreement or (iii) debt securities of the Borrower that are secured by a Lien ranking pari passu with the Liens securing the Obligations pursuant to a First Lien Intercreditor Agreement; provided that (a) in the case of debt securities issued in reliance on Section 7.03(s)(iii), such debt securities are issued for cash consideration, (b) the terms of such debt securities do not provide for any scheduled repayment, mandatory redemption or sinking fund obligations prior to the Maturity Date of the Term Facility (other than customary offers to repurchase upon a change of control, asset sale or event of loss and customary acceleration rights after an event of default), (c) the covenants, events of default, guarantees, collateral and other terms of which (other than interest rate and redemption premiums), taken as a whole, are not more restrictive to the Borrower and the Restricted Subsidiaries than those in this Agreement; provided that a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent at least three Business Days (or such shorter period as the Administrative Agent may reasonably agree) prior to the incurrence of such debt securities, together with a reasonably detailed description of the material terms and conditions of such debt securities or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement, (d) at the time that any such Permitted Notes are issued (and after giving effect thereto) no Event of Default shall exist, (e) the Borrower shall be in compliance with the covenants set forth in Section 7.11 determined on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements were required to have been delivered pursuant to Section 6.01(a) or (b), as applicable (or if no Test Period cited in Section 7.11 has passed, the covenants in Section 7.11 for the first Test Period cited in such Section shall be satisfied as of the last four quarters ended), in each case, as if such Permitted Notes had been outstanding on the last day of such four quarter period, and (f) no Subsidiary of the Borrower (other than a Guarantor) shall be an obligor and no Permitted Notes shall be secured by any collateral other than the Collateral.
“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal, replacement or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, replaced or extended except by an amount equal to unpaid accrued interest and premium thereon plus other amounts paid, and fees and expenses reasonably incurred, in connection with such modification, refinancing, refunding, renewal, replacement or extension and by an amount equal to any existing commitments unutilized thereunder, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Section 7.03(e), such modification, refinancing, refunding, renewal, replacement or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended, (c) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Sections 7.03(e) or (f), at the time thereof, no Event of Default shall have occurred and be continuing and (d) if such Indebtedness being modified, refinanced, refunded, renewed, replaced or extended is Indebtedness permitted pursuant to Section 7.03(b), 7.03(q), 7.03(s) or 7.13(a) or is otherwise a Junior Financing, (i) to the extent such
 
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Indebtedness being modified, refinanced, refunded, renewed, replaced or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal, replacement or extension is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended, (ii) the terms and conditions (including, if applicable, as to collateral but excluding as to subordination, interest rate and redemption premium) of any such modified, refinanced, refunded, renewed, replaced or extended Indebtedness, taken as a whole, are not materially less favorable to the Loan Parties or the Lenders than the terms and conditions of the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended, taken as a whole; provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Borrower within such five Business Day period that it disagrees with such determination (including a reasonable description of the basis upon which it disagrees) and (iii) such modification, refinancing, refunding, renewal, replacement or extension is incurred by the Person who is the obligor of the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established, maintained or contributed to by any Loan Party or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.
“Platform” has the meaning set forth in Section 6.01.
“Principal L/C Issuer” means Bank of America and any other L/C Issuer that has issued Letters of Credit having an aggregate Outstanding Amount in excess of $10,000,000.
“Pro Forma Balance Sheet” has the meaning set forth in Section 5.05(a)(i).
“Pro Forma Basis” means, with respect to compliance with any test or covenant or calculation of any ratio hereunder, the determination or calculation of such test, covenant or ratio (including in connection with Specified Transactions) in accordance with Section 1.09.
“Pro Forma Compliance” means, with respect to any covenant in Section 7.11, compliance on a Pro Forma Basis with such covenant in accordance with Section 1.09.
“Pro Forma Financial Statements” has the meaning set forth in Section 5.05(a).
“Projections” has the meaning set forth in Section 6.01(c).
“Proposed Discounted Prepayment Amount” has the meaning set forth in Section 2.05(c)(ii).
“Pro Rata Share” means, with respect to each Lender at any time a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Commitments of such Lender under the applicable Facility or Facilities at such time and the denominator of which is the amount of the Aggregate Commitments under the applicable Facility or Facilities at such time; provided that if such Commitments have been terminated, then the Pro Rata Share of each Lender shall be determined based on the Pro Rata Share of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.
 
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“Public Lender” has the meaning set forth in Section 6.01.
“Purchasing Borrower Party” means Holdings or any Subsidiary of Holdings that (x) makes a Discounted Voluntary Prepayment pursuant to Section 2.05(c) or (y) becomes an Eligible Assignees or Participant pursuant to Section 10.07(k).
“Qualified Equity Interests” means any Equity Interests that are not Disqualified Equity Interests.
“Qualified IPO” means the issuance by Holdings or any direct or indirect parent of Holdings of its common Equity Interests in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) (i) pursuant to an effective registration statement filed with the U.S. Securities and Exchange Commission in accordance with the Securities Act (whether alone or in connection with a secondary public offering) or (ii) after which the common Equity Interests of Holdings or any direct or indirect parent of Holdings are listed on an internationally recognized securities exchange or dealer quotation system.
“Qualifying Lenders” has the meaning set forth in Section 2.05(c)(iv).
“Qualifying Loans” has the meaning set forth in Section 2.05(c)(iv).
“Ratio-Based Incremental Facility” has the meaning set forth in Section 2.14(a).
“Real Property” means, collectively, all right, title and interest (including any leasehold, mineral or other estate) in and to any and all parcels of or interests in real property owned or leased by any Person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.
“Refinanced Term Loans” has the meaning set forth in Section 10.01.
“Refinancing Effective Date” has the meaning set forth in Section 2.15(a).
“Refinancing Term Facility” means the Refinancing Term Loans established pursuant to a specified Refinancing Term Loan Amendment.
“Refinancing Term Lender” has the meaning set forth in Section 2.15(b).
“Refinancing Term Loan Amendment” has the meaning set forth in Section 2.15(c).
“Refinancing Term Loans” has the meaning set forth in Section 2.15(a).
“Register” has the meaning set forth in Section 10.07(d).
“Rejection Notice” has the meaning set forth in Section 2.05(b)(vi).
“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing or migrating in, into, onto or through the Environment or from or through any facility, property or equipment.
“Replacement L/C Issuer” means, with respect to any Replacement Revolving Facility, any Replacement Revolving Lender thereunder from time to time designated by the applicable Borrower as the Replacement L/C Issuer under such Replacement Revolving Facility with the consent of such Replacement Revolving Lender and the Administrative Agent.
 
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“Replacement L/C Obligations” means, at any time with respect to any Replacement Revolving Facility, an amount equal to the sum of (a) the then aggregate undrawn and unexpired amount of the then outstanding Replacement Letters of Credit under such Replacement Revolving Facility and (b) the aggregate amount of drawings under the Replacement Letters of Credit under such Replacement Revolving Facility that have not then been reimbursed.
“Replacement Letter of Credit” means any letter of credit issued pursuant to a Replacement Revolving Facility.
“Replacement Revolving Credit Percentage” means, as to any Replacement Revolving Lender at any time under any Replacement Revolving Facility, the percentage which such Lender’s Replacement Revolving Commitment under such Replacement Revolving Facility then constitutes of the aggregate Replacement Revolving Commitments under such Replacement Revolving Facility (or, at any time after such Replacement Revolving Commitments shall have expired or terminated, the percentage which the aggregate amount of such Lender’s Replacement Revolving Extensions of Credit then outstanding pursuant to such Replacement Revolving Facility constitutes of the amount of the aggregate Replacement Revolving Extensions of Credit then outstanding pursuant to such Replacement Revolving Facility).
“Replacement Revolving Commitment Series” has the meaning specified in Section 2.17(b).
“Replacement Revolving Extensions of Credit” means, as to any Replacement Revolving Lender at any time under any Replacement Revolving Facility, an amount equal to the sum of (a) the aggregate principal amount of all Replacement Revolving Loans made by such Lender pursuant to such Replacement Revolving Facility then outstanding, (b) such Lender’s Replacement Revolving Credit Percentage of the outstanding Replacement L/C Obligations under any Replacement Letters of Credit under such Replacement Revolving Facility and (c) such Lender’s Replacement Revolving Credit Percentage of the Replacement Swing Line Loans then outstanding under such Replacement Revolving Facility.
“Replacement Revolving Facility” means each Replacement Revolving Commitment Series of Replacement Revolving Commitments and the Replacement Revolving Extensions of Credit made hereunder.
“Replacement Revolving Facility Amendment” has the meaning specified in Section 2.17(c).
“Replacement Revolving Commitments” has the meaning specified in Section 2.17(a).
“Replacement Revolving Facility Effective Date” has the meaning specified in Section 2.17(a).
“Replacement Revolving Lender” has the meaning specified in Section 2.17(b).
“Replacement Revolving Loans” has the meaning specified in Section 2.17(a).
“Replacement Swing Line Lender” means, with respect to any Replacement Revolving Facility, any Replacement Revolving Lender thereunder from time to time designated by the applicable Borrower as the Replacement Swing Line Lender under such Replacement Revolving Facility with the consent of such Replacement Revolving Lender and the Administrative Agent
“Replacement Swing Line Loans” means any swing line loan made to the Borrower pursuant to a Replacement Revolving Facility.
“Replacement Term Loans” has the meaning set forth in Section 10.01.
 
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“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA or the regulations issued thereunder, other than events for which the thirty (30) day notice period has been waived.
“Request for Credit Extension” means (a) with respect to a Borrowing, continuation or conversion of Term Loans or Revolving Credit Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.
“Required Class Lenders” means, as of any date of determination and subject to the limitations set forth in Section 10.07(l), Term Lenders of a particular Class of Term Loans having more than 50% of the aggregate principal amount of outstanding Term Loans of such Class of all Term Lenders in such Class.
“Required Lenders” means, as of any date of determination and subject to the limitations set forth in Section 10.07(l), Lenders having more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition), (b) aggregate unused Term Commitments and (c) aggregate unused Revolving Credit Commitments and Replacement Revolving Commitments; provided that the unused Term Commitment and unused Revolving Credit Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“Responsible Officer” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer or other similar officer of a Loan Party and, as to any document delivered on the Closing Date, any secretary or assistant secretary of such Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restricted Cash” means cash and Cash Equivalents held by Restricted Subsidiaries that is contractually restricted from being distributed to the Borrower.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to the Borrower’s or a Restricted Subsidiary’s stockholders, partners or members (or the equivalent Persons thereof).
“Restricted Subsidiary” means any Subsidiary of the Borrower other than an Unrestricted Subsidiary.
“Retained Percentage” means, with respect to any Excess Cash Flow Period, (a) 100% minus (b) the Applicable ECF Percentage with respect to such Excess Cash Flow Period.
“Revolving Commitment Increase” has the meaning set forth in Section 2.14(a).
“Revolving Commitment Increase Lender” has the meaning set forth in Section 2.14(a).
“Revolving Credit Borrowing” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Revolving Credit Lenders pursuant to Section 2.01(d).
 
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“Revolving Credit Commitment” means, as to each Revolving Credit Lender, its obligation to (a) make Revolving Credit Loans to the Borrower pursuant to Section 2.01(d), (b) purchase participations in L/C Obligations in respect of Letters of Credit and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.01A under the caption “Revolving Credit Commitment” or, in the case of an Additional Revolving Credit Lender, as set forth in the Amendment No. 1 Joinder Agreement, or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement (including Section 2.14 and Section 10.07(b)). The aggregate Revolving Credit Commitments of all Revolving Credit Lenders shall be $172,500,000 on the Amendment No. 2 Effective Date, as such amount may be adjusted from time to time in accordance with the terms of this Agreement.
“Revolving Credit Exposure” means, as to each Revolving Credit Lender, the sum of the amount of the outstanding principal amount of such Revolving Credit Lender’s Revolving Credit Loans and its Pro Rata Share of the L/C Obligations and the Swing Line Obligations at such time.
“Revolving Credit Facility” means, at any time, the aggregate amount of the Revolving Credit Lenders’ Revolving Credit Commitments at such time.
“Revolving Credit Lender” means, at any time, any Lender that has a Revolving Credit Commitment at such time (including Additional Revolving Credit Lenders) or, if the Revolving Credit Commitments have terminated, Revolving Credit Exposure.
“Revolving Credit Loans” has the meaning set forth in Section 2.01(d).
“Revolving Credit Note” means a promissory note of the Borrower payable to any Revolving Credit Lender or its registered assigns, in substantially the form of Exhibit C-2 hereto, evidencing the aggregate Indebtedness of the Borrower to such Revolving Credit Lender resulting from the Revolving Credit Loans made by such Revolving Credit Lender to the Borrower.
“Rollover Amount” has the meaning set forth in Section 7.11(c)(ii).
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.
“Same Day Funds” means immediately available funds.
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Second Lien Intercreditor Agreement” means an intercreditor agreement by and among the Collateral Agent and the collateral agents or other representatives for the holders of Indebtedness secured by Liens that are intended to rank junior to the Liens securing the Obligations and that are otherwise permitted pursuant to Section 7.01 providing that all proceeds of Collateral shall first be applied to repay the Obligations in full prior to being applied to any obligations under the Indebtedness secured by such junior Liens and that until the termination of the Aggregate Commitments and the repayment in full (or cash collateralization of Letters of Credit) of all Obligations outstanding under this Agreement, the Collateral Agent shall have the sole right to exercise remedies against the Collateral (subject to customary exceptions for limited protective actions that may be taken by the holders of such junior Lien Indebtedness) and otherwise in form and substance reasonably satisfactory to the Collateral Agent.
“Secured Hedge Agreement” means any Swap Contract permitted under Article VII that is entered into by and between the Borrower or any Subsidiary and any Person that is a Lender or an Affiliate of a Lender (or was a Lender or an Affiliate of a Lender at the time such Swap Contract was entered into (a “Hedge Bank”)).
 
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“Secured Leverage Ratio” means, with respect to any Test Period, the ratio of (a) Consolidated Total Net Debt that is then secured by Liens on property or assets of the Borrower or its Restricted Subsidiaries as of the last day of such Test Period to (b) Consolidated EBITDA for such Test Period.
“Secured Parties” means, collectively, the Administrative Agent, the Collateral Agent, the Lenders, the Hedge Banks, the Cash Management Banks, the Supplemental Agents and each co-agent or sub-agent appointed by the Administrative Agent or Collateral Agent from time to time pursuant to Section 9.02.
“Securities Act” means the Securities Act of 1933, as amended.
“Security Agreement” means a Security Agreement substantially in the form of Exhibit F .
“Security Agreement Supplement” has the meaning set forth in the Security Agreement.
“Seller” has the meaning set forth in the preliminary statements hereto.
“Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“SPC” has the meaning set forth in Section 10.07(h).
“Specified Acquisition Agreement Representations” means those representations and warranties relating to the Acquired Company and its Subsidiaries in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that the Borrower has the right to terminate its obligations under the Acquisition Agreement as a result of a breach of such representations and warranties in the Acquisition Agreement.
“Specified Default” means a Default under Section 8.01(a), (f) or (g).
“Specified Equity Contribution” means any cash contribution to the common equity of Holdings and/or any purchase or investment in an Equity Interest of Holdings other than Disqualified Equity Interests.
“Specified Transaction” means any incurrence or repayment of Indebtedness (other than for working capital purposes) or Incremental Term Loan or Revolving Commitment Increase or Investment that results in a Person becoming a Restricted Subsidiary or an Unrestricted Subsidiary, any Permitted Acquisition or any Disposition that results in a Restricted Subsidiary ceasing to be a Subsidiary of the Borrower, any Investment constituting an acquisition of assets constituting a business unit, line of business or division of another Person or any Disposition of a business unit, line of business or division of the Borrower or a Restricted Subsidiary, in each case whether by merger, consolidation, amalgamation or otherwise.
 
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“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which (i) a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, (ii) more than half of the issued share capital is at the time beneficially owned or (iii) the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Subsidiary Guarantor” means any Guarantor other than Holdings.
“Successor Company” has the meaning set forth in Section 7.04(d).
“Supplemental Agent” has the meaning set forth in Section 9.13(a) and “Supplemental Agents” shall have the corresponding meaning.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.
“Swing Line Facility” means the swing line loan facility made available by the Swing Line Lenders pursuant to Section 2.04.
“Swing Line Lender” means Bank of America, in its capacity as provider of Swing Line Loans or any successor swing line lender hereunder.
“Swing Line Loan” has the meaning set forth in Section 2.04(a).
“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit B .
 
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“Swing Line Note” means a promissory note of the Borrower payable to any Swing Line Lender or its registered assigns, in substantially the form of Exhibit C-3 hereto, evidencing the aggregate Indebtedness of the Borrower to such Swing Line Lender resulting from the Swing Line Loans.
“Swing Line Obligations” means, as at any date of determination, the aggregate principal amount of all Swing Line Loans outstanding.
“Swing Line Sublimit” means an amount equal to the lesser of (a) $20,000,000 and (b) the aggregate amount of the Revolving Credit Commitments. The Swing Line Sublimit is part of, and not in addition to, the Revolving Credit Commitments.
“Tax Group” has the meaning set forth in Section 7.06(h)(iii).
“Taxes” means any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other charges imposed by any Governmental Authority, whether computed on a separate, consolidated, unitary, combined or other basis and any and all liabilities (including interest, fines, penalties or additions to tax) with respect to the foregoing.
“Term Borrowing” means a borrowing consisting of simultaneous Term Loans of the same Class and Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Term Lenders pursuant to Section 2.01(b) or (c).
“Term Lender” means, at any time, any Lender that has an Additional Term B Commitment, Term A Commitment, Term A Loan or Term B Loan at such time.
“Term A Commitment” means with respect to the Initial Tranche A Lender, its commitment to make a Term A Loan in the amount of $150,000,000 on the Amendment No. 1 Effective Date.
“Term A Lender” means, at any time, any Lender that has a Term A Commitment or a Term A Loan at such time.
“Term A Loan” means a Loan made pursuant to Section 2.01(c), together with all Incremental Term A Loans.
“Term Loan” means each Original Term Loan, Term A Loan, Term B Loan, Extended Term Loan and Incremental Term Loan.
“Term B Lender” means, at any time, any Lender that has an Additional Term B Commitment or Term B Loan at such time.
“Term B Increase Commitment” means, with respect to the Term B Increase Lender, its commitment to make a Term B Loan on the Amendment No. 3 Effective Date in an amount equal to $500.0 million.
“Term B Increase Lender” means the Person identified as such in the Amendment No. 3 Joinder Agreement.
“Term B Lender” means, at any time, any Lender that has an Additional Term B Commitment, a Term B Increase Commitment or Term B Loan at such time.
“Term B Loans” has the meaning set forth in Section 2.01(b).
 
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“ Term Borrowing” means a borrowing consisting of simultaneous Term Loans of the same Class and Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Term Lenders pursuant to Section 2.01(b) or (c).
“ Term Commitment” means any Original Term Commitment, Additional Term B Commitment, Term A Commitment, Incremental Term A Commitment or Term B Increase Commitment.
“ Term Lender” means, at any time, any Lender that has an Additional Term B Commitment, Term A Commitment, Incremental Term A Commitment, Term B Increase Commitment, Term A Loan or Term B Loan at such time.
“Term Loan” means each Original Term Loan, Term A Loan, Term B Loan, Extended Term Loan and Incremental Term Loan.
“Term Loan Extension Amendment” has the meaning set forth in Section 2.16(c).
“Term Note” means a promissory note of the Borrower payable to any Term Lender or its registered assigns, in substantially the form of Exhibit C-1 hereto (with appropriate modifications in the case or any Term Loan that is not an Original Term Loan), evidencing the aggregate Indebtedness of the Borrower to such Term Lender resulting from the Term Loans of each Class made by such Term Lender.
“Test Period” means, for any date of determination under this Agreement, the latest four consecutive fiscal quarters of the Borrower for which financial statements have been delivered to the Administrative Agent on or prior to the Closing Date and/or for which financial statements are required to be delivered pursuant to Section 6.01, as applicable.
“Threshold Amount” means $25,000,000.
“Total Leverage Ratio” means, with respect to any Test Period, the ratio of (a) Consolidated Total Net Debt as of the last day of such Test Period to (b) Consolidated EBITDA for such Test Period.
“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations and Replacement L/C Obligations.
“Transaction Expenses” means any fees or expenses incurred or paid by the Investors, Holdings, the Borrower or any of its (or their) Subsidiaries in connection with the Transactions (including expenses in connection with hedging transactions), this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby.
“Transactions” means, collectively, (a) the Acquisition and other related transactions contemplated by the Acquisition Agreement, (b) the Equity Contribution, (c) the issuance and the funding of the Mezzanine Debt, (d) the funding of the Loans on the Closing Date and the execution and delivery of Loan Documents to be entered into on the Closing Date, (e) the funding of any amounts into escrow on the Closing Date in connection with any escrow identified to the Initial Lenders on or prior to the date hereof, (f) the repayment of certain Indebtedness of the Acquired Company and its subsidiaries existing on the Closing Date (if any) and (g) the payment of Transaction Expenses.
“Transferred Guarantor” has the meaning set forth in Section 11.09.
“Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurocurrency Rate Loan.
 
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“Unaudited Financial Statements” means (a) the unaudited consolidated balance sheet of the Acquired Company and its Subsidiaries as of September 30, 2009 and (b) the related unaudited consolidated statements of operations for the Acquired Company and its Subsidiaries for the fiscal quarter ended September 30, 2009.
“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.
“United States” and “U.S.” mean the United States of America.
“United States Tax Compliance Certificate” has the meaning set forth in Section 3.01(d)(ii)(C) and is in substantially the form of Exhibit I hereto.
“Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).
“Unrestricted Subsidiary” means (i) each Subsidiary of the Borrower listed on Schedule 1.01B and (ii) any Subsidiary of the Borrower designated by the board of directors of the Borrower as an Unrestricted Subsidiary pursuant to Section 6.14 subsequent to the Closing Date.
“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness.
“wholly owned” means, with respect to a Subsidiary of a Person, a Subsidiary of such Person all of the outstanding Equity Interests of which (other than (x) director’s qualifying shares and (y) shares issued to foreign nationals to the extent required by applicable Law) are owned by such Person and/or by one or more wholly owned Subsidiaries of such Person.
Section 1.02 . Other Interpretive Provisions .
With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof.
(c) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears.
(d) The term “including” is by way of example and not limitation.
 
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(e) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.
(f) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”
(g) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
Section 1.03 . Accounting Terms .
All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, except as otherwise specifically prescribed herein.
Section 1.04. Rounding .
Any financial ratios required to be maintained by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding up if there is no nearest number).
Section 1.05. References to Agreements, Laws, Etc .
Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are permitted by the Loan Documents; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.
Section 1.06. Times of Day .
Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
 
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Section 1.07. Timing of Payment of Performance .
When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in the definition of Interest Period) or performance shall extend to the immediately succeeding Business Day.
Section 1.08. Cumulative Credit Transactions .
If more than one action occurs on any given date the permissibility of the taking of which is determined hereunder by reference to the amount of the Cumulative Credit immediately prior to the taking of such action, the permissibility of the taking of each such action shall be determined independently and in no event may any two or more such actions be treated as occurring simultaneously.
Section 1.09. Pro Forma Calculations .
(a) Notwithstanding anything to the contrary herein, the Total Leverage Ratio, the Secured Leverage Ratio, the First Lien Secured Leverage Ratio and the Interest Coverage Ratio shall be calculated in the manner prescribed by this Section 1.09; provided that notwithstanding anything to the contrary in clauses (b), (c) or (d) of this Section 1.09, when calculating the Total Leverage Ratio, the Secured Leverage Ratio, the First Lien Secured Leverage Ratio and the Interest Coverage Ratio, as applicable, for purposes of (i) the Applicable ECF Percentage of Excess Cash Flow and (ii) determining actual compliance (and not Pro Forma Compliance or compliance on a Pro Forma Basis) with any covenant pursuant to Section 7.11, the events described in this Section 1.09 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect.
(b) For purposes of calculating the Total Leverage Ratio, the Secured Leverage Ratio, the First Lien Secured Leverage Ratio and the Interest Coverage Ratio, Specified Transactions (and the incurrence or repayment of any Indebtedness in connection therewith) that have been made (i) during the applicable Test Period and (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period. If since the beginning of any applicable Test Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.09, then the Total Leverage Ratio, the Secured Leverage Ratio, the First Lien Secured Leverage Ratio and the Interest Coverage Ratio shall be calculated to give pro forma effect thereto in accordance with this Section 1.09.
(c) Whenever pro forma effect is to be given to a Specified Transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Borrower and include, for the avoidance of doubt, the amount of cost savings, operating expense reductions and synergies projected by the Borrower in good faith to be realized as a result of specified actions taken or with respect to which the Borrower in good faith expects that substantial steps will have been taken within 6 months after the closing date of such Specified Transaction (calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of such period as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period) relating to such Specified Transaction, net of the amount of actual benefits realized during such period from such actions; provided that any increase in Consolidated EBITDA as a result of cost savings, operating expense reductions and synergies shall be subject to the limitations set forth in the definition of Consolidated EBITDA.
 
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(d) In the event that the Borrower or any Restricted Subsidiary incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement or extinguishment) any Indebtedness included in the calculations of the Total Leverage Ratio, the Secured Leverage Ratio, the First Lien Secured Leverage Ratio and the Interest Coverage Ratio, as the case may be (in each case, other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary course of business for working capital purposes), (i) during the applicable Test Period and (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then the Total Leverage Ratio, the Secured Leverage Ratio and the Interest Coverage Ratio shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on (A) the last day of the applicable Test Period in the case of the Total Leverage Ratio, the First Lien Secured Leverage Ratio or the Secured Leverage Ratio and (B) the first day of the applicable Test Period in the case of the Interest Coverage Ratio. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Interest Coverage Ratio is made had been the applicable rate for the entire period (taking into account any hedging obligations applicable to such Indebtedness); provided, in the case of repayment of any Indebtedness, to the extent actual interest related thereto was included during all or any portion of the applicable Test Period, the actual interest may be used for the applicable portion of such Test Period. Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Borrower to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a London interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chose, or if none, then based upon such optional rate chosen as the Borrower or Restricted Subsidiary may designate.
Section 1.10. Letter of Credit Amounts .
Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
ARTICLE II.
The Commitments and Credit Extensions
Section 2.01. The Loans .
(a) The Term Borrowings. Subject to the terms and conditions set forth herein, each Term Lender severally agrees to make to the Borrower on the Closing Date loans denominated in Dollars in an aggregate amount not to exceed the amount of such Term Lender’s Original Term Commitment. Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed. Term Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.
(b) The Term B Borrowings. (i)  Subject to the terms and conditions set forth in Amendment No. 1 ( i x ) the Additional Term B Lender agrees to make a loan to the Borrower denominated in Dollars (a “Term B Loan”) on the Amendment No. 1 Effective Date in an aggregate amount not to exceed the amount of its Additional Term B Commitment and ( ii y ) all or a portion of each Converted Term Loan of each Amendment No. 1 Consenting Lender shall be converted into a Term B Loan of such Lender effective as of the
 
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Amendment No. 1 Effective Date in a principal amount equal to the principal amount of such Lender’s Converted Term Loan immediately prior to such conversion. For the avoidance of doubt, such conversion shall not constitute a novation of any interest owing to any Amendment No. 1 Consenting Lender and each Amendment No. 1 Consenting Lender shall receive all accrued and unpaid interest owing to it from the Borrower through but not including the Amendment No. 1 Effective Date with respect to its Converted Term Loan (which, in the case of accrued interest, shall be payable on the Amendment No. 1 Effective Date). The Term B Loans may from time to time be Eurocurrency Rate Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Section 2.02; provided that all Term B Loans shall on the Amendment No. 1 Effective Date initially be Eurodollar Rate Loans with an Interest Period equal to the remaining Interest Period on the Converted Term Loans immediately prior to the effectiveness of Amendment No. 1. Repaid Term B Loans may not be reborrowed.
(ii) Subject to the terms and conditions set forth in Amendment No. 3, the Term B Increase Lender agrees to make a Term B Loan to the Borrower denominated in Dollars on the Amendment No. 3 Effective Date in an aggregate amount equal to the amount of its Term B Increase Commitment. Amounts borrowed under this Section 2.01(b)(ii) may not be reborrowed. The Term B Loans may from time to time be Eurocurrency Rate Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Section 2.02; provided that all Term B Loans made on the Amendment No. 3 Effective Date shall initially be Eurodollar Rate Loans with an Interest Period equal to the remaining Interest Period on the Term B Loans outstanding immediately prior to the effectiveness of Amendment No. 3.
(c) The Term A Borrowings. Subject to the terms and conditions set forth herein, the Initial Term A Lender agrees to make loans to the Borrower on the Amendment No. 1 Effective Date denominated in Dollars in an aggregate amount not to exceed the amount of the Term A Commitment. Amounts borrowed under this Section 2.01(c) and repaid or prepaid may not be reborrowed. Term A Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein; provided that all Term A Loans shall on the Amendment No. 1 Effective Date initially be Eurodollar Rate Loans with an Interest Period equal to the remaining Interest Period on the Converted Term Loans immediately prior to the effectiveness of Amendment No. 1.
(d) The Revolving Credit Borrowings. Subject to the terms and conditions set forth herein each Revolving Credit Lender severally agrees to make Revolving Credit Loans denominated in Dollars pursuant to Section 2.02 to the Borrower from its applicable Lending Office (each such loan, a “Revolving Credit Loan”) from time to time, on any Business Day during the period from the Closing Date until the Maturity Date of the Revolving Credit Facility, in an aggregate principal amount not to exceed at any time outstanding the amount of such Lender’s Revolving Credit Commitment; provided that after giving effect to any Revolving Credit Borrowing, the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Revolving Credit Commitment. Within the limits of each Lender’s Revolving Credit Commitments, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01(d), prepay under Section 2.05, and reborrow under this Section 2.01(d). Revolving Credit Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.
Section 2.02. Borrowings, Conversions and Continuations of Loans .
(a) Each Term Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans or Revolving Credit Loans from one Type to the other, and each continuation of Eurocurrency Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent (except that, subject to Section 3.05, a notice in connection with the initial Credit Extensions hereunder may be revoked if the Closing Date does
 
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not occur on the proposed date of borrowing), which may be given by telephone. Each such notice must be received by the Administrative Agent not later than (i) 11:00 a.m. (New York City time) three (3) Business Days prior to the requested date of any Borrowing or continuation of Eurocurrency Rate Loans or any conversion of Base Rate Loans to Eurocurrency Rate Loans, and (ii) 10:00 a.m. (New York City time) on the Business Day of any Borrowing of Base Rate Loans (or, in the case of Borrowings on the Amendment No. 1 Effective Date, such shorter period as to which the Administrative Agent may consent). Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Except as provided in Section 2.14(a), each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be in a minimum principal amount of $2,500,000 or a whole multiple of $500,000, in excess thereof. Except as provided in Section 2.03(c), 2.04(c), 2.14(a) or the last sentence of this paragraph, each Borrowing of or conversion to Base Rate Loans shall be in a minimum principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Term Borrowing of a particular Class, a Revolving Credit Borrowing, a conversion of Term Loans of any Class or Revolving Credit Loans from one Type to the other, or a continuation of Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Term Loans of a Class or Revolving Credit Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Committed Loan Notice or fails to give a timely notice requesting a conversion or continuation, then the applicable Term Loans or Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one (1) month.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Pro Rata Share of the applicable Class of Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans or continuation described in Section 2.02(a). In the case of each Borrowing, each Appropriate Lender shall make the amount of its Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office not later than 2:00 p.m. (New York City time) on the Business Day specified in the applicable Committed Loan Notice. The Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided that if, on the date the Committed Loan Notice with respect to such Borrowing is given by the Borrower, there are Swing Line Loans or L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowing, second, to the payment in full of any such Swing Line Loans, and third, to the Borrower as provided above.
(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan unless the Borrower pays the amount due, if any, under Section 3.05 in connection therewith. During the existence of an Event of Default, the Administrative Agent or the Required Lenders may require that no Loans may be converted to or continued as Eurocurrency Rate Loans.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Loans upon determination of such interest rate. The determination of the Eurocurrency Rate by the Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.
 
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(e) After giving effect to all Term Borrowings, all Revolving Credit Borrowings, all conversions of Term Loans or Revolving Credit Loans from one Type to the other, and all continuations of Term Loans or Revolving Credit Loans as the same Type, there shall not be more than ten (10) Interest Periods in effect with respect to all Revolving Credit Borrowings and not more than five (5) Interest Periods in effect with respect to all Term Borrowings.
(f) The failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing.
Section 2.03. Letters of Credit .
(a) The Letter of Credit Commitment. (i) Subject to the terms and conditions set forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the other Revolving Credit Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars for the account of the Borrower (provided that any Letter of Credit may be for the benefit of any Subsidiary of the Borrower) and to amend or renew Letters of Credit previously issued by it, in accordance with Section 2.03(b), and (2) to honor drafts under the Letters of Credit and (B) the Revolving Credit Lenders severally agree to participate in Letters of Credit issued pursuant to this Section 2.03; provided that no L/C Issuer shall be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit if as of the date of such L/C Credit Extension, (x) the Revolving Credit Exposure of any Revolving Credit Lender would exceed such Lender’s Revolving Credit Commitment or (y) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.
(ii) An L/C Issuer shall be under no obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from issuing such Letter of Credit, or any Law applicable to such L/C Issuer or any directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or direct that such L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date (for which such L/C Issuer is not otherwise compensated hereunder);
(B) the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last renewal, unless the Lenders holding a majority of the Revolving Credit Commitments have approved such expiry date;
(C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Revolving Credit Lenders have approved such expiry date;
 
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(D) the issuance of such Letter of Credit would violate any Laws binding upon such L/C Issuer;
(E) such Letter of Credit is denominated in a currency other than Dollars;
(F) any Revolving Credit Lender is at such time a Defaulting Lender, unless such L/C Issuer has received (as set forth in clause (a)(iv) below) Cash Collateral or similar security satisfactory to such L/C Issuer (in its sole discretion) from either the Borrower or such Defaulting Lender or such Defaulting Lender’s Pro Rata Share of the L/C Obligations has been reallocated pursuant to clause (a)(iv) below in respect of such Defaulting Lender’s obligation to fund under Section 2.03(c); or
(G) such Letter of Credit is in an initial amount less than $100,000.
(iii) An L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) such L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
(iv) In the case where any Revolving Credit Lender is at any time a Defaulting Lender, the Borrower and such Defaulting Lender each agree, within one Business Day following notice by the Administrative Agent, to cause to be deposited with the Administrative Agent for the benefit of the L/C Issuer, Cash Collateral in the full amount of such Defaulting Lender’s Pro Rata Share of the outstanding L/C Obligations; provided that, at the Borrower’s option, the Borrower may, by notice to the Administrative Agent, elect to reallocate all or any part of the Defaulting Lender’s Pro Rata Share of the L/C Obligations among all Revolving Credit Lenders that are not Defaulting Lenders but only to the extent (x) the total Revolving Credit Exposure of all Revolving Credit Lenders that are not Defaulting Lenders plus such Defaulting Lender’s Pro Rata Share of the L/C Obligations and any Swing Line Loans, in each case, except to the extent Cash Collateralized, does not exceed the aggregate Revolving Credit Commitments (excluding the Revolving Credit Commitment of any Defaulting Lender except to the extent of any outstanding Revolving Credit Loans of such Defaulting Lender) and (y) the conditions set forth in Section 4.02 are satisfied at such time (in which case (i) the Revolving Credit Commitments of all Defaulting Lenders shall be deemed to be zero (except to the extent Cash Collateral has been posted in respect of any portion of such Defaulting Lender’s L/C Obligations or participations in Swing Line Loans) for purposes of any determination of the Revolving Credit Lenders’ respective Pro Rata Shares of L/C Obligations (including for purposes of all fee calculations hereunder). The Borrower and/or such Defaulting Lender hereby grant to the Administrative Agent, for the benefit of such L/C Issuer, a security interest in any Cash Collateral and all proceeds of the foregoing with respect to such Defaulting Lender’s participations in Letters of Credit deposited hereunder. Such Cash Collateral shall be maintained in blocked deposit accounts at Bank of America and may be invested in Cash Equivalents reasonably acceptable to the Administrative Agent. If at any time the Administrative Agent determines that any funds held as Cash Collateral under this clause (a)(iv) are subject to any right or claim of any Person other than the Administrative Agent for the benefit of such L/C Issuer or that the total amount of such funds is less than such Defaulting Lender’s Pro Rata Share of all L/C Obligations that has not been reallocated as provided above, the Borrower and/or such Defaulting Lender will, promptly upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (I) such Defaulting Lender’s Pro Rata Share of all L/C Obligations that have not been so reallocated over (II) the total amount of funds, if any, then held as Cash Collateral in respect thereof under this clause (a)(iv) that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws, to reimburse such L/C Issuer. If the Lender that triggers the Cash Collateral requirement under this clause (a)(iv) ceases to be a Defaulting Lender (as determined by such L/C Issuer in good faith), or if there are no L/C Obligations outstanding, any funds held as Cash Collateral pursuant to the foregoing provisions shall thereafter be returned to the Borrower or the Defaulting Lender, whichever provided the funds for the Cash Collateral, and the Pro Rata Share of the L/C Obligations of each Revolving Credit Lender shall thereafter take into account such Revolving Credit Lender’s Revolving Credit Commitment.
 
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(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to an L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the relevant L/C Issuer and the Administrative Agent not later than 11:00 a.m. (New York City time) at least two (2) Business Days prior to the proposed issuance date or date of amendment, as the case may be; or, in each case, such later date and time as the relevant L/C Issuer may agree in a particular instance in its sole discretion. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the relevant L/C Issuer: (a) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (b) the amount thereof; (c) the expiry date thereof; (d) the name and address of the beneficiary thereof; (e) the documents to be presented by such beneficiary in case of any drawing thereunder; (f) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (g) such other matters as the relevant L/C Issuer may reasonably request. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the relevant L/C Issuer (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as the relevant L/C Issuer may reasonably request.
(ii) Promptly after receipt of any Letter of Credit Application, the relevant L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the relevant L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, such L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be. Immediately upon the issuance of each Letter of Credit, each Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the relevant L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Pro Rata Share times the amount of such Letter of Credit.
(iii) If the Borrower so requests in any applicable Letter of Credit Application, the relevant L/C Issuer shall agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the relevant L/C Issuer to prevent any such extension at least once in each twelve month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-extension Notice Date”) in each such twelve month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the relevant L/C Issuer, the Borrower shall not be required to make a specific request to the relevant L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the relevant L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided that the relevant L/C Issuer shall (A) not be required to permit any such extension if the relevant L/C Issuer has determined that it would have no obligation at such time to issue such Letter of Credit in its extended form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii) or otherwise), and (B) shall not permit any such extension if it has received notice (which may be by telephone or in writing) on or before the day that is five (5) Business Days before the Non-extension Notice Date from the Administrative Agent, any Revolving Credit Lender or the Borrower that one or more of the applicable conditions specified in Section 4.01 is not then satisfied.
 
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(iv) Promptly after issuance of any Letter of Credit or any amendment to a Letter of Credit, the relevant L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations. (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the relevant L/C Issuer shall notify promptly the Borrower and the Administrative Agent thereof. Not later than 2:00 p.m. (New York City time) on the Business Day immediately following any payment by an L/C Issuer under a Letter of Credit with notice to the Borrower (each such date, an “Honor Date”), the Borrower shall reimburse such L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing in Dollars. The L/C Issuer shall notify the Borrower of the amount of the drawing promptly following the determination or revaluation thereof. If the Borrower fails to so reimburse such L/C Issuer by such time, the Administrative Agent shall promptly notify each Appropriate Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Appropriate Lender’s Pro Rata Share thereof. In such event, the Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans but subject to the amount of the unutilized portion of the Revolving Credit Commitments of the Appropriate Lenders and the conditions set forth in Section 4.01 (other than the delivery of a Committed Loan Notice). Any notice given by an L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii) Each Appropriate Lender (including any Lender acting as an L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make funds available to the Administrative Agent for the account of the relevant L/C Issuer in Dollars at the Administrative Agent’s Office for payments in an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m. (New York City time) on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Appropriate Lender that so makes funds available shall be deemed to have made a Revolving Credit Loan that is a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the relevant L/C Issuer.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in Section 4.01 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the relevant L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate for Revolving Credit Loans. In such event, each Appropriate Lender’s payment to the Administrative Agent for the account of the relevant L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.
(iv) Until each Appropriate Lender funds its Revolving Credit Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the relevant L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall be solely for the account of the relevant L/C Issuer.
(v) Each Revolving Credit Lender’s obligation to make Revolving Credit Loans or L/C Advances to reimburse an L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the relevant L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided
 
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that each Revolving Credit Lender’s obligation to make Revolving Credit Loans (but not L/C Advances) pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.01 (other than delivery by the Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the relevant L/C Issuer for the amount of any payment made by such L/C Issuer under any Letter of Credit, together with interest as provided herein.
(vi) If any Revolving Credit Lender fails to make available to the Administrative Agent for the account of the relevant L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), such L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. A certificate of the relevant L/C Issuer submitted to any Revolving Credit Lender (through the Administrative Agent) with respect to any amounts owing under this Section 2.03(c)(vi) shall be conclusive absent manifest error.
(d) Repayment of Participations. (i) If, at any time after an L/C Issuer has made a payment under any Letter of Credit and has received from any Revolving Credit Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), the Administrative Agent receives for the account of such L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Pro Rata Share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the amount received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of an L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by such L/C Issuer in its discretion), each Appropriate Lender shall pay to the Administrative Agent for the account of such L/C Issuer its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Obligations Absolute. The obligation of the Borrower to reimburse the relevant L/C Issuer for each drawing under each Letter of Credit issued by it and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that any Loan Party may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the relevant L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
 
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(iv) any payment by the relevant L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the relevant L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
(v) any exchange, release or non-perfection of any Collateral, or any release or amendment or waiver of or consent to departure from the Guaranty or any other guarantee, for all or any of the Obligations of any Loan Party in respect of such Letter of Credit; or
(vi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Loan Party; provided that the foregoing shall not excuse any L/C Issuer from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are waived by the Borrower to the extent permitted by applicable Law) suffered by the Borrower that are caused by such L/C Issuer’s gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.
(f) Role of L/C Issuers. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the relevant L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuers, any Agent-Related Person nor any of the respective correspondents, participants or assignees of any L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Lenders holding a majority of the Revolving Credit Commitments, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuers, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of any L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (vi) of Section 2.03(e); provided that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against an L/C Issuer, and such L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by such L/C Issuer’s willful misconduct or gross negligence or such L/C Issuer’s willful or grossly negligent failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit, in each case as determined in a final and non-appealable judgment by a court of competent jurisdiction. In furtherance and not in limitation of the foregoing, each L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no L/C Issuer shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.
 
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(g) Cash Collateral. (i) If, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, (ii) if any Event of Default occurs and is continuing and the Administrative Agent or the Lenders holding a majority of the Revolving Credit Commitments, as applicable, require the Borrower to Cash Collateralize the L/C Obligations pursuant to Section 8.02 or (iii) an Event of Default set forth under Section 8.01(f) occurs and is continuing, the Borrower shall Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C Borrowing or the Letter of Credit Expiration Date, as the case may be), and shall do so not later than 2:00 P.M., New York City time, on (x) in the case of the immediately preceding clauses (i) through (iii), (1) the Business Day that the Borrower receives notice thereof, if such notice is received on such day prior to 12:00 Noon, New York City time, or (2) if clause (1) above does not apply, the Business Day immediately following the day that the Borrower receives such notice and (y) in the case of the immediately preceding clause (iii), the Business Day on which an Event of Default set forth under Section 8.01(f) occurs or, if such day is not a Business Day, the Business Day immediately succeeding such day. For purposes hereof, “Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the relevant L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances (“Cash Collateral”) pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the relevant L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuers and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash Collateral shall be maintained in blocked accounts at the Administrative Agent and may be invested in readily available Cash Equivalents. If at any time the Administrative Agent determines that any funds held as Cash Collateral are expressly subject to any right or claim of any Person other than the Administrative Agent (on behalf of the Secured Parties) or that the total amount of such funds is less than the aggregate Outstanding Amount of all L/C Obligations, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the deposit accounts at the Administrative Agent as aforesaid, an amount equal to the excess of (a) such aggregate Outstanding Amount over (b) the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent reasonably determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Law, to reimburse the relevant L/C Issuer. To the extent the amount of any Cash Collateral exceeds the then Outstanding Amount of such L/C Obligations and so long as no Event of Default has occurred and is continuing, the excess shall be refunded to the Borrower. To the extent any Event of Default giving rise to the requirement to Cash Collateralize any Letter of Credit pursuant to this Section 2.03(g) is cured or otherwise waived by the Required Lenders, then so long as no other Event of Default has occurred and is continuing, all Cash Collateral pledged to Cash Collateralize such Letter of Credit shall be refunded to the Borrower.
(h) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Revolving Credit Lender in accordance with its Pro Rata Share a Letter of Credit fee for each Letter of Credit issued pursuant to this Agreement equal to the Applicable Rate times the daily maximum amount then available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit if such maximum amount increases periodically pursuant to the terms of such Letter of Credit); provided that (x) if any portion of a Defaulting Lender’s Pro Rata Share of any Letter of Credit is Cash Collateralized by the Borrower or reallocated to the other Revolving Credit Lenders pursuant to Section 2.03(a)(iv), then the Borrower shall not be required to pay a Letter of Credit fee with respect to such portion of such Defaulting Lender’s Pro Rata Share so long as it is Cash Collateralized by the Borrower or reallocated to the other Revolving Credit Lenders and (y) if any portion of a Defaulting Lender’s Pro Rata Share is not Cash Collateralized or reallocated pursuant to Section 2.03(a)(iv), then the Letter of Credit fee with respect to such Defaulting Lender’s Pro Rata Share shall be payable to the applicable L/C Issuer until such Pro Rata Share is Cash Collateralized or such Lender ceases to be a Defaulting Lender. Such Letter of Credit fees shall be computed on a quarterly basis in arrears. Such Letter of Credit fees shall be due and payable in Dollars on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there is any change in the Applicable Rate during any quarter, the daily maximum amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
 
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(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuers. The Borrower shall pay directly to each L/C Issuer for its own account a fronting fee with respect to each Letter of Credit issued by it to the Borrower equal to the greater of (x) 0.125% per annum (or such other amount as may be mutually agreed by the Borrower and the applicable L/C Issuer) of the daily maximum amount then available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit if such maximum amount increases periodically pursuant to the terms of such Letter of Credit) and (y) to the extent the L/C Issuer is the Administrative Agent or an Affiliate thereof, $1,500 per annum. Such fronting fees shall be computed on a quarterly basis in arrears. Such fronting fees shall be due and payable in Dollars on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. In addition, the Borrower shall pay directly to each L/C Issuer for its own account with respect to each Letter of Credit issued to the Borrower the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable within ten (10) Business Days of demand and are nonrefundable.
(j) Conflict with Letter of Credit Application. Notwithstanding anything else to the contrary in this Agreement, in the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.
(k) Addition of an L/C Issuer. A Revolving Credit Lender may become an additional L/C Issuer hereunder pursuant to a written agreement among the Borrower, the Administrative Agent and such Revolving Credit Lender. The Administrative Agent shall notify the Revolving Credit Lenders of any such additional L/C Issuer.
Section 2.04. Swing Line Loans .
(a) The Swing Line. Subject to the terms and conditions set forth herein, Bank of America, in its capacity as Swing Line Lender, may in its sole discretion, agree to make loans in Dollars to the Borrower (each such loan, a “Swing Line Loan”), from time to time on any Business Day during the period beginning on the Closing Date and until the Maturity Date in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Pro Rata Share of the Outstanding Amount of Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Swing Line Lender’s Revolving Credit Commitment; provided that, after giving effect to any Swing Line Loan, (i) the Revolving Credit Exposure shall not exceed the aggregate Revolving Credit Commitment and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender (other than the relevant Swing Line Lender), plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Revolving Credit Commitment then in effect; provided further that the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Pro Rata Share times the amount of such Swing Line Loan.
 
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Notwithstanding the foregoing, before making any Swing Line Loans (if at such time any Revolving Credit Lender is a Defaulting Lender), the applicable Swing Line Lender may condition the provision of any Swing Line Loans on its receipt of Cash Collateral or similar security satisfactory to such Swing Line Lender (in its sole discretion) from either the Borrower or such Defaulting Lender in respect of such Defaulting Lender’s risk participation in such Swing Line Loans as set forth below. The Borrower and/or such Defaulting Lender hereby grants to the Administrative Agent, for the benefit of the Swing Line Lender, a security interest in all such Cash Collateral and all proceeds of the foregoing. Such Cash Collateral shall be maintained in blocked deposit accounts at Bank of America and may be invested in Cash Equivalents reasonably acceptable to the Administrative Agent. If at any time the Administrative Agent determines that any funds held as Cash Collateral under this paragraph are subject to any right or claim of any Person other than the Administrative Agent for the benefit of the Swing Line Lender or that the total amount of such funds is less than the aggregate risk participation of such Defaulting Lender in the applicable Swing Line Loan, the Borrower and/or such Defaulting Lender will, promptly upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such aggregate risk participation over (y) the total amount of funds, if any, then held as Cash Collateral under this paragraph that the Administrative Agent determines to be free and clear of any such right and claim. If the Revolving Credit Lender that triggers the Cash Collateral requirement under this paragraph ceases to be a Defaulting Lender (as determined by the Swing Line Lender in good faith), or if the Swing Line Commitments have been permanently reduced to zero, the funds held as Cash Collateral shall thereafter be returned to the Borrower or the Defaulting Lender, whichever provided the funds for the Cash Collateral.
(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. (New York City time) on the requested borrowing date and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000 and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the relevant Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing Line Lender of any Swing Line Loan Notice (by telephone or in writing), the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, such Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless (x) the relevant Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Revolving Credit Lender) prior to 2:00 p.m. (New York City time) on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Section 4.01 is not then satisfied or (y) such Swing Line Lender has determined in its sole discretion not to make such Swing Line Loan, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 5:00 p.m. (New York City time) on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower.
(c) Refinancing of Swing Line Loans. (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf the Borrower (which hereby irrevocably authorizes such Swing Line Lender to so request on its behalf), that each Revolving Credit Lender make a Base Rate Loan in an amount equal to such Lender’s Pro Rata Share of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the aggregate Revolving Credit Commitments and the conditions set forth in Section 4.01. The relevant Swing Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each Revolving Credit Lender shall make an amount equal to its Pro Rata Share of the amount specified in such Committed Loan Notice available to the Administrative Agent in Same Day Funds for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m.
 
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(New York City time) on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted by the relevant Swing Line Lender as set forth herein shall be deemed to be a request by such Swing Line Lender that each of the Revolving Credit Lenders fund its risk participation in the relevant Swing Line Loan and each Revolving Credit Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.
(iii) If any Revolving Credit Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by the Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv) Each Revolving Credit Lender’s obligation to make Revolving Credit Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided that each Revolving Credit Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.04(c) (but not to purchase and fund risk participations in Swing Line Loans) is subject to the conditions set forth in Section 4.01. No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.
(d) Repayment of Participations. (i) At any time after any Revolving Credit Lender has purchased and funded a risk participation in a Swing Line Loan, if the relevant Swing Line Lender receives any payment on account of such Swing Line Loan, such Swing Line Lender will distribute to such Lender its Pro Rata Share of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by such Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Revolving Credit Lender shall pay to the Swing Line Lender its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Federal Funds Rate. The Administrative Agent will make such demand upon the request of a Swing Line Lender. The obligations of the Revolving Credit Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Revolving Credit
 
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Lender funds its Base Rate Loan, Eurocurrency Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Pro Rata Share of any Swing Line Loan, interest in respect of such Pro Rata Share shall be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
Section 2.05. Prepayments .
(a) Optional. (i) The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Term Loans of any Class and Revolving Credit Loans in whole or in part and, except as set forth below in clause (d) below, without premium or penalty; provided that (1) such notice must be received by the Administrative Agent not later than 11:00 a.m. (New York City time) (A) three (3) Business Days prior to any date of prepayment of Eurocurrency Rate Loans and (B) on the date of prepayment of Base Rate Loans; (2) any prepayment of Eurocurrency Rate Loans shall be in a minimum principal amount of $2,500,000, or a whole multiple of $500,000 in excess thereof; (3) any prepayment of Base Rate Loans shall be in a minimum principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; and (4) no Extended Term Loan under any Extended Term Facility shall be prepaid prior to the date on which all Term Loans of the Class from which such Extended Term Loans were converted unless such prepayment is accompanied by a pro rata prepayment of Term Loans under the original Class (or in the case of prepayments made on the Amendment No. 1 Effective Date, such shorter notice period as to which the Administrative Agent may consent). Each such notice shall specify the date and amount of such prepayment and the Class(es) and Type(s) of Loans and the order of Borrowing(s) to be prepaid. The Administrative Agent will promptly notify each Appropriate Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share or, if such prepayment is being made pursuant to Section 2.05(c) or Section 10.07(k), such Lender’s share, of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. In the case of each prepayment of the Loans pursuant to this Section 2.05(a), the Borrower may in its sole discretion select the Borrowing or Borrowings (and the order of maturity of principal payments) to be repaid, and such payment shall be paid to the Appropriate Lenders in accordance with their respective Pro Rata Shares (other than if pursuant to Section 2.05(c) or Section 10.07(k)).
(ii) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (1) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. (New York City time) on the date of the prepayment, and (2) any such prepayment shall be in a minimum principal amount of $100,000 or a whole multiple of $100,000 in excess thereof or, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.
Notwithstanding anything to the contrary contained in this Agreement, the Borrower may rescind any notice of prepayment under Section 2.05(a)(i) or 2.05(a)(ii) if such prepayment would have resulted from a refinancing of all of the Facilities, which refinancing shall not be consummated or shall otherwise be delayed. Each prepayment of Term Loans of any Class pursuant to this Section 2.05(a) shall be applied in an order of priority to repayments thereof required pursuant to Section 2.07(a) as directed by the Borrower and, absent such direction, shall be applied in direct order of maturity to repayments thereof required pursuant to Section 2.07(a).
 
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(b) Mandatory. (i) Within six (6) Business Days after financial statements have been delivered pursuant to Section 6.01(a) (commencing with the fiscal year ended December 31, 2011) and the related Compliance Certificate has been delivered pursuant to Section 6.02(a), the Borrower shall cause to be prepaid an aggregate amount of Term Loans in an amount equal to (A) the Applicable ECF Percentage of Excess Cash Flow, if any, for the Excess Cash Flow Period covered by such financial statements minus (B) the sum of (1) all voluntary prepayments of Term Loans during such fiscal year pursuant to Section 2.05(a) and the amount expended by any Purchasing Borrower Party to prepay any Term Loans pursuant to Section 2.05(c) or Section 10.07(k) and (2) all voluntary prepayments of Revolving Credit Loans and Swing Line Loans during such fiscal year to the extent the Revolving Credit Commitments are permanently reduced by the amount of such payments, in the case of each of the immediately preceding clauses (1) and (2), to the extent such prepayments are not funded with the proceeds of Indebtedness.
(ii) If (1) the Borrower or any Restricted Subsidiary of the Borrower Disposes of any property or assets (other than any Disposition of any property or assets permitted by Section 7.05(a)(i), (b), (c), (d), (e), (f), (g), (h), (l), (n), (p) or (q), or (2) any Casualty Event occurs, which results in the realization or receipt by the Borrower or Restricted Subsidiary of Net Proceeds, the Borrower shall cause to be offered to be prepaid on or prior to the date which is ten (10) Business Days after the date of the realization or receipt by the Borrower or any Restricted Subsidiary of such Net Proceeds an aggregate principal amount of Term Loans in an amount equal to 100% of all Net Proceeds received; provided that if any Permitted Notes have been issued in compliance with Section 7.01 and 7.03 with Liens ranking pari passu with the Liens securing the Obligations pursuant to the First Lien Intercreditor Agreement, then the Borrower may, to the extent required pursuant to the terms of the documentation governing such Permitted Notes, prepay Term Loans and purchase such Permitted Notes (at a purchase price no greater than par plus accrued and unpaid interest) on a pro rata basis in accordance with the respective principal amounts thereof.
(iii) If the Borrower or any Restricted Subsidiary (A) incurs or issues any Indebtedness after the Closing Date (x) pursuant to Section 7.03(s)(iii) or (y) that is not otherwise permitted to be incurred pursuant to Section 7.03, or (B) if any Refinancing Term Loans are borrowed, the Borrower shall cause to be prepaid an aggregate principal amount of Term Loans in an amount equal to 100% of all Net Proceeds received therefrom, in the case of Clause (A) on or prior to the date which is six (6) Business Days after the receipt by the Borrower or such Restricted Subsidiary of such Net Proceeds and, in the case of clause (B), on the date of such incurrence.
(iv) If for any reason the aggregate Revolving Credit Exposures at any time exceeds the aggregate Revolving Credit Commitments then in effect, the Borrower shall promptly prepay or cause to be promptly prepaid Revolving Credit Loans and Swing Line Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b)(iv) unless after the prepayment in full of the Revolving Credit Loans and Swing Line Loans such aggregate Outstanding Amount exceeds the aggregate Revolving Credit Commitments then in effect.
(v) Each prepayment of Term Loans pursuant to (x) Section 2.05(b)(i), (ii) or (iii) shall (except to the extent that any Incremental Amendment, Term Loan Extension Amendment or Refinancing Term Loan Amendment provides that the Incremental Term Loans, Extended Term Loans or Refinancing Term Loans established thereby shall participate on a less than pro rata basis with any existing Class of Term Loans) be applied pro rata to each Class of Term Loans in direct order of maturity to repayments thereof required pursuant to Section 2.07(a); and each such prepayment shall be paid to the Lenders in accordance with their respective Pro Rata Shares, subject to clause (vi) of this Section 2.05(b) or (y) Section 2.05(b)(x) or (xi) shall be applied to repay the Term B Loans and shall be applied to scheduled repayments thereof required by Section 2.07(a) on a pro rata basis; and each such prepayment shall be paid to the Lenders in accordance with their respective Pro Rata Shares.
 
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(vi) The Borrower shall notify the Administrative Agent in writing of any mandatory prepayment of Term Loans required to be made pursuant to clause (i) or (ii) of this Section 2.05(b) at least four (4) Business Days prior to the date of such prepayment. Each such notice shall specify the date of such prepayment and provide a reasonably detailed calculation of the amount of such prepayment. The Administrative Agent will promptly notify each Appropriate Lender of the contents of the Borrower’s prepayment notice and of such Appropriate Lender’s Pro Rata Share of the prepayment. Each Term Lender may reject all or a portion of its Pro Rata Share of any mandatory prepayment (such declined amounts, the “Declined Proceeds”) of Term Loans required to be made pursuant to clauses (i) and (ii) of this Section 2.05(b) by providing written notice (each, a “Rejection Notice”) to the Administrative Agent and the Borrower no later than 5:00 p.m. one (1) Business Day after the date of such Lender’s receipt of notice from the Administrative Agent regarding such prepayment. Each Rejection Notice from a given Lender shall specify the principal amount of the mandatory repayment of Term Loans to be rejected by such Lender. If a Term Lender fails to deliver a Rejection Notice to the Administrative Agent within the time frame specified above or such Rejection Notice fails to specify the principal amount of the Term Loans to be rejected, any such failure will be deemed an acceptance of the total amount of such mandatory prepayment of Term Loans. Any Declined Proceeds shall be retained by the Borrower.
(vii) Funding Losses, Etc. All prepayments under this Section 2.05 shall be made together with, in the case of any such prepayment of a Eurocurrency Rate Loan on a date other than the last day of an Interest Period therefor, any amounts owing in respect of such Eurocurrency Rate Loan pursuant to Section 3.05. Notwithstanding any of the other provisions of Section 2.05(b), so long as no Event of Default shall have occurred and be continuing, if any prepayment of Eurocurrency Rate Loans is required to be made under this Section 2.05(b), prior to the last day of the Interest Period therefor, the Borrower may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made thereunder into a Cash Collateral Account until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of such Loans in accordance with this Section 2.05(b). Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of the outstanding Loans in accordance with this Section 2.05(b).
(viii) Foreign Dispositions. Notwithstanding any other provisions of this Section 2.05, (i) to the extent that any of or all the Net Proceeds of any Disposition by a Foreign Subsidiary (“Foreign Disposition”) or Excess Cash Flow attributable to Foreign Subsidiaries are prohibited or delayed by applicable local law from being repatriated to the United States, the portion of such Net Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in this Section 2.05 but may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United States (the Borrower hereby agreeing to cause the applicable Foreign Subsidiary to promptly take all actions required by the applicable local law to permit such repatriation), and once such repatriation of any of such affected Net Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be immediately effected and such repatriated Net Proceeds or Excess Cash Flow will be promptly (and in any event not later than two Business Days after such repatriation) applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to this Section 2.05 and (ii) to the extent that the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Foreign Disposition or Foreign Subsidiary Excess Cash Flow would have material adverse tax cost consequences with respect to such Net Proceeds or Excess Cash Flow, such Net Proceeds or Excess Cash Flow so affected may be retained by the applicable Foreign Subsidiary; provided that, in the case of this clause (ii), on or before the date on which any such Net Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to Section 2.05(b) or any such Excess Cash Flow would have been required to be applied to prepayments pursuant to Section 2.05(b), the Borrower applies an amount equal to such Net Proceeds or Excess Cash Flow to such reinvestments or prepayments, as applicable, as if such Net Proceeds or Excess Cash Flow had been received by the Borrower rather than such Foreign Subsidiary, less the amount of additional taxes that would have been payable or reserved against if such Net Proceeds or Excess Cash Flow had been repatriated (or, if less, the Net Proceeds or Excess Cash Flow that would be calculated if received by such Foreign Subsidiary).
 
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(ix) The Borrower shall prepay all Term Loans that are not Converted Term Loans on the Amendment No. 1 Effective Date.
(x) If immediately after giving effect to Amendment No.1 Effective Date the aggregate outstanding amount of Term A Loans and Term B Loans exceeds $1,050,000,000 (the “ Amendment No. 1 Aggregate Term Loan Cap”), the Borrower shall prepay an amount of Term B Loans on the Amendment No. 1 Effective Date to the extent required to reduce the aggregate principal amount of outstanding Term A Loans and Term B Loans to the Amendment No. 1 Aggregate Term Loan Cap.
(xi) The Borrower shall prepay Term B Loans with the Net Proceeds of any Term A Loan Increase promptly upon receipt thereof.
(c) (i) Notwithstanding anything to the contrary in Section 2.05(a), 2.12(a) or 2.13 (which provisions shall not be applicable to this Section 2.05(c)), any Purchasing Borrower Party shall have the right at any time and from time to time to prepay Term Loans of any Class to the Lenders at a discount to the par value of such Loans and on a non pro rata basis (each, a “Discounted Voluntary Prepayment”) pursuant to the procedures described in this Section 2.05(c); provided that (A) no Discounted Voluntary Prepayment shall be made from the proceeds of any Revolving Credit Loan or Swing Line Loan, (B) immediately after giving effect to any Discounted Voluntary Prepayment, the sum of (x) the excess of the aggregate Revolving Credit Commitments at such time less the aggregate Revolving Credit Exposure plus (y) the amount of unrestricted cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries shall be not less than $50,000,000, (C) any Discounted Voluntary Prepayment shall be offered to all Lenders with Term Loans of the specified Class on a pro rata basis, (D) such Purchasing Borrower Party shall deliver to the Administrative Agent a certificate stating that (1) no Default or Event of Default has occurred and is continuing or would result from the Discounted Voluntary Prepayment (after giving effect to any related waivers or amendments obtained in connection with such Discounted Voluntary Prepayment), (2) each of the conditions to such Discounted Voluntary Prepayment contained in this Section 2.05(c) has been satisfied, (3) such Purchasing Borrower Party does not have any material non-public information (“MNPI”) with respect to Holdings or any of its Subsidiaries that either (a) has not been disclosed to the Lenders (other than Lenders that do not wish to receive MNPI with respect to Holdings, any of its Subsidiaries or Affiliates) prior to such time or (b) if not disclosed to the Lenders, could reasonably be expected to have a material effect upon, or otherwise be material, (i) to a Lender’s decision to participate in any Discounted Voluntary Prepayment or (ii) to the market price of the Term Loans.
(ii) To the extent a Purchasing Borrower Party seeks to make a Discounted Voluntary Prepayment, such Purchasing Borrower Party will provide written notice to the Administrative Agent substantially in the form of Exhibit J hereto (each, a “Discounted Prepayment Option Notice”) that such Purchasing Borrower Party desires to prepay Term Loans in an aggregate principal amount specified therein by the Purchasing Borrower Party (each, a “Proposed Discounted Prepayment Amount”), in each case at a discount to the par value of such Term Loans as specified below. The Proposed Discounted Prepayment Amount of Term Loans shall not be less than $5,000,000. The Discounted Prepayment Option Notice shall further specify with respect to the proposed Discounted Voluntary Prepayment: (A) the Proposed Discounted Prepayment Amount of Term Loans, (B) a discount range (which may be a single percentage) selected by the Purchasing Borrower Party with respect to such proposed Discounted Voluntary Prepayment (representing the percentage of par of the principal amount of Term Loans to be prepaid) (the “Discount Range”), and (C) the date by which Lenders are required to indicate their election to participate in such proposed Discounted Voluntary Prepayment which shall be at least five Business Days following the date of the Discounted Prepayment Option Notice (the “Acceptance Date”).
(iii) Upon receipt of a Discounted Prepayment Option Notice in accordance with Section 2.05(c)(ii), the Administrative Agent shall promptly notify each applicable Lender thereof. On or prior to the
 
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Acceptance Date, each such Lender may specify by written notice substantially in the form of Exhibit K hereto (each, a “Lender Participation Notice”) to the Administrative Agent (A) a minimum price (the “Acceptable Price”) within the Discount Range (for example, 80% of the par value of the Loans to be prepaid) and (B) a maximum principal amount (subject to rounding requirements specified by the Administrative Agent) of Term Loans of the applicable Class with respect to which such Lender is willing to permit a Discounted Voluntary Prepayment at the Acceptable Price (“Offered Loans”). Based on the Acceptable Prices and principal amounts of Term Loans specified by the Lenders in the applicable Lender Participation Notice, the Administrative Agent, in consultation with the Purchasing Borrower Party, shall determine the applicable discount for Term Loans (the “Applicable Discount”), which Applicable Discount shall be (A) the percentage specified by the Purchasing Borrower Party if the Purchasing Borrower Party has selected a single percentage pursuant to Section 2.05(c)(ii) for the Discounted Voluntary Prepayment or (B) otherwise, the lowest Acceptable Price at which the Purchasing Borrower Party can pay the Proposed Discounted Prepayment Amount in full (determined by adding the principal amounts of Offered Loans commencing with the Offered Loans with the lowest Acceptable Price); provided, however, that in the event that such Proposed Discounted Prepayment Amount cannot be repaid in full at any Acceptable Price, the Applicable Discount shall be the highest Acceptable Price specified by the Lenders that is within the Discount Range. The Applicable Discount shall be applicable for all Lenders who have offered to participate in the Voluntary Discounted Prepayment and have Qualifying Loans (as defined below). Any Lender with outstanding Term Loans of the applicable Class whose Lender Participation Notice is not received by the Administrative Agent by the Acceptance Date shall be deemed to have declined to accept a Discounted Voluntary Prepayment of any of its Term Loans at any discount to their par value within the Applicable Discount.
(iv) The Purchasing Borrower Party shall make a Discounted Voluntary Prepayment by prepaying those Term Loans of the applicable Class (or the respective portions thereof) offered by the Lenders (“Qualifying Lenders”) that specify an Acceptable Price that is equal to or lower than the Applicable Discount (“Qualifying Loans”) at the Applicable Discount; provided that if the aggregate proceeds required to prepay all Qualifying Loans (disregarding any interest payable at such time) would exceed the amount of aggregate proceeds required to prepay the Proposed Discounted Prepayment Amount, such amounts in each case calculated by applying the Applicable Discount, the Purchasing Borrower Party shall prepay such Qualifying Loans ratably among the Qualifying Lenders based on their respective principal amounts of such Qualifying Loans (subject to rounding requirements specified by the Administrative Agent). If the aggregate proceeds required to prepay all Qualifying Loans (disregarding any interest payable at such time) would be less than the amount of aggregate proceeds required to prepay the Proposed Discounted Prepayment Amount, such amounts in each case calculated by applying the Applicable Discount, the Purchasing Borrower Party shall prepay all Qualifying Loans.
(v) Each Discounted Voluntary Prepayment shall be made within four Business Days of the Acceptance Date (or such other date as the Administrative Agent shall reasonably agree, given the time required to calculate the Applicable Discount and determine the amount and holders of Qualifying Loans), without premium or penalty (but subject to Section 3.05), upon irrevocable notice substantially in the form of Exhibit L hereto (each a “Discounted Voluntary Prepayment Notice”), delivered to the Administrative Agent no later than 11:00 a.m. (New York City time), three Business Days prior to the date of such Discounted Voluntary Prepayment, which notice shall specify the date and amount of the Discounted Voluntary Prepayment and the Applicable Discount determined by the Administrative Agent. Upon receipt of any Discounted Voluntary Prepayment Notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any Discounted Voluntary Prepayment Notice is given, the amount specified in such notice shall be due and payable to the applicable Lenders, subject to the Applicable Discount on the applicable Loans, on the date specified therein together with accrued interest (on the par principal amount) to but not including such date on the amount prepaid.
(vi) To the extent not expressly provided for herein, each Discounted Voluntary Prepayment shall be consummated pursuant to reasonable procedures (including as to timing, rounding and calculation of Applicable Discount in accordance with Section 2.05(c)(iii) above) established by the Administrative Agent in consultation with the Borrower.
(vii) Prior to the delivery of a Discounted Voluntary Prepayment Notice, upon written notice to the Administrative Agent, the Purchasing Borrower Party may withdraw its offer to make a Discounted Voluntary Prepayment pursuant to any Discounted Prepayment Option Notice.
 
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(d) Prepayment Premium. In the event that, at any time after the Amendment No. 1 3 Effective Date and on or prior to August 17, 2011 , March 30, 2013, (i) this Agreement is amended and such amendment to this Agreement has the effect of reducing the interest rate applicable to the Term B Loans (other than any waiver of default interest) or (ii) the Borrower makes any mandatory or voluntary prepayment of Term B Loans with the proceeds of any term loan Indebtedness under any credit facility (including, without limitation, any new or additional Term Loans under this Agreement , but excluding any Term A Loan Increase ) which term loan Indebtedness has a lower interest rate margin than the highest interest rate that may, under any circumstances, be payable then applicable with respect to the Term B Loans (provided that solely for the purposes of the foregoing clause (ii), the interest rate margins applicable to any term loan Indebtedness shall be deemed to include all upfront or similar fees or original issue discount payable by the Borrower generally to the lenders providing such term loan Indebtedness based on an assumed four-year life to maturity and, if the lowest possible Eurocurrency Rate applicable to such term loan Indebtedness is greater than 1.00% or the lowest possible Base Rate applicable to such term loan Indebtedness is greater than 2.00%, the difference between such “floor” and 1.00% in the case of Eurocurrency Rate Term B Loans, or 2.00%, in the case of Base Rate Term B Loans, shall be equated to interest rate margin for purposes of the foregoing clause (ii)), then the Borrower agrees to pay to the Administrative Agent, (x) in the case of clause (i), for the account of each Term B Lender that agrees to such amendment a fee in an amount equal to 1.00% of such Lender’s Term B Loans outstanding on the effective date of such amendment and (y) in the case of clause (ii), for the account of each Term B Lender a fee in an amount equal to 1.00% of such Lender’s Term B Loans that are being prepaid as a result of such prepayment.
Section 2.06. Termination or Reduction of Commitments .
(a) Optional. The Borrower may, upon written notice to the Administrative Agent, terminate the unused Commitments of any Class, or from time to time permanently reduce the unused Commitments of any Class, in each case without premium or penalty; provided that (i) any such notice shall be received by the Administrative Agent three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in a minimum aggregate amount of $1,000,000, as applicable, or any whole multiple of $250,000, in excess thereof and (iii) if, after giving effect to any reduction of the Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Revolving Credit Facility, such sublimit shall be automatically reduced by the amount of such excess. The amount of any such Commitment reduction shall not otherwise be applied to the Letter of Credit Sublimit or the Swing Line Sublimit unless otherwise specified by the Borrower. Notwithstanding the foregoing, the Borrower may rescind or postpone any notice of termination of the Commitments if such termination would have resulted from a refinancing of all of the Facilities, which refinancing shall not be consummated or otherwise shall be delayed.
(b) Mandatory. The Original Term Commitment of each Term Lender shall be automatically and permanently reduced to $0 upon the funding of Term Loans to be made by it on the Closing Date. The Additional Term B Commitment of the Additional Term B Lender and the Term A Commitment of the Initial Term A Lender shall be automatically and permanently reduced to $0 upon the funding of Term B Loans and Term A Loans to be made by such respective Lenders on the Amendment No. 1 Effective Date or if the Amendment No. 1 Effective Date does not occur on or prior to 5:00 p.m. (New York, New York time) on the date of Amendment No. 1. The Term B Increase Commitment of the Term B Increase Lender shall be automatically and permanently reduced to $0 upon the funding of the Term B Loans to be made by such Term B Increase Lender on the Amendment No. 3 Effective Date or if the Amendment No. 3 Effective Date does not occur on or prior to 5:00 p.m. (New York, New York time) on the date of Amendment No. 3. The Revolving Credit Commitment of each Revolving Credit Lender shall automatically and permanently terminate on the Maturity Date or if the Closing Date does not occur on or prior to 5:00 p.m. (New York, New York time) on the date of this Agreement.
(c) Application of Commitment Reductions; Payment of Fees. The Administrative Agent will promptly notify the Lenders of any termination or reduction of unused portions of the Letter of Credit Sublimit or the Swing Line Sublimit or the unused Commitments of any Class under this Section 2.06. Upon any reduction of unused Commitments of any Class, the Commitment of each Lender of such Class shall be reduced by such Lender’s Pro Rata Share of the amount by which such Commitments are reduced (other than the termination of the Commitment of any Lender as provided in Section 3.07). All commitment fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.
 
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Section 2.07. Repayment of Loans .
(a) Term Loans. The Borrower shall repay to the Administrative Agent for the ratable account of (x) the Term A Lenders (i) on the last Business Day of each March, June, September and December, commencing with the first full quarter after the Closing Date, an aggregate amount equal to $1,875,000 (which payments shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.05, but which payments shall not be increased to give effect to any Term A Loan Increase) and (ii) on the Maturity Date for the Term A Loans, the aggregate principal amount of all Term A Loans outstanding on such date and (y) the Term B Lenders (i) on the last Business Day of each March, June, September and December, commencing with the first full quarter after the Closing Date , June 30, 2012, an aggregate amount equal to 0.25% of the aggregate principal amount of all Term B Loans outstanding on the Closing Date $3,457,393.48 (which payments shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.05) and (ii) on the Maturity Date for the Term B Loans, the aggregate principal amount of all Term B Loans outstanding on such date. The Incremental Term Loans of any Class shall mature as provided in the applicable Incremental Amendment. The Extended Term Loans under any Extended Term Facility shall mature as provided in the applicable Extended Term Loan Amendment. The Refinancing Term Loans shall mature as provided in the applicable Refinancing Term Loan Amendment.
(b) Revolving Credit Loans. The Borrower shall repay to the Administrative Agent for the ratable account of the Appropriate Lenders on the Maturity Date for the Revolving Credit Facility the aggregate principal amount of all of the Borrower’s Revolving Credit Loans under such Facility outstanding on such date.
(c) Swing Line Loans. The Borrower shall repay the aggregate principal amount of its Swing Line Loans on the earlier to occur of (i) the date five (5) Business Days after such Loan is made and (ii) the Maturity Date for the Revolving Credit Facility.
Section 2.08. Interest .
(a) Subject to the provisions of Section 2.08(b), (i) each Eurocurrency Rate Loan (which shall not include any Swing Line Loan) shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurocurrency Rate, for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate for Revolving Credit Loans.
 
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(b) During the continuance of a Default under Section 8.01(a), the Borrower shall pay interest on past due amounts owing by it hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws; provided that no interest at the Default Rate shall accrue or be payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender. Accrued and unpaid interest on such amounts (including interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
Section 2.09. Fees .
In addition to certain fees described in Sections 2.03(h) and (i):
(a) Commitment Fee. The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Credit Lender under each Facility in accordance with its Pro Rata Share, a commitment fee equal to the Applicable Rate with respect to commitment fees times the actual daily amount by which the aggregate Revolving Credit Commitment exceeds the sum of (A) the Outstanding Amount of Revolving Credit Loans (which shall exclude, for the avoidance of doubt, any Swing Line Loans) and (B) the Outstanding Amount of L/C Obligations; provided that (x) any commitment fee accrued with respect to any of the Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such commitment fee shall otherwise have been due and payable by the Borrower prior to such time and (y) no commitment fee shall accrue on any of the Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. The commitment fee on each Revolving Credit Facility shall accrue at all times from the Closing Date until the Maturity Date for the Revolving Credit Facility, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date during the first full fiscal quarter to occur after the Closing Date, and on the Maturity Date for the Revolving Credit Facility. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
(b) Other Fees. The Borrower shall pay to the Agents such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever (except as expressly agreed between the Borrower and the applicable Agent).
(c) Closing Fees. The Borrower agrees to pay on the Closing Date to each Lender party to this Agreement on the Closing Date (other than the GS Lenders), as fee compensation for the funding of such Lender’s Original Term Loan and making of such Lender’s Revolving Credit Commitment, a closing fee (the “Closing Fee”) in an amount equal to (x) 3.00% of the stated principal amount of such Lender’s Revolving Credit Commitment on the Closing Date and (y) 1.50% of the stated principal amount of such Lender’s Term Loan made on the Closing Date. Such Closing Fee will be in all respects fully earned, due and payable on the Closing Date and non-refundable and non-creditable thereafter and, in the case of the Original Term Loans, such Closing Fee shall be netted against Original Term Loans made by such Lender.
 
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Section 2.10. Computation of Interest and Fees .
All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year of three hundred sixty-five (365) days, or three hundred sixty-six (366) days, as applicable, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a three hundred and sixty (360) day year and actual days elapsed. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one (1) day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
Section 2.11. Evidence of Indebtedness .
(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and evidenced by one or more entries in the Register maintained by the Administrative Agent, acting solely for purposes of Treasury Regulation Section 5f.103-1(c), as non-fiduciary agent for the Borrower, in each case in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be prima facie evidence absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note payable to such Lender, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in Section 2.11(a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records and, in the case of the Administrative Agent, entries in the Register, evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
(c) Entries made in good faith by the Administrative Agent in the Register pursuant to Sections 2.11(a) and (b), and by each Lender in its account or accounts pursuant to Sections 2.11(a) and (b), shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement and the other Loan Documents, absent manifest error; provided that the failure of the Administrative Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement and the other Loan Documents.
 
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Section 2.12. Payments Generally .
(a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in Same Day Funds not later than 2:00 p.m. (New York City time) on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as provided in Section 2.05(b)(vi) or Section 2.05(c) or as otherwise provided herein) of such payment in like funds as received by wire transfer to such Lender’s applicable Lending Office. All payments received by the Administrative Agent after 2:00 p.m. (New York City time), shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.
(b) If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be; provided that, if such extension would cause payment of interest on or principal of Eurocurrency Rate Loans to be made in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day.
(c) Unless the Borrower or any Lender has notified the Administrative Agent, prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in Same Day Funds, then:
(i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in Same Day Funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in Same Day Funds at the applicable Federal Funds Rate from time to time in effect; and
(ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in Same Day Funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the “Compensation Period”) at a rate per annum equal to the greater of (x) the applicable Federal Funds Rate from time to time in effect and (y) a rate determined by the Administrative Agent in accordance with banking rules governing interbank compensation. When such Lender makes payment to the Administrative Agent (together with all accrued interest thereon), then such payment amount (excluding the amount of any interest which may have accrued and been paid in respect of such late payment) shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder.
A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this Section 2.12(c) shall be conclusive, absent manifest error.
(d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
 
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(e) The obligations of the Lenders hereunder to make Loans and to fund participations in Letters of Credit and Swing Line Loans are several and not joint. The failure of any Lender to make any Loan or to fund any such participation on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or purchase its participation.
(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
(g) Whenever any payment received by the Administrative Agent under this Agreement or any of the other Loan Documents is insufficient to pay in full all amounts due and payable to the Administrative Agent and the Lenders under or in respect of this Agreement and the other Loan Documents on any date, such payment shall be distributed by the Administrative Agent and applied by the Administrative Agent and the Lenders in the order of priority set forth in Section 8.04. If the Administrative Agent receives funds for application to the Obligations of the Loan Parties under or in respect of the Loan Documents under circumstances for which the Loan Documents do not specify the manner in which such funds are to be applied, the Administrative Agent may (to the fullest extent permitted by mandatory provisions of applicable Law), but shall not be obligated to, elect to distribute such funds to each of the Lenders in accordance with such Lender’s Pro Rata Share of the sum of (a) the Outstanding Amount of all Loans outstanding at such time and (b) the Outstanding Amount of all L/C Obligations outstanding at such time, in repayment or prepayment of such of the outstanding Loans or other Obligations then owing to such Lender.
(h) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(b), 2.03(c), 2.04(c), 2.12(c) or 2.13, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.
Section 2.13. Sharing of Payments .
If, other than as expressly provided in Section 2.05(b)(vi), Section 2.05(c), Section 7.03(s)(iv), Section 10.07(k) or as otherwise provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations and Swing Line Loans held by it, any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations or Swing Line Loans held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by applicable Law, exercise
 
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all its rights of payment (including the right of setoff, but subject to Section 10.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section 2.13 and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section 2.13 shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.
Section 2.14. Incremental Credit Extensions .
(a) The Borrower may at any time or from time to time after the Closing Date, by notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders), request (a) one or more additional Classes or additions to an existing Class of Term Loans (the “Incremental Term Loans” and any such Class, an “Incremental Series”) or (b) one or more increases in the amount of the Revolving Credit Commitments on the same terms as the Revolving Credit Facility (except for interest rate margins and commitment fees; provided that if any such additional Revolving Credit Commitment is requested prior to February 17, 2013, if the interest rate margins or commitment fees in respect of any such additional Revolving Credit Commitment exceed the interest rate margins or commitment fees in respect of any of the existing Revolving Credit Commitments by more than 50 basis points, the interest rate margins and commitment fees for such existing Revolving Credit Commitments shall be increased to 50 basis points less than such interest rate margins or commitment fees with respect to such new Revolving Credit Commitments) (a “Revolving Commitment Increase”), provided that (i) both at the time of any such request and upon the effectiveness of any Incremental Amendment referred to below, no Event of Default shall exist and at the time that any such Incremental Term Loan is made (and after giving effect thereto) no Event of Default shall exist and (ii) the Borrower shall be in compliance with the covenants set forth in Section 7.11 determined on a Pro Forma Basis as of the date of the most recently ended Test Period (or, if no Test Period cited in Section 7.11 has passed, the covenants in Section 7.11 for the first Test Period cited in such Section shall be satisfied as of the last four quarters ended), in each case, as if such Incremental Term Loans or any borrowings under any such Revolving Commitment Increases, as applicable, had been outstanding on the last day of such fiscal quarter of the Borrower for testing compliance therewith. Each tranche of Incremental Term Loans and each Revolving Commitment Increase shall be in an aggregate principal amount that is not less than $25,000,000 and shall be in an increment of $1,000,000 (provided that such amount may be less than $25,000,000 if such amount represents all remaining availability under the limit set forth in the next sentence). Notwithstanding anything to the contrary herein, the aggregate amount of the Incremental Term Loans and the Revolving Commitment Increases, when aggregated with the amount of Permitted Notes issued in reliance on Section 7.03(s)(i) and Section 7.03(s)(ii), shall not exceed (x) $150,000,000 (the “Initial Incremental Amount”); provided that during the sixty (60) consecutive day period beginning on the Amendment No. 1 Effective Date (the “Incremental Increase Period”) the Borrower may incur a Revolving Commitment Increase in an amount not to exceed $50.0 million and an increase to the Term A Loan in an amount not to exceed $50.0 million (the “Term A Loan Increase”), in each case without reducing the amount available for future Incremental Term Loans or Revolving Commitment Increases under the Initial Incremental Amount, so long as, in the case of any Term A Loan Increase, the Net Proceeds therefrom shall be used to repay Term B Loans pursuant to Section 2.05(b)(xi) plus (y) the Borrower may incur additional Incremental Term Loans and/or Revolving Commitment Increases (a “Ratio-Based Incremental Facility”) so long as the Borrower’s First Lien Secured Leverage Ratio, determined on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements were required to have been delivered pursuant to Section 6.01(a) or (b), as applicable (or, if no Test Period has passed, as of the last four quarters ended), in each case, as if such Ratio-Based Incremental Facility (and Revolving Credit Loans in an amount equal to the full amount of any such Revolving Commitment Increase) had been outstanding on the last day of such four quarter period, shall not exceed 2.75 to 1.00. The Incremental Term Loans (a) shall rank pari passu in right of payment and of security with the Revolving Credit Loans and the Term Loans, (b) shall not
 
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mature earlier than the Maturity Date with respect to the Term B Loans (except in the case of any Term A Loan Increase, which shall mature on the Maturity Date with respect to the Term A Loans), (c) shall have a Weighted Average Life to Maturity not shorter than the remaining Weighted Average Life to Maturity of then-existing Term B Loans (except in the case of any Term A Loan Increase, which shall have the same weighted average life to maturity as that of the Term A Loans) and (d) the Applicable Rate for the Incremental Term Loan, and subject to clause (c) above, amortization for the Incremental Term Loans shall be determined by the Borrower and the applicable new Lenders (except that in the case of any Term A Loan Increase, such Applicable Rate and amortization shall be the same as that of the Term A Loans); provided, however, that if any such additional Incremental Term Loans are requested prior to February 17, 2013, March 30, 2014, (i) the interest rate margins for the Incremental Term Loans shall not be greater than the highest interest rate margins that may, under any circumstances, be payable with respect to Term B Loans plus 50 basis points (unless the interest rate margins applicable to the Term B Loans are increased to the extent necessary to achieve the foregoing), (ii) solely for purposes of the foregoing clause (i), the interest rate margins applicable to any Term Loans or Incremental Term Loans shall be deemed to include all upfront or similar fees or original issue discount payable by the Borrower generally to the Lenders providing such Term Loans or such Incremental Term Loans based on an assumed four-year life to maturity and (iii) if the lowest permissible Eurocurrency Rate is greater than 1.00% or the lowest permissible Base Rate is greater than 2.00% for such Incremental Term Loans, the difference between such “floor” and 1.00%, in the case of Eurocurrency Rate Incremental Term Loans, or 2.00%, in the case of Base Rate Incremental Term Loans, shall be equated to interest rate margin for purposes of clause (i) above; provided that except as provided above, the terms and conditions applicable to Incremental Term Loans may be materially different from those of the Term Loans to the extent such differences are reasonably satisfactory to the Administrative Agent. Each notice from the Borrower pursuant to this Section 2.14 shall set forth the requested amount and proposed terms of the relevant Incremental Term Loans or Revolving Commitment Increases. Incremental Term Loans may be made, and Revolving Commitment Increases may be provided, by any existing Lender (but each existing Lender will not have an obligation to make a portion of any Incremental Term Loan or any portion of any Revolving Commitment Increase) or by any other bank or other financial institution (any such other bank or other financial institution being called an “Additional Lender”), provided that the Administrative Agent, L/C Issuer and/or Swing Line Lender, as applicable, shall have consented (not to be unreasonably withheld, conditioned or delayed) to such Lender’s or Additional Lender’s making such Incremental Term Loans or providing such Revolving Commitment Increases to the extent any such consent would be required under Section 10.07(b) for an assignment of Loans or Revolving Credit Commitments, as applicable, to such Lender or Additional Lender. Commitments in respect of Incremental Term Loans and Revolving Commitment Increases shall become Commitments (or in the case of a Revolving Commitment Increase to be provided by an existing Revolving Credit Lender, an increase in such Lender’s applicable Revolving Credit Commitment) under this Agreement pursuant to an amendment (an “Incremental Amendment”) to this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the Administrative Agent. The Incremental Amendment may, without the consent of Borrower, or any other Loan Party, Agents or Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.14. The Borrower will use the proceeds of the Incremental Term Loans and Revolving Commitment Increases for any purpose not prohibited by this Agreement. No Lender shall be obligated to provide any Incremental Term Loans or Revolving Commitment Increases, unless it so agrees. Upon each increase in the Revolving Credit Commitments pursuant to this Section 2.14, (a) if the increase relates to the Revolving Credit Facility, each Revolving Credit Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Lender providing a portion of the Revolving Commitment Increase (each, a “Revolving Commitment Increase Lender”), and each such Revolving Commitment Increase Lender will automatically and without further act be deemed to have assumed (in the case of an increase to the Revolving Credit Facility only), a portion of such Revolving Credit Lender’s participations hereunder in outstanding Letters of Credit and Swing Line Loans such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding (i) participations hereunder in Letters of Credit and (ii) participations hereunder in Swing Line Loans held by each Revolving Credit Lender (including each such Revolving Commitment Increase Lender) will equal the percentage of the aggregate Revolving Credit Commitments of all Revolving Credit Lenders represented by such Revolving Credit Lender’s Revolving Credit Commitment and (b) if, on the date of such increase, there are
 
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any Revolving Credit Loans under the applicable Facility outstanding, such Revolving Credit Loans shall on or prior to the effectiveness of such Revolving Commitment Increase be prepaid from the proceeds of additional Revolving Credit Loans made hereunder (reflecting such increase in Revolving Credit Commitments), which prepayment shall be accompanied by accrued interest on the Revolving Credit Loans being prepaid and any costs incurred by any Lender in accordance with Section 3.05. The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.
(b) This Section 2.14 shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
Section 2.15. Refinancing Term Loans .
(a) The Borrower may by written notice to Administrative Agent elect to request the establishment of one or more additional tranches of term loans denominated in Dollars under this Agreement (“Refinancing Term Loans”) to refinance an outstanding Class of Term Loans. Each such notice shall specify the date (each, a “Refinancing Effective Date”) on which the Borrower proposes that the Refinancing Term Loans shall be made, which shall be a date not less than five Business Days after the date on which such notice is delivered to the Administrative Agent; provided that:
(i) before and after giving effect to the borrowing of such Refinancing Term Loans on the Refinancing Effective Date each of the conditions set forth in Section 4.01 shall be satisfied;
(ii) such Refinancing Term Loans shall mature no earlier than, and the Weighted Average Life to Maturity of such Refinancing Term Loans shall not be shorter than the then remaining Weighted Average Life to Maturity of the Term B Loans at the time of such refinancing;
(iii) all other terms applicable to such Refinancing Term Loans (other than provisions relating to original issue discount, upfront fees and interest rates which shall be as agreed between the Borrower and the Lenders providing such Refinancing Term Loans) shall be substantially identical to, or less favorable to the Lenders providing such Refinancing Term Loans than, those applicable to the then outstanding Term Loans of the applicable Class except to the extent such covenants and other terms apply solely to any period after the latest final maturity of all Classes of Term Loans and Revolving Commitments in effect on the Refinancing Effective Date immediately prior to the borrowing of such Refinancing Term Loans;
(iv) the Loan Parties and the Collateral Agent shall enter into such amendments to the Collateral Documents as may be requested by the Collateral Agent (which shall not require any consent from any Lender) in order to ensure that the Refinancing Term Loans are provided with the benefit of the applicable Collateral Documents and shall deliver such other documents, certificates and opinions of counsel in connection therewith as may be requested by the Collateral Agent; and
(v) the Net Proceeds of the Refinancing Term Loans shall be applied to the repayment of the then outstanding Term Loans in accordance with Section 2.05(b).
(b) The Borrower may approach any Lender or any other Person that would be a permitted Assignee pursuant to Section 10.07 to provide all or a portion of the Refinancing Term Loans (a “Refinancing Term Lender”); provided that any Lender offered or approached to provide all or a portion of the Refinancing Term Loans may elect or decline, in its sole discretion, to provide a Refinancing Term Loan. Any Refinancing Term Loans made on any Refinancing Effective Date shall be designated a Class of Refinancing Term Loans for all purposes of this Agreement; provided that any Refinancing Term Loans may, to the extent provided in the applicable Refinancing Term Loan Amendment, be designated as an increase in any previously established Class of Term Loans made to the Borrower that were Refinancing Term Loans.
 
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(c) The Refinancing Term Loans shall be established pursuant to an amendment to this Agreement among the Borrower, the Administrative Agent and the Refinancing Term Lenders providing such Refinancing Term Loans (a “Refinancing Term Loan Amendment”) which shall be consistent with the provisions set forth in paragraph (a) above (which shall not require the consent of any other Lender). Each Refinancing Term Loan Amendment shall be binding on the Lenders, the Loan Parties and the other parties hereto.
(d) This Section 2.15 shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
Section 2.16. Extended Term Loans .
(a) The Borrower may at any time and from time to time request that all or a portion of the Term Loans under any Facility (an “Existing Term Loan Facility”) be converted to extend the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of such Term Loans (any such Term Loans which have been so converted, “Extended Term Loans”) and to provide for other terms consistent with this Section 2.16. In order to establish any Extended Term Loans, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders under the applicable Existing Term Loan Facility) (an “Extension Request”) setting forth the proposed terms of the Extended Term Loans to be established which shall be identical to the Class of Term Loans from which such Extended Term Loans are to be converted except that:
(i) all or any of the scheduled amortization payments of principal of the Extended Term Loans may be delayed to later dates than the scheduled amortization payments of principal of the Class of Term Loans being converted to the extent provided in the applicable Term Loan Extension Amendment;
(ii) the interest margins with respect to the Extended Term Loans may be different than the interest margins for the Class of Term Loans being converted and upfront fees may be paid to the Extending Term Lenders, in each case, to the extent provided in the applicable Term Loan Extension Amendment;
(iii) the Term Loan Extension Amendment may provide for other covenants and terms that apply solely to any period after the latest final maturity of all Classes of Term Loans and Revolving Commitments in effect on the effective date of the Term Loan Extension Amendment immediately prior to the establishment of such Extended Term Loans; and
(iv) no Extended Term Loans may be optionally prepaid prior to the date on which the Term Loans under the Class from which they were converted are repaid in full unless such optional prepayment is accompanied by a pro rata optional prepayment of the Term Loans under such Class that were not converted.
Any Extended Term Loans converted pursuant to any Extension Request shall be designated a Class of Extended Term Loans for all purposes of this Agreement; provided that any Extended Term Loans converted may, to the extent provided in the applicable Term Loan Extension Amendment, be designated as an increase in any previously established Class of Extended Term Loans.
(b) The Borrower shall provide the applicable Extension Request to all Lenders of such Class that is subject to the Extension Request at least five (5) Business Days prior to the date on which Lenders under such Class being converted are requested to respond. No Lender shall have any obligation to agree to have any of its Term Loans of such class converted into Extended Term Loans pursuant to any Extension Request.
 
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Any Lender (an “Extending Term Lender”) wishing to have all or a portion of its Term Loans under such Class being converted into Extended Term Loans shall notify the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Term Loans of such Class which it has elected to request be converted into Extended Term Loans (subject to any minimum denomination requirements reasonably imposed by the Administrative Agent). In the event that the aggregate amount of Term Loans under such Class being converted exceeds the amount of Extended Term Loans requested pursuant to the Extension Request, Term Loans subject to Extension Elections shall be converted to Extended Term Loans on a pro rata basis based on the amount of Term Loans included in each such Extension Election.
(c) Extended Term Loans shall be established pursuant to an amendment (a “Term Loan Extension Amendment”) to this Agreement among the Borrower, the Administrative Agent and each Extending Term Lender providing an Extended Term Loan thereunder which shall be consistent with the provisions set forth in paragraph (a) above (but which shall not require the consent of any other Lender). Each Term Loan Extension Amendment shall be binding on the Lenders, the Loan Parties and the other parties hereto. In connection with any Term Loan Extension Amendment, the Loan Parties and the Collateral Agent shall enter into such amendments to the Collateral Documents as may be reasonably requested by the Collateral Agent (which shall not require any consent from any Lender) in order to ensure that the Extended Term Loans are provided with the benefit of the applicable Collateral Documents and shall deliver such other documents, certificates and opinions of counsel in connection therewith as may be requested by the Collateral Agent.
(d) This Section 2.16 shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
Section 2.17. Replacement Revolving Commitments .
(a) The Borrower may by written notice to Administrative Agent elect to request the establishment of one or more additional Facilities providing for revolving commitments (“Replacement Revolving Commitments” and the revolving loans thereunder “Replacement Revolving Loans”). Each such notice shall specify the date (each, a “Replacement Revolving Facility Effective Date”) on which the Borrower proposes that the Replacement Revolving Commitments shall become effective, which shall be a date not less than five Business Days after the date on which such notice is delivered to the Administrative Agent; provided that:
(i) before and after giving effect to the establishment of such Replacement Revolving Commitments on the Replacement Revolving Facility Effective Date each of the conditions set forth in Section 4.01 shall be satisfied;
(ii) after giving effect to the establishment of any Replacement Revolving Commitments and any concurrent reduction in the aggregate amount of any other Revolving Credit Commitments, the aggregate amount of Revolving Credit Commitments shall not exceed the aggregate amount of the Revolving Credit Commitments outstanding on the Amendment No. 1 Effective Date;
(iii) no Replacement Revolving Commitments shall have a scheduled termination date prior to the Maturity Date of the Revolving Credit Facility (or if later, the date required pursuant to any Replacement Revolving Facility Amendment);
(iv) all other terms applicable to such Replacement Revolving Facility (other than provisions relating to (x) fees and interest rates which shall be as agreed between the Borrower and the Lenders providing such Replacement Revolving Commitments and (y) the amount of any Letter of Credit Sublimit and Swing Line Sublimit under such Replacement Revolving Facility which shall be as agreed between the Borrower, the Lenders providing such Replacement Revolving Commitments, the
 
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Administrative Agent and the Replacement L/C Issuer and Replacement Swing Line Lender, if any, under such Replacement Revolving Commitments) shall be substantially identical to, or less favorable to the Lenders providing such Replacement Revolving Commitments than, those applicable to the Revolving Credit Facility;
(v) there shall be no more than two Classes, in the aggregate, of Revolving Credit Commitments and Replacement Revolving Commitment Series in effect at any time any Replacement Revolving Commitment Series is established; and
(vi) the Loan Parties and the Collateral Agent shall enter into such amendments to the Collateral Documents as may be reasonably requested by the Collateral Agent (which shall not require any consent from any Lender) in order to ensure that the Replacement Revolving Loans are provided with the benefit of the applicable Collateral Documents on a pari passu basis with the other Obligations and shall deliver such other documents, certificates and opinions of counsel in connection therewith as may be reasonably requested by the Collateral Agent.
(b) The Borrower may approach any Lender or any other Person that would be a permitted Assignee of a Revolving Credit Commitment pursuant to Section 10.07 to provide all or a portion of the Replacement Revolving Commitments (a “Replacement Revolving Lender”); provided that any Lender offered or approached to provide all or a portion of the Replacement Revolving Commitments may elect or decline, in its sole discretion, to provide a Replacement Revolving Commitment and the selection of Replacement Revolving Lender shall be subject to any consent that would be required pursuant to Section 10.07. Any Replacement Revolving Commitment made on any Replacement Revolving Facility Effective Date shall be designated a series (a “Replacement Revolving Commitment Series”) of Replacement Revolving Commitments for all purposes of this Agreement; provided that any Replacement Revolving Commitments may, to the extent provided in the applicable Replacement Revolving Facility Amendment, be designated as an increase in any previously established Replacement Revolving Commitment Series of the Borrower.
(c) The Replacement Revolving Commitments shall be established pursuant to an amendment to this Agreement among the Borrower, the Administrative Agent, the Replacement Revolving Lenders providing such Replacement Revolving Loans and any Replacement L/C Issuer and/or Replacement Swing Line Lender thereunder (a “Replacement Revolving Facility Amendment”) which shall be consistent with the provisions set forth in paragraph (a) above (but which shall not require the consent of any other Lender).
(d) On any Replacement Revolving Facility Effective Date, subject to the satisfaction of the foregoing terms and conditions, each of the Replacement Revolving Lenders with Replacement Revolving Commitments of such Replacement Revolving Commitment Series shall purchase from each of the other Lenders with Replacement Revolving Commitment Series of such Replacement Revolving Commitment Series, at the principal amount thereof and in the applicable currencies, such interests in the Replacement Revolving Loans under such Replacement Revolving Commitment Series outstanding on such Replacement Revolving Facility Effective Date as shall be necessary in order that, after giving effect to all such assignments and purchases, the Replacement Revolving Loans of such Replacement Revolving Commitment Series will be held by Replacement Revolving Lenders thereunder ratably in accordance with their Replacement Revolving Credit Percentages.
(e) This Section 2.17 shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
 
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ARTICLE III.
Taxes, Increased Costs Protection and Illegality
Section 3.01. Taxes .
(a) Unless required by applicable Laws (as determined in good faith by the applicable withholding agent), any and all payments made by or on account of any Loan Party under any Loan Document shall be made free and clear of and without deduction for Taxes. If the Loan Party or other applicable withholding agent shall be required by any Laws to withhold or deduct any Indemnified Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to any Agent or any Lender, (i) the sum payable by such Loan Party shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.01) have been made, each of such Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the applicable withholding agent shall make such deductions, (iii) the applicable withholding agent shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within thirty (30) days after the date of such payment (or, if receipts or evidence are not available within thirty (30) days, as soon as possible thereafter), if the relevant Loan Party is the applicable withholding agent, shall furnish to such Agent or Lender (as the case may be) the original or a copy of a receipt evidencing payment thereof or other evidence acceptable to such Agent or Lender.
(b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary Taxes and any other excise, property, intangible or mortgage recording Taxes, or charges or levies of the same character, imposed by any Governmental Authority, which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document, other than any such Taxes that are imposed as a result of a Lender’s voluntary assignment in such Lender’s interest in the Loan hereunder, but only to the extent such assignment-related Taxes are imposed as a result of such Lender’s current or former connection with the jurisdiction imposing such Taxes (other than any connections arising from such Lender having executed, delivered, enforced, become a party to, performed its obligations or received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to, any Loan Document) (the “Other Taxes”).
(c) Each of the Loan Parties agrees to indemnify each Agent and each Lender for (i) the full amount of Indemnified Taxes and Other Taxes payable by such Agent or such Lender (whether or not such Taxes are legally imposed) and (ii) any expenses arising therefrom or with respect thereto, provided such Agent or Lender, as the case may be, provides the relevant Loan Party with a written statement thereof setting forth in reasonable detail the basis and calculation of such amounts. If the Borrower reasonably believes that such Indemnified Taxes or Other Taxes were not correctly or legally asserted, the Administrative Agent and each Lender and L/C Issuer will use reasonable efforts to cooperate with Borrower for the Borrower to file for and obtain a refund of such Indemnified Taxes or Other Taxes so long as such efforts would not, in the sole determination of the Administrative Agent, such Lender, or such L/C Issuer, result in any additional costs, expenses or risks or be otherwise disadvantageous to it.
(d) Each Lender shall, at such times as are reasonably requested by the Borrower or the Administrative Agent, provide the Borrower and the Administrative Agent with any documentation prescribed by Law certifying as to any entitlement of such Lender to an exemption from, or reduction in, withholding tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders such documentation obsolete or inaccurate in any material respect, deliver promptly to the Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify the Borrower and the Administrative Agent of its inability to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to such Tax at a rate reduced by an applicable tax treaty, the Borrower, the Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable Law from such payments at the applicable statutory rate. Without limiting the foregoing:
(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement two properly completed and duly signed original copies of Internal Revenue Service Form W-9 certifying that such Lender is exempt from federal backup withholding.
 
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(ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent) whichever of the following is applicable:
(A) two properly completed and duly signed original copies of Internal Revenue Service Form W-8BEN (or any successor forms) claiming eligibility for the benefits of an income tax treaty to which the United States is a party, and such other documentation as required under the Code,
(B) two properly completed and duly signed original copies of Internal Revenue Service Form W-8ECI (or any successor forms),
(C) in the case of a Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (A) a certificate substantially in the form of Exhibit I (any such certificate a “United States Tax Compliance Certificate”) and (B) two properly completed and duly signed original copies of Internal Revenue Service Form W-8BEN,
(D) to the extent a Lender is not the beneficial owner (for example, where the Lender is a partnership, or is a Participant holding a participation granted by a participating Lender), Internal Revenue Service Form W-8IMY (or any successor forms) of the Lender, accompanied by a Form W-8ECI, W-8BEN, United States Tax Compliance Certificate, Form W-9, Form W-8IMY or any other required information from each beneficial owner, as applicable (provided that, if one or more beneficial owners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Lender on behalf of such beneficial owner). Each Lender shall deliver to the Borrower and the Administrative Agent two further original copies of any previously delivered form or certification (or any applicable successor form) on or before the date that any such form or certification expires or becomes obsolete or inaccurate and promptly after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower or the Administrative Agent, or promptly notify the Borrower and the Administrative Agent that it is unable to do so. Each Lender shall promptly notify the Administrative Agent at any time it determines that it is no longer in a position to provide any previously delivered form or certification to the Borrower or the Administrative Agent, or
(E) two properly completed and duly signed original copies of any other form prescribed by applicable U.S. federal income tax laws (including the Treasury Regulations) as a basis for claiming a complete exemption from, or a deduction in, United States federal withholding tax on any payments to such Lender under the Loan Documents.
Notwithstanding any other provision of this clause (d), a Lender shall not be required to deliver any form that such Lender is not legally able to deliver.
(e) Any Lender claiming any additional amounts payable pursuant to this Section 3.01 shall use its reasonable efforts to change the jurisdiction of its Lending Office (or take any other measures reasonably requested by the Borrower) if such a change or other measures would reduce any such additional amounts (or any similar amount that may thereafter accrue) and would not, in the sole determination of such Lender, result in any unreimbursed cost or expense or be otherwise materially disadvantageous to such Lender.
(f) If any Lender or Agent determines, in its sole discretion, that it has received a refund in respect of any Indemnified Taxes or Other Taxes as to which indemnification or additional amounts have been paid to it by any Loan Party pursuant to this Section 3.01, it shall promptly remit such refund to the Loan Party, net of all out-of-pocket expenses of the Lender or Agent, as the case may be and without interest (other than any interest paid by the relevant taxing authority with respect to such refund net of any Taxes payable by any Agent or Lender on such interest); provided that the Loan Party, upon the request of the Lender or Agent, as the case may be, agrees promptly to return such refund (plus any penalties, interest or other charges imposed by the relevant taxing authority) to such party in the event such party is required to repay such refund to the relevant taxing authority. This section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to Taxes that it deems confidential) to the Borrower or any other person.
 
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Section 3.02. Illegality .
If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurocurrency Rate Loans, or to determine or charge interest rates based upon the Eurocurrency Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurocurrency Rate Loans or to convert Base Rate Loans to Eurocurrency Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all applicable Eurocurrency Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or promptly, if such Lender may not lawfully continue to maintain such Eurocurrency Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted and all amounts due, if any, in connection with such prepayment or conversion under Section 3.05. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.
Section 3.03. Inability to Determine Rates .
If the Administrative Agent or the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the applicable Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan, or that the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, or that Dollar deposits are not being offered to banks in the London interbank eurodollar, or other applicable, market for the applicable amount and the Interest Period of such Eurocurrency Rate Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurocurrency Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of such Eurocurrency Rate Loans or, failing that, will be deemed to have converted such request, if applicable, into a request for a Borrowing of Base Rate Loans in the amount specified therein.
 
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Section 3.04. Eurocurrency Rate Loans Increased Cost and Reduced Return; Capital Adequacy; Reserves on.
(a) If any Lender reasonably determines that as a result of the introduction of or any change in or in the interpretation of any Law, in each case after the Closing Date, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any Eurocurrency Rate Loans (or in the case of Taxes, any Loan) or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this Section 3.04(a) any such increased costs or reduction in amount resulting from (i) Indemnified Taxes or Other Taxes (which are covered by Section 3.01), or any Excluded Taxes or (ii) reserve requirements contemplated by Section 3.04(c)) and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining the Eurocurrency Rate Loan (or of maintaining its obligations to make any Loan), or to reduce the amount of any sum received or receivable by such Lender, then from time to time within fifteen (15) days after demand by such Lender setting forth in reasonable detail such increased costs (with a copy of such demand to the Administrative Agent given in accordance with Section 3.06), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.
(b) If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, in each case after the Closing Date, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender setting forth in reasonable detail the charge and the calculation of such reduced rate of return (with a copy of such demand to the Administrative Agent given in accordance with Section 3.06), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction within fifteen (15) days after receipt of such demand.
(c) The Borrower shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits, additional interest on the unpaid principal amount of each applicable Eurocurrency Rate Loan of the Borrower equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive in the absence of manifest error), and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of any Eurocurrency Rate Loans of the Borrower, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent manifest error) which in each case shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least fifteen (15) days’ prior notice (with a copy to the Administrative Agent) of such additional interest or cost from such Lender. If a Lender fails to give notice fifteen (15) days prior to the relevant Interest Payment Date, such additional interest or cost shall be due and payable fifteen (15) days from receipt of such notice.
(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 3.04 shall not constitute a waiver of such Lender’s right to demand such compensation.
(e) If any Lender requests compensation under this Section 3.04, then such Lender will, if requested by the Borrower and at the Borrower’s expense, use commercially reasonable efforts to designate another Lending Office for any Loan or Letter of Credit affected by such event; provided that such efforts are made on terms that, in the reasonable judgment of such Lender, cause such Lender and its Lending Office(s) to suffer no material economic, legal or regulatory disadvantage, and provided further that nothing in this Section 3.04(e) shall affect or postpone any of the Obligations of the Borrower or the rights of such Lender pursuant to Section 3.04(a), (b), (c) or (d).
 
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Section 3.05. Funding Losses .
Upon written demand of any Lender (with a copy to the Administrative Agent) from time to time, which demand shall set forth in reasonable detail the basis for requesting such amount, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense actually incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Eurocurrency Rate Loan of the Borrower on a day other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Eurocurrency Rate Loan of the Borrower on the date or in the amount notified by the Borrower;
including any loss or expense (excluding loss of anticipated profits) arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.
Section 3.06. Matters Applicable to All Requests for Compensation .
(a) Any Agent or any Lender claiming compensation under this Article III shall deliver a certificate to the Borrower setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. In determining such amount, such Agent or such Lender may use any reasonable averaging and attribution methods.
(b) With respect to any Lender’s claim for compensation under Section 3.01, 3.02, 3.03 or 3.04, the Borrower shall not be required to compensate such Lender for any amount incurred more than one hundred and eighty (180) days prior to the date that such Lender notifies the Borrower of the event that gives rise to such claim; provided that, if the circumstance giving rise to such claim is retroactive, then such 180-day period referred to above shall be extended to include the period of retroactive effect thereof. If any Lender requests compensation by the Borrower under Section 3.04, the Borrower may, by notice to such Lender (with a copy to the Administrative Agent), suspend the obligation of such Lender to make or continue from one Interest Period to another applicable Eurocurrency Rate Loan, or, if applicable, to convert Base Rate Loans into Eurocurrency Rate Loans, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of Section 3.06(c) shall be applicable); provided that such suspension shall not affect the right of such Lender to receive the compensation so requested.
(c) If the obligation of any Lender to make or continue any Eurocurrency Rate Loan, or to convert Base Rate Loans into Eurocurrency Rate Loans shall be suspended pursuant to Section 3.06(b) hereof, such Lender’s applicable Eurocurrency Rate Loans shall be automatically converted into Base Rate Loans (or, if such conversion is not possible, repaid) on the last day(s) of the then current Interest Period(s) for such Eurocurrency Rate Loans (or, in the case of an immediate conversion required by Section 3.02, on such earlier date as required by Law) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 3.02, 3.03 or 3.04 hereof that gave rise to such conversion no longer exist:
(i) to the extent that such Lender’s Eurocurrency Rate Loans have been so converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s applicable Eurocurrency Rate Loans shall be applied instead to its Base Rate Loans; and
(ii) all Loans that would otherwise be made or continued from one Interest Period to another by such Lender as Eurocurrency Rate Loans shall be made or continued instead as Base Rate Loans (if possible), and all Base Rate Loans of such Lender that would otherwise be converted into Eurocurrency Rate Loans shall remain as Base Rate Loans.
(d) If any Lender gives notice to the Borrower (with a copy to the Administrative Agent) that the circumstances specified in Section 3.02, 3.03 or 3.04 hereof that gave rise to the conversion of any of such Lender’s Eurocurrency Rate Loans pursuant to this Section 3.06 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurocurrency Rate Loans made by other Lenders under the applicable Facility are outstanding, if applicable, such Lender’s Base Rate Loans shall be automatically converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Eurocurrency Rate Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding Eurocurrency Rate Loans under such Facility and by such Lender are held pro rata (as to principal amounts, interest rate basis, and Interest Periods) in accordance with their respective Commitments for the applicable Facility.
 
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Section 3.07. Replacement of Lenders Under Certain Circumstances .
(a) If at any time (i) the Borrower becomes obligated to pay additional amounts or indemnity payments described in Section 3.01 or 3.04 as a result of any condition described in such Sections or any Lender ceases to make any Eurocurrency Rate Loans as a result of any condition described in Section 3.02 or Section 3.04, (ii) any Lender becomes a Defaulting Lender or (iii) any Lender becomes a Non-Consenting Lender, then the Borrower may, on ten (10) Business Days’ prior written notice to the Administrative Agent and such Lender, (x) replace such Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 10.07(b) (with the assignment fee to be paid by the Borrower in such instance) all of its rights and obligations under this Agreement (in respect of any applicable Facility only in the case of clause (i) or, with respect to a Class vote, clause (iii)) to one or more Eligible Assignees; provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender or other such Person; and provided further that (A) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments and (B) in the case of any such assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable Eligible Assignees shall have agreed to, and shall be sufficient (together with all other consenting Lenders) to cause the adoption of, the applicable departure, waiver or amendment of the Loan Documents; or (y) terminate the Commitment of such Lender or L/C Issuer, as the case may be, and (1) in the case of a Lender (other than an L/C Issuer), repay all Obligations of the Borrower owing to such Lender relating to the Loans and participations held by such Lender as of such termination date and (2) in the case of an L/C Issuer, repay all Obligations of the Borrower owing to such L/C Issuer relating to the Loans and participations held by the L/C Issuer as of such termination date and cancel or backstop on terms satisfactory to such L/C Issuer any Letters of Credit issued by it; provided that in the case of any such termination of a Non-Consenting Lender such termination shall be sufficient (together with all other consenting Lenders) to cause the adoption of the applicable departure, waiver or amendment of the Loan Documents and such termination shall be in respect of any applicable facility only in the case of clause (i) or, with respect to a Class vote, clause (iii).
(b) Any Lender being replaced pursuant to Section 3.07(a) above shall (i) execute and deliver an Assignment and Assumption with respect to such Lender’s applicable Commitment and outstanding Loans and participations in L/C Obligations and Swing Line Loans in respect thereof, and (ii) deliver any Notes evidencing such Loans to the Borrower or Administrative Agent. Pursuant to such Assignment and Assumption, (A) the assignee Lender shall acquire all or a portion, as the case may be, of the assigning Lender’s Commitment and outstanding Loans and participations in L/C Obligations and Swing Line Loans, (B) all obligations of the Borrower owing to the assigning Lender relating to the Loans, Commitments and participations so assigned shall
 
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be paid in full by the assignee Lender to such assigning Lender concurrently with such Assignment and Assumption and (C) upon such payment and, if so requested by the assignee Lender, delivery to the assignee Lender of the appropriate Note or Notes executed by the Borrower, the assignee Lender shall become a Lender hereunder and the assigning Lender shall cease to constitute a Lender hereunder with respect to such assigned Loans, Commitments and participations, except with respect to indemnification provisions under this Agreement, which shall survive as to such assigning Lender. In connection with any such replacement, if any such Non-Consenting Lender or Defaulting Lender does not execute and deliver to the Administrative Agent a duly executed Assignment and Assumption reflecting such replacement within five (5) Business Days of the date on which the assignee Lender executes and delivers such Assignment and Assumption to such Non-Consenting Lender or Defaulting Lender, then such Non-Consenting Lender or Defaulting Lender shall be deemed to have executed and delivered such Assignment and Assumption without any action on the part of the Non-Consenting Lender or Defaulting Lender.
(c) Notwithstanding anything to the contrary contained above, any Lender that acts as an L/C Issuer may not be replaced hereunder at any time that it has any Letter of Credit outstanding hereunder unless arrangements reasonably satisfactory to such L/C Issuer (including the furnishing of a back-up standby letter of credit in form and substance, and issued by an issuer reasonably satisfactory to such L/C Issuer or the depositing of Cash Collateral into a Cash Collateral account in amounts and pursuant to arrangements reasonably satisfactory to such L/C Issuer) have been made with respect to each such outstanding Letter of Credit and the Lender that acts as the Administrative Agent may not be replaced hereunder except in accordance with the terms of Section 9.09.
(d) In the event that (i) the Borrower or the Administrative Agent has requested that the Lenders consent to a departure or waiver of any provisions of the Loan Documents or agree to any amendment thereto, (ii) the consent, waiver or amendment in question requires the agreement of all affected Lenders in accordance with the terms of Section 10.01 or all the Lenders with respect to a certain Class of the Loans and (iii) the Required Lenders (or, in the case of a consent, waiver or amendment involving all affected Lenders of a certain Class, the Required Class Lenders) have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed a “Non-Consenting Lender.”
Section 3.08. Survival .
All of the Borrower’s obligations under this Article III shall survive any assignment of rights by, or the replacement of, a Lender (including any L/C Issuer) and termination of the Aggregate Commitments and repayment, satisfaction and discharge of all other Obligations hereunder.
ARTICLE IV.
Conditions Precedent to Credit Extensions
Section 4.01. All Credit Events After the Closing Date .
The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurocurrency Rate Loans) after the Closing Date is subject to the following conditions precedent:
(i) The representations and warranties of each Loan Party set forth in Article V and in each other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date.
 
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(ii) No Default shall exist or would result from such proposed Credit Extension or from the application of the proceeds therefrom.
(iii) The Administrative Agent and, if applicable, the relevant L/C Issuer or the relevant Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurocurrency Rate Loans) submitted by the Borrower after the Closing Date shall be deemed to be a representation and warranty that the conditions specified in Sections 4.01(i) and (ii) have been satisfied on and as of the date of the applicable Credit Extension.
Section 4.02. First Credit Event .
Each Lender shall make the Credit Extension to be made by it on the Closing Date subject only to the following conditions precedent, unless otherwise waived by the Initial Lenders in their sole discretion:
(a) This Agreement shall have been duly executed and delivered by the Borrower and each Guarantor.
(b) The Administrative Agent and, if applicable, the relevant L/C Issuer or the relevant Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
(c) The Administrative Agent shall have received, on behalf of itself, the Collateral Agent, the Lenders and each L/C Issuer, an opinion of (i) Simpson Thacher & Bartlett LLP, special counsel for the Loan Parties, and (ii) from each local counsel for the Loan Parties listed on Schedule 4.02(c), in each case, dated the Closing Date and addressed to each L/C Issuer, the Administrative Agent, the Collateral Agent and the Lenders, in each case in form and substance customary for senior secured credit facilities in transactions of this kind.
(d) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation or organization, including all amendments thereto, of each Loan Party, certified, if applicable, as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing (where relevant) of each Loan Party as of a recent date, from such Secretary of State or similar Governmental Authority and (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws or operating (or limited liability company) agreement of such Loan Party as in effect on the Closing Date, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or equivalent governing body) of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation or organization of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document on behalf of such Loan Party and countersigned by another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above.
(e) (i) The Administrative Agent shall have received the results of (x) searches of the Uniform Commercial Code filings (or equivalent filings) and (y) judgment and tax lien searches, made with respect to the Loan Parties in the states or other jurisdictions of formation of such Person and with respect to such
 
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other locations and names listed on the Perfection Certificate, together with (in the case of clause (y)) copies of the financing statements (or similar documents) disclosed by such search and (ii) the Security Agreement and the Holdings Pledge Agreement shall have been duly executed and delivered by each Loan Party that is to be a party thereto, together with (x) certificates, if any, representing the Pledged Equity of the Borrower and the Domestic Subsidiaries accompanied by undated stock powers executed in blank and (y) documents and instruments to be recorded or filed that the Administrative Agent may deem reasonably necessary to satisfy the Collateral and Guarantee Requirement; provided, however, that each of the requirements set forth in clauses (i) and (ii) above, including lien searches (other than Uniform Commercial Code, tax and lien searches) and the delivery of documents and instruments necessary to satisfy the Collateral and Guarantee Requirement (other than the pledge and perfection of domestic assets with respect to which a lien may be perfected by the filing of a financing statement under the Uniform Commercial Code or, to the extent applicable, the delivery of a stock certificate and related stock power of the Borrower and any Domestic Subsidiary on the Closing Date) shall not constitute conditions precedent to the Credit Extension on the Closing Date after the Borrower’s use of commercially reasonable efforts to provide such items on or prior to the Closing Date if the Borrower agrees to deliver or cause to be delivered such search results, documents and instruments, or take or cause to be taken such other actions as may be required to perfect such security interests within 120 days after the Closing Date (subject to extensions approved by the Administrative Agent in its reasonable discretion).
(f) The Administrative Agent shall have received a certified copy of the Acquisition Agreement, duly executed by the parties thereto (together with all material ancillary agreements entered into in connection therewith and all exhibits and schedules thereto). Prior to or substantially simultaneously with the initial Credit Extension on the Closing Date, the Acquisition shall have been consummated pursuant to the Acquisition Agreement, and no provision of the Acquisition Agreement shall have been waived or amended in any material respect by Holdings or Parent in a manner materially adverse to the Lenders without the consent of the Initial Lenders, such consent not to be unreasonably withheld, conditioned or delayed (it being understood that the good faith determination by the parties to the Acquisition Agreement that the Acquisition Agreement closing conditions specified in Sections 6.1 and 6.2 have been satisfied (other than conditions which by their nature may be satisfied only at the Closing) shall be conclusive).
(g) The Administrative Agent shall have received confirmation from the Investors or their representatives that the Equity Contribution and the Mezzanine Financing shall have been consummated, or substantially simultaneously with the initial borrowing hereunder shall be consummated.
(h) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by the Chief Financial Officer of the Borrower, certifying that the Borrower and its Subsidiaries, on a consolidated basis after giving effect to the Transactions on the Closing Date, are Solvent as of the Closing Date.
(i) On the Closing Date, the representations and warranties made by the Loan Parties in Sections 5.01(a) (solely as to the Borrower), 5.01(b)(ii) (solely as to the Loan Parties), 5.02(a) (solely as to the Loan Documents), 5.02(b)(i) and (b)(iii) (in each case, solely as to the Loan Documents), 5.04, 5.13, 5.17 and 5.18 shall be true and correct in all material respects.
(j) The Initial Lenders shall have received all documentation and other information required by regulatory authorities with respect to the Borrower reasonably requested by the Initial Lenders under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act; provided that the Initial Lenders shall use commercially reasonable efforts to ensure that such requests are delivered at least 10 days prior to the Closing Date and are not unduly burdensome on any person unless required by applicable Law.
(k) The Initial Lenders shall have received the Audited Financial Statements, the Unaudited Financial Statements and the Pro Forma Financial Statements.
 
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ARTICLE V. Representations
and Warranties
The Borrower and each of the Subsidiary Guarantors party hereto represent and warrant to the Agents and the Lenders at the time of each Credit Extension that:
Section 5.01. Existence, Qualification and Power; Compliance with Laws .
Each Loan Party and each Restricted Subsidiary (a) is a Person duly organized or formed, validly existing and in good standing (where relevant) under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority to (i) own or lease its assets and carry on its business as currently conducted and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and in good standing (where relevant) under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, (d) is in compliance with all Laws, orders, writs and injunctions and (e) has all requisite governmental licenses, authorizations, consents and approvals to operate its business as currently conducted; except in the case of clause (a) (other than with respect to the Borrower), (b)(i) (other than with respect to the Borrower), (c), (d) or (e), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
Section 5.02. Authorization; No Contravention .
The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party, and the consummation of the Transactions, are within such Loan Party’s corporate or other powers, (a) have been duly authorized by all necessary corporate or other organizational action, and (b) do not (i) contravene the terms of any of such Person’s Organization Documents, (ii) conflict with or result in any breach or contravention of, or the creation of any Lien under (other than as permitted by Section 7.01), or require any payment to be made under (x) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (y) any material order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (iii) violate any material Law; except with respect to any conflict, breach or contravention or payment (but not creation of Liens) (A) referred to in clause (b)(ii)(x), to the extent that such violation, conflict, breach, contravention or payment could not reasonably be expected to have a Material Adverse Effect, and (B) solely for purposes of Section 4.02, referred to in clauses (b)(iii), to the extent that such violation could not reasonably be expected to have a Company Material Adverse Effect.
Section 5.03. Governmental Authorization; Other Consents .
No material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, or for the consummation of the Transactions, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (c) the perfection or maintenance of the Liens created under the Collateral Documents (including the priority thereof) or (d) the exercise by the Administrative Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for (i) filings and registrations necessary to perfect the Liens on the Collateral granted by the Loan Parties in favor of the Secured Parties, (ii) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full
 
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force and effect (except to the extent not required to obtained, taken, given or made or in full force and effect pursuant to the Collateral and Guarantee Requirement) and (iii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect.
Section 5.04. Binding Effect .
This Agreement and each other Loan Document has been duly executed and delivered by each Loan Party that is a party thereto. This Agreement and each other Loan Document constitute legal, valid and binding obligations of such Loan Party, enforceable against each Loan Party that is a party thereto in accordance with its terms, except as such enforceability may be limited by (i) Debtor Relief Laws and by general principles of equity, (ii) the need for filings and registrations necessary to create or perfect the Liens on the Collateral granted by the Loan Parties in favor of the Secured Parties and (iii) the effect of foreign Laws, rules and regulations as they relate to pledges, if any, of Equity Interests in Foreign Subsidiaries.
Section 5.05. Financial Statements; No Material Adverse Effect .
(a) (i) The unaudited pro forma consolidated balance sheet of the Borrower and its Subsidiaries as at the last day of the most recent fiscal quarter for which Unaudited Financial Statements have been delivered prior to the Closing Date (including the notes thereto describing the pro forma adjustments) (the “Pro Forma Balance Sheet”) and the unaudited pro forma consolidated statement of operations of the Borrower and its Subsidiaries for the twelve months ended on the last day of the most recent fiscal quarter for which Unaudited Financial Statements have been delivered prior to the Closing Date (together with the Pro Forma Balance Sheet, the “Pro Forma Financial Statements”), copies of which will be furnished to each Lender prior to the Closing Date, have been prepared giving effect (as if such events had occurred on such date or at the beginning of such periods, as the case may be) to the Transactions. The Pro Forma Financial Statements have been prepared in good faith, based on assumptions believed by the Borrower to be reasonable as of the date of delivery thereof, and present fairly in all material respects on a pro forma basis the estimated consolidated financial position of the Borrower and its Subsidiaries as at the last day of the most recent fiscal quarter for which Unaudited Financial Statements have been delivered and its estimated consolidated results of operations for the periods covered thereby, assuming that the events specified in the preceding sentence had actually occurred at such date or at the beginning of the periods covered thereby.
(ii) The Audited Financial Statements fairly present in all material respects the consolidated financial condition of the Acquired Company as of the dates thereof and its consolidated results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the periods covered thereby, except as otherwise expressly noted therein.
(iii) The Unaudited Financial Statements fairly present in all material respects the consolidated financial condition of the Acquired Company as of the dates thereof and its results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the periods covered thereby, except as otherwise expressly noted therein and subject to normal year-end audit adjustments.
(b) The forecasts of income statements of the Borrower and its Subsidiaries which have been furnished to the Administrative Agent prior to the Closing Date have been prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed to be reasonable at the time of preparation of such forecasts, it being understood that actual results may vary from such forecasts and that such variations may be material.
 
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(c) Since the Closing Date, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
(d) As of the Closing Date, neither the Acquired Company nor any of its Subsidiaries has any Indebtedness or other obligations or liabilities, direct or contingent (other than (i) the liabilities reflected on Schedule 5.05, (ii) obligations arising under the Loan Documents and the Mezzanine Debt Documentation, (iii) liabilities incurred in the ordinary course of business, (iv) liabilities disclosed in the Pro Forma Financial Statements and (v) liabilities under the Acquisition Agreement) that, either individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.
Section 5.06. Litigation .
There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened in writing or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Restricted Subsidiaries or against any of their properties or revenues that either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.07. No Default .
Neither the Borrower nor any of its Restricted Subsidiaries is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.08. Ownership of Property; Liens .
(a) The Borrower and each of its Restricted Subsidiaries has good record title to, or valid leasehold interests in, or easements or other limited property interests in, all Real Property necessary in the ordinary conduct of its business, free and clear of all Liens except as set forth on Schedule 5.08 hereto and except for minor defects in title that do not materially interfere with its ability to conduct its business or to utilize such assets for their intended purposes and Liens permitted by Section 7.01 and except where the failure to have such title could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) As of the Closing Date, Schedule 5.08 contains a true and complete list of each Material Real Property owned by the Borrower and the Subsidiaries as of the Closing Date.
(c) No Casualty Event. As of the Closing Date, except as otherwise disclosed to the Administrative Agent, (i) no Loan Party has received any notice of, nor has any knowledge of, the occurrence (and still pending as of the Closing Date) or pendency or contemplation of any Casualty Event affecting all or any portion of a Mortgaged Property, and (ii) no Mortgage encumbers improved Mortgaged Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards within the meaning of the National Flood Insurance Act of 1968 unless flood insurance available under such Act has been obtained in accordance with Section 6.07.
 
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Section 5.09. Environmental Matters .
Except as specifically disclosed in Schedule 5.09(a) or except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:
(a) each Loan Party and its properties are and have been in compliance with all Environmental Laws, which includes obtaining and maintaining all applicable Environmental Permits required under such Environmental Laws to carry on the business and operations of the Loan Parties;
(b) the Loan Parties have not received any written notice that alleges any of them is in violation of or potentially liable under any Environmental Laws and none of the Loan Parties nor any of their properties is the subject of any claims, investigations, liens, demands or judicial, administrative or arbitral proceedings pending or, to the knowledge of the Borrower, threatened under any Environmental Law or to revoke or modify any Environmental Permit held by any of the Loan Parties;
(c) there has been no release, discharge or disposal of Hazardous Materials on, at, under or from any property owned, leased or operated by any of the Loan Parties, or, to the knowledge of the Borrower, any property formerly owned, operated or leased by any Loan Party or arising out of the conduct of the Loan Parties that could reasonably be expected to require investigation, response or corrective action, or could reasonably be expected to result in the Borrower incurring liability, under Environmental Laws; and
(d) there are no facts, circumstances or conditions arising out of or relating to the operations of the Loan Parties or any property owned, leased or operated by any of the Loan Parties or, to the knowledge of the Borrower, any property formerly owned, operated or leased by the Loan Parties or any of their predecessors in interest that could reasonably be expected to require investigation, response or corrective action, or could reasonably be expected to result in any of the Loan Parties incurring liability, under Environmental Laws.
Section 5.10. Taxes .
Except as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Loan Parties and their Subsidiaries have filed all tax returns required to be filed, and have paid all Taxes levied or imposed upon them or their properties, that are due and payable (including in their capacity as a withholding agent) and taking into account applicable extensions, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed Tax deficiency or assessment known to any Loan Parties against the Loan Parties that would, if made, individually or in the aggregate, have a Material Adverse Effect.
Section 5.11. ERISA Compliance .
(a) Except as could not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other Federal or state Laws.
(b) (i) No ERISA Event has occurred during the five year period prior to the date on which this representation is made or deemed made; (ii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of
 
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ERISA with respect to a Multiemployer Plan; and (iv) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA, except, with respect to each of the foregoing clauses of this Section 5.11(b), as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(c) The Pension Plans of the Loan Parties and the Subsidiaries are funded to the extent required by Law, in each case, except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
Section 5.12. Subsidiaries; Equity Interests .
As of the Closing Date (after giving effect to any part of the Transactions that is consummated on or prior to the Closing Date), no Loan Party has any material Subsidiaries other than those specifically disclosed in Schedule 5.12, and all of the outstanding Equity Interests owned by the Loan Parties (or a Subsidiary of any Loan Party) in such material Subsidiaries have been validly issued and are fully paid and all Equity Interests owned by a Loan Party (or a Subsidiary of any Loan Party) in such material Subsidiaries are owned free and clear of all Liens except (i) those created under the Collateral Documents and (ii) any Lien that is permitted under Section 7.01. As of the Closing Date, Schedule 5.12(a) sets forth the name and jurisdiction of each Domestic Subsidiary that is a Loan Party and (b) sets forth the ownership interest of the Borrower and any other Subsidiary thereof in each Subsidiary, including the percentage of such ownership.
Section 5.13. Margin Regulations; Investment Company Act .
(a) The Borrower is not engaged nor will it engage, principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Borrowings or drawings under any Letter of Credit will be used for any purpose that violates Regulation U.
(b) None of the Borrower, any Person Controlling the Borrower, or any of its Restricted Subsidiaries is or is required to be registered as an “investment company” under the Investment Company Act of 1940.
Section 5.14. Disclosure .
To the best of the Borrower’s knowledge, no report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party (other than projected financial information, pro forma financial information and information of a general economic or industry nature) to any Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or any other Loan Document (as modified or supplemented by other information so furnished) when taken as a whole contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein (when taken as a whole), in the light of the circumstances under which they were made, not materially misleading. With respect to projected financial information and pro forma financial information, the Borrower represents that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation; it being understood that such projections may vary from actual results and that such variances may be material.
 
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Section 5.15. Labor Matters .
Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against the Borrower or any of its Restricted Subsidiaries pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and payment made to employees of the Borrower or any of its Restricted Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Laws dealing with such matters; and (c) all payments due from the Borrower or any of its Restricted Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the relevant party.
Section 5.16. Intellectual Property; Licenses, Etc .
Except as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, the Borrower and its Restricted Subsidiaries own, license or possess the right to use all of the trademarks, service marks, trade names, domain names, copyrights, patents, patent rights, licenses, technology, software, know-how, rights in databases, design rights and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses as currently conducted, and, to the knowledge of the Borrower and its Restricted Subsidiaries, such IP Rights do not conflict with the rights of any Person, except to the extent such failure to own, license or possess or such conflicts, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No advertisement, product, process, method or substance used by any Loan Party or any of its Subsidiaries in the operation of their respective businesses as currently conducted infringes upon any IP Rights held by any Person except for such infringements which individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the IP Rights is filed and presently pending or, to the knowledge of the Borrower, presently threatened against any Loan Party or any of its Subsidiaries, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Except pursuant to written licenses and other user agreements entered into by each Loan Party in the ordinary course of business, as of the Closing Date, all registrations listed in Schedule 8(a) or 8(b) to the Perfection Certificate are valid and in full force and effect, except, in each individual case, to the extent that such a registration is not valid and in full force and effect could not reasonably be expected to have a Material Adverse Effect.
Section 5.17. Solvency .
On the Closing Date after giving effect to the Transactions, the Borrower and its Restricted Subsidiaries, on a consolidated basis, are Solvent.
Section 5.18. Security Documents .
(a) Valid Liens. Each Collateral Document delivered pursuant to Sections 4.02, 6.11 and 6.13 will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral described therein to the extent intended to be created thereby and (i) when financing statements and other filings in appropriate form are filed in the offices specified on Schedule 4 to the Perfection Certificate and (ii) upon the
 
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taking of possession or control by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the Security Agreement), the Liens created by the Collateral Documents shall constitute fully perfected Liens on, and security interests in (to the extent intended to be created thereby), all right, title and interest of the grantors in such Collateral to the extent perfection can be obtained by filing financing statements, in each case subject to no Liens other than Liens permitted hereunder.
(b) PTO Filing; Copyright Office Filing. When the Security Agreement or a short form thereof is properly filed in the United States Patent and Trademark Office and the United States Copyright Office, to the extent such filings may perfect such interests, the Liens created by such Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in Patents and Trademarks (each as defined in the Security Agreement) registered or applied for with the United States Patent and Trademark Office or Copyrights (as defined in such Security Agreement) registered or applied for with the United States Copyright Office, as the case may be, in each case free and clear of Liens other than Liens permitted under Section 7.01 hereof (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to establish a Lien on registered Patents, Trademarks and Copyrights registered or applied for by the grantors thereof after the Closing Date).
(c) Mortgages. Upon recording thereof in the appropriate recording office, each Mortgage is effective to create, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, legal, valid and enforceable perfected first-priority Liens on, and security interest in, all of the Loan Parties’ right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, subject only to Liens permitted hereunder, and when the Mortgages are filed in the offices specified on Schedule 4 to the Perfection Certificate dated the Closing Date (or, in the case of any Mortgage executed and delivered after the date thereof in accordance with the provisions of Sections 6.11 and 6.13, when such Mortgage is filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of Sections 6.11 and 6.13), the Mortgages shall constitute fully perfected first-priority Liens on, and security interests in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other Person, other than Liens permitted by hereunder.
Notwithstanding anything herein (including this Section 5.18) or in any other Loan Document to the contrary, neither the Borrower nor any other Loan Party makes any representation or warranty as to (A) the effects of perfection or non-perfection, the priority or the enforceability of any pledge of or security interest in any Equity Interests of any Foreign Subsidiary, or as to the rights and remedies of the Agents or any Lender with respect thereto, under foreign Law, (B) the pledge or creation of any security interest, or the effects of perfection or non-perfection, the priority or the enforceability of any pledge of or security interest to the extent such pledge, security interest, perfection or priority is not required pursuant to the Collateral and Guarantee Requirement or the Collateral Documents or (C) on the Closing Date and until required pursuant to Section 6.13 or Section 4.02(e), the pledge or creation of any security interest, or the effects of perfection or non-perfection, the priority or enforceability of any pledge or security interest to the extent not required on the Closing Date pursuant to Section 4.02(e).
 
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ARTICLE VI.
Affirmative Covenants
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation (other than Cash Management Obligations or obligations under Secured Hedge Agreements) hereunder which is accrued and payable shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (unless the Outstanding Amount of the L/C Obligations related thereto has been Cash Collateralized or a backstop letter of credit reasonably satisfactory to the applicable L/C Issuer is in place), then from and after the Closing Date, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02 and 6.03) cause each of its Restricted Subsidiaries to:
Section 6.01. Financial Statements .
(a) Deliver to the Administrative Agent for prompt further distribution to each Lender, as soon as available, but in any event within one hundred eighty (180) days after the end of the fiscal year ending December 31, 2009 and within ninety (90) days after the end of each subsequent fiscal year, beginning with the fiscal year ending December 31, 2010, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, stockholders’ equity (other than with respect to the fiscal year ending December 31, 2009) and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent registered public accounting firm of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; provided that no later than 90 days following the Borrower’s fiscal year ending December 31, 2009, the Borrower shall deliver to the Administrative Agent, (i) audited combined financial statements of the Acquired Company and its Subsidiaries (but otherwise satisfying the requirements set forth above including with respect to an audit opinion) for the portion of the 2009 fiscal year ending on the day prior to the Closing Date and as of the day prior to the Closing Date and (ii) unaudited consolidated financial statements (otherwise satisfying the requirements set forth above except that such financial statements shall be unaudited) for the Borrower and its Subsidiaries for the period from the Closing Date to December 31, 2009 and as of December 31, 2009, certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP subject to the absence of footnotes and the finalization of purchase accounting adjustments;
(b) Deliver to the Administrative Agent for prompt further distribution to each Lender, as soon as available, but in any event within (x) sixty (60) days after the end of the fiscal quarter ending March 31, 2010 and (y) within forty-five (45) days after the end of each of the first three (3) fiscal quarters of each fiscal year of the Borrower for fiscal quarters ended on or after June 30, 2010, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter and the related (i) consolidated statements of income or operations for such fiscal quarter and for the portion of the fiscal year then ended and (ii) consolidated statements of cash flows for such fiscal quarter and the portion of the fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;
(c) Deliver to the Administrative Agent for prompt further distribution to each Lender, as soon as available, and in any event no later than ninety (90) days after the end of the fiscal year ending December 31, 2009 and no later than sixty (60) days after the end of each subsequent fiscal year of the Borrower, beginning with the fiscal year ending December 31, 2010, a detailed consolidated budget for the following fiscal year on a quarterly basis (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the following fiscal year, the related consolidated statements of projected cash flow and projected income and a summary of the material underlying assumptions applicable thereto) (collectively, the “Projections”), which Projections shall in each case be accompanied by a certificate of a Responsible Officer stating that such Projections have been prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed to be reasonable at the time of preparation of such Projections, it being understood that actual results may vary from such Projections and that such variations may be material; and
(d) Deliver to the Administrative Agent with each set of consolidated financial statements referred to in Sections 6.01(a) and 6.01(b) above, the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) (which may be in footnote form only) from such consolidated financial statements.
 
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Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 6.01 may be satisfied with respect to financial information of the Borrower and the Restricted Subsidiaries by furnishing (A) the applicable financial statements of the Borrower (or any direct or indirect parent of the Borrower) or (B) the Borrower’s (or any direct or indirect parent thereof), as applicable, Form l0-K or 10-Q, as applicable, filed with the SEC; provided that, with respect to clauses (A) and (B), (i) to the extent such information relates to a parent of the Borrower, such information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to the Borrower (or such parent), on the one hand, and the information relating to the Borrower and the Restricted Subsidiaries on a standalone basis, on the other hand and (ii) to the extent such information is in lieu of information required to be provided under Section 6.01(a), such materials are accompanied by a report and opinion of an independent registered public accounting firm of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualifications or exception as to the scope of such audit.
Documents required to be delivered pursuant to Section 6.01 and Sections 6.02(c) and (d) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower (or any direct or indirect parent of the Borrower) posts such documents, or provides a link thereto on the website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) upon written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a) to the Administrative Agent; provided, however, that if such Compliance Certificate is first delivered by electronic means, the date of such delivery by electronic means shall constitute the date of delivery for purposes of compliance with Section 6.02(a). Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC,” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws; provided that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.08; (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent and each Arranger shall be entitled to treat any
 
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Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” Notwithstanding the foregoing, the Borrower shall not be under any obligation to mark any Borrower Materials “PUBLIC.”
Section 6.02. Certificates; Other Information
Deliver to the Administrative Agent for prompt further distribution to each Lender:
(a) no later than five (5) days after the delivery of the financial statements referred to in Section 6.01(a) and (b), commencing with the first full fiscal quarter completed after the Closing Date, a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower;
(b) no later than five (5) days after the delivery of the financial statements referred to in Section 6.01(a), but only if available after the use of commercially reasonable efforts, a certificate (or other appropriate reporting means in accordance with applicable auditing standards) of its independent registered public accounting firm stating that in making the examination necessary therefor no knowledge was obtained of any Event of Default under Section 7.11 or, if any such Event of Default shall exist, stating the nature and status of such event;
(c) promptly after the same are publicly available, copies of all annual, regular, periodic and special reports and registration statements which the Borrower or any Restricted Subsidiary files with the SEC or with any Governmental Authority that may be substituted therefor (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(d) promptly after the furnishing thereof, copies of any material requests or material notices received by any Loan Party (other than in the ordinary course of business) or material statements or material reports furnished to any holder of debt securities (other than in connection with any board observer rights) of any Loan Party or of any of its Restricted Subsidiaries pursuant to the terms of any Mezzanine Debt Documentation, or Junior Financing Documentation in each case in a principal amount in excess of the Threshold Amount and not otherwise required to be furnished to the Lenders pursuant to any clause of this Section 6.02;
(e) together with the delivery of each Compliance Certificate pursuant to Section 6.02(a), (i) in the case of annual Compliance Certificates only, a report setting forth the information required by sections describing the legal name and the jurisdiction of formation of each Loan Party and the location of the Chief Executive Office of each Loan Party of the Perfection Certificate or confirming that there has been no change in such information since the Closing Date or the date of the last such report, (ii) a description of each event, condition or circumstance during the last fiscal quarter covered by such Compliance Certificate requiring a mandatory prepayment under Section 2.05(b) and (iii) a list of each Subsidiary of the Borrower that identifies each Subsidiary as a Restricted or an Unrestricted Subsidiary as of the date of delivery of such Compliance Certificate (to the extent that there have been any changes in the identity of such Subsidiaries since the Closing Date or the most recent list provided); and
(f) promptly, such additional customary information regarding the business, legal, financial or corporate affairs of the Loan Parties or any of their respective Restricted Subsidiaries, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request.
 
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Section 6.03. Notices
Promptly after a Responsible Officer of the Borrower or any Subsidiary Guarantor has obtained knowledge thereof, notify the Administrative Agent:
(a) of the occurrence of any Default;
(b) Adverse Effect; and of any matter that has resulted or could reasonably be expected to result in a Material
(c) of the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit, litigation or proceeding, whether at law or in equity by or before any Governmental Authority with respect to any Loan Document.
Each notice pursuant to this Section shall be accompanied by a written statement of a Responsible Officer of the Borrower (x) that such notice is being delivered pursuant to Section 6.03(a), (b) or (c) (as applicable) and (y) setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.
Section 6.04. Payment of Obligations
Pay, discharge or otherwise satisfy as the same shall become due and payable in the normal conduct of its business, all its Taxes (whether or not shown on a Tax return), except, in each case, to the extent any such Tax is being contested in good faith and by appropriate proceedings for which appropriate reserves have been established in accordance with GAAP or the failure to pay or discharge the same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 6.05. Preservation of Existence, Etc
(a) Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization and (b) take all reasonable action to maintain all rights, privileges (including its good standing where applicable in the relevant jurisdiction), permits, licenses and franchises necessary or desirable in the normal conduct of its business, except, in the case of (a) or (b), (i) (other than with respect to the Borrower) to the extent that failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (ii) pursuant to a transaction permitted by Section 7.04 or 7.05.
Section 6.06. Maintenance of Properties
Except if the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order, repair and condition, ordinary wear and tear excepted and fire, casualty or condemnation excepted, and (b) make all necessary renewals, replacements, modifications, improvements, upgrades, extensions and additions thereof or thereto in accordance with prudent industry practice and in the normal conduct of its business.
 
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Section 6.07. Maintenance of Insurance
(a) Generally. Maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as the Borrower and the Restricted Subsidiaries) as are customarily carried under similar circumstances by such other Persons.
(b) Requirements of Insurance. Not later than ninety (90) days after the Closing Date (or the date any such insurance is obtained, in the case of insurance obtained after the Closing Date), the Borrower shall use commercially reasonable efforts to ensure that (i) all such insurance with respect to any Collateral shall provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 10 days (or, to the extent reasonably available, 30 days) after receipt by the Collateral Agent of written notice thereof (the Borrower shall deliver a copy of the policy (and to the extent any such policy is renewed, a renewal policy) or other evidence thereof to the Administrative Agent and the Collateral Agent, or insurance certificate with respect thereto) and (ii) all such insurance with respect to any Collateral shall name the Collateral Agent as mortgagee (in the case of property insurance) or additional insured on behalf of the Secured Parties (in the case of liability insurance) and loss payee (in the case of property insurance), as applicable.
(c) Flood Insurance. With respect to each Mortgaged Property, obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time reasonably require, if at any time the area in which any material improvements are located on any Mortgaged Property is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time.
Section 6.08. Compliance with Laws
Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except if the failure to comply therewith could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 6.09. Books and Records
Maintain proper books of record and account, in which entries that are full, true and correct in all material respects and are in conformity with GAAP consistently applied and which reflect all material financial transactions and matters involving the assets and business of the Borrower or a Restricted Subsidiary, as the case may be (it being understood and agreed that Foreign Subsidiaries may maintain individual books and records in conformity with generally accepted accounting principles that are applicable in their respective countries of organization and that such maintenance shall not constitute a breach of the representations, warranties or covenants hereunder).
 
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Section 6.10. Inspection Rights .
Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom (other than records of the Board of Directors of such Loan Party or such Subsidiary), and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants (subject to such accountants’ customary policies and procedures), all at the reasonable expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise rights of the Administrative Agent and the Lenders under this Section 6.10 and the Administrative Agent shall not exercise such rights more often than two (2) times during any calendar year and only one (1) such time shall be at the Borrower’s expense; provided further that when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice. The Administrative Agent and the Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants. Notwithstanding anything to the contrary in this Section 6.10, none of the Borrower nor any Restricted Subsidiary shall be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law or (iii) is subject to attorney client or similar privilege or constitutes attorney work-product.
Section 6.11. Additional Collateral; Additional Guarantors .
At the Borrower’s expense, take all action necessary or reasonably requested by the Administrative Agent or the Collateral Agent to ensure that the Collateral and Guarantee Requirement continues to be satisfied, including:
(a) Upon (x) the formation or acquisition of any new direct or indirect wholly owned Domestic Subsidiary (in each case, other than an Excluded Subsidiary) by the Borrower, (y) any Excluded Subsidiary ceasing to constitute an Excluded Subsidiary or (z) or the designation in accordance with Section 6.14 of any existing direct or indirect wholly owned Domestic Subsidiary (other than an Excluded Subsidiary) as a Restricted Subsidiary:
(i) within 60 days after such formation, acquisition, cessation or designation, or such longer period as the Administrative Agent may agree in writing in its discretion:
(A) cause each such Domestic Subsidiary that is required to become a Guarantor pursuant to the Collateral and Guarantee Requirement to duly execute and deliver to the Administrative Agent or the Collateral Agent (as appropriate) joinders to this Agreement as Guarantors, Security Agreement Supplements, Intellectual Property Security Agreements, a counterpart of the Intercompany Note and other security agreements and documents (including, with respect to such Mortgages, the documents listed in Section 6.13(b)), as reasonably requested by and in form and substance reasonably satisfactory to the Administrative Agent (consistent, subject to local law requirements, with the Mortgages, Security Agreement, Intellectual Property Security Agreements and other security agreements in effect on the Closing Date), in each case granting first-priority Liens required by the Collateral and Guarantee Requirement;
 
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(B) cause each such Domestic Subsidiary that is required to become a Guarantor pursuant to the Collateral and Guarantee Requirement (and the parent of each such Domestic Subsidiary that is a Guarantor) to deliver any and all certificates representing Equity Interests (to the extent certificated) and intercompany notes (to the extent certificated) that are required to be pledged pursuant to the Collateral and Guarantee Requirement, accompanied by undated stock powers or other appropriate instruments of transfer executed in blank;
(C) take and cause such Restricted Subsidiary that is required to become a Guarantor pursuant to the Collateral and Guarantee Requirement and each direct or indirect parent of such Restricted Subsidiary to take whatever action (including the recording of Mortgages, the filing of UCC financing statements and delivery of stock and membership interest certificates) as may be necessary in the reasonable opinion of the Collateral Agent to vest in the Collateral Agent (or in any representative of the Collateral Agent designated by it) valid and perfected Liens to the extent required by the Collateral and Guarantee Requirement or the Collateral Documents, and to otherwise comply with the requirements of the Collateral and Guarantee Requirement or the Collateral Documents;
(ii) if reasonably requested by the Administrative Agent or the Collateral Agent, within forty-five (45) days after such request (or such longer period as the Administrative Agent may agree in writing in its sole discretion), deliver to the Administrative Agent a signed copy of an opinion, addressed to the Administrative Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent as to such matters set forth in this Section 6.11(a) as the Administrative Agent may reasonably request;
(iii) as promptly as practicable after the request therefor by the Administrative Agent or Collateral Agent, deliver to the Collateral Agent with respect to each Material Real Property, any existing title reports, abstracts or environmental assessment reports, to the extent available and in the possession or control of the Borrower; provided, however, that there shall be no obligation to deliver to the Administrative Agent any existing environmental assessment report whose disclosure to the Administrative Agent would require the consent of a Person other than the Borrower or one of its Subsidiaries, where, despite the commercially reasonable efforts of the Borrower to obtain such consent, such consent cannot be obtained; and
(iv) if reasonably requested by the Administrative Agent or the Collateral Agent, within sixty (60) days after such request (or such longer period as the Administrative Agent may agree in writing in its sole discretion), deliver to the Collateral Agent any other items necessary from time to time to satisfy the Collateral and Guarantee Requirement with respect to perfection and existence of security interests with respect to property of any Guarantor acquired after the Closing Date and subject to the Collateral and Guarantee Requirement or the Collateral Documents, but not specifically covered by the preceding clauses (i), (ii) or (iii) or clause (b) below.
(b) Not later than one hundred twenty (120) days after the acquisition by any Loan Party of Material Real Property as determined by the Borrower (acting reasonably and in good faith) (or such longer period as the Administrative Agent may agree in writing in its sole discretion) that is required to be provided as Collateral pursuant to the Collateral and Guarantee Requirement, which property would not be automatically subject to another Lien pursuant to pre-existing Collateral Documents, cause such property to be subject to a first-priority Lien and Mortgage in favor of the Collateral Agent for the benefit of the Secured Parties and take, or cause the relevant Loan Party to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect or record such Lien, in each case to the extent required by, and subject to the limitations and exceptions of, the Collateral and Guarantee Requirement and to otherwise comply with the requirements of the Collateral and Guarantee Requirement.
(c) Always ensuring that the Obligations are secured by a first-priority security interest in all the Equity Interests of the Borrower.
 
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Section 6.12. Compliance with Environmental Laws .
Except, in each case, to the extent that the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, comply, and take all reasonable actions to cause all lessees and other Persons operating or occupying its properties to comply with all applicable Environmental Laws and Environmental Permits; obtain and renew all Environmental Permits necessary for its operations and properties; and, in each case to the extent the Loan Parties are required by Environmental Laws, conduct any investigation, remedial or other corrective action necessary to address Hazardous Materials at any property or facility in accordance with applicable Environmental Laws.
Section 6.13. Further Assurances and Post-Closing Conditions .
(a) Within ninety (90) days after the Closing Date (subject to extension by the Administrative Agent in its reasonable discretion), deliver each Collateral Document required to satisfy the Collateral and Guarantee Requirement or required pursuant to the terms of any Collateral Document, duly executed by each Loan Party required to be party thereto, together with all documents and instruments required to perfect the security interest or Lien of the Collateral Agent in the Collateral (if any) free of any other pledges, security interests or mortgages, except Liens permitted under the Collateral and Guarantee Requirement, to the extent required pursuant to the Collateral and Guarantee Requirement or the Collateral Documents.
(b) Promptly upon reasonable request by the Administrative Agent (i) correct any material defect or error that may be discovered in the execution, acknowledgment, filing or recordation of any Collateral Document or other document or instrument relating to any Collateral, and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent may reasonably request from time to time in order to carry out more effectively the purposes of the Collateral Documents, to the extent required pursuant to the Collateral and Guarantee Requirement or the Collateral Documents. If the Administrative Agent or the Collateral Agent reasonably determines that it is required by applicable Law to have appraisals prepared in respect of the Real Property of any Loan Party subject to a mortgage constituting Collateral, the Borrower shall provide to the Administrative Agent appraisals that satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of FIRREA.
Section 6.14. Designation of Subsidiaries .
The Borrower may at any time after the Closing Date designate any Restricted Subsidiary as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately before and after such designation, no Default shall have occurred and be continuing, (ii) immediately after giving effect to such designation, the Borrower shall be in compliance with the covenants set forth in Section 7.11, determined on a Pro Forma Basis as of the last day of the most recently ended Test Period (or, if no Test Period cited in Section 7.11 has passed, the covenants in Section 7.11 for the first Test Period cited in such Section shall be satisfied as of the last four quarters ended), in each case, as if such designation had occurred on the last day of
 
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such fiscal quarter of the Borrower and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance), (iii) no Subsidiary may be designated as an Unrestricted Subsidiary if it is a “Restricted Subsidiary” for the purpose of the Mezzanine Debt, or any Junior Financing, as applicable, (iv) no Restricted Subsidiary may be designated an Unrestricted Subsidiary if it was previously designated an Unrestricted Subsidiary and (v) if a Restricted Subsidiary is being designated as an Unrestricted Subsidiary hereunder, the sum of (A) the fair market value of assets of such Subsidiary as of such date of designation (the “Designation Date”), plus (B) the aggregate fair market value of assets of all Unrestricted Subsidiaries designated as Unrestricted Subsidiaries pursuant to this Section 6.14 prior to the Designation Date (in each case measured as of the date of each such Unrestricted Subsidiary’s designation as an Unrestricted Subsidiary) shall not exceed $75,000,000 as of such Designation Date pro forma for such designation. The designation of any Subsidiary as an Unrestricted Subsidiary after the Closing Date shall constitute an Investment by the Borrower therein at the date of designation in an amount equal to the fair market value of the Borrower’s investment therein. The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute (i) the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time and (ii) a return on any Investment by the Borrower in Unrestricted Subsidiaries pursuant to the preceding sentence in an amount equal to the fair market value at the date of such designation of the Borrower’s Investment in such Subsidiary.
Section 6.15. Maintenance of Ratings .
The Borrower shall use commercially reasonable efforts to maintain a public corporate rating from S&P and a public corporate family rating from Moody’s, in each case in respect of the Borrower, and a public rating of the Facilities by each of S&P and Moody’s.
ARTICLE VII.
Negative Covenants
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder (other than Cash Management Obligations or obligations under Secured Hedge Agreements) which is accrued and payable shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (unless the Outstanding Amount of the L/C Obligations related thereto has been Cash Collateralized or a backstop letter of credit reasonably satisfactory to the applicable L/C Issuer is in place), then from and after the Closing Date:
Section 7.01. Liens .
Neither the Borrower nor the Restricted Subsidiaries shall, directly or indirectly, create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the Closing Date; provided that any Lien securing Indebtedness in excess of (x) $2,500,000 individually or (y) $10,000,000 in the aggregate (when taken together with all other Liens securing obligations outstanding in reliance on this clause (b) that are not listed on Schedule 7.01(b)) shall only be permitted to the extent such Lien is listed on Schedule 7.01(b), and any modifications, replacements, renewals, refinancings or extensions thereof; provided that (i) the Lien does not extend to any additional property other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien or financed by Indebtedness permitted under Section 7.03, and (B) proceeds and products thereof, and (ii) the replacement, renewal, extension or refinancing of the obligations secured or benefited by such Liens, to the extent constituting Indebtedness, is permitted by Section 7.03;
 
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(c) Liens for Taxes that are not overdue for a period of more than thirty (30) days or that are being contested in good faith and by appropriate actions, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP to the extent required by GAAP;
(d) statutory or common law Liens of landlords, sublandlords, carriers, warehousemen, mechanics, materialmen, repairmen, construction contractors or other like Liens arising in the ordinary course of business that secure amounts not overdue for a period of more than thirty (30) days or if more than thirty (30) days overdue, that are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith and by appropriate actions, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP to the extent required by GAAP;
(e) (i) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation and (ii) pledges and deposits in the ordinary course of business securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any of its Restricted Subsidiaries;
(f) deposits to secure the performance of bids, trade contracts, governmental contracts and leases (other than Indebtedness for borrowed money), statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations of a like nature (including (i) those to secure health, safety and environmental obligations and (ii) letters of credit and bank guarantees required or requested by any Governmental Authority) incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions (including zoning restrictions), encroachments, protrusions and other similar encumbrances and minor title defects affecting Real Property that do not in the aggregate materially interfere with the ordinary conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole, and any exceptions on the Mortgage Policies issued in connection with the Mortgaged Properties;
(h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h);
(i) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole, or (ii) secure any Indebtedness;
(j) Liens (i) in favor of customs and revenue authorities arising as a matter of Law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business or (ii) on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business;
(k) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking or other financial institution arising as a matter of Law or under customary general terms and conditions encumbering deposits or other funds maintained with a financial institution (including the right of setoff) and that are within the general parameters customary in the banking industry or arising pursuant to such banking institutions general terms and conditions;
 
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(l) Liens (i) on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 7.02(i) or (n) or, to the extent related to any of the foregoing, Section 7.02(r) to be applied against the purchase price for such Investment, and (ii) consisting of an agreement to Dispose of any property in a Disposition permitted under Section 7.05, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(m) Liens (i) in favor of the Borrower or a Restricted Subsidiary on assets of a Restricted Subsidiary that is not a Loan Party or (ii) in favor of the Borrower or any Subsidiary Guarantor;
(n) any interest or title of a lessor, sublessor, licensor or sublicensor under leases, subleases, licenses or sublicenses entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business;
(o) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business permitted by this Agreement; Section 7.02;
(p) Liens deemed to exist in connection with Investments in repurchase agreements under
(q) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(r) Liens that are contractual rights of setoff or rights of pledge (i) relating to the establishment of depository relations with banks or other financial institutions not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any of its Restricted Subsidiaries in the ordinary course of business;
(s) Liens solely on any cash earnest money deposits made by the Borrower or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;
(t) ground leases in respect of Real Property on which facilities owned or leased by the Borrower or any of its Restricted Subsidiaries are located;
(u) Liens to secure Indebtedness permitted under Section 7.03(e); provided that (i) such Liens are created within 270 days of the acquisition, construction, repair, lease or improvement of the property subject to such Liens, (ii) such Liens do not at any time encumber property (except for replacements, additions and accessions to such property) other than the property financed by such Indebtedness and the proceeds and products thereof and customary security deposits and (iii) with respect to Capitalized Leases, such Liens do not at any time extend to or cover any assets (except for replacements, additions and accessions to such assets) other than the assets subject to such Capitalized Leases and the proceeds and products thereof and customary security deposits; provided that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;
(v) Liens on property of any Restricted Subsidiary that is not a Loan Party securing Indebtedness of the applicable Subsidiary permitted under Section 7.03;
 
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(w) Liens existing on property at the time of its acquisition or existing on the property of any Person at the time such Person becomes a Restricted Subsidiary (other than by designation as a Restricted Subsidiary pursuant to Section 6.14), in each case after the Closing Date (including Capital Leases); provided that (i) such Lien was not created in contemplation of such acquisition or such Person becoming a Restricted Subsidiary, (ii) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subjected to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition), and (iii) (a) the obligations secured thereby do not exceed $75,000,000 at any time outstanding and (b) the Indebtedness secured thereby is permitted under Section 7.03(g);
(x) (i) zoning, building, entitlement and other land use regulations by Governmental Authorities with which the normal operation of the business complies, and (ii) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole;
(y) Liens arising from precautionary Uniform Commercial Code financing statement or similar filings;
(z) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(aa) the modification, replacement, renewal or extension of any Lien permitted by clauses (u) and (w) of this Section 7.01; provided that (i) the Lien does not extend to any additional property, other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien and (B) proceeds and products thereof, and (ii) the renewal, extension or refinancing of the obligations secured or benefited by such Liens is permitted by Section 7.03 (to the extent constituting Indebtedness);
(bb) other Liens (which may be Liens on the Collateral so long as any such Liens securing Indebtedness for money borrowed are junior to the Liens securing the Obligations and any such obligations secured by junior Lien on the Collateral in excess of $10,000,000 in the aggregate shall be expressly subject to a Second Lien Intercreditor Agreement) securing obligations in an aggregate principal amount outstanding at any time not to exceed $75,000,000;
(cc) Liens securing Permitted Notes issued pursuant to Section 7.03(s) so long as such Liens are subject to the First Lien Intercreditor Agreement or a Second Lien Intercreditor Agreement;
(dd) Liens in favor of the Borrower or a Restricted Subsidiary securing Indebtedness (other than Indebtedness of a Loan Party to a Restricted Subsidiary that is not a Loan Party) permitted under Section 7.03(d); and
(ee) Liens on specific items of inventory or other goods and the proceeds thereof securing such Person’s obligations in respect of documentary letters of credit or bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods.
 
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Section 7.02. Investments .
Neither the Borrower nor the Restricted Subsidiaries shall directly or indirectly, make or hold any Investments, except:
(a) Investments by the Borrower or any of its Restricted Subsidiaries in assets that were Cash Equivalents when such Investment was made;
(b) loans or advances to officers, directors and employees of any Loan Party (or any direct or indirect parent thereof) or any of its Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of Holdings or any direct or indirect parent thereof (provided that the amount of such loans and advances shall be contributed to the Borrower in cash as common equity) and (iii) for any other purposes not described in the foregoing clauses (i) and (ii); provided that the aggregate principal amount outstanding at any time under clause (iii) above shall not exceed $15,000,000;
(c) Investments (i) by the Borrower or any Restricted Subsidiary in any Loan Party and (ii) by any Restricted Subsidiary that is not a Loan Party in any other Restricted Subsidiary that is not a Loan Party;
(d) Investments (i) consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and (ii) received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;
(e) Investments consisting of (x) transactions permitted under Sections 7.01, 7.03 (other than 7.03(c) and (d)), 7.04 (other than 7.04(d) and (e)) and 7.05 (other than 7.05(e)), (y) Restricted Payments permitted by Section 7.06 and (z) repayments or other acquisitions of Indebtedness of the Company or a Subsidiary Guarantor not prohibited by Section 7.13;
(f) Investments (i) existing or contemplated on the Closing Date and set forth on Schedule 7.02(f) and any modification, replacement, renewal, reinvestment or extension thereof and (ii) existing on the Closing Date by the Borrower or any Restricted Subsidiary in the Borrower or any other Restricted Subsidiary and any modification, renewal or extension thereof; provided that the amount of any original Investment under this clause (f) is not increased except by the terms of such Investment as of the Closing Date or as otherwise permitted by Section 7.02;
(g) Investments in Swap Contracts permitted under Section 7.03;
(h) promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 7.05;
(i) any acquisition of all or substantially all the assets of, or all the Equity Interests (other than directors’ qualifying shares or any options for Equity Interests that cannot, as a matter of law, be cancelled, redeemed or otherwise extinguished without the express agreement of the holder thereof at or prior to acquisition) in, a Person or division or line of business of a Person (or any subsequent investment made in a Person, division or line of business previously acquired in a Permitted Acquisition), in a single transaction or series of related transactions, if immediately after giving effect thereto: (i) no Event of Default shall have occurred and be continuing or would result therefrom (other than in respect of any Permitted Acquisition made pursuant to a legally binding commitment entered into at a time when no Default exists or would result therefrom); (ii) the Borrower and the Restricted Subsidiaries shall be in Pro Forma Compliance with the covenants set forth in Section 7.11 after giving effect to such acquisition or investment and any related transactions; (iii) any acquired or newly formed Restricted Subsidiary shall not be liable for any Indebtedness except for Indebtedness otherwise permitted by Section 7.03; (iv) to the extent required by the Collateral and Guarantee Requirement, (A) the property, assets and businesses acquired in such purchase or other acquisition shall constitute Collateral and (B) any such newly created or acquired Subsidiary (other than an Excluded Subsidiary or an Unrestricted Subsidiary (it being understood that the acquisition of an Unrestricted Subsidiary as part of a Permitted Acquisition shall be deemed to be an Investment made in reliance on a provision of this
 
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Section 7.02 other than this clause (i)) shall become Guarantors, in each case, in accordance with Section 6.11, and (v) the aggregate amount of such Investments by Loan Parties in assets that are not (or do not become) owned by a Loan Party or in Equity Interests in Persons that do not become Loan Parties upon consummation of such acquisition shall not exceed $75,000,000 (any such acquisition, a “Permitted Acquisition”);
(j) Investments made in connection with the Transactions;
(k) Investments in the ordinary course of business consisting of UCC Article 3 endorsements for collection or deposit and UCC Article 4 customary trade arrangements with customers consistent with past practices;
(l) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers arising in the ordinary course of business or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(m) loans and advances to the Borrower and any other direct or indirect parent of the Borrower, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof) Restricted Payments permitted to be made to such parent in accordance with Section 7.06(f), (g) or (h);
(n) other Investments (including in connection with Permitted Acquisitions as contemplated pursuant to Sections 7.02(i)(iv) and (i)(v)) in an aggregate amount outstanding pursuant to this clause (n) (valued at the time of the making thereof, and without giving effect to any write downs or write offs thereof) at any time not to exceed (x) $175,000,000 (net of any return in respect thereof, including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) plus (y) the portion, if any, of the Cumulative Credit on the date of such election that the Borrower elects to apply to this subsection (y), such election to be specified in a written notice of a Responsible Officer of the Borrower calculating in reasonable detail the amount of Cumulative Credit immediately prior to such election and the amount thereof elected to be so applied;
(o) advances of payroll payments to employees in the ordinary course of business;
(p) (i) Investments made in the ordinary course of business and consistent with past practice in connection with obtaining, maintaining or renewing client contracts and loans or advances made to distributors in the ordinary course of business and consistent with past practice and (ii) Investments to the extent that payment for such Investments is made solely with Equity Interests of the Borrower (or any direct or indirect parent of the Borrower);
(q) Investments of a Restricted Subsidiary acquired after the Closing Date or of a corporation merged or amalgamated or consolidated into the Borrower or merged, amalgamated or consolidated with a Restricted Subsidiary, in each case in accordance with Section 7.04 after the Closing Date to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation, do not constitute a material portion of the aggregate assets acquired by the Borrower and its Restricted Subsidiaries in such transaction and were in existence on the date of such acquisition, merger or consolidation;
(r) Investments made by any Restricted Subsidiary that is not a Loan Party to the extent such Investments are financed with the proceeds received by such Restricted Subsidiary from an Investment in such Restricted Subsidiary contemplated pursuant to Section 7.02(n) or permitted under Section 7.02(i)(v);
 
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(s) Guarantees by the Borrower or any of its Restricted Subsidiaries of leases (other than Capitalized Leases) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business; and
(t) loans and leases of animals to third parties for the purposes of exhibition, storage or breeding, as the case may be, in each case in the ordinary course of business and consistent with past practices.
Section 7.03. Indebtedness .
Neither the Borrower nor any of the Restricted Subsidiaries shall directly or indirectly, create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party under the Loan Documents;
(b) Indebtedness (i) outstanding on the Closing Date and listed on Schedule 7.03(b) and any refinancing thereof and (ii) intercompany Indebtedness outstanding on the Closing Date and any refinancing thereof, of which any amount owed by a Restricted Subsidiary that is not a Loan Party to a Loan Party shall be evidenced by an Intercompany Note; provided that all such Indebtedness of any Loan Party owed to any Restricted Subsidiary that is not a Loan Party shall be unsecured and subordinated to the Obligations pursuant to an Intercompany Note;
(c) Guarantees by the Borrower and any Restricted Subsidiary in respect of Indebtedness of the Borrower or any Restricted Subsidiary of the Borrower otherwise permitted hereunder; provided that (A) no Guarantee of any Mezzanine Debt or Junior Financing shall be permitted unless such guaranteeing party shall have also provided a Guarantee of the Obligations on the terms set forth herein and (B) if the Indebtedness being Guaranteed is subordinated to the Obligations, such Guarantee shall be subordinated to the Guarantee of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(d) Indebtedness of the Borrower or any Restricted Subsidiary owing to any Loan Party or any other Restricted Subsidiary (or issued or transferred to any direct or indirect parent of a Loan Party which is substantially contemporaneously transferred to a Loan Party or any Restricted Subsidiary of a Loan Party) to the extent constituting an Investment permitted by Section 7.02; provided that all such Indebtedness shall be evidenced by an Intercompany Note;
(e) (i) Attributable Indebtedness and other Indebtedness (including Capitalized Leases) financing an acquisition, construction, repair, replacement, lease or improvement of a fixed or capital asset incurred by the Borrower or any Restricted Subsidiary prior to or within 270 days after the acquisition, construction, repair, replacement, lease or improvement of the applicable asset in an aggregate amount not to exceed $30,000,000 (together with any Permitted Refinancings thereof) at any time outstanding, (ii) Attributable Indebtedness arising out of sale-leaseback transactions permitted by Section 7.05(m) and (iii) any Permitted Refinancing of any of the foregoing;
(f) Indebtedness in respect of Swap Contracts designed to hedge against the Borrower’s or any Restricted Subsidiary’s exposure to interest rates, foreign exchange rates or commodities pricing risks incurred in the ordinary course of business and not for speculative purposes;
(g) Indebtedness of the Borrower or any Restricted Subsidiary (A) assumed in connection with any Permitted Acquisition, provided that such Indebtedness is not incurred in contemplation of such Permitted Acquisition, and any Permitted Refinancing thereof or (B) incurred to finance a Permitted Acquisition and any Permitted Refinancing thereof; provided that (w) in the case of clauses (A) and (B), such Indebtedness
 
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and all Indebtedness resulting from a Permitted Refinancing thereof is unsecured (except for Liens permitted by Section 7.01(w) securing Indebtedness (together with Permitted Refinancings thereof) incurred pursuant to clause (A) in an aggregate principal outstanding not to exceed $75,000,000 and Liens securing Indebtedness incurred pursuant to clause (A) permitted by Section 7.01(bb)), (x) in the case of clauses (A) and (B), both immediately prior and after giving effect thereto, (1) no Default shall exist or result therefrom (other than a Permitted Acquisition made pursuant to a legally binding commitment entered into at a time when no Default exists or would result therefrom), and (2) the Borrower and the Restricted Subsidiaries will be in Pro Forma Compliance with the covenants set forth in Section 7.11 and (y) in the case of any such incurred Indebtedness under clause (B), such Indebtedness matures after, and does not require any scheduled amortization or other scheduled payments of principal prior to, the seventh anniversary of the Closing Date; provided, further, that the amount of Indebtedness incurred by Restricted Subsidiaries that are not Loan Parties under this Section 7.03(g) shall not exceed $50,000,000 in the aggregate;
(h) Indebtedness representing deferred compensation to employees of the Borrower or any of its Restricted Subsidiaries incurred in the ordinary course of business;
(i) Indebtedness to current or former officers, managers, consultants, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Borrower or any direct or indirect parent of the Borrower permitted by Section 7.06;
(j) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries in a Permitted Acquisition, any other Investment expressly permitted hereunder or any Disposition, in each case, constituting indemnification obligations or obligations in respect of purchase price (including customary earnouts) or other similar adjustments;
(k) Indebtedness consisting of obligations of the Borrower or any of its Restricted Subsidiaries under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions, and Permitted Acquisitions or any other Investment expressly permitted hereunder;
(l) Cash Management Obligations and other Indebtedness in respect of netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements in each case in connection with deposit accounts in the ordinary course of business;
(m) Indebtedness of the Borrower or any of its Restricted Subsidiaries, in an aggregate principal amount that at the time of, and after giving effect to, the incurrence thereof, would not exceed $125,000,000;
(n) Indebtedness consisting of (a) the financing of insurance premiums or (b) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(o) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries in respect of letters of credit, bank guarantees, bankers’ acceptances, warehouse receipts or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims; provided that any reimbursement obligations in respect thereof are reimbursed within 30 days following the due date thereof;
(p) obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any of its Restricted Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(q) Indebtedness constituting the Mezzanine Debt and any Permitted Refinancing thereof;
 
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(r) Indebtedness supported by a Letter of Credit, in a principal amount not to exceed the face amount of such Letter of Credit;
(s) (i) Permitted Notes in an aggregate principal amount, when aggregated with the amount of Incremental Term Loans and Revolving Commitment Increases pursuant to Section 2.14, not to exceed $150,000,000, (ii) to the extent Permitted Notes may not be issued in reliance on the foregoing subclause (i), Permitted Notes that are secured on a pari passu basis with the Obligations in an aggregate principal amount that would not cause the First Lien Secured Leverage Ratio, determined on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements were required to have been delivered pursuant to Section 6.01(a) or (b), as applicable (or, if no Test Period has passed, as of the last four quarters ended), as if such Permitted Notes had been outstanding on the last day of such four quarter period, to exceed 2.75 to 1.00, (iii) Permitted Notes, the Net Proceeds of which are applied to the permanent repayment of Term Loans pursuant to Section 2.05(b)(iii), (iv) Permitted Notes that are offered on a pro rata basis to all Lenders that are “Qualified Institutional Buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended) holding Term Loans and in a principal amount not to exceed the amount of Term Loans exchanged for such Permitted Notes pursuant to procedures reasonably acceptable to the Administrative Agent (including procedures designed to comply with securities laws); provided that any Term Loans exchanged for such Permitted Notes shall be deemed to have been repaid immediately upon the effectiveness of such exchange, and (v) in the case of Permitted Notes incurred under any of the foregoing clauses (i), (ii), (iii) and (iv), Permitted Refinancings thereof; and
(t) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (s) above.
For purposes of determining compliance with this Section 7.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness described in clauses (a) through (t) above, the Borrower shall, in its sole discretion, classify and reclassify or later divide, classify or reclassify such item of Indebtedness (or any portion thereof) and will only be required to include the amount and type of such Indebtedness in one or more of the above clauses; provided that (i) all Indebtedness outstanding under the Loan Documents will at all times be deemed to be outstanding in reliance only on the exception in clause (a) of Section 7.03, and (ii) all Indebtedness constituting Mezzanine Debt will be deemed to be outstanding in reliance only on the exception in clause (q) of Section 7.03.
Section 7.04. Fundamental Changes
Neither the Borrower nor any of the Restricted Subsidiaries shall merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person (other than as part of the Transactions), except that:
(a) any Restricted Subsidiary may merge, amalgamate or consolidate with (i) the Borrower (including a merger, the purpose of which is to reorganize the Borrower into a new jurisdiction in the United States); provided that the Borrower shall be the continuing or surviving Person or (ii) one or more other Restricted Subsidiaries; provided that when any Person that is a Loan Party is merging with a Restricted Subsidiary, a Loan Party shall be the continuing or surviving Person;
(b) (i) any Subsidiary that is not a Loan Party may merge, amalgamate or consolidate with or into any other Subsidiary that is not a Loan Party and (ii) any Subsidiary may liquidate or dissolve or the Borrower or any Subsidiary may change its legal form if the Borrower determines in good faith that such action is in the best interest of the Borrower and its Subsidiaries and if not materially disadvantageous to the Lenders (it being understood that in the case of any change in legal form, a Subsidiary that is a Guarantor will remain a Guarantor unless such Guarantor is otherwise permitted to cease being a Guarantor hereunder);
 
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(c) any Restricted Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Restricted Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then (i) the transferee must be a Guarantor or the Borrower or (ii) to the extent constituting an Investment, such Investment must be a permitted Investment in or Indebtedness of a Restricted Subsidiary which is not a Loan Party in accordance with Sections 7.02 (other than Section 7.02(e)) and 7.03, respectively;
(d) so long as no Default exists or would result therefrom, the Borrower may merge with any other Person; provided that (i) the Borrower shall be the continuing or surviving corporation or (ii) if the Person formed by or surviving any such merger or consolidation is not the Borrower (any such Person, the “Successor Company”), (A) the Successor Company shall be an entity organized or existing under the Laws of the United States, any state thereof, the District of Columbia or any territory thereof, (B) the Successor Company shall expressly assume all the obligations of the Borrower under this Agreement and the other Loan Documents to which the Borrower is a party pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (C) each Guarantor, unless it is the other party to such merger or consolidation, shall have confirmed that its Guarantee shall apply to the Successor Company’s obligations under the Loan Documents, (D) each Guarantor, unless it is the other party to such merger or consolidation, shall have by a supplement to the Security Agreement and other applicable Collateral Documents confirmed that its obligations thereunder shall apply to the Successor Company’s obligations under the Loan Documents, (E) if requested by the Administrative Agent, each mortgagor of a Mortgaged Property, unless it is the other party to such merger or consolidation, shall have by an amendment to or restatement of the applicable Mortgage (or other instrument reasonably satisfactory to the Administrative Agent) confirmed that its obligations thereunder shall apply to the Successor Company’s obligations under the Loan Documents, and (F) the Borrower shall have delivered to the Administrative Agent an officer’s certificate and an opinion of counsel, each stating that such merger or consolidation and such supplement to this Agreement or any Collateral Document comply with this Agreement; provided, further, that if the foregoing are satisfied, the Successor Company will succeed to, and be substituted for, the Borrower under this Agreement;
(e) so long as no Default exists or would result therefrom (in the case of a merger involving a Loan Party), any Restricted Subsidiary may merge with any other Person in order to effect an Investment permitted pursuant to Section 7.02; provided that the continuing or surviving Person shall be a Restricted Subsidiary or the Borrower, which together with each of its Restricted Subsidiaries, shall have complied with the requirements of Section 6.11 to the extent required pursuant to the Collateral and Guarantee Requirement;
(f) the Borrower and the Restricted Subsidiaries may consummate the Acquisition, related transactions contemplated by the Acquisition Agreement (and documents related thereto) and the Transactions; and
(g) so long as no Default exists or would result therefrom, a merger, dissolution, liquidation, consolidation or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 7.05.
 
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Section 7.05. Dispositions
Neither the Borrower nor any of the Restricted Subsidiaries shall, directly or indirectly, make any Disposition or enter into any agreement to make any Disposition (other than as part of or in connection with the Transaction), except:
(a) (i) Dispositions of obsolete, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and Dispositions in the ordinary course of business of property no longer used or useful in the conduct of the business of the Borrower or any of its Restricted Subsidiaries and (ii) Dispositions of property no longer used or useful in the conduct of the business of the Borrower and its Restricted Subsidiaries outside the ordinary course of business (and for consideration complying with the requirements applicable to Dispositions pursuant to clause (j) below) in an aggregate amount not to exceed $25,000,000;
(b) Dispositions of inventory, goods held for sale in the ordinary course of business and immaterial assets (including allowing any registrations or any applications for registration of any intellectual property to lapse or go abandoned) in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are promptly applied to the purchase price of such replacement property;
(d) Dispositions of property to the Borrower or any Restricted Subsidiary; provided that if the transferor of such property is a Loan Party, (i) the transferee thereof must be a Loan Party or (ii) if such transaction constitutes an Investment, such transaction is permitted under Section 7.02;
(e) to the extent constituting Dispositions, the granting of Liens permitted by Section 7.01, the making of Investments permitted by Section 7.02, mergers, consolidations and liquidations permitted by Section 7.04 (other than Section 7.04(g)) and Restricted Payments permitted by Section 7.06;
(f) Dispositions made on the Closing Date to consummate the Transaction;
(g) Dispositions of Cash Equivalents;
(h) leases, subleases, licenses or sublicenses (including the provision of software or the licensing of other intellectual property rights), in each case in the ordinary course of business and which do not materially interfere with the business of the Borrower and its Restricted Subsidiaries, taken as a whole;
(i) transfers of property subject to Casualty Events;
(j) Dispositions of property not otherwise permitted under this Section 7.05 in an aggregate amount during the term of this Agreement not to exceed $500,000,000; provided that (i) at the time of such Disposition (other than any such Disposition made pursuant to a legally binding commitment entered into at a time when no Default exists), no Default shall exist or would result from such Disposition, (ii) with respect to any Disposition pursuant to this clause (j) for a purchase price in excess of $5,000,000, the Borrower or any of its Restricted Subsidiaries shall receive not less than 75% of such consideration in the form of cash or Cash Equivalents (in each case, free and clear of all Liens at the time received, other than nonconsensual Liens permitted by Section 7.01 and Liens permitted by Sections 7.01(a), (f), (k), (p), (q), (bb) and (cc) and clauses (i) and (ii) of Section 7.01(r)); provided, however, that for the purposes of this clause (j)(ii), the following shall be deemed to be cash: (A) any liabilities (as shown on the Borrower’s most recent balance sheet provided hereunder or in the footnotes thereto) of the Borrower or such Restricted Subsidiary associated with the assets or Restricted Subsidiary sold in such Disposition that are assumed by the transferee with respect to the applicable Disposition and for which the Borrower and all of its Restricted Subsidiaries shall have been validly released by all applicable creditors in writing, (B) any securities received by such the Borrower or the applicable Restricted Subsidiary from such transferee that are converted by the Borrower or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received) within 180 days following the closing of the applicable Disposition, and (C) aggregate non-cash consideration received by the Borrower or the applicable Restricted Subsidiary having an aggregate fair market value (determined as of the closing of the applicable Disposition for which such non-cash consideration is received) not to exceed $10,000,0000 at any
 
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time (net of any non-cash consideration converted into cash and Cash Equivalents), and (iii) to the extent that the aggregate amount of Net Proceeds received by the Borrower or a Restricted Subsidiary from all Dispositions made pursuant to this Section 7.05(j) exceeds $250,000,000, all Net Proceeds in excess of such amount shall be applied to prepay Term Loans in accordance with Section 2.05(b)(ii) and may not be reinvested in the business of the Borrower or a Restricted Subsidiary;
(k) Dispositions listed on Schedule 7.05(k);
(l) Dispositions or discounts without recourse of accounts receivable in connection with the compromise or collection thereof in the ordinary course of business;
(m) Dispositions of property pursuant to sale-leaseback transactions; provided that the fair market value of all property so Disposed of after the Closing Date shall not exceed $50,000,000;
(n) any swap of assets in exchange for services or other assets in the ordinary course of business of comparable or greater value or usefulness to the business of the Borrower and its Subsidiaries as a whole, as determined in good faith by the management of the Borrower;
(o) Unrestricted Subsidiary; any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an
(p) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements; and
(q) the unwinding of any Swap Contracts pursuant to its terms;
provided that any Disposition of any property pursuant to Section 7.05(j) or (m) shall be for no less than the fair market value of such property at the time of such Disposition. To the extent any Collateral is Disposed of as expressly permitted by this Section 7.05 to any Person other than a Loan Party, such Collateral shall be sold free and clear of the Liens created by the Loan Documents, and the Administrative Agent or the Collateral Agent, as applicable, shall be authorized to take any actions deemed appropriate in order to effect the foregoing.
Section 7.06. Restricted Payments .
Neither the Borrower shall, nor shall the Borrower permit any of its Restricted Subsidiaries to, directly or indirectly, declare or make, directly or indirectly, any Restricted Payment, except:
(a) each Restricted Subsidiary may make Restricted Payments to the Borrower, and other Restricted Subsidiaries of the Borrower (and, in the case of a Restricted Payment by a non-wholly owned Restricted Subsidiary, to the Borrower and any other Restricted Subsidiary and to each other owner of Equity Interests of such Restricted Subsidiary based on their relative ownership interests of the relevant class of Equity Interests);
(b) the Borrower and each Restricted Subsidiary may declare and make dividend payments or other Restricted Payments payable solely in Equity Interests (other than Disqualified Equity Interests not otherwise permitted by Section 7.03) of such Person;
(c) Restricted Payments made (i) on the Closing Date to consummate the Transactions, (ii) in respect of working capital adjustments or purchase price adjustments pursuant to the Acquisition Agreement and (iii) in order to satisfy indemnity and other similar obligations under the Acquisition Agreement;
 
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(d) to the extent constituting Restricted Payments, the Borrower and its Restricted Subsidiaries may enter into and consummate transactions expressly permitted by any provision of Section 7.02 (other than 7.02(e)), 7.04 or Section 7.08 (other than Section 7.08(f));
(e) repurchases of Equity Interests in the Borrower (or any direct or indirect parent thereof) or any Restricted Subsidiary of the Borrower deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;
(f) the Borrower and each Restricted Subsidiary may pay (or make Restricted Payments to allow the Borrower or any other direct or indirect parent thereof to pay) for the repurchase, retirement or other acquisition or retirement for value of Equity Interests of such Restricted Subsidiary (or of the Borrower or any other such direct or indirect parent thereof) by any future, present or former employee, officer, director, manager or consultant of such Restricted Subsidiary (or the Borrower or any other direct or indirect parent of such Restricted Subsidiary) or any of its Subsidiaries upon the death, disability, retirement or termination of employment of any such Person or pursuant to any employee, manager or director equity plan, employee, manager or director stock option plan or any other employee, manager or director benefit plan or any agreement (including any stock subscription or shareholder agreement) with any employee, director, officer or consultant of such Restricted Subsidiary (or the Borrower or any other direct or indirect parent thereof) or any of its Restricted Subsidiaries; provided that the aggregate amount of Restricted Payments made pursuant to this clause (f) shall not exceed $15,000,000 in any calendar year (which shall increase to $25,000,000 subsequent to the consummation of a Qualified IPO of Holdings or any direct or indirect parent thereof, as the case may be) (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $25,000,000 in any calendar year (which shall increase to $50,000,000 subsequent to the consummation of a Qualified IPO of Holdings or any direct or indirect parent thereof, as the case may be)); provided further that such amount in any calendar year may be increased by an amount not to exceed:
(i) to the extent contributed to the Borrower, the Net Proceeds from the sale of Equity Interests of any of the Borrower’s direct or indirect parent companies, in each case to members of management, managers, directors or consultants of Holdings, the Borrower, any of its Subsidiaries or any of its direct or indirect parent companies that occurs after the Closing Date; plus
(ii) the Cash Proceeds of key man life insurance policies received by the Borrower or its Restricted Subsidiaries; less
(iii) the amount of any Restricted Payments previously made with the cash proceeds described in clauses (i) and (ii) of this Section 7.06(f);
(g) the Borrower may make Restricted Payments in an aggregate amount equal to when combined with the amount applied to make prepayments of Junior Financing pursuant to Section 7.13(a)(v) (x) $100,000,000, plus (y) if the portion, if any, of the Cumulative Credit on such date that the Borrower elects to apply to this paragraph so long as (i)  the Total Leverage Ratio determined on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements were required to have been delivered pursuant to Section 6.01(a) or (b), as applicable (or, if no Test Period has passed, as of the last four quarters ended), as if such Restricted Payment had been made on the last day of such four quarter period, is less than or equal to 3.25: 1.00, the portion, if any, of the Cumulative Credit on such date that the Borrower elects to apply to this paragraph, such election to 1.00 and (ii) no Default has occurred and is continuing; provided that any election made pursuant to this clause (g) shall be specified in a written notice of a Responsible Officer of the Borrower calculating in reasonable detail the amount of Cumulative Credit immediately prior to such election and the amount thereof elected to be so applied; provided that with respect to any Restricted Payment made pursuant to clause (y) above, no Default has occurred and is continuing or would result therefrom;
 
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(h) the Borrower may make Restricted Payments to any direct or indirect parent of the Borrower:
(i) to pay its operating expenses incurred in the ordinary course of business and other corporate overhead costs and expenses (including administrative, legal, accounting and similar expenses provided by third parties), which are reasonable and customary and incurred in the ordinary course of business and attributable to the ownership or operations of the Borrower and its Restricted Subsidiaries so long as allocable to such entity in accordance with GAAP, Transaction Expenses and any reasonable and customary indemnification claims made by directors or officers of such parent attributable to the ownership or operations of the Borrower and its Restricted Subsidiaries;
(ii) the proceeds of which shall be used by such parent to pay franchise taxes and other fees, taxes and expenses required to maintain its (or any of its direct or indirect parents’) corporate existence;
(iii) for any taxable period in which the Borrower and/or any of its Subsidiaries is a member of a consolidated, combined or similar income tax group of which a direct or indirect parent of Borrower is the common parent (a “Tax Group”), to pay federal, foreign, state and local income Taxes of such Tax Group that are attributable to the taxable income of the Borrower and/or its Subsidiaries; provided that, for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate shall not exceed the amount that the Borrower and the Subsidiaries would have been required to pay as a stand-alone Tax Group, reduced by any portion of such income Taxes directly paid by the Borrower or any of its Subsidiaries; provided further that the permitted payment pursuant to this clause (iii) with respect to any Taxes of any Unrestricted Subsidiary for any taxable period shall be limited to the amount actually paid with respect to such period by such Unrestricted Subsidiary to the Borrower or its Restricted Subsidiaries for the purposes of paying such consolidated, combined or similar Taxes;
(iv) to finance any Investment that would be permitted to be made pursuant to Section 7.02 if such parent were subject to such section; provided that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment and (B) such parent shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests) to be contributed to the Borrower or the Restricted Subsidiaries or (2) the merger (to the extent permitted in Section 7.04) of the Person formed or acquired into the Borrower or its Restricted Subsidiaries in order to consummate such Permitted Acquisition or Investment, in each case, in accordance with the requirements of Section 6.11;
(v) the proceeds of which shall be used to pay customary salary, bonus and other benefits payable to officers and employees of Holdings or any direct or indirect parent company of Holdings to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Borrower and the Restricted Subsidiaries;
(vi) the proceeds of which shall be used by Holdings to pay (or to make Restricted Payments to allow any direct or indirect parent thereof to pay fees and expenses (other than to Affiliates) related to any unsuccessful equity or debt offering by Holdings (or any direct or indirect parent thereof) that is directly attributable to the operations of the Borrower and its Restricted Subsidiaries; and
(vii) the proceeds of which shall be used to pay customary costs, fees and expenses (other than to Affiliates) related to any unsuccessful equity or debt offering permitted by this Agreement;
 
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(i) payments made or expected to be made by the Borrower or any of the Restricted Subsidiaries in respect of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant (or any spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees of any of the foregoing) and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options; and
(j) after a Qualified IPO, (i) any Restricted Payment by the Borrower or any other direct or indirect parent of the Borrower to pay listing fees and other costs and expenses attributable to being a publicly traded company which are reasonable and customary and (ii) Restricted Payments of up to 6% per annum of the net proceeds received by (or contributed to) the Borrower and its Restricted Subsidiaries from such Qualified IPO ; and
(k) the Borrower may make the Amendment No. 3 Distribution .
Section 7.07. Change in Nature of Business .
The Borrower shall not, nor shall the Borrower permit any of the Restricted Subsidiaries to, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by the Borrower and the Restricted Subsidiaries on the Closing Date or any business reasonably related, complementary, synergistic or ancillary thereto (including related, complementary, synergistic or ancillary technologies) or reasonable extensions thereof.
Section 7.08. Transactions with Affiliates .
Neither the Borrower shall, nor shall the Borrower permit any of the Restricted Subsidiaries to, directly or indirectly, enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than (a) transactions among the Borrower and its Restricted Subsidiaries or any entity that becomes a Restricted Subsidiary as a result of such transaction, (b) on terms substantially as favorable to the Borrower or such Restricted Subsidiary as would be obtainable by the Borrower or such Restricted Subsidiary at the time in a comparable arm’s-length transaction with a Person other than an Affiliate, (c) the Transactions and the payment of fees and expenses (including Transaction Expenses) as part of or in connection with the Transactions, (d) the issuance of Equity Interests to any officer, director, employee or consultant of the Borrower or any of its Restricted Subsidiaries in connection with the Transactions, (e) if no Event of Default is occurring or would result therefrom, the payment of management, monitoring, consulting, transaction and advisory fees (but for avoidance of doubt, excluding termination fees) in an aggregate amount not to exceed the amount payable pursuant to the terms of the Investor Management Agreement and related indemnities and reasonable expenses, (f) Restricted Payments permitted under Section 7.06, (g) loans and other transactions among the Borrower and its Subsidiaries and joint ventures (to the extent any such Subsidiary that is not a Restricted Subsidiary or any such joint venture is only an Affiliate as a result of Investments by the Borrower and its Restricted Subsidiaries in such Subsidiary or joint venture) to the extent otherwise permitted under this Article VII, (h) employment and severance arrangements between the Borrower and its Restricted Subsidiaries and their respective officers and employees in the ordinary course of business and transactions pursuant to stock option plans and employee benefit plans and arrangements in the ordinary course of business, (i) the payment of customary fees and reasonable out of pocket costs to, and indemnities provided on behalf of, directors, managers, officers, employees and consultants of the Borrower and its Restricted Subsidiaries (or any
 
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direct or indirect parent of the Borrower) in the ordinary course of business to the extent attributable to the ownership or operation of the Borrower and its Restricted Subsidiaries, (j) transactions pursuant to agreements in existence on the Closing Date and set forth on Schedule 7.08 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect, (k) customary payments by the Borrower and any of its Restricted Subsidiaries to the Investors made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions or divestitures), which payments are approved by the majority of the members of the board of directors or managers or a majority of the disinterested members of the board of directors or managers of the Borrower, in good faith, (l) payments by the Borrower or any of its Subsidiaries pursuant to any tax sharing agreements with any direct or indirect parent of the Borrower to the extent attributable to the ownership or operation of the Borrower and the Subsidiaries, but only to the extent permitted by Section 7.06(h)(iii), (m) the issuance or transfer of Equity Interests (other than Disqualified Equity Interests) of Holdings to any Permitted Holder or to any former, current or future director, manager, officer, employee or consultant (or any Affiliate of any of the foregoing) of the Borrower, any of its Subsidiaries or any direct or indirect parent thereof, (n) transactions with customers, clients, joint venture partners, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement that are fair to the Borrower and the Restricted Subsidiaries, in the reasonable determination of the board of directors or the senior management of the Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, (o) any payments required to be made pursuant to the Acquisition Agreement, (p) the payment of reasonable out-of-pocket costs and expenses relating to registration rights and indemnities provided to shareholders pursuant to the Shareholder Agreement and (q) any termination fees payable pursuant to the Investor Management Agreement not to exceed the amount set forth in the Investor Management Agreement as in effect on the Closing Date; provided that in the case of payments under this clause (q), (A) the Borrower and its Subsidiaries shall be in Pro Forma Compliance with the covenants set forth in Section 7.11 after giving effect to such payments, and (B) the Total Leverage Ratio shall be less than or equal to 4.0 to 1.00 after giving effect to such payments.
Section 7.09. Burdensome Agreements .
The Borrower shall not, nor shall the Borrower permit any of the Restricted Subsidiaries to, enter into or permit to exist any Contractual Obligation (other than this Agreement or any other Loan Document) that limits the ability of (a) any Restricted Subsidiary of the Borrower that is not a Guarantor to make Restricted Payments to the Borrower or any Guarantor or (b) any Loan Party to create, incur, assume or suffer to exist Liens on property of such Person for the benefit of the Lenders with respect to the Facilities and the Obligations or under the Loan Documents; provided that the foregoing clauses (a) and (b) shall not apply to Contractual Obligations which (i) (x) exist on the Closing Date and (to the extent not otherwise permitted by this Section 7.09) are listed on Schedule 7.09 hereto and (y) to the extent Contractual Obligations permitted by clause (x) are set forth in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted modification, replacement, renewal, extension or refinancing of such Indebtedness so long as such modification, replacement, renewal, extension or refinancing does not expand the scope of such Contractual Obligation, (ii) are binding on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes a Restricted Subsidiary of the Borrower, so long as such Contractual Obligations were not entered into solely in contemplation of such Person becoming a Restricted Subsidiary of the Borrower; provided further that this clause (ii) shall not apply to Contractual Obligations that are binding on a Person that becomes a Restricted Subsidiary pursuant to Section 6.14, (iii) represent Indebtedness of a Restricted Subsidiary of the Borrower which is not a Loan Party which is permitted by Section 7.03, (iv) arise in connection with any Disposition permitted by Section 7.04 or 7.05 and relate solely to the assets or Person subject to such Disposition, (v) are customary provisions in joint venture agreements and other similar agreements applicable to joint ventures permitted under Section 7.02 and applicable solely to such joint venture entered into in the ordinary course of business, (vi) are negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 7.03 but solely to the extent any negative pledge relates to the property financed by such Indebtedness, (vii) are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate
 
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to the assets subject thereto, (viii) comprise restrictions imposed by any agreement relating to secured Indebtedness permitted pursuant to Section 7.03(e), (g) or (m) and to the extent that such restrictions apply only to the property or assets securing such Indebtedness or to the Restricted Subsidiaries incurring or guaranteeing such Indebtedness, (ix) are customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Restricted Subsidiary, (x) are customary provisions restricting assignment of any agreement entered into in the ordinary course of business, (xi) are restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (xii) are customary restrictions contained in the Mezzanine Debt Documents or (xiii) arise in connection with cash or other deposits permitted under Sections 7.01 and 7.02 and limited to such cash or deposit.
Section 7.10. Use of Proceeds .
The proceeds of the Original Term Loans received on the Closing Date, together with the Equity Contribution and the proceeds of the Mezzanine Debt, shall be used solely to pay the cash consideration for the Acquisition (and related transactions) and to pay Transaction Expenses and for other purposes contemplated by, or otherwise fund, the Transactions. The proceeds of the Revolving Credit Loans and Swing Line Loans, shall be used to pay the cash consideration for the Acquisition and to pay Transaction Expenses, for working capital, general corporate purposes, and any other purpose not prohibited by this Agreement including Permitted Acquisitions, and other Investments; provided that on the Closing Date, after consummating the Transactions, the sum of (x) the excess of the aggregate Revolving Credit Commitments at such time less the aggregate Revolving Credit Exposure plus (y) the amount of unrestricted cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries shall be not less than $50,000,000. The Letters of Credit shall be used solely to support obligations of the Borrower and its Subsidiaries incurred for working capital, general corporate purposes and any other purpose not prohibited by this Agreement.
Section 7.11. Financial Covenants .
(a) Total Leverage Ratio. The Borrower shall not permit the Total Leverage Ratio as of the last day of any Test Period ending during any period set forth in the table below (commencing with the first full fiscal quarter completed after Closing Date) to be greater than the ratio set forth below opposite the last day of such Test Period:

Test Period	  	Total
Leverage Ratio	 	
January 1, 2010	  	-	  	December 31, 2010	  	 	5.15 to 1.0	  	
January 1, 2011	  	-	  	December 31, 2011	  	 	4.95 to 1.0	  	
January 1, 2012	  	-	  	December 31, 2012	  	 	4.65 6.25  to 1.0	  	
January 1, 2013	  	-	  	December 31, 2013	  	 	4.15 5.75 to 1.0	  	
January 1, 2014	  	-	  	December 31, 2014	  	 	3.75 5.25 to 1.0	  	
January 1, 2015 and thereafter	  	 	3.65 4.50 to 1.0	  	
 
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(b) Interest Coverage Ratio. The Borrower shall not permit the Interest Coverage Ratio as of the last day of any Test Period ending during any period set forth in the table below (commencing with the first full fiscal quarter completed after Closing Date) to be less than the ratio set forth below opposite the last day of such Test Period:

Test Period	  	Interest
Coverage Ratio	 	
January 1, 2010	  	-	  	December 31, 2010	  	 	1.70 to 1.0	  	
January 1, 2011	  	-	  	December 31, 2011	  	 	1.80 to 1.0	  	
January 1, 2012	  	-	  	December 31, 2012	  	 	1.90 to 1.0	  	
January 1, 2013	  	-	  	December 31, 2013	  	 	1.95 to 1.0	  	
January 1, 2014 and thereafter	  	 	2.05 to 1.0	  	
(c) Maximum Capital Expenditures. (i) The Borrower shall not and shall not permit the Restricted Subsidiaries to make any Capital Expenditures that would cause the aggregate amount of Capital Expenditures made by the Borrower and the Restricted Subsidiaries in any fiscal year commencing with the fiscal year ending December 31, 2010 to exceed $ 165,000,000. 165,000,000; provided that up to an aggregate amount of $65.0 million of Capital Expenditures made by the Borrower and the Restricted Subsidiaries for improving worker safety conditions related to Orca infrastructure spending ( “ Orca Infrastructure CapEx ” ) incurred on or after January 1, 2012 shall be excluded for purposes of determining compliance with this Section 7.11(c) .
(ii) Notwithstanding anything to the contrary contained in clause (c)(i) above, (x) to the extent that the aggregate amount of Capital Expenditures made by the Borrower and the Restricted Subsidiaries in any fiscal year (for the avoidance of doubt, after giving effect to any CapEx Pull-Forward Amount utilized in the preceding year that reduced the amount of Capital Expenditures that could be made in such year but disregarding any Capital Expenditures made in reliance on any Rollover Amount utilized during such year) pursuant to such clause (i) is less than the amount set forth therein, the amount of such difference (the “Rollover Amount”) may be carried forward and used to make Capital Expenditures in the immediately succeeding fiscal year (with such Rollover Amount deemed utilized first in such succeeding year); provided that any Orca Infrastructure CapEx made prior to January 1, 2012 shall be excluded from the aggregate amount of Capital Expenditures made in a given fiscal year for purposes of determining the Rollover Amount and (y) for any fiscal year, the amount of Capital Expenditures that would otherwise be permitted in such fiscal year pursuant to this Section 7.11(c) (including as a result of the application of clause (x) of this clause (ii)) may be increased by an amount not to exceed $25,000,000 (the “CapEx Pull-Forward Amount”). The actual CapEx Pull-Forward Amount in respect of any such fiscal year shall reduce, on a dollar-for-dollar basis, the amount of Capital Expenditures that are permitted to be made in the immediately succeeding fiscal year.
(iii) In addition to the Capital Expenditures permitted pursuant to the preceding paragraphs (i) and (ii), the Borrower and its Restricted Subsidiaries may make additional Capital Expenditures at any time in an amount not to exceed the portion, if any, of the Cumulative Credit on the date of such Capital Expenditure that the Borrower elects to apply to this Section 7.11(c)(iii).
Section 7.12. Accounting Changes .
The Borrower shall not make any change in its fiscal year; provided, however, that the Borrower may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, the Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year.
 
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Section 7.13. Prepayments, Etc. of Indebtedness .
(a) The Borrower shall not, nor shall the Borrower permit any of the Restricted Subsidiaries to, directly or indirectly, prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner (it being understood that payments of regularly scheduled interest shall be permitted) the Mezzanine Debt, any Indebtedness constituting a Permitted Refinancing of the Mezzanine Debt, any subordinated Indebtedness incurred under Section 7.03(g) or any other Indebtedness that is required to be subordinated to the Obligations pursuant to the terms of the Loan Documents (collectively, “Junior Financing”) or make any payment in violation of any subordination terms of any Junior Financing Documentation, except (i) the refinancing thereof with the Net Proceeds of any Indebtedness constituting a Permitted Refinancing; provided that if such Indebtedness was originally incurred under Section 7.03(g), such Permitted Refinancing is permitted pursuant to Section 7.03(g), (ii) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of Holdings or any of its direct or indirect parents, (iii) the prepayment of Indebtedness of the Borrower or any Restricted Subsidiary to the Borrower or any Restricted Subsidiary to the extent not prohibited by the subordination provisions contained in the Intercompany Note, (iv) prepayments or purchases of Junior Financing with Declined Proceeds as required pursuant to the Junior Financing Documentation and (v) prepayments, redemptions, purchases, defeasances and other payments in respect of Junior Financings prior to their scheduled maturity in an aggregate amount not to exceed when combined with the amount of Restricted Payments pursuant to Section 7.06(g) $100,000,000 plus , if the Total Leverage Ratio, determined on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements were required to have been delivered pursuant to Section 6.01(a) or (b), as applicable (or, if no Test Period has passed, as of the last four quarters ended), as if such prepayment, redemption, purchase, defeasance or other payment in respect of Junior Financings had been made on the last day of such four quarter period, is less than or equal to 3.25 to 1.00, the portion, if any, of the Cumulative Credit on such date that the Borrower elects to apply to this paragraph , such ; provided that any election to made pursuant to this clause (a) shall be specified in a written notice of a Responsible Officer of the Borrower calculating in reasonable detail the amount of Cumulative Credit immediately prior to such election and the amount thereof elected to be so applied.
(b) The Borrower shall not, nor shall it permit any of the Restricted Subsidiaries to, directly or indirectly, amend, modify or change in any manner materially adverse to the interests of the Lenders any term or condition of any Junior Financing Documentation without the consent of the Administrative Agent (which consent shall not be unreasonably withheld, conditioned or delayed ); provided that the Mezzanine Debt Amendment shall be deemed to not be materially adverse to the interests of the Lenders for purposes of this Section 7.13(b ).
Section 7.14. Permitted Activities .
Holdings shall not engage in any material operating or business activities; provided that the following shall be permitted in any event: (i) its ownership of the Equity Interests of Borrower and activities incidental thereto, (ii) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance), (iii) the performance of its obligations with respect to the Loan Documents and any other Indebtedness, (iv) any public offering of its common stock or any other issuance or sale of its Equity Interests, (v) financing activities, including the issuance of securities, incurrence of debt, payment of dividends, making contributions to the capital of the Borrower and guaranteeing the obligations of the Borrower, (vi) participating in tax, accounting and other administrative matters as a member of the consolidated group of Holdings and the Borrower, (vii) holding any cash or property (but not operating any property), (viii) providing
 
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indemnification to officers, managers and directors and (ix) any activities incidental to the foregoing. Holdings shall not incur any Liens on Equity Interests of the Borrower other than those for the benefit of the Obligations and Holdings shall not own any Equity Interests other than those of the Borrower.
ARTICLE VIII.
Events Of Default and Remedies
Section 8.01. Events of Default .
Any of the following from and after the Closing Date shall constitute an event of default (an “Event of Default”):
(a) Non-Payment. Any Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five (5) Business Days after the same becomes due, any interest on any Loan or any other amount payable hereunder or with respect to any other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in any of Sections 6.03(a) or 6.05(a) (solely with respect to the Borrower) or Article VII; provided that the covenants in Section 7.11(a) and (b) are subject to cure pursuant to Section 8.05; or
(c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after notice thereof by the Administrative Agent or the Required Lenders to the Borrower; or
(d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document required to be delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or
(e) Cross-Default. Any Loan Party or any Restricted Subsidiary (A) fails to make any payment beyond the applicable grace period with respect thereto, if any, (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (other than Indebtedness hereunder) having an outstanding aggregate principal amount of not less than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness, or any other event occurs (other than, with respect to Indebtedness consisting of Swap Agreements, termination events or equivalent events pursuant to the terms of such Swap Agreements), the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity; provided that this clause (e)(B) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness; provided further that such failure is unremedied and is not waived by the holders of such Indebtedness prior to any termination of the Revolving Credit Commitments or acceleration of the Loans pursuant to Section 8.02; or
(f) Insolvency Proceedings, Etc. Any Loan Party or any Restricted Subsidiary institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer for it or for all or any material
 
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part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Restricted Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of the Borrower and the Restricted Subsidiaries, taken as a whole, and is not released, vacated or fully bonded within sixty (60) days after its issue or levy; or
(h) Judgments. There is entered against any Loan Party or any Restricted Subsidiary a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer has been notified of such judgment or order and has not denied coverage) and such judgment or order shall not have been satisfied, vacated, discharged or stayed or bonded pending an appeal for a period of sixty (60) consecutive days; or
(i) Invalidity of Loan Documents. Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder (including as a result of a transaction permitted under Section 7.04 or 7.05) or as a result of acts or omissions by the Administrative Agent or Collateral Agent or any Lender or the satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in writing the validity or enforceability of any provision of any Loan Document; or any Loan Party denies in writing that it has any or further liability or obligation under any Loan Document (other than as a result of repayment in full of the Obligations and termination of the Aggregate Commitments), or purports in writing to revoke or rescind any Loan Document; or
(j) Change of Control. There occurs any Change of Control; or
(k) Collateral Documents. Any Collateral Document after delivery thereof pursuant to Section 6.11 or 6.13 shall for any reason (other than pursuant to the terms thereof including as a result of a transaction not prohibited under this Agreement) cease to create a valid and perfected Lien, with the priority required by the Collateral Documents on and security interest in any material portion of the Collateral purported to be covered thereby, subject to Liens permitted under Section 7.01, (i) except to the extent that any such perfection or priority is not required pursuant to the Collateral and Guarantee Requirement or results from the failure of the Administrative Agent or the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Documents or to file Uniform Commercial Code continuation statements and (ii) except as to Collateral consisting of Real Property to the extent that such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage; or
(l) ERISA. (i) An ERISA Event occurs which has resulted or could reasonably be expected to result in liability of a Loan Party or a Restricted Subsidiary in an aggregate amount which could reasonably be expected to result in a Material Adverse Effect, or (ii) a Loan Party, any Restricted Subsidiary or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount which could reasonably be expected to result in a Material Adverse Effect.
 
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Section 8.02. Remedies upon Event of Default
If any Event of Default occurs and is continuing, the Administrative Agent may and, at the request of the Required Lenders, shall take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and
(d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable Law;
provided that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
Section 8.03. Exclusion of Immaterial Subsidiaries
Solely for the purpose of determining whether a Default or Event of Default has occurred under clause (f) or (g) of Section 8.01, any reference in any such clause to any Restricted Subsidiary or Loan Party shall be deemed not to include any Restricted Subsidiary (an “Immaterial Subsidiary”) affected by any event or circumstances referred to in any such clause that did not, as of the last day of the most recent completed fiscal quarter of the Borrower, have assets with a fair market value in excess of 5% of the consolidated total assets of the Borrower and the Restricted Subsidiaries (it being agreed that all Restricted Subsidiaries affected by any event or circumstance referred to in any such clause shall be considered together, as a single consolidated Restricted Subsidiary, for purposes of determining whether the condition specified above is satisfied).
Section 8.04. Application of Funds
After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order (to the fullest extent permitted by mandatory provisions of applicable Law):
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than principal and interest, but including Attorney Costs payable under Section 10.04 and amounts payable under Article III) payable to the Administrative Agent or the Collateral Agent in its capacity as such;
 
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Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs payable under Section 10.04 and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and unpaid interest and fees on the Loans, Commitments, Letters of Credit and L/C Borrowings, and any fees, premiums and scheduled periodic payments due under Cash Management Obligations or Secured Hedge Agreements, ratably among the Secured Parties in proportion to the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings (including to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit), and any breakage, termination or other payments under Cash Management Obligations or Secured Hedge Agreements, ratably among the Secured Parties in proportion to the respective amounts described in this clause Fourth held by them;
Fifth, to the payment of all other Obligations of the Borrower that are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative Agent and the other Secured Parties on such date; and
Last, the balance, if any, after all of the Obligations have been paid in full, to the Borrower or as otherwise required by Law.
Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above and, if no Obligations remain outstanding, to the Borrower as applicable.
Section 8.05. Borrower’s Right to Cure
(a) Notwithstanding anything to the contrary contained in Section 8.01 or 8.02, in the event of any Event of Default or potential Event of Default under the covenants set forth in Sections 7.11(a) and/or (b) and at any time until the expiration of the tenth (10th) day after the date on which financial statements are required to be delivered with respect to the applicable fiscal quarter hereunder, the Investors may make a Specified Equity Contribution to Holdings, and Holdings may apply the amount of the net cash proceeds thereof to increase Consolidated EBITDA with respect to such applicable quarter; provided that such net cash proceeds (i) are actually received by the Borrower as cash common equity (including through capital contribution of such net cash proceeds to the Borrower) no later than ten (10) days after the date on which financial statements are required to be delivered with respect to such fiscal quarter hereunder and (ii) are Not Otherwise Applied. The parties hereby acknowledge that this Section 8.05(a) may not be relied on for purposes of calculating any financial ratios other than as applicable to Section 7.11 and shall not result in any adjustment to any amounts other than the amount of the Consolidated EBITDA referred to in the immediately preceding sentence.
(b) (i) In each period of four consecutive fiscal quarters, there shall be at least two fiscal quarters in which no Specified Equity Contribution is made, (ii) no more than three Specified Equity Contributions will be made in the aggregate during the term of this Agreement, (iii) the amount of any Specified Equity Contribution shall be no more than the amount required to cause the Borrower to be in Pro Forma Compliance with Section 7.11(a) and/or (b) for any applicable period and (iv) there shall be no pro forma
 
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reduction in Indebtedness with the proceeds of any Specified Equity Contribution for determining compliance with Sections 7.11(a) and/or (b) for the fiscal quarter immediately prior to the fiscal quarter in which such Specified Equity Contribution was made.
ARTICLE IX.
Administrative Agent and Other Agents
Section 9.01. Appointment and Authorization of Agents
(a) Each Lender hereby irrevocably appoints, designates and authorizes each of the Administrative Agent and the Collateral Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, neither the Administrative Agent nor the Collateral Agent shall have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent or the Collateral Agent have or be deemed to have any fiduciary relationship with any Lender or Participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent or the Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.
(b) Each L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and each such L/C Issuer shall have all of the benefits and immunities (i) provided to the Agents in this Article IX with respect to any acts taken or omissions suffered by such L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term “Agent” as used in this Article IX and in the definition of “Agent-Related Person” included such L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to such L/C Issuer.
(c) Each of the Secured Parties hereby irrevocably appoints and authorizes the Collateral Agent to act as the agent of (and to hold any security interest created by the Collateral Documents for and on behalf of or in trust for) such Secured Party for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent (and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.02 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Collateral Agent), shall be entitled to the benefits of all provisions of this Article IX (including, Section 9.07, as though such co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the Loan Documents) as if set forth in full herein with respect thereto.
Section 9.02. Delegation of Duties
Each of the Administrative Agent and the Collateral Agent may execute any of its duties under this Agreement or any other Loan Document (including for purposes of holding or enforcing any Lien on the
 
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Collateral (or any portion thereof) granted under the Collateral Documents or of exercising any rights and remedies thereunder) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or sub-agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct (as determined in the final non-appealable judgment of a court of competent jurisdiction).
Section 9.03. Liability of Agents .
No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct, as determined by the final non-appealable judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or Participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent or the Collateral Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or the perfection or priority of any Lien or security interest created or purported to be created under the Collateral Documents, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof.
Section 9.04. Reliance by Agents .
(a) Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by such Agent. Each Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.
(b) For purposes of determining compliance with the conditions specified in Section 4.01 with respect to Credit Extensions on the Closing Date or Section 4.02, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
 
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Section 9.05. Notice of Default .
The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default and stating that such notice is a “notice of default.” The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to any Event of Default as may be directed by the Required Lenders in accordance with Article VIII; provided that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable or in the best interest of the Lenders.
Section 9.06. Credit Decision; Disclosure of Information by Agents .
Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by any Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to each Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by any Agent herein, such Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their Affiliates which may come into the possession of any Agent-Related Person.
Section 9.07. Indemnification of Agents .
Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Agent-Related Person’s own gross negligence or willful misconduct, as determined by the final non-appealable judgment of a court of competent jurisdiction; provided that no action taken in accordance with the directions of the Required Lenders (or such other number or percentage of the Lenders as shall be required by the Loan Documents) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section 9.07; provided further that any obligation to indemnify an L/C Issuer pursuant to this
 
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Section 9.07 shall be limited to Revolving Credit Lenders only. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Liabilities, this Section 9.07 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limitation of the foregoing, each Lender shall reimburse each of the Administrative Agent and the Collateral Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent or the Collateral Agent, as the case may be, in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent or the Collateral Agent, as the case may be, is not reimbursed for such expenses by or on behalf of the Loan Parties. The undertaking in this Section 9.07 shall survive termination of the Aggregate Commitments, the payment of all other Obligations and the resignation of the Administrative Agent or the Collateral Agent, as the case may be.
Section 9.08. Agents in Their Individual Capacities .
Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire Equity Interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Borrower and its respective Affiliates as though Bank of America were not the Administrative Agent, the Collateral Agent or an L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding the Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such Affiliate) and acknowledge that neither the Administrative Agent nor the Collateral Agent shall be under any obligation to provide such information to them. With respect to its Loans, Bank of America and its Affiliates shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent, the Collateral Agent or an L/C Issuer, and the terms “Lender” and “Lenders” include Bank of America in its individual capacity. Any successor to Bank of America as the Administrative Agent or the Collateral Agent shall also have the rights attributed to Bank of America under this paragraph.
Section 9.09 . Successor Agents .
Each of the Administrative Agent and the Collateral Agent may resign as the Administrative Agent or the Collateral Agent, as applicable, upon thirty (30) days’ notice to the Lenders and the Borrower and if either the Administrative Agent or the Collateral Agent is a Defaulting Lender, the Borrower may remove such Defaulting Lender from such role upon fifteen (15) days’ notice to the Lenders. If the Administrative Agent or the Collateral Agent resigns under this Agreement or is removed by the Borrower, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default under Section 8.01(f) or (g) (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor agent is appointed prior to the effective date of the resignation or removal of the Administrative Agent or the Collateral Agent, as applicable, the Administrative Agent or the Collateral Agent, as applicable in the case of a resignation, and the Borrower, in the case of a removal, may appoint, after consulting with the Lenders and the Borrower (in the case of a resignation), a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, the Person acting as such successor agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent or retiring Collateral Agent and the term “Administrative Agent” or “Collateral Agent” shall mean such successor administrative agent or collateral agent and/or Supplemental Agent, as the case may be, and the retiring Administrative Agent’s or Collateral Agent’s appointment, powers and duties as the Administrative Agent or Collateral Agent shall be terminated. After the retiring Administrative Agent’s or the Collateral Agent’s resignation or removal hereunder as the Administrative Agent or Collateral
 
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Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent or Collateral Agent under this Agreement. If no successor agent has accepted appointment as the Administrative Agent or the Collateral Agent by the date which is thirty (30) days following the retiring Administrative Agent’s or Collateral Agent’s notice of resignation or fifteen (15) days following the Borrower’s notice of removal, the retiring Administrative Agent’s or the retiring Collateral Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent or Collateral Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. Upon the acceptance of any appointment as the Administrative Agent or Collateral Agent hereunder by a successor and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to (a) continue the perfection of the Liens granted or purported to be granted by the Collateral Documents or (b) otherwise ensure that Section 6.11 is satisfied, the Administrative Agent or Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges, and duties of the retiring Administrative Agent or Collateral Agent, and the retiring Administrative Agent or Collateral Agent shall be discharged from its duties and obligations under the Loan Documents. After the retiring Administrative Agent’s or Collateral Agent’s resignation hereunder as the Administrative Agent or the Collateral Agent, the provisions of this Article IX shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent or the Collateral Agent.
Section 9.10. Administrative Agent May File Proofs of Claim
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower or the Collateral Agent) shall be (to the fullest extent permitted by mandatory provisions of applicable Law) entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Collateral Agent and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Collateral Agent and the Administrative Agent and their respective agents and counsel and all other amounts due to the Lenders, the Collateral Agent and the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 10.04) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, curator, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent or the Collateral Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent or the Collateral Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agents and their respective agents and counsel, and any other amounts due the Administrative Agent or the Collateral Agent under Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
 
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Section 9.11. Collateral and Guaranty Matters
The Lenders irrevocably agree:
(a) that any Lien on any property granted to or held by the Administrative Agent or the Collateral Agent under any Loan Document shall be automatically released (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (x) Cash Management Obligations or obligations under Secured Hedge Agreements not yet due and payable and (y) contingent obligations not yet accrued and payable) and the expiration or termination or Cash Collateralization of all Letters of Credit, (ii) at the time the property subject to such Lien is Disposed or to be substantially simultaneously Disposed as part of or in connection with any Disposition permitted hereunder or under any other Loan Document to any Person other than a Person required to grant a Lien to the Administrative Agent or the Collateral Agent under the Loan Documents (or, if such transferee is a Person required to grant a Lien to the Administrative Agent or the Collateral Agent on such asset, at the option of the applicable Loan Party, such Lien on such asset may still be released in connection with the transfer so long as (x) the transferee grants a new Lien to the Administrative Agent or Collateral Agent on such asset substantially concurrently with the transfer of such asset, (y) the transfer is between parties organized under the laws of different jurisdictions and the transferee is a Foreign Subsidiary and (z) the priority of the new Lien is the same as that of the original Lien), (iii) subject to Section 10.01, if the release of such Lien is approved, authorized or ratified in writing by the Required Lenders or (iv) if the property subject to such Lien is owned by a Guarantor, upon release of such Guarantor from its obligations under its Guaranty pursuant to clause (c) below;
(b) the Collateral Agent is authorized to release any Lien on any property granted to or held by the Collateral Agent under any Loan Document on any assets that are excluded from the Collateral;
(c) that any Guarantor shall be automatically released from its obligations under the Guaranty if such Person ceases to be a Restricted Subsidiary or becomes an Excluded Subsidiary (other than pursuant to (i) clause (a) of the definition thereof unless such Restricted Subsidiary ceases to be a Restricted Subsidiary or (ii) clause (b) of the definition thereof unless, in the case of this subclause (ii), the Borrower delivers a written request to the Administrative Agent for such release and no Default has occurred and is continuing at such time) as a result of a transaction or designation permitted hereunder; provided that no such release shall occur if such Guarantor continues to be a guarantor in respect of the Mezzanine Debt or any Junior Financing; and
(d) (x) the Collateral Agent may, without any further consent of any Lender, enter into or amend (i) a First Lien Intercreditor Agreement with the collateral agent or other representatives of the holders of Permitted Notes issued pursuant to Section 7.03(s) that are intended to be secured on a pari passu basis with the Obligations and/or (ii) a Second Lien Intercreditor Agreement with the collateral agent or other representatives of the holders of Indebtedness that is permitted to be secured by a Lien on the Collateral ranking junior to the Lien securing the Obligations that is permitted by Section 7.03, (y) the Collateral Agent may rely exclusively on a certificate of a Responsible Officer of the Borrower as to whether any such other Liens are permitted and (z) any First Lien Intercreditor Agreement or Second Lien Intercreditor Agreement entered into by the Collateral Agent shall be binding on the Secured Parties.
Upon request by the Administrative Agent or the Collateral Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s or the Collateral Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.11. In each case as specified in this Section 9.11, the
 
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Administrative Agent or the Collateral Agent will (and each Lender irrevocably authorizes the Administrative Agent and the Collateral Agent to), at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as the Borrower may reasonably request to evidence the release or subordination of such item of Collateral from the assignment and security interest granted under the Collateral Documents, or to evidence the release of such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.11.
Section 9.12. Other Agents; Arrangers and Managers .
None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a “syndication agent,” “documentation agent,” “joint bookrunner” or “arranger” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.
Section 9.13. Appointment of Supplemental Agents .
(a) It is the purpose of this Agreement and the other Loan Documents that there shall be no violation of any Law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as agent or trustee in such jurisdiction. It is recognized that in case of litigation under this Agreement or any of the other Loan Documents, and in particular in case of the enforcement of any of the Loan Documents, or in case the Administrative Agent or the Collateral Agent deems that by reason of any present or future Law of any jurisdiction it may not exercise any of the rights, powers or remedies granted herein or in any of the other Loan Documents or take any other action which may be desirable or necessary in connection therewith, the Administrative Agent and the Collateral Agent are hereby authorized to appoint an additional individual or institution selected by the Administrative Agent or the Collateral Agent in its sole discretion as a separate trustee, co-trustee, administrative agent, collateral agent, administrative sub-agent or administrative co-agent (any such additional individual or institution being referred to herein individually as a “Supplemental Agent” and collectively as “Supplemental Agents”).
(b) In the event that the Collateral Agent appoints a Supplemental Agent with respect to any Collateral, (i) each and every right, power, privilege or duty expressed or intended by this Agreement or any of the other Loan Documents to be exercised by or vested in or conveyed to the Collateral Agent with respect to such Collateral shall be exercisable by and vest in such Supplemental Agent to the extent, and only to the extent, necessary to enable such Supplemental Agent to exercise such rights, powers and privileges with respect to such Collateral and to perform such duties with respect to such Collateral, and every covenant and obligation contained in the Loan Documents and necessary to the exercise or performance thereof by such Supplemental Agent shall run to and be enforceable by either the Collateral Agent or such Supplemental Agent, and (ii) the provisions of this Article IX and of Sections 10.04 and 10.05 that refer to the Administrative Agent shall inure to the benefit of such Supplemental Agent and all references therein to the Collateral Agent shall be deemed to be references to the Collateral Agent and/or such Supplemental Agent, as the context may require.
(c) Should any instrument in writing from any Loan Party be required by any Supplemental Agent so appointed by the Administrative Agent or the Collateral Agent for more fully and certainly vesting in and confirming to it or its such rights, powers, privileges and duties, such Loan Party shall execute, acknowledge and deliver any and all such instruments promptly upon request by the Administrative Agent or the Collateral Agent. In case any Supplemental Agent, or a successor thereto, shall die, become
 
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incapable of acting, resign or be removed, all the rights, powers, privileges and duties of such Supplemental Agent, to the extent permitted by Law, shall vest in and be exercised by the Administrative Agent until the appointment of a new Supplemental Agent.
Section 9.14. Withholding Tax Indemnity .
(a) To the extent required by any applicable Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any other authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender for any reason (including, without limitation, because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Borrower pursuant to Section 3.01 and Section 3.04 and without limiting or expanding the obligation of the Borrower to do so) for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such tax was correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. The agreements in this Section 9.14 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Agreement and the repayment, satisfaction or discharge of all other Obligations.
ARTICLE X.
Miscellaneous
Section 10.01. Amendments, Etc .
Except as otherwise set forth in this Agreement, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, no such amendment, waiver or consent shall:
(a) extend or increase the Commitment of any Lender without the written consent of each Lender holding such Commitment (it being understood that a waiver of any condition precedent or of any Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender);
(b) postpone any date scheduled for, or reduce or forgive the amount of, any payment of principal or interest under Section 2.07 or 2.08 without the written consent of each Lender holding the applicable Obligation (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of the Term Loans shall not constitute a postponement of any date scheduled for the payment of principal or interest and it being understood that any change to the definition of “Secured Leverage Ratio” or in the component definitions thereof shall not constitute a reduction or forgiveness in any rate of interest);
(c) reduce or forgive the principal of, or the rate of interest specified herein on, any Loan, or L/C Borrowing, or (subject to clause (iii) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document (or change the timing of payments of such fees or
 
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other amounts) without the written consent of each Lender holding such Loan, L/C Borrowing or to whom such fee or other amount is owed (it being understood that any change to the definition of “Secured Leverage Ratio” or in the component definitions thereof shall not constitute a reduction or forgiveness in any rate of interest); provided that, only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate;
(d) change any provision of this Section 10.01, the definition of “Required Lenders,” without the written consent of each Lender, or the definition of “Required Class Lenders,” Section 8.04 or, following an exercise of remedies pursuant to Section 8.02(a), the definition of “Pro Rata Share” or Section 2.12(a), 2.12(g) or 2.13 without the written consent of each Lender directly affected thereby;
(e) other than in connection with a transaction permitted under Section 7.04 or 7.05, release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender;
(f) other than in connection with a transaction permitted under Section 7.04 or 7.05, release all or substantially all of the aggregate value of the Guarantees, without the written consent of each Lender;
(g) without the written consent of each Lender adversely affected thereby, amend the portion of the definition of “Interest Period” that reads as follows: “one, two, three or six months thereafter or, to the extent agreed by each Lender of such Eurocurrency Rate Loan, nine or twelve months or less than one month thereafter”; or
(h) waive or modify any mandatory prepayment of the Term Loans required under Section 2.05 without the written consent of the Required Class Lenders;
and provided further that (i) no amendment, waiver or consent shall, unless in writing and signed by each L/C Issuer in addition to the Lenders required above, affect the rights or duties of an L/C Issuer under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by a Swing Line Lender in addition to the Lenders required above, affect the rights or duties of such Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or the Collateral Agent, as applicable, in addition to the Lenders required above, affect the rights or duties of, or any fees or other amounts payable to, the Administrative Agent or the Collateral Agent, as applicable, under this Agreement or any other Loan Document; and (iv) Section 10.07(h) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification.
Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and the Revolving Credit Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders. Notwithstanding the foregoing, this Agreement may be amended to adjust the borrowing mechanics related to Swing Line Loans with only the written consent of the Administrative Agent, the applicable Swing Line Lender(s) and the Borrower so long as the obligations of the Revolving Credit Lenders and, if applicable, the other Swing Line Lender are not affected thereby.
In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the Replacement Term Loans (as defined below) to permit the refinancing of all outstanding Term Loans of any Class (“Refinanced Term
 
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Loans”) with a replacement term loan tranche denominated in Dollars (“Replacement Term Loans”) hereunder; provided that (a) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of such Refinanced Term Loans, (b) the Applicable Rate for such Replacement Term Loans shall not be higher than the Applicable Rate for such Refinanced Term Loans, (c) the Weighted Average Life to Maturity of Replacement Term Loans shall not be shorter than the Weighted Average Life to Maturity of such Refinanced Term Loans, at the time of such refinancing (except to the extent of nominal amortization for periods where amortization has been eliminated as a result of prepayment of the applicable Term Loans) and (d) all other terms applicable to such Replacement Term Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Term Loans, than those applicable to such Refinanced Term Loans except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Term Loans in effect immediately prior to such refinancing.
Notwithstanding the foregoing, technical and conforming modifications to the Loan Documents may be made with the consent of the Borrower and the Administrative Agent to the extent necessary to integrate any Refinancing Term Loans, any Extended Term Loans or any Replacement Revolving Loans on substantially the same basis as the Term Loans or Revolving Loans, as applicable.
Anything herein to the contrary notwithstanding, during such period as a Lender is a Defaulting Lender, to the fullest extent permitted by applicable law, such Lender will not be entitled to vote in respect of amendments, waivers and consents hereunder and the Commitment and the outstanding Loans or other extensions of credit of such Lender hereunder will not be taken into account in determining whether the Required Class Lenders, the Required Lenders or all of the Lenders, as required, have approved any such amendment, waiver or consent (and the definitions of “Required Class Lenders” and “Required Lenders” will automatically be deemed modified accordingly for the duration of such period); provided that any such amendment or waiver that would increase or extend the term of the Commitment of such Defaulting Lender, extend the date fixed for the payment of principal or interest owing to such Defaulting Lender hereunder, reduce the principal amount of any obligation owing to such Defaulting Lender, reduce the amount of or the rate or amount of interest on any amount owing to such Defaulting Lender or of any fee payable to such Defaulting Lender hereunder, or alter the terms of this proviso, will require the consent of such Defaulting Lender.
Notwithstanding anything to the contrary contained in this Section 10.01, the Borrower and the Administrative Agent may without the input or consent of the Lenders, effect amendments to this Agreement and the other Loan Documents as may be necessary or appropriate in the opinion of the Administrative Agent to effect the provisions of Section 2.14.
Notwithstanding anything to the contrary contained in this Section 10.01, guarantees, collateral security documents and related documents executed by Subsidiaries in connection with this Agreement may be in a form reasonably determined by the Administrative Agent and may be, together with this Agreement, amended, supplemented and waived with the consent of the Administrative Agent at the request of the Borrower without the need to obtain the consent of any other Lender if such amendment, supplement or waiver is delivered in order (i) to comply with local Law or advice of local counsel, (ii) to cure ambiguities, omissions, mistakes or defects or (iii) to cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents.
Section 10.02. Notices and Other Communications; Facsimile Copies .
(a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder or under any other Loan Document shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Borrower or the Administrative Agent, the Collateral Agent, an L/C Issuer or a Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower and the Administrative Agent, the Collateral Agent, an L/C Issuer or a Swing Line Lender.
 
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All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four (4) Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of Section 10.02(d)), when delivered; provided that notices and other communications to the Administrative Agent, the Collateral Agent, an L/C Issuer and a Swing Line Lender pursuant to Article II shall not be effective until actually received by such Person. In no event shall a voice mail message be effective as a notice, communication or confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile or other electronic communication. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually signed originals and shall be binding on all Loan Parties, the Agents and the Lenders.
(c) Reliance by Agents and Lenders. The Administrative Agent, the Collateral Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower in the absence of gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction. All telephonic notices to the Administrative Agent or Collateral Agent may be recorded by the Administrative Agent or the Collateral Agent, and each of the parties hereto hereby consents to such recording.
(d) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or
 
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intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
Section 10.03. No Waiver; Cumulative Remedies .
No failure by any Lender or the Administrative Agent or the Collateral Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.
Section 10.04. Attorney Costs and Expenses .
The Borrower agrees (a) if the Closing Date occurs, to pay or reimburse the Administrative Agent, the Collateral Agent, the Co-Syndication Agents and the Arrangers for all reasonable out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, syndication and execution of this Agreement and the other Loan Documents, and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby (including all Attorney Costs, which shall be limited to Cahill Gordon & Reindel LLP (and one local counsel in each applicable jurisdiction and, in the event of a conflict of interest, one additional counsel of each type to the affected parties)) and (b) from and after the Closing Date, to pay or reimburse the Administrative Agent, the Collateral Agent, the Co-Syndication Agents, the Arrangers and each Lender for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Law, and including all respective Attorney Costs, which shall be limited to Attorney Costs of one counsel to the Administrative Agent and Joint Bookrunners (and one local counsel in each applicable jurisdiction and, in the event of any conflict of interest, one additional counsel of each type to the affected parties)). The foregoing costs and expenses shall include all reasonable search, filing, recording and title insurance charges and fees related thereto, and other reasonable out-of-pocket expenses incurred by any Agent. The agreements in this Section 10.04 shall survive the termination of the Aggregate Commitments and repayment of all other Obligations. All amounts due under this Section 10.04 shall be paid within ten (10) Business Days of receipt by the Borrower of an invoice relating thereto setting forth such expenses in reasonable detail; provided that, with respect to the Closing Date, all amounts due under this Section 10.04 shall be paid on the Closing Date solely to the extent invoiced to the Borrower within three (3) Business Days of the Closing Date. If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it hereunder or under any Loan Document, such amount may be paid on behalf of such Loan Party by the Administrative Agent in its sole discretion.
Section 10.05. Indemnification by the Borrower .
Whether or not the transactions contemplated hereby are consummated, from and after the Closing Date, the Borrower shall indemnify and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, and directors, officers, employees, counsel, agents, trustees, investment advisors and
 
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attorneys-in-fact of each of the foregoing (collectively the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs which shall be limited to Attorney Costs of one counsel to the Administrative Agent and the Joint Bookrunners and one counsel to the other Lenders (and one local counsel in each applicable jurisdiction and, in the event of any actual conflict of interest, one additional counsel of each type to the affected parties)) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom including any refusal by an L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit, or (c) any actual or alleged presence or Release of Hazardous Materials at, on, under or from any property or facility currently or formerly owned, leased or operated by the Loan Parties or any Subsidiary, or any Environmental Liability related in any way to any Loan Parties or any Subsidiary, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”) in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that, notwithstanding the foregoing, such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements resulted from (x) the gross negligence, bad faith or willful misconduct of such Indemnitee or of any affiliate, director, officer, employee, counsel, agent or attorney-in-fact of such Indemnitee, as determined by the final non-appealable judgment of a court of competent jurisdiction or (y) a material breach of its obligations under the Loan Documents by such Indemnitee or of any affiliate, director, officer, employee, counsel, agent or attorney-in-fact of such Indemnitee as determined by the final non-appealable judgment of a court of competent jurisdiction. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnitee or the Borrower or any Subsidiary have any liability for any special, punitive, indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 10.05 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, any Subsidiary of any Loan Party, any Loan Party’s directors, stockholders or creditors or an Indemnitee or any other Person, whether or not any Indemnitee is otherwise a party thereto and whether or not any of the transactions contemplated hereunder or under any of the other Loan Documents are consummated. All amounts due under this Section 10.05 shall be paid within ten (10) Business Days after demand therefor; provided, however, that such Indemnitee shall promptly refund such amount to the extent that there is a final judicial or arbitral determination that such Indemnitee was not entitled to indemnification rights with respect to such payment pursuant to the express terms of this Section 10.05. The agreements in this Section 10.05 shall survive the resignation of the Administrative Agent or the Collateral Agent, the replacement of, or assignment of rights by, any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations. For the avoidance of doubt, any indemnification relating to Taxes, other than Taxes resulting from any non-Tax claim, shall be covered by Sections 3.01 and 3.04 and shall not be covered by this Section 10.05.
Section 10.06. Payments Set Aside .
To the extent that any payment by or on behalf of the Borrower is made to any Agent or any Lender, or any Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required
 
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(including pursuant to any settlement entered into by such Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall, to the fullest extent possible under provisions of applicable Law, be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by any Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect.
Section 10.07. Successors and Assigns .
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (except as permitted by Section 7.04) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Assignee pursuant to an assignment made in accordance with the provisions of Section 10.07(b) (such an assignee, an “Eligible Assignee”), (ii) by way of participation in accordance with the provisions of Section 10.07(e), (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.07(g) or (iv) to an SPC in accordance with the provisions of Section 10.07(h) (and any other attempted assignment or transfer by any party hereto shall be null and void); Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 10.07(e) and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (“Assignees”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this Section 10.07(b), participations in L/C Obligations and in Swing Line Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower shall be required for (i) an assignment of all or a portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund, (ii) an assignment related to Revolving Credit Commitments or Revolving Credit Exposure to a Revolving Credit Lender or an Affiliate of a Revolving Credit Lender or an Approved Fund of a Revolving Credit Lender or (iii) if an Event of Default under Section 8.01(a), (f) or (g) has occurred and is continuing, any Assignee;
(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan to a Lender or an Approved Fund;
(C) each Principal L/C Issuer at the time of such assignment, provided that no consent of the Principal L/C Issuers shall be required for any assignment not related to Revolving Credit Commitments or Revolving Credit Exposure or any assignment to an Agent or an Affiliate of an Agent; and
(D) the Swing Line Lenders; provided that no consent of a Swing Line Lender shall be required for any assignment not related to Revolving Credit Commitments or Revolving Credit Exposure or any assignment to an Agent or an Affiliate of an Agent.
Notwithstanding the foregoing or anything to the contrary set forth herein, any assignment of any Loans or Commitments to a Purchasing Borrower Party or a Non-Debt Fund Affiliate shall also be subject to the requirements set forth in Section 10.07(k).
 
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(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than an amount of $5,000,000 (in the case of each Revolving Credit Loan) or $1,000,000 (in the case of a Term Loan), and shall be in increments of an amount of $1,000,000 in excess thereof unless each of the Borrower and the Administrative Agent otherwise consents, provided that such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Administrative Agent, in its sole discretion, may elect to waive such processing and recordation fee; and
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
This paragraph (b) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Facilities on a non-pro rata basis among such Facilities.
(c) Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 10.07(d), from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, and the surrender by the assigning Lender of its Note, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this clause (c) shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.07(e).
(d) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and related interest amounts) of the Loans, L/C Obligations (specifying the Unreimbursed Amounts), L/C Borrowings and the amounts due under Section 2.03, owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Agents and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, any Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(e) Any Lender may at any time sell participations to any Person (other than a natural person, Holdings or any of its Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such
 
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Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement or the other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that requires the affirmative vote of such Lender. Subject to Section 10.07(f), the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 (subject to the requirements and limitations of such Sections, including the requirement to provide the forms and certificates pursuant to Section 3.01(d)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.07(c). To the extent permitted by applicable Law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. The Loan Parties and each Non-Debt Fund Affiliate (by its acquisition of a participation in any Lender’s rights and/or obligations under this Agreement) hereby agree that if a case under Title 11 of the United States Code is commenced against any Loan Party, to the extent that any Non-Debt Fund Affiliate would have the right to direct any Participant with respect to any vote with respect to any plan of reorganization with respect to any Loan Party (or to directly vote on such plan of reorganization) as a result of any participation taken by such Non-Debt Fund Affiliate pursuant to this Section 10.07(e), such Loan Party shall seek (and each Non-Debt Fund Affiliate shall consent) to provide that the vote of any Non-Debt Fund Affiliate (in its capacity as a Participant) with respect to any plan of reorganization of such Loan Party shall not be counted except that such Non-Debt Fund Affiliate’s vote (in its capacity as a Participant) may be counted to the extent any such plan of reorganization proposes to treat the participation in any Obligations held by such Non-Debt Fund Affiliate in a manner that is less favorable in any material respect to such Non-Debt Fund Affiliate than the proposed treatment of similar Obligations held by Lenders or Participants that are not Affiliates of the Borrower. Each Non-Debt Fund Affiliate hereby irrevocably appoints the Administrative Agent (such appointment being coupled with an interest) as such Non-Debt Fund Affiliate’s attorney-in-fact, with full authority in the place and stead of such Non-Debt Fund Affiliate and in the name of such Non-Debt Fund Affiliate, from time to time in the Administrative Agent’s discretion to take any action and to execute any instrument that the Administrative Agent may deem reasonably necessary to carry out the provisions of this paragraph.
(f) A Participant shall not be entitled to receive any greater payment under Section 3.01, 3.04 or 3.05 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.
(g) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(h) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. Each party hereto hereby agrees that (i) an SPC shall be entitled to the benefit of Sections 3.01, 3.04 and 3.05 (subject to the requirements and the
 
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limitations of such Sections, including the requirement to provide the forms and certificates pursuant to Section 3.01(d)), but neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement, unless the grant to the SPC was made with the prior written consent of the Borrower, not to be unreasonably withheld or delayed (for the avoidance of doubt, the Borrower shall have reasonable basis for withholding consent if an exercise by SPC immediately after the grant would result in materially increased indemnification obligation to the Borrower at such time), (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and with the payment of a processing fee of $3,500, assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.
(i) Notwithstanding anything to the contrary contained herein, without the consent of the Borrower or the Administrative Agent, (1) any Lender may in accordance with applicable Law create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it and (2) any Lender that is a Fund may create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities; provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 10.07, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.
(j) Notwithstanding anything to the contrary contained herein, any L/C Issuer or Swing Line Lender may, upon thirty (30) days’ notice to the Borrower and the Lenders, resign as an L/C Issuer or Swing Line Lender, respectively; provided that on or prior to the expiration of such 30-day period with respect to such resignation, the relevant L/C Issuer or Swing Line Lender shall have identified a successor L/C Issuer or Swing Line Lender reasonably acceptable to the Borrower willing to accept its appointment as successor L/C Issuer or Swing Line Lender, as applicable. In the event of any such resignation of an L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders willing to accept such appointment a successor L/C Issuer or Swing Line Lender hereunder; provided that no failure by the Borrower to appoint any such successor shall affect the resignation of the relevant L/C Issuer or the Swing Line Lender, as the case may be, except as expressly provided above. If an L/C Issuer resigns as an L/C Issuer, it shall retain all the rights and obligations of an L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If the Swing Line Lender resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans, Eurocurrency Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c).
(k) (i) Notwithstanding anything else to the contrary contained in this Agreement, any Lender may assign all or a portion of its Term Loans to any Non-Debt Fund Affiliate or Purchasing Borrower Party in accordance with Section 10.07(b); provided that:
(A) no Default or Event of Default has occurred or is continuing or would result therefrom;
 
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(B) the assigning Lender and Non-Debt Fund Affiliate or Purchasing Borrower Party purchasing such Lender’s Term Loans, as applicable, shall execute and deliver to the Administrative Agent an assignment agreement substantially in the form of Exhibit M hereto (an “Affiliated Lender Assignment and Assumption”) in lieu of an Assignment and Assumption;
(C) for the avoidance of doubt, Lenders shall not be permitted to assign Revolving Credit Commitments or Revolving Credit Loans to any Purchasing Borrower Party or Non-Debt Fund Affiliate;
(D) any Term Loans assigned to any Purchasing Borrower Party shall be automatically and permanently cancelled for upon the effectiveness of such assignment and will thereafter no longer be outstanding for any purpose hereunder;
(E) (i) no Purchasing Borrower Party may use the proceeds from Revolving Credit Loans or Swing Line Loans to purchase any Term Loans and (ii) Term Loans may only be purchased by a Purchaser Borrowing Party if, after giving effect to any such purchase, the sum of (x) the excess of the aggregate Revolving Credit Commitments at such time less the aggregate Revolving Credit Exposure plus (y) the amount of unrestricted cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries shall be not less than $50,000,000; and
(F) no Term Loan may be assigned to a Non-Debt Fund Affiliates pursuant to this Section 10.07(k), if after giving effect to such assignment, Non-Debt Fund Affiliates in the aggregate would own in excess of 25% of all Term Loans then outstanding.
(ii) Notwithstanding anything to the contrary in this Agreement, no Non-Debt Fund Affiliate shall have any right to (i) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Loan Parties are not invited, and (ii) receive any information or material prepared by Administrative Agent or any Lender or any communication by or among Administrative Agent and/or one or more Lenders, except to the extent such information or materials have been made available to any Loan Party or its representatives (and in any case, other than the right to receive notices of prepayments and other administrative notices in respect of its Loans required to be delivered to Lenders pursuant to Article II), or (iii) make or bring (or participate in, other than as a passive participant in or recipient of its pro rata benefits of) any claim, in its capacity as a Lender, against Administrative Agent, the Collateral Agent or any other Lender with respect to any duties or obligations or alleged duties or obligations of such Agent or any other such Lender under the Loan Documents.
(l) Notwithstanding anything in Section 10.01 or the definition of “Required Lenders” or “Required Class Lenders” to the contrary, for purposes of determining whether the Required Lenders or the Required Class Lenders have (i) consented (or not consented) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Loan Document or any departure by any Loan Party therefrom, (ii) otherwise acted on any matter related to any Loan Document, or (iii) directed or required the Administrative Agent, Collateral Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document:
(x) all Term Loans held by any Non-Debt Fund Affiliate shall be deemed to be not outstanding for all purposes of calculating whether the Required Lenders or Required Class Lenders have taken any actions; and
(y) all Term Loans, Revolving Credit Commitments and Revolving Credit Exposure held by Debt Fund Affiliates may not account for more than 50% of the Term Loans, Revolving Credit Commitments and Revolving Credit Exposure of consenting Lenders included in determining whether the Required Lenders or the Required Class Lender have consented to any action pursuant to Section 10.01.
 
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Additionally, the Loan Parties and each Non-Debt Fund Affiliate hereby agree that if a case under Title 11 of the United States Code is commenced against any Loan Party, such Loan Party shall seek (and each Non-Debt Fund Affiliate shall consent) to provide that the vote of any Non-Debt Fund Affiliate (in its capacity as a Lender) with respect to any plan of reorganization of such Loan Party shall not be counted except that such Non-Debt Fund Affiliate’s vote (in its capacity as a Lender) may be counted to the extent any such plan of reorganization proposes to treat the Obligations held by such Non-Debt Fund Affiliate in a manner that is less favorable in any material respect to such Non-Debt Fund Affiliate than the proposed treatment of similar Obligations held by Lenders that are not Affiliates of the Borrower. Each Non-Debt Fund Affiliate hereby irrevocably appoints the Administrative Agent (such appointment being coupled with an interest) as such Non-Debt Fund Affiliate’s attorney-in-fact, with full authority in the place and stead of such Non-Debt Fund Affiliate and in the name of such Non-Debt Fund Affiliate, from time to time in the Administrative Agent’s discretion to take any action and to execute any instrument that the Administrative Agent may deem reasonably necessary to carry out the provisions of this paragraph.
Section 10.08. Confidentiality .
Each of the Agents and the Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (a) to its Affiliates and its and its Affiliates’ managers, administrators, directors, officers, employees, trustees, partners, investors, investment advisors and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any Governmental Authority or self regulatory authority having or asserting jurisdiction over such Person (including any Governmental Authority regulating any Lender or its Affiliates); (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) subject to an agreement containing provisions substantially the same as those of this Section 10.08 (or as may otherwise be reasonably acceptable to the Borrower), to any pledgee referred to in Section 10.07(g), counterparty to a Swap Contract, Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in any of its rights or obligations under this Agreement; (f) with the written consent of the Borrower; (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 10.08 or becomes available to the Administrative Agent, any Arranger, any Lender, the L/C Issuer or any of their respective Affiliates on a non-confidential basis from a source other than a Loan Party or any Investor or their respective related parties (so long as such source is not known to the Administrative Agent, such Arranger, such Lender, the L/C Issuer or any of their respective Affiliates to be bound by confidentiality obligations to any Loan Party); (h) to any Governmental Authority or examiner (including the National Association of Insurance Commissioners or any other similar organization) regulating any Lender; (i) to any rating agency when required by it (it being understood that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Information relating to Loan Parties and their Subsidiaries received by it from such Lender) or to the CUSIP Service Bureau or any similar organization; or (j) in connection with the exercise of any remedies hereunder, under any other Loan Document or the enforcement of its rights hereunder or thereunder. In addition, the Agents and the Lenders may disclose the existence of this Agreement and publicly available information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Commitments, and the Credit Extensions. For the purposes of this Section 10.08, “Information” means all information received from the Loan Parties relating to any Loan Party, its Affiliates or its Affiliates’ directors, managers, officers, employees, trustees, investment advisors or agents, relating to Holdings, the Borrower or any of their Subsidiaries or its business, other than any such information that is publicly available to any Agent, any L/C Issuer or any Lender prior to disclosure by any Loan Party other than as a result of a breach of this Section 10.08; provided that, in the case of information received from a Loan Party after the Closing Date, such information is clearly identified at the time of delivery as confidential or is delivered pursuant to Section 6.01, 6.02 or 6.03 hereof.
 
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Section 10.09. Setoff .
In addition to any rights and remedies of the Lenders provided by Law, upon the occurrence and during the continuance of any Event of Default, each Lender and its Affiliates (and the Collateral Agent, in respect of any unpaid fees, costs and expenses payable hereunder) is authorized at any time and from time to time, without prior notice to the Borrower, any such notice being waived by the Borrower (on its own behalf and on behalf of each Loan Party and each of its Subsidiaries) to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Indebtedness at any time owing by, such Lender and its Affiliates or the Collateral Agent to or for the credit or the account of the respective Loan Parties and their Subsidiaries against any and all Obligations owing to such Lender and its Affiliates or the Collateral Agent hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not such Agent or such Lender or Affiliate shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Administrative Agent, the Collateral Agent and each Lender under this Section 10.09 are in addition to other rights and remedies (including other rights of setoff) that the Administrative Agent, the Collateral Agent and such Lender may have at Law.
Section 10.10. Interest Rate Limitation .
Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If any Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by an Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
Section 10.11. Counterparts .
This Agreement and each other Loan Document may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier of an executed counterpart of a signature page to this Agreement and each other Loan Document shall be effective as delivery of an original executed counterpart of this Agreement and such other Loan Document. The Agents may also require that any such documents and signatures delivered by telecopier be confirmed by a manually signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any document or signature delivered by telecopier.
 
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Section 10.12. Integration; Termination .
This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Agents or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.
Section 10.13. Survival of Representations and Warranties .
All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by each Agent and each Lender, regardless of any investigation made by any Agent or any Lender or on their behalf and notwithstanding that any Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
Section 10.14. Severability .
If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 10.15. GOVERNING LAW .
THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(a) ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, EACH AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH LOAN PARTY, EACH AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS IN THE MANNER PROVIDED FOR NOTICES (OTHER THAN TELECOPIER) IN
 
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SECTION 10.02. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
Section 10.16. WAIVER OF RIGHT TO TRIAL BY JURY .
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 10.16 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 10.17. Binding Effect .
This Agreement shall become effective when it shall have been executed by the Loan Parties and the Administrative Agent shall have been notified by each Lender, the Swing Line Lenders and L/C Issuer that each such Lender, Swing Line Lender and L/C Issuer has executed it and thereafter shall be binding upon and inure to the benefit of the Loan Parties, each Agent and each Lender and their respective successors and assigns, in each case in accordance with Section 10.07 (if applicable) and except that no Loan Party shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders except as permitted by Section 7.04.
Section 10.18. USA Patriot Act .
Each Lender that is subject to the USA Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name, address and tax identification number of the Borrower and other information regarding the Borrower that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the USA Patriot Act. This notice is given in accordance with the requirements of the USA Patriot Act and is effective as to the Lenders and the Administrative Agent.
Section 10.19. No Advisory or Fiduciary Responsibility .
In connection with all aspects of each transaction contemplated hereby, each Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that (i) the facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial
 
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transaction between the Borrower and its Affiliates, on the one hand, and the Agents, the Arrangers and the Lenders, on the other hand, and the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof), (ii) in connection with the process leading to such transaction, each of the Agents, the Arrangers and the Lenders is and has been acting solely as a principal and except as expressly agreed in writing by the relevant parties, is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person, (iii) none of the Agents, the Arrangers or the Lenders has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto except as expressly agreed in writing by the relevant parties, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any Agent or Lender has advised or is currently advising the Borrower or any of its Affiliates on other matters) and none of the Agents, the Arrangers or the Lenders has any obligation to the Borrower or any of its Affiliates with respect to the financing transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents, (iv) the Agents, the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from, and may conflict with, those of the Borrower and its Affiliates, and none of the Agents, the Arrangers or the Lenders has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship and (v) the Agents, the Arrangers and the Lenders have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Loan Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate.
ARTICLE XI.
Guarantee
Section 11.01. The Guarantee .
Each Guarantor hereby jointly and severally with the other Guarantors guarantees, as a primary obligor and not as a surety to each Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of (i) the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code and (ii) any other Debtor Relief Laws) on the Loans made by the Lenders to, and the Notes, if any, held by each Lender of, the Borrower (other than such Guarantor), and all other Obligations from time to time owing to the Secured Parties by any Loan Party under any Loan Document or the Borrower or any Restricted Subsidiary under any Secured Hedge Agreement or any Cash Management Obligations, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”). The Guarantors hereby jointly and severally agree that if the Borrower or other Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.
Section 11.02. Obligations Unconditional .
The obligations of the Guarantors under Section 11.01 shall constitute a guaranty of payment and to the fullest extent permitted by applicable Law, are absolute, irrevocable and unconditional, joint and
 
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several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrower under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:
(i) at any time or from time to time, without notice to the Guarantors, to the extent permitted by Law, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or except as permitted pursuant to Section 11.09, any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien or security interest granted to, or in favor of, an L/C Issuer or any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected; or
(v) the release of any other Guarantor pursuant to Section 11.09 or otherwise.
The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and, to the extent permitted by Law, all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against the Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors waive, to the extent permitted by Law, any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrower and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against the Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.
 
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Section 11.03. Reinstatement .
The obligations of the Guarantors under this Article XI shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or other Loan Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.
Section 11.04. Subrogation; Subordination .
Each Guarantor hereby agrees that until the payment and satisfaction in full in cash of all Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 11.01, whether by subrogation or otherwise, against the Borrower or any other Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations. Any Indebtedness of any Loan Party permitted pursuant to Section 7.03(b)(ii) or 7.03(d) shall be subordinated to such Loan Party’s Obligations in the manner set forth in the Intercompany Note evidencing such Indebtedness.
Section 11.05. Remedies .
The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of the Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Section 8.02 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 8.02) for purposes of Section 11.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 11.01.
Section 11.06. Instrument for the Payment of Money .
Each Guarantor hereby acknowledges that the guarantee in this Article XI constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.
Section 11.07. Continuing Guarantee .
The guarantee in this Article XI is a continuing guarantee of payment, and shall apply to all Guaranteed Obligations whenever arising.
Section 11.08. General Limitation on Guarantee Obligations .
In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other Law
 
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affecting the rights of creditors generally, if the obligations of any Guarantor under Section 11.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 11.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount (after giving effect to the right of contribution established in Section 11.10) that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.
Section 11.09. Release of Guarantors .
If, in compliance with the terms and provisions of the Loan Documents, Equity Interests of any Subsidiary Guarantor (a “Transferred Guarantor”) are sold or otherwise transferred, following which transfer such Subsidiary Guarantor ceases to be a Subsidiary, such Transferred Guarantor shall, upon the consummation of such sale or transfer, be automatically released from its obligations under this Agreement (including under Section 10.05 hereof) and the other Loan Documents and, so long as the Borrower shall have provided the Agents such certifications or documents as any Agent shall reasonably request, the Collateral Agent shall take such actions as are necessary to effect the releases described in this Section 11.09.
When all Commitments hereunder have terminated, and all Loans or other Obligation hereunder which are accrued and payable have been paid or satisfied, and no Letter of Credit remains outstanding (except any Letter of Credit the Outstanding Amount of which the Obligations related thereto has been Cash Collateralized or for which a backstop letter of credit reasonably satisfactory to the applicable L/C Issuer has been put in place), this Agreement and the Guarantees made herein shall terminate with respect to all Obligations, except with respect to Obligations that expressly survive such repayment pursuant to the terms of this Agreement.
Section 11.10. Right of Contribution .
Each Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 11.04. The provisions of this Section 11.10 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Administrative Agent, the L/C Issuer, the Swing Line Lender and the Lenders, and each Subsidiary Guarantor shall remain liable to the Administrative Agent, the L/C Issuer, the Swing Line Lender and the Lenders for the full amount guaranteed by such Subsidiary Guarantor hereunder.
 
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SCHEDULE 1.01A
Commitments

Lender	  	Revolving Credit Commitment	 	  	Term Commitment	 	
Bank of America, N.A.	  	$	20,000,000.00	  	  	$	796,500,000.00	  	
Deutsche Bank Trust Company Americas	  	$	20,000,000.00	  	  	$	0	  	
Barclays Bank PLC	  	$	20,000,000.00	  	  	$	0	  	
Mizuho Corporate Bank, Ltd.	  	$	25,000,000.00	  	  	$	0	  	
GSLP I Offshore Holdings Fund A, L.P.	  	$	0	  	  	$	76,337,705.79	  	
GSLP I Offshore Holdings Fund B, L.P.	  	$	0	  	  	$	76,337,705.79	  	
GSLP I Offshore Holdings Fund C, L.P.	  	$	0	  	  	$	76,337,705.79	  	
GSLP I Onshore Holdings Fund, L.L.C.	  	$	0	  	  	$	20,986,882.63	  	
Goldentree Capital Opportunities, LP	  	$	0	  	  	$	3,500,000.00	  	
Compass Bank	  	$	15,000,000.00	  	  	$	0	  	
Sumitomo Mitsui Banking Corporation	  	$	10,000,000.00	  	  	$	0	  	
Raymond James Bank, FSB	  	$	10,000,000.00	  	  	$	0	  	
U.S. Bank National Association	  	$	10,000,000.00	  	  	$	0	  	
Credit Industriel et Commercial	  	$	10,000,000.00	  	  	$	0	  	

Total	  	$	140,000,000	  	  	$	1,050,000,000	  	

SCHEDULE 1.01B
Unrestricted Subsidiaries
None.

SCHEDULE 4.02(c)
Local Counsel Opinions

Loan Party	  	Jurisdiction	
		
Sea World of Florida LLC	  	Florida	

SCHEDULE 5.05
Certain Liabilities
Solely to the extent actually known as of the date hereof, losses and liabilities related to salt water escaping the Discovery Cove (Orlando, FL) reef attraction into the surrounding soil.

SCHEDULE 5.08
Ownership of Property
None.

SCHEDULE 5.09(a)
Environmental Matters
Solely to the extent actually known as of the date hereof, losses and liabilities related to salt water escaping the Discovery Cove (Orlando, FL) reef attraction into the surrounding soil.

SCHEDULE 5.12
Subsidiaries and Other Equity Investments

Current Legal Entities Owned	  	Jurisdiction	  	Record Owner and (Percentage Ownership Interest)	
SW Acquisitions Co., Inc.	  	Delaware	  	SW Holdco, Inc. (100%)	
Busch Entertainment LLC	  	Delaware	  	SW Acquisitions Co., Inc. (100%)	
Busch Entertainment Company International, Inc.	  	Delaware	  	Busch Entertainment LLC (100%)	
Langhorne Food Services LLC	  	Delaware	  	Busch Entertainment LLC (100%)	
Sea World LLC	  	Delaware	  	SW Acquisitions Co., Inc. (100%)	
Sea World of Florida LLC	  	Florida	  	Sea World LLC (100%)	
Sea World of Texas LLC	  	Delaware	  	Sea World LLC (100%)	

SCHEDULE 7.01(b)
Existing Liens

No	  	Type of
Filing	  	Jurisdiction	  	Debtor	  	Secured Party	  	Collateral	  	File Date	 	  	File
Number	 	
1	  	UCC-1	  	Delaware	  	Busch Entertainment LLC	  	Olympus America Inc.	  	Equipment - Video processor with keyboard and light control cable	  	 	6/23/2009	  	  	 	91995452	  	
2	  	UCC-1	  	Florida	  	Sea World of Florida LLC	  	CIT Technology Financing Services, Inc.	  	Equipment lease - 2 Riso RZ-390 copiers	  	 	3/9/2005	  	  	 	2005091455 48	  	

SCHEDULE 7.02(f)
Existing Investments
None.

SCHEDULE 7.03(b)
Existing Indebtedness
$351,500 irrevocable standby letter of credit No. SLCLSTL04333, dated September 9, 2008, issued by U.S. Bank National Association for the benefit of the City of San Diego in connection with Anheuser-Busch Companies, Inc. D/B/A SEA World of California
$138,000 irrevocable standby letter of credit No. SLCLSTL04334, dated September 10, 2008, issued by U.S. Bank National. Association for the benefit of Greater Orlando Aviation Authority
$138,000 irrevocable standby letter of credit No. SLCLSTL04354, dated September 18, 2009, issued by U.S. Bank National Association for the benefit of Greater Orlando Aviation Authority

SCHEDULE 7.05(k)
Dispositions
None.

SCHEDULE 7.08
Transactions with Affiliates
None.

SCHEDULE 7.09
Certain Contractual Obligations.
None.

SCHEDULE 10.02
Administrative Agent’s Office, Certain Addresses for Notices
Notices Addresses
Borrower:
SW Acquisitions Co., Inc.
c/o Busch Entertainment LLC
9205 South Park Center Loop, Suite 400
Orlando, FL 32819
Attn: Howard J. Demsky
Phone: (407) 226-5061
Fax: (407) 226-5089
SW Acquisitions Co., Inc.
c/o The Blackstone Group 345 Park Avenue
New York, NY 10154
Attn: Peter Wallace
Phone: (212) 583-5528
Fax: (646) 253-5722
Administrative Agent:
(for payments and Requests for Credit Extensions, including Swing Line Loans):
Bank of America, N.A.
101 North Tryon Street
Mail Code: NC1-001-15-04
Charlotte, NC 28255
Attention: Rose M. Bollard
Telephone: (980) 386-2881
Telecopier: (704) 409-0355
Electronic Mail: rose.bollard@bankofamerica.com
Account No.: 1366212250600
Ref: Busch Entertainment Corp.
ABA# 026009593

(other notices):
Bank of America, N.A.
Agency Management
1455 Market Street, 5th Floor
Mail Code: CA5-701-05-19
San Francisco, CA 94103
Attention: Liliana Claar
Telephone: (415) 436-2770
Telecopier: (415) 503-5003
Electronic Mail: liliana.claar@bankofamerica.com
Bank of America, N.A.
Corp. Debt Products — Financial Sponsors
100 North Tryon Street
Mail Code: NC1-007-17-15
Charlotte, NC 28255
Attention: Keri Shull
Telephone; (980) 388-7517
Telecopier: (704) 683-9281
Electronic Mail: keri.shull@bankofamerica.com

EXHIBIT A
[FORM OF]
COMMITTED LOAN NOTICE
 
To:	Bank of America, N.A., as Administrative Agent	
1455 Market Street, 5 th Floor
Mail Code: CA5-701-05-19
San Francisco, CA 94103
Attention: Liliana Claar
[Date]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation, the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
The undersigned Borrower hereby requests (select one):

q	 	A Borrowing of new Loans	  	                                                         	
			
q	 	A conversion of Loans made on	  	                                                         	
			
q	 	A continuation of Eurocurrency Rate Loans made on	  	                                                         	
to be made on the terms set forth below:

(A)	 	Class of Borrowing 1	  	                                                         	
			
(B)	 	Date of Borrowing, conversion or continuation (which is a Business Day)	  	                                                         	
			
(C)	 	Principal amount 2	  	                                                         	
			
(D)	 	Type of Loan 3	  	                                                         	
			
(E)	 	Interest Period and the last day thereof 4	  	                                                         	
			
(F)	 	Location and number of Borrower’s account to which proceeds of Borrowings are to be disbursed:	  	                                                         	

1  	Term or Revolving Credit	
2  	Eurocurrency borrowing minimum of $2,500,000, as applicable, and borrowings also allowed in whole multiples of $500,000, in excess thereof, as applicable. Base Rate borrowing minimum of $500,000 and borrowings also allowed in whole multiples of $100,000 in excess thereof.	
3  	Specify Eurocurrency or Base Rate.	
4  	Applicable for Eurocurrency Borrowings/Loans only.	
 
A-1

The above request complies with the notice requirements set forth in the Credit Agreement.
[The undersigned Borrower hereby represents and warrants to the Administrative Agent and the Lenders that, on the date of this Committed Loan Notice and on the date of the related Borrowing, the conditions to lending specified in Section 4.01 of the Credit Agreement will be satisfied as of the date of the Borrowing set forth above.] 5

SW ACQUISITIONS CO., INC.	
		
By:	 	 	
Name:	 		
Title:	 		

5  	Insert bracketed language if the Borrower is making a Request for Credit Extension after the Closing Date.	
 
A-2

EXHIBIT B
[FORM OF]
SWING LINE LOAN NOTICE
 
To:	Bank of America, N.A., as Administrative Agent	
1455 Market Street, 5 th Floor
Mail Code: CA5-701-05-19
San Francisco, CA 94103
Attention: Liliana Claar
Bank of America, N.A., as Swing Line Lender
1455 Market Street, 5th Floor
Mail Code: CA5-701-05-19
San Francisco, CA 94103
Attention: Liliana Claar
[Date]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation, the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. The undersigned Borrower hereby gives you notice pursuant to Section 2.04(b) of the Credit Agreement that it requests a Swing Line Borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such Swing Line Borrowing is requested to he made:

(A)	 	PrincipalAmount to be Borrowed 1  	  	                                                         	
			
(B)	 	Date of Borrowing (which is a Business Day)	  	                                                         	
The above request complies with the notice requirements set forth in the Credit Agreement.
[The undersigned Borrower hereby represents and warrants to the Administrative Agent and the Lenders that, on the date of this Swing Line Loan Notice and on the date of the related Swing Line Borrowing, the conditions to lending specified in Section 4.01 of the Credit Agreement will be satisfied as of the date of the Borrowing set forth above.] 2

SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	
	 	Title:	

1  	Shall be a minimum of $100,000	
2  	Insert bracketed language after the Closing Date.	
 
B-1

EXHIBIT C-1
LENDER: [ — ]
PRINCIPAL AMOUNT: $[ — ]
[FORM OF] TERM NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, the undersigned, SW Acquisitions Co., Inc., a Delaware corporation (“ Borrower ”), hereby promises to pay to the Lender set forth above (the “ Lender ”) or its registered assigns, in lawful money of the United States of America in immediately available funds at the Administrative Agent’s Office (such term, and each other capitalized term used but not defined herein, having the meaning assigned to it in the Credit Agreement dated as of December I, 2009 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation, the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent) (i) on the dates set forth in the Credit Agreement, the principal amounts set forth in the Credit Agreement with respect to Term Loans made by the Lender to Borrower pursuant to the Credit Agreement and (ii) on each Interest Payment Date, interest at the rate or rates per annum as provided in the Credit Agreement on the unpaid principal amount of all Term Loans made by the Lender to Borrower pursuant to the Credit Agreement.
Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at the rate or rates provided in the Credit Agreement.
Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of Borrower under this note.
This note is one of the Term Notes referred to in the Credit Agreement that, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.
 
C-1-1

THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE CE WITH THE TERMS OF THE CREDIT AGREEMENT.
THIS TERM NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX PURPOSES. BEGINNING NO LATER THAN TEN (10) DAYS AFTER THE ISSUE DATE OF THIS TERM NOTE, THE HOLDER OF THIS TERM NOTE MAY REQUEST, AND WILL PROMPTLY BE MADE AVAILABLE UPON REQUEST, THE FOLLOWING INFORMATION WITH RESPECT TO THE TERM NOTE: ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY. ANY REQUEST SHALL BE MADE TO SW ACQUISITIONS CO., INC., [            ], [ATTENTION: GENERAL COUNSEL AND CHIEF FINANCIAL OFFICER].
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 
C-1-2

			
SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
C-1-3

LOANS AND PAYMENTS

Date	 	Amount of Loan	 	Maturity Date	 	Payments of
Principal/Interest	 	Principal Balance
of Note	 	Name of Person
Making the
Notation	
 
C-1-4

EXHIBIT C-2
LENDER: [ — ]
PRINCIPAL AMOUNT: $[ — ]
[FORM OF] REVOLVING CREDIT NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, the undersigned, SW Acquisitions Co., Inc., a Delaware corporation (together with its successors and assigns, the “ Borrower ”), hereby severally promises to pay to the Lender set forth above (the “ Lender ”) or its registered assigns, in immediately available funds at the Administrative Agent’s Office (such term, and each other capitalized term used but not defined herein, having the meaning assigned to it in the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation, the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent) (A) on the dates set forth in the Credit Agreement, the lesser of (i) the principal amount set forth above and (ii) the aggregate unpaid principal amount of all Revolving Credit Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and (B) interest from the date hereof on the principal amount from time to time outstanding on each such Revolving Credit Loan at the rate or rates per annum and payable on such dates, as provided in the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at a rate or rates provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of the Borrower under this note.
This note is one of the Revolving Credit Notes referred to in the Credit Agreement that, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.
 
C-2-1

THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 
C-2-2

			
SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
C-2-3

LOANS AND PAYMENTS

Date	 	Amount of Loan	 	Maturity Date	 	Payments of
Principal/Interest	 	Principal Balance
of Note	 	Name of Person
Making the
Notation	
 
C-2-4

EXHIBIT C-3
LENDER: [ — ]
PRINCIPAL AMOUNT: $[ — ]
[FORM OF] SWING LINE NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, the undersigned, SW Acquisitions Co., Inc., a Delaware corporation, (together with its successors and assigns, the “ Borrower ”), hereby severally promises to pay to the Lender set forth above (the “ Lender ”) or its registered assigns, in immediately available funds at the Administrative Agent’s Office (such term, and each other capitalized term used but not defined herein, having the meaning assigned to it in the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation, the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent) (A) on the dates set forth in the Credit Agreement, the lesser of (i) the principal amount set forth above and (ii) the aggregate unpaid principal amount of all Swing Line Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and (B) interest from the date hereof on the principal amount from time to time outstanding on each such Swing Line Loan at the rate or rates per annum and payable on such dates as provided in the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at a rate or rates provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of the Borrower under this note.
This note is one of the Swing Line Notes referred to in the Credit Agreement that, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.
 
C-3-1

THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 
C-3-2

			
SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
C-3-3

LOANS AND PAYMENTS

Date	 	Amount of Loan	 	Maturity Date	 	Payments of
Principal/Interest	 	Principal Balance
of Note	 	Name of Person
Making the
Notation	
 
C-3-4

EXHIBIT D
[FORM OF]
COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation (the “ Borrower ”), the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent (capitalized terms used herein have the meanings attributed thereto in the Credit Agreement unless otherwise defined herein). Pursuant to Section 6.02(a) of the Credit Agreement, the undersigned, solely in his/her capacity as a Responsible Officer of the Borrower, certifies as follows:
 
 	1.	[Attached hereto as Exhibit A is the consolidated balance sheet of the Borrower and its Subsidiaries as of December 31, 20[    ] and the related consolidated statements of income or operations, stockholders’ equity and cash flows for the fiscal year then ended, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent registered public accounting firm of nationally recognized standing, which report and opinion has been prepared in accordance with generally accepted auditing standards and not subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit. Also attached hereto as Exhibit A are the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) (which may be in footnote form only) from such consolidated financial statements.] 1	
 
 	2.	[Attached hereto as Exhibit A is the consolidated balance sheet of the Borrower and its Subsidiaries as of [    ] and the related (i) consolidated statements of income or operations for such fiscal quarter and for the portion of the fiscal year then ended and (ii) consolidated statements of cash flows for such fiscal quarter and the portion of the fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail. These present fairly in all material respects the financial condition, results of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes. Also attached hereto as Exhibit A are the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) (which may be in footnote form only) from such consolidated financial statements.] 2	
 
 	3.	[Attached as Exhibit B hereto is a detailed consolidated budget for 20[    ] (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of 20[    ], the related consolidated statements of projected cash flow and projected income and a summary of the material underlying assumptions applicable thereto) (collectively, the “ Projections ”), which Projections are prepared in good faith and are based on the reasonable assumptions at the time of preparation of such Projections. Actual results may vary from such Projections and such variations may be material.] 3	

1  	To be included if accompanying annual financial statements only. Financial Statements to be included for 2009 are as reflected in Section 6.01(a).	
2  	To be included if accompanying quarterly financial statements only.	
3  	To be included only in annual compliance certificate.	
 
D-1

 	4.	To my knowledge, except as otherwise disclosed to the Administrative Agent pursuant to the Credit Agreement, no Default has occurred. [If unable to provide the foregoing certification, describe in reasonable detail the reasons therefor and circumstances thereof and any action taken or proposed to be taken with respect thereto on Annex A attached hereto.] [Attached as Exhibit C hereto is the certificate of an independent registered public accounting firm of nationally recognized standing certifying that to their knowledge after making the necessary examination, there is no Event of Default under Section 7.11 of the Credit Agreement.]	
 
 	5.	[The following represent true and accurate calculations, as of [            ], to be used to determine compliance with the covenants set forth in Section 7.11 of the Credit Agreement:	
Total Leverage Ratio:

		
Consolidated Total Net Debt=	  	[    ]	
Consolidated EBITDA=	  	[    ]	
Actual Ratio=	  	[    ] to 1.0	
Required Ratio=	  	[    ] to 1.0	
Interest Coverage Ratio:

		
Consolidated EBITDA=	  	[    ]	
Consolidated Interest Expense=	  	[    ]	
Actual Ratio=	  	[    ] to 1.0	
Required Ratio=	  	[    ] to 1.0	
[Capital Expenditures:

		
Actual Capital Expenditures:	  	$	[    	] 	
Base Cap on Capital Expenditures:	  	$	165,000,000	  	
CapEx Pull-Forward Amount use in previous year:	  	$	[    	] 	
CapEx Pull-Forward Amount from subsequent year:	  	$	[    	] 	
Rollover Amount from previous year:	  	$	[    	] 	
Cumulative Credit utilized for Capital Expenditures:	  	$	[    	] 	
Rollover Amount available for next year:	  	$	[    	]] 4  	
Supporting detail showing the calculation of Total Leverage Ratio and Consolidated Interest Expense is attached hereto as Schedule 1.] 5
 
 	6.	Attached hereto as Schedule 2 are detailed calculations setting forth Excess Cash Flow.] 6	

4  	Only required to be provided in compliance certificate provided with audited financial statements, commencing with audited financials for year ending December 31, 2010.	
5  	Insert if Section 7.11 is applicable for the reporting period.	
6  	To be included only in annual compliance certificate.	
 
D-2

 	7.	[Attached hereto is the information required by Section 6.02(e) of the Credit Agreement.] 7 ] 8	

7  	Information required by Section 6.02(e)(i) to be included only in annual compliance certificate.	
8  	Items 4-6 may be disclosed in a separate certificate no later than 5 business days after delivery of the financial statements pursuant to Section 6.02(a) of the Credit Agreement.	
 
D-3

SCHEDULE 1

(A)	 	Total Leverage Ratio: Consolidated Total Net Debt of Consolidated EBITDA	 		
			
(1)	 	Consolidated Total Net Debt as of [            ], 20[    ]:	 		
				
	 	(a)	 	At any date of determination, the aggregate principal amount of Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP (but (x) excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with the Transactions or any Permitted Acquisition and (y) any Indebtedness that is issued at a discount to its initial principal amount shall be calculated based on the entire principal amount thereof) consisting of the sum of the following:	 		
					
	 		 	(i)	 	Indebtedness for borrowed money	 	 	
					
	 		 	(ii)	 	Attributable Indebtedness	 	 	
					
	 		 	(iii)	 	debt obligations evidenced by promissory notes or similar instruments	 	 	
				
	 		 	minus	 		
				
	 	(b)  	 	the aggregate amount of cash and Cash Equivalents (other than Restricted Cash), in each case, that is held by the Borrower and its Restricted Subsidiaries as of such date free and clear of all Liens, other than nonconsensual Liens permitted by Section 7.01 and Liens permitted by Section 7.01(a), Section 7.01(p) and Section 7.01(q) and clauses (i) and (ii) of Section 7.01(r)	 	 	
		
Consolidated Total Net Debt shall not include Indebtedness in respect of (i) letters of credit (including Letters of Credit), except to the extent of unreimbursed amounts thereunder; provided that any unreimbursed amount under commercial letters of credit shall not be counted as Consolidated Total Net Debt until 3 Business Days after such amount is drawn and (ii) Unrestricted Subsidiaries; it being understood, for the avoidance of doubt, that obligations under Swap Contracts entered into for non-speculative purposes do not constitute Consolidated Total Net Debt	 		
			
	 	Consolidated Total Net Debt	 	 	
 
Schedule 1-1

											
(2)	 	Consolidated EBITDA:	 		
				
	 	(a)	 	Consolidated Net Income:	 		
					
	 		 	(i)	 	the net income (loss) of the Borrower and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication:	 	 	
						
	 		 		 	(A)	 	after-tax effect of extraordinary, non-recurring or unusual items (including gains or losses and all fees and expenses relating thereto) for such period	 	 	
						
	 		 		 	(B)	 	the cumulative effect of a change in ac-counting principles during such period to the extent included in Consolidated Net Income	 	 	
						
	 		 		 	(C)	 	any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with any acquisition, investment, asset disposition, issuance or repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction consummated on or prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt the effects of expensing all transaction related expenses in accordance with Financial Accounting Standards No. 141(R) and gains or losses associated with FASB Interpretation No. 45)	 	 	
						
	 		 		 	(D)	 	accruals and reserves that are established or adjusted within twelve months after the Closing Date that are so required to be established or adjusted as a result of the Transactions in accordance with GAAP or changes as a result of adoption or modification of accounting policies in accordance with GAAP	 	 	
						
	 		 		 	(E)	 	any net after-tax gains or losses on disposal of abandoned, disposed or discontinued operations	 	 	
 
Schedule 1-2

											
	 		 		 	(F)	 	any net after-tax effect of gains or losses (less all fees, expenses and charges) attributable to asset dispositions or the sale or other disposition of any Equity Interests of any Person in each case other than in the ordinary course of business, as determined in good faith by the Borrower	 	 	
						
	 		 		 	(G)	 	the net income (loss) for such period of any Person that is not a Subsidiary of the Borrower, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting; provided that Consolidated Net Income of the Borrower shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash or Cash Equivalents (or to the extent subsequently converted into cash or Cash Equivalents) to the Borrower or a Restricted Subsidiary thereof in respect of such period	 	 	
						
	 		 		 	(H)	 	any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets, long-lived assets, investments in debt and equity securities or as a result of a change in law or regulation, in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP	 	 	
						
	 		 		 	(I)	 	any non-cash compensation charge or expense, including any such charge or expense arising from the grants of stock appreciation or similar rights, stock options, restricted stock or other rights or equity incentive programs, and any cash charges associated with the rollover, acceleration or payout of Equity Interests by management of the Borrower or any of its direct or indirect parents in connection with the Transactions	 	 	
 
Schedule 1-3

											
	 		 		 	(J)	 	any expenses, charges or losses that are covered by indemnification or other reimbursement provisions in connection with any Investment, Permitted Acquisition or any sale, conveyance, transfer or other disposition of assets permitted under the Credit Agreement, to the extent actually reimbursed, or, so long as the Borrower has made a determination that a reasonable basis exists for indemnification or reimbursement and only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days)	 	 	
						
	 		 		 	(K)	 	to the extent covered by insurance and actually reimbursed, or, so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is in fact reimbursed within 365 days of the date of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so reimbursed within such 365 days), expenses, charges or losses with respect to liability or casualty events or business interruption	 	 	
						
	 		 		 	(L)	 	any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of Statement of Financial Accounting Standards Nos. 87, 106 and 112, and any other items of a similar nature.	 	 	
						
	 		 		 	(M)	 	the income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Subsidiaries or that Person’s assets are acquired by Borrower or any of its Restricted Subsidiaries (except to the extent required for any calculation of Consolidated EBITDA on a Pro Forma Basis in accordance with Section 1.09)	 	 	
 
Schedule 1-4

											
For the avoidance of doubt (1) revenue will be accounted for on a GAAP basis and the recognition of any deferred revenue will be included in Consolidated Net Income in the same period as recognized for GAAP and (2) any net gain or loss resulting in such period from mark-to-market adjustments to any liability recorded in connection with the contingent obligation owed to Anheuser Busch InBev NV/SA pursuant to the Acquisition Agreement will be excluded from Consolidated Net Income.	 		
		
There shall be excluded from Consolidated Net Income for any period the purchase accounting effects of adjustments (including the effects of such adjustments pushed down to the Borrower and its Restricted Subsidiaries) in component amounts required or permitted by GAAP (including in the inventory, property and equipment, software, goodwill, intangible assets, in-process research and development, deferred revenue and debt line items thereof) and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and the Restricted Subsidiaries), as a result of the Transactions, any acquisition consummated prior to the Closing Date, any Permitted Acquisitions, or the amortization or write-off of any amounts thereof.	 		
				
	 	(b)	 	plus , without duplication and, except with respect to clauses (viii) and (x) below, to the extent deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following:	 	 	
					
	 		 	(i)	 	total interest expense determined in accordance with GAAP (including, to the extent deducted and not added back in computing Consolidated Net Income, (a) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers’ acceptances, (c) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in mark-to-market valuation of Swap Contracts or other derivative instruments pursuant to GAAP), (d) the interest component of capitalized lease obligations, (e) net payments, if any, pursuant to interest rate Swap Contracts with respect to Indebtedness, (f) amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses and (g) any expensing of bridge, commitment and other financing fees) and, to the extent not reflected in such total interest expense, any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations, and costs of surety bonds in connection with financing activities (whether amortized or immediately expensed),	 	 	
 
Schedule 1-5

											
	 		 	(ii)	 	provision for taxes based on income, profits or capital of the Borrower and the Restricted Subsidiaries, including, without limitation, federal, state, franchise and similar taxes (such as Delaware franchise tax, Pennsylvania capital tax or Texas margin tax) and foreign withholding taxes paid or accrued during such period including penalties and interest related to such taxes or arising from any tax examinations,	 	 	
					
	 		 	(iii)	 	depreciation and amortization (including amortization of intangible assets, including Capitalized Software Expenditures),	 	 	
					
	 		 	(iv)	 	(A) severance, relocation costs and expenses, Transaction Expenses, integration costs, transition costs (including any one-time information technology or other costs relating to the separation of the Borrower or its predecessor from Anheuser-Busch InBev NV/SA as part of the Transactions, to the extent incurred on or prior to the last day of the month immediately prior to the second anniversary of the Closing Date), pre-opening, opening, consolidation and closing costs for facilities, costs incurred in connection with any non-recurring strategic initiatives, costs incurred in connection with acquisitions and nonrecurring product and intellectual property development after the Closing Date, other business optimization expenses (including costs and expenses relating to business optimization programs) and new systems design and implementation costs), project start-up costs and other restructuring charges, accruals or reserves (including restructuring costs related to acquisitions after the Closing Date and to closure/consolidation of facilities, retention charges, systems establishment costs and excess pension charges) in an aggregate amount of all items deducted pursuant to this clause (iv) (other than Transaction Expenses incurred, accrued or paid no later than the end of the first full fiscal quarter ending after the Closing Date) not to exceed (I) with respect to the Transactions $50,000,000 and (II) otherwise, $10,000,000 in any period of four consecutive fiscal quarters (it being understood that unused amounts of the cap under clause (II) in any fiscal year (without giving effect to any amount carried over from a prior fiscal year) may be carried over to the next succeeding fiscal year (but not any other fiscal year) ( provided that amounts deducted in any fiscal year shall first be deemed to be allocated against the cap for such fiscal year before giving effect to any carryover)), and (B) purchase price adjustments incurred prior to 150 days after the Closing Date,	 	 	
 
Schedule 1-6

											
	 		 	(v)	 	the amount of any minority interest expense consisting of Restricted Subsidiary income attributable to minority interests of third parties in any non-wholly owned Restricted Subsidiary except to the extent of any cash distributions in respect thereof,	 	 	
					
	 		 	(vi)	 	the amount of management, monitoring, consulting and advisory fees and related expenses paid or accrued to the Investors or their Affiliates (or management companies) under the Investor Management Agreement (for avoidance of doubt, no termination fee paid under the Investor Management Agreement may be included in this clause (vi)),	 	 	
					
	 		 	(vii)	 	any costs or expenses incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are funded with cash proceeds contributed to the capital of the Borrower or net cash proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests),	 	 	
					
	 		 	(viii)	 	the amount of cost savings, operating expense reductions and synergies projected by the Borrower in good faith to be realized as a result of specified actions taken or with respect to which substantial steps have been taken (in the good faith determination of the Borrower) during such period, including in connection with any Specified Transaction (calculated on a Pro Forma Basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such actions; provided that (A) a duly completed certificate signed by a Responsible Officer of the Borrower shall be delivered to the Administrative Agent, certifying that (x) such cost savings, operating expense reductions and synergies are reasonably expected and factually supportable in the good faith judgment of the Borrower and (y) such actions are to be taken within (I) in the case of any such cost savings, operating expense reductions and synergies in connection with the Transactions, 18 months after the Closing Date and (II) in all other cases, within 12 months after the consummation of the acquisition or Disposition, restructuring or the implementation of an initiative which is expected to result in such cost savings, expense reductions or synergies, (B) no cost savings, operating expense reductions and synergies shall be added pursuant to this clause (viii) to the extent duplicative of any expenses or charges otherwise	 	 

Schedule 1-7

											
	 		 		 	added to Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for such period, (C) the aggregate amount of cost savings and operating expense reductions added pursuant to this clause (viii) does not exceed (x) in the case of the Transaction, $35,000,000 and (y) in all other cases (1) $30,000,000 for any individual acquisition or Disposition and (2) for all other initiatives that do not result from acquisition or Dispositions, $10,000,000 in the aggregate for any period of four consecutive fiscal quarters; provided that amounts added back to Consolidated EBITDA pursuant to this clause (C)(y)(2) do not exceed $30,000,000 in the aggregate for all periods following the Closing Date and (D) projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this clause (b)(viii) to the extent occurring more than four full fiscal quarters after the specified action taken in order to realize such projected cost savings, operating expense reductions and synergies,	 		
					
	 		 	(ix)	 	any net loss from disposed, abandoned or discontinued operations,	 	 	
					
	 		 	(x)	 	cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing Consolidated EBITDA or Consolidated Net Income in any period to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDA pursuant to section (b) below for any previous period and not added back,	 	 	
					
	 		 	(xi)	 	non-cash expenses, charges and losses (including impairment charges or asset write-offs, losses from investments recorded using the equity method, stock-based awards compensation expense), in each case other than (A) any non-cash charge representing amortization of a prepaid cash item that was paid and not expensed in a prior period and (B) any non-cash charge relating to write-offs, write-downs or reserves with respect to accounts receivable or inventory; provided that if any non-cash charges referred to in this clause (xi) represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period	 	 	
					
	 		 	(xii)	 	shall be subtracted from Consolidated EBITDA in such future period to such extent paid	 	 	
 
Schedule 1-8

											
	 	(c)	 	minus , without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following:	 	 	
					
	 		 	(i)	 	non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated EBITDA in any prior period),	 	 	
					
	 		 	(ii)	 	any net gain from disposed, abandoned or discontinued operations,	 	 	
					
	 		 	(iii)	 	the amount of any minority interest income consisting of Restricted Subsidiary losses attributable to minority interests of third parties in any non-wholly owned Restricted Subsidiary; provided that, for the avoidance of doubt, any gain representing the reversal of any non-cash charge referred to in clause (b)(xi)(B) above for a prior period shall be added (together with, without duplication, any amounts received in respect thereof to the extent not increasing Consolidated Net Income) to Consolidated EBITDA in any subsequent period to such extent so reversed (or received),	 	 	
		
provided that;	 		
				
	 	(A)	 	to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA (x) currency translation gains and losses related to currency remeasurements of Indebtedness (including the net loss or gain (i) resulting from Swap Contracts for currency exchange risk and (ii) resulting from intercompany indebtedness) and (y) gains or losses on Swap Contracts,	 		
				
	 	(B)	 	to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Statement of Financial Accounting Standards No. 133 and International Accounting Standard No. 39 and their respective related pronouncements and interpretations,	 		
				
	 	(C)	 	to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any income (loss) for such period attributable to the early extinguishment of (i) Indebtedness, (ii) obligations under any Swap Contracts or (iii) other derivative instruments,	 		
				
	 	(D)	 	there shall be excluded in determining Consolidated EBITDA for any period any after-tax effect of nonrecurring items (including gains or losses and all fees and expenses relating thereto) relating to curtailments or modifications to pension and post-retirement employee benefit plans for such period.	 		
 
Schedule 1-9

											
Notwithstanding anything to the contrary contained herein, for purposes of determining Consolidated EBITDA under this Agreement for any period that includes (x) any of the fiscal quarters ended December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009, Consolidated EBITDA for such fiscal quarters shall be $21,983,510, $(87,000), $143,844,000 and $204,748,000, respectively or (y) any other period occurring prior to the Closing Date, Consolidated EBITDA shall be calculated on a Pro Forma Basis to give effect to the Transaction.	 	 	
			
	 	Consolidated EBITDA	 	 	
			
	 	Consolidated Total Net Debt to Consolidated EBITDA	 	[        ]:1.00	
			
	 	Covenant Requirement	 	No more than [        ]:1.00	
 
Schedule 1-10

											
(B)	 	Interest Coverage Ratio: Consolidated EBITDA to Consolidated Interest Expense	
			
(1)	 	Consolidated EBITDA	 	 	
			
(2)	 	Consolidated Interest Expense:	 		
			
	 	the sum, without duplication, of	 		
				
	 	(i)	 	the cash interest expense (including that attributable to Capitalized Leases), net of cash interest income, of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, with respect to all outstanding Indebtedness of the Borrower and its Restricted Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net cash costs under Swap Contracts,	 	 	
				
	 	(ii)	 	any cash payments made during such period in respect of obligations referred to in clause (b) below relating to Funded Debt that were amortized or accrued in a previous period	 	 	
		
but excluding,	 		
				
	 	(a)	 	amortization of deferred financing costs and any other amounts of non-cash interest, (b) the accretion or accrual of discounted liabilities during such period, (c) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under Swap Contracts or other derivative instruments pursuant to Statement of Financial Accounting Standards No. 133, (d) any cash costs associated with breakage in respect of hedging agreements for interest rates, (e) all non-recurring cash interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations and financing fees, all as calculated on a consolidated basis in accordance with GAAP, (f) fees and expenses associated with the consummation of the Transaction, (g) annual agency fees paid to the Administrative Agent and/or Collateral Agent, and (h) costs associated with obtaining Swap Contracts; provided that there shall be excluded from Consolidated Interest Expense for any period the cash interest expense (or income) of all Unrestricted Subsidiaries for such period to the extent otherwise included in Consolidated Interest Expense.	 	 	
 
Schedule 1-11

											
Notwithstanding anything to the contrary contained herein, for purposes of determining Consolidated Interest Expense (i) for any period ending prior to the first anniversary of the Closing Date, Consolidated Interest Expense shall be an amount equal to actual Consolidated Interest Expense from the Closing Date through the date of determination multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from the Closing Date through the date of determination and (ii) shall exclude the purchase accounting effects described in the last sentence of the definition of Consolidated Net Income.	 		
			
	 	Consolidated EBITDA to Consolidated Interest Expense	 	[        ]:1.00	
			
	 	Covenant Requirement	 	No less than [        ]:1.00	
 
Schedule 1-12

											
[SCHEDULE 2
 
Excess Cash Flow Calculation:
 	
(a)	 	the sum, without duplication of:	 		
					
	 	(i)	 		 	Consolidated Net Income for such period	 	 	
					
	 	(ii)	 		 	an amount equal to the amount of all non-cash charges (including depreciation and amortization) to the extent deducted in arriving at such Consolidated Net Income	 	 	
					
	 	(iii)	 		 	decreases in Consolidated Working Capital and long-term accounts receivable of the Borrower and its Restricted Subsidiaries for such period (other than any such decreases arising from acquisitions or dispositions by the Borrower and its Restricted Subsidiaries completed during such period)	 	 	
					
	 	(iv)	 		 	an amount equal to the aggregate net non-cash loss on Dispositions by the Borrower and its Restricted Subsidiaries during such period (other than sales in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income	 	 	
			
(b)	 	minus the sum, without duplication, of: 	 		
					
	 	(i)	 		 	all non-cash credits included in arriving at such Consolidated Net Income and cash charges included in the following components of the definition of Consolidated Net Income:	 		
				
	 		 	(i) any after-tax effect of extraordinary, non-recurring or unusual items (including gains or losses and all fees and expenses relating thereto) for such period, (ii) the cumulative effect of a change in accounting principles during such period to the extent included in Consolidated Net Income, (iii) any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with any acquisition, investment, asset disposition, issuance or repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction consummated on or prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt the effects of expensing all transaction related expenses in accordance with Financial Accounting Standards No. 141(R) and gains or losses associated with FASB Interpretation No. 45), (iv) accruals and reserves that are established or adjusted within twelve months after the Closing Date that are so required to be established as a result of the Transactions in accordance with GAAP or changes as a result of adoption or modification of accounting policies in accordance with GAAP, (v) any net after-tax gains or losses on disposal of abandoned, disposed or discontinued operations, (vi) any net after-	 	 

Schedule 2-1

											
	 		 	tax effect of gains or losses (less all fees, expenses and charges) attributable to asset dispositions or the sale or other disposition of any Equity Interests of any Person in each case other than in the ordinary course of business, as determined in good faith by the Borrower, (vii) the net income (loss) for such period of any Person that is not a Subsidiary of the Borrower, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting; provided that Consolidated Net Income of the Borrower shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash or Cash Equivalents (or to the extent subsequently converted into cash or Cash Equivalents) to the Borrower or a Restricted Subsidiary thereof in respect of such period, (viii) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets, long-lived assets, investments in debt and equity securities or as a result of a change in law or regulation, in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP, (ix) any non-cash compensation charge or expense, including any such charge or expense arising from the grants of stock appreciation or similar rights, stock options, restricted stock or other rights or equity incentive programs, and any cash charges associated with the rollover, acceleration or payout of Equity Interests by management of the Borrower or any of its direct or indirect parents in connection with the Transactions, (x) any expenses, charges or losses that are covered by indemnification or other reimbursement provisions in connection with any Investment, Permitted Acquisition or any sale, conveyance, transfer or other disposition of assets permitted under the Credit Agreement, to the extent actually reimbursed, or, so long as the Borrower has made a determination that a reasonable basis exists for indemnification or reimbursement and only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such de-termination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days), (xi) to the extent covered by insurance and actually reimbursed, or, so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is in fact reimbursed within 365 days of the date of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so reimbursed within such 365 days), expenses, charges or losses with respect to liability or casualty events or business interruption, (xii) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of Statement of Financial Accounting Standards Nos. 87, 106 and 112, and any other items of a similar nature, and (xiii) the income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Subsidiaries or that Person’s assets are acquired by Borrower or any of its Restricted Subsidiaries (except to the extent required for any calculation of Consolidated EBITDA on a Pro Forma Basis in accordance with Section 1.09)	 		
 
Schedule 2-2

											
	 	(ii)	 		 	without duplication of amounts deducted pursuant to clause (xi) below in prior fiscal years, the amount of Capital Expenditures or acquisitions of intellectual property to the extent not expensed and Capitalized Software Expenditures accrued or made in cash or accrued during such period, to the extent that such Capital Expenditures or acquisitions were financed with internally generated cash or borrowings under the Revolving Credit Facility and were not made by utilizing the Cumulative Retained Excess Cash Flow Amount	 	 	
					
	 	(iii)	 		 	the aggregate amount of all principal payments of Indebtedness of the Borrower or its Restricted Subsidiaries (including (A) the principal component of payments in respect of Capitalized. Leases, (B) the amount of any scheduled repayment of Term Loans pursuant to Section 2.07 and (C) any mandatory prepayment of Term Loans pursuant to Section 2.05(b)(ii) to the extent required due to a Disposition that resulted in an increase to Consolidated Net Income and not in excess of the amount of such increase, but excluding (X) all other voluntary and mandatory prepayments of Term Loans, (Y) all prepayments of Revolving Credit Loans and Swing Line Loans made during such period and (Z) all payments in respect of any other revolving credit facility made during such period, except in the case of clause (Z) to the extent there is an equivalent permanent reduction in commitments thereunder), to the extent financed with internally generated cash	 	 	
					
	 	(iv)	 		 	the aggregate net non-cash gain on Dispositions by the Borrower and its Restricted Subsidiaries during such period (other than Dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income	 	 	
					
	 	(v)	 		 	increases in Consolidated Working Capital and long-term accounts receivable of the Borrower and its Restricted Subsidiaries for such period (other than any such increases arising from acquisitions or dispositions by the Borrower and its Restricted Subsidiaries during such period)	 	 	
					
	 	(vi)	 		 	cash payments by the Borrower and its Restricted Subsidiaries during such period in respect of long-term liabilities of the Borrower and its Restricted Subsidiaries other than Indebtedness	 	 	
 
Schedule 2-3

											
	 	(vii)	 		 	without duplication of amounts deducted pursuant to clause (xi) below in prior fiscal years, the amount of Investments and acquisitions made during such period by the Borrower and its Restricted Subsidiaries on a consolidated basis pursuant to Section 7.02) to the extent that such Investments and acquisitions were financed with internally generated cash and were not made by utilizing the Cumulative Retained Excess Cash Flow Amount	 	 	
					
	 	(viii)	 		 	the amount of Restricted Payments paid during such period pursuant to Section 7.06(h), Section 7.06(g)(x) or Section 7.06(f) to the extent such Restricted Payments were financed with internally generated cash or borrowings under the Revolving Credit Facility	 	 	
					
	 	(ix)	 		 	the aggregate amount of expenditures actually made by the Borrower and its Restricted Subsidiaries in cash during such period (including expenditures for the payment of financing fees) to the extent that such expenditures are not expensed during such period	 	 	
					
	 	(x)	 		 	the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and its Restricted Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness	 	 	
					
	 	(xi)	 		 	without duplication of amounts deducted from Excess Cash Flow in prior periods, the aggregate consideration required to be paid in cash by the Borrower and its Restricted Subsidiaries pursuant to binding contracts (the “ Contract Consideration ”) entered into prior to or during such period relating to Permitted Acquisitions or Capital Expenditures or acquisitions of intellectual property to the extent not expensed to be consummated or made, plus any restructuring cash expenses, pension payments or tax contingency payments that have been added to Excess Cash Flow pursuant to clause (a)(ii) above required to be made, in each case during the period of four consecutive fiscal quarters of the Borrower following the end of such period, provided that to the extent the aggregate amount of internally generated cash not utilizing the Cumulative Retained Excess Cash Flow Amount actually utilized to finance such Permitted Acquisitions, Capital Expenditures or acquisitions of intellectual property during such period of four consecutive fiscal quarters is less than the Contract Consideration, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such period of four consecutive fiscal quarters	 	 	
					
	 	(xii)	 		 	the amount of cash taxes paid in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period	 	 	
					
	 	(xiii)	 		 	cash expenditures in respect of Swap Contracts during such fiscal year to the extent not deducted in arriving at such Consolidated Net Income	 	 	
 
Schedule 2-4

											
	 	(xiv)	 		 	any payment of cash to be amortized or expensed over a future period and recorded as a long-term asset	 	 	
		
Notwithstanding anything in the definition of any term used in the definition of Excess Cash Flow to the contrary, all components of Excess Cash Flow shall be computed for the Borrower and its Restricted Subsidiaries on a consolidated basis.	 	 	
		
Excess Cash Flow	 	 	
 
Schedule 2-5

IN WITNESS WHEREOF, the undersigned, solely in his/her capacity as a Responsible Officer of SW Acquisitions Co., Inc., has executed this certificate for and on behalf of SW Acquisitions Co., Inc. and has caused this certificate to be delivered this      day of             , 20[    ].

SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
Schedule 2-6

EXHIBIT E
[FORM OF]
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor (as defined below) and the Assignee (as defined below). Capitalized terms used in this Assignment and Assumption and not otherwise defined herein shall have the meanings specified in the Credit Agreement, dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation, the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent, receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement, any other Loan Documents and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including participations in any Letters of Credit or Swing Line Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “ Assigned Interest ”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
 
 	1.	Assignor (the “ Assignor ”):	
 
 	2.	Assignee (the “ Assignee ”):	
Assignee is an Affiliate of: [Name of Lender]
Assignee is an Approved Fund of: [Name of Lender]
 
 	3	Borrower: SW Acquisitions Co., Inc.	
 
 	4.	Administrative Agent: Bank of America, N.A.	
 
E-1

 	5.	Assigned Interest:	

Facility	  	Aggregate Amount  of
Commitment/Loans of all
Lenders	 	  	Amount of
Commitment/Loans
Assigned 1	 	  	Percentage Assigned  of
Aggregate
Commitment/Loans of All
Lenders 2	 	
Revolving Credit Commitments	  	$	            	  	  	$	            	  	  	 	    	% 	
Term Loans	  	$	            	  	  	$	            	  	  	 	    	% 	
Effective Date of Assignment (the “ Effective Date ”): 3

1  	Subject to the amount requirements set forth in Section 10.07 (ii)(A) of the Credit Agreement.	
2  	Set forth, to at least 8 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.	
3  	To be inserted by the Administrative Agent and which shall be the effective date of recordation of the transfer in the register therefor	
 
E-2

The terms set forth in this Assignment and Assumption are hereby agreed to:

[NAME OF ASSIGNOR], as	
Assignor	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
[NAME OF ASSIGNEE], as	
Assignee	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
E-3

[Consented to and] 4 Accepted:

BANK OF AMERICA, N.A.	
as Administrative Agent	
		
By:	 	 	
	 	Name:	
	 	Title:	
[Consented to:

BANK OF AMERICA, N.A.	
as L/C Issuer	
		
By:	 	 	
	 	Name:	
	 	Title:	

BANK OF AMERICA, N.A.	
as Swing Line Lender	
		
By:	 	 	
	 	Name:	
	 	Title: 5	

4  	No consent of the Administrative Agent shall be required for (i) an assignment to an Agent or an Affiliate of an Agent or (ii) an assignment of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund.	
5  	No consent of any Principal L/C Issuer or the Swing Line Lender shall be required for (i) an assignment to an Agent or an Affiliate of an Agent or (ii) an assignment of a Term Loan.	
 
E-4

			
SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	
	 	Title: 6	

6  	No consent of the Borrower shall be required for (i) an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (unless, in each case, such assignee is a Competitor), (ii) an assignment related to Revolving Credit Commitments or Revolving Credit Exposure to a Revolving Credit Lender or an Affiliate of a Revolving Credit Lender or an Approved Fund of a Revolving Credit Lender or (iii) if an Event of Default under Section 8.01(a), (f) or (g) of the Credit Agreement has occurred and is continuing, any other assignee.	
 
E-5

Annex 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties .
1.1 Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of SW Acquisitions Co., Inc., or any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or (iv) the performance or observance by SW Acquisitions Co., Inc., or any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender thereunder, (iii) from and after the Effective Date, it shall be bound by the Credit Agreement and, to the extent provided in this Assignment and Assumption, have the rights and obligations of a Lender under the Credit Agreement, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Sections 5.05 or 6.01 of the Credit Agreement, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent, the Assignor or any other Lender, (vi) if it is not already a Lender under the Credit Agreement, attached to the Assignment and Assumption is an Administrative Questionnaire as required by the Credit Agreement and (vii) the Administrative Agent has received a processing and recordation fee of $3,500 as of the Effective Date and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, including its obligations pursuant to Section 3.01 of the Credit Agreement.
2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions .
3.1 In accordance with Section 10.07 of the Credit Agreement, upon execution, delivery, acceptance and recording of this Assignment and Assumption, from and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Assumption, have the rights and obligations of a Lender under the Credit Agreement with a Commitment as set forth herein and (b) the Assignor shall, to the extent of the Assigned Interest assigned pursuant to this Assignment and Assumption, be released from its obligations under the Credit Agreement (and, in the case that this Assignment and Assumption covers all of the Assignor’s rights and obligations under the Credit Agreement, the Assignor shall cease to be a party to the Credit Agreement but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 thereof with respect to facts and circumstances occurring prior to the effective date of this assignment).
 
Annex 1-1

3.2 This Assignment and Assumption shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed by one or more of the parties to this Assignment and Assumption on any number of separate counterparts (including by facsimile or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Assignment and Assumption and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with the law of the state of New York.
 
Annex 1-2

EXHIBIT F
[FORM OF]
SECURITY AGREEMENT
(See Attached)
 
F-1

EXHIBIT G
[FORM OF]
[GLOBAL] INTERCOMPANY NOTE
[            ], 2009
FOR VALUE RECEIVED, each of the undersigned, to the extent a borrower from time to time from any other entity listed on the signature page hereto (each, in such capacity, an “ Issuer ”), hereby promises to pay on demand to such other entity listed below (each, in such capacity, a “ Holder ” and, together with each Issuer, a “ Note Party ”), in immediately available funds in the currencies as shall be agreed from time to time at such location as the applicable Holder shall from time to time designate, the unpaid principal amount of all loans and advances or other credit extensions (including trade payables) made by such Holder to such Issuer. Each Issuer promises also to pay interest on the unpaid principal amount of all such loans and advances or other credit extensions in like money at said location from the date of such loans and advances until paid at such rate per annum as shall be agreed upon from time to time by such Issuer and such Holder.
This note (“ Note ”) is an Intercompany Note referred to in the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among SW Acquisitions Co., Inc., a Delaware corporation (together with its successors and assigns, the “ Borrower ”), the Guarantors party thereto from time to time, the lenders and other parties thereto from time to time (collectively, the “ Lenders ” and individually, a “ Lender ”) and Bank of America, N.A., as Administrative Agent and is subject to the terms thereof, and shall be pledged by each Holder pursuant to the Security Agreement (as defined in the Credit Agreement), to the extent required pursuant to the terms thereof. Each Holder hereby acknowledges and agrees that the Administrative Agent may exercise all rights provided in the Credit Agreement and the Security Agreement with respect to this Note.
Anything in this Note to the contrary notwithstanding, the indebtedness evidenced by this Note owed by any Issuer that is the Borrower or a Guarantor to any Holder shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to all Obligations (as defined in the Credit Agreement) of such Issuer under the Credit Agreement, including, without limitation, where applicable, under such Issuer’s guarantee of the Obligations under the Credit Agreement (such Obligations and obligations in connection with any renewal, refunding, restructuring or refinancing of any thereof, including interest thereon accruing after the commencement of any proceedings referred to in clause (i) below, whether or not such interest is an allowed claim in such proceeding, being hereinafter collectively referred to as “ Senior Indebtedness ”):
(i) In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to any Issuer or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of such Issuer, whether or not involving insolvency or bankruptcy, then (x) the holders of Senior Indebtedness shall be paid in full in cash in respect of all amounts constituting Senior Indebtedness before any Holder is entitled to receive (whether directly or indirectly), or make any demands for, any payment on account of this Note and (y) until the holders of Senior Indebtedness are paid in full in cash in respect of all amounts constituting Senior Indebtedness, any payment or distribution to which such Holder would otherwise be entitled (other than (A) equity securities or (B) debt securities of such Issuer that are subordinated, to at least the same extent as this Note, to the payment of all Senior Indebtedness then outstanding (such securities being hereinafter referred to as “ Restructured Debt Securities ”)) shall be made to the holders of Senior Indebtedness;
(ii) if any Event of Default (as defined in the Credit Agreement) occurs and is continuing with respect to any Senior Indebtedness, then no payment or distribution of any kind or character to any Person that is not a Loan Party shall be made by or on behalf of the Issuer or any other Person on its behalf with respect to this Note unless otherwise agreed in writing by the Agent in its reasonable discretion; and
 
G-1

(iii) if any payment or distribution of any character, whether in cash, securities or other property (other than Restructured Debt Securities), in respect of this Note shall (despite these subordination provisions) be received by any Holder in violation of clause (i) or (ii) before all Senior Indebtedness shall have been paid in full in cash, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness (or their representatives), ratably according to the respective aggregate amounts remaining unpaid thereon, to the extent necessary to pay all Senior Indebtedness in full in cash.
To the fullest extent permitted by law, no present or future holder of Senior Indebtedness shall be prejudiced in its right to enforce the subordination of this Note by any act or failure to act on the part of any Issuer or by any act or failure to act on the part of such holder or any trustee or agent for such holder. Each Holder and each Issuer hereby agree that the subordination of this Note is for the benefit of the Administrative Agent and the Lenders and the Administrative Agent and the Lenders are obligees under this Note to the same extent as if their names were written herein as such and the Administrative Agent may, on behalf of the itself and the Lenders, proceed to enforce the subordination provisions herein.
The indebtedness evidenced by this Note owed by any Issuer that is not the Borrower or a Guarantor (as defined in the Credit Agreement) shall not be subordinated to, and shall rank pari passu in right of payment with, any other obligation of such Issuer.
Notwithstanding the foregoing, (i) nothing contained in the subordination provisions set forth above is intended to or will impair, as between each Issuer and each Holder, the obligations of such Issuer, which are absolute and unconditional, to pay to such Holder the principal of and interest on this Note as and when due and payable in accordance with its terms, or is intended to or will affect the relative rights of such Holder and other creditors of such Issuer other than the holders of Senior Indebtedness and (ii) with respect to any indebtedness owing from any Issuer to any Holder with a “works council” or other employee representative body, such Indebtedness shall, unless such body has been consulted with respect to such subordination, and, if and to the extent required, unconditionally approved such subordination (by means of a prior positive advice or otherwise), not be subordinated to the Senior Indebtedness to the extent, and only to the extent, that the terms of such subordination would require the approval of or consultation with such entity before such subordination could be effective.
Each Holder is hereby authorized to record all loans and advances or other credit extensions made by it to any Issuer (all of which shall be evidenced by this Note), and all repayments or prepayments thereof; in its books and records, such books and records constituting prima facie evidence of the accuracy of the information contained therein. For the avoidance of doubt, this Note as between each Issuer and each Holder contains additional terms to any intercompany loan agreement between them and this Note does not in any way replace such intercompany loans between them nor does this Note in any way change the principal amount of any intercompany loans between them.
Upon execution and delivery after the date hereof by SW Acquisitions Co., Inc. or any subsidiary of SW Acquisitions Co., Inc. of a counterpart signature page hereto, such subsidiary shall become a Note Party hereunder with the same force and effect thereafter as if originally named as a Note Party hereunder. The rights and obligations of each Note Party hereunder shall remain in full force and effect notwithstanding the addition of any new Note Party as a party to this Note.
Each Issuer hereby waives presentment, demand, protest or notice of any kind in connection with this Note. All payments under this Note shall be made without offset, counterclaim or deduction of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
 
G-2

	
[SEPARATE SIGNATURE PAGES TO BE ATTACHED]	
 
G-3

EXHIBIT H
[FORM OF]
HOLDINGS PLEDGE AGREEMENT
(See Attached)
 
H-1

EXHIBIT I-1
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among SW ACQUISITIONS CO., INC., a Delaware corporation (“ Borrower ”), the Guarantors party hereto from time to time, BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent, each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), BANK OF AMERICA, N.A., as L/C Issuer and Swing Line Lender, and DEUTSCHE BANK SECURITIES INC. and BARCLAYS BANK PLC, as Co-Syndication Agents. Capitalized terms used herein but not otherwise de-fined shall have the meaning given to such term in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended, (the “ Code ”), (iii) it is not a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a U.S. trade or business.
The undersigned has furnished the Administrative Agent with a certificate of its non-U.S. person status on Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and (2) the undersigned shall furnish the Borrower and the Administrative Agent a properly completed and currently effective certificate in either the calendar year in which payment is to be made by the Borrower or the Administrative Agent to the undersigned, or in either of the two calendar years preceding such payment.
[Signature Page Follows]
 
I-1-1

			
[Lender]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
[Address]	
Dated:             , 20[    ]
 
I-1-2

EXHIBIT I-2
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among SW ACQUISITIONS CO., INC., a Delaware corporation (“ Borrower ”), the Guarantors party hereto from time to time, BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent, each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), BANK OF AMERICA, N.A., as L/C Issuer and Swing Line Lender, and DEUTSCHE BANK SECURITIES INC. and BARCLAYS BANK PLC, as Co-Syndication Agents. Capitalized terms used herein but not otherwise de-fined shall have the meaning given to such teen in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) neither the undersigned nor any of its partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended, (the “ Code ”), (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (v) none of its partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with Internal Revenue Service Foul’ W-8IMY accompanied by an Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption, provided that, for the avoidance of doubt, the foregoing shall not limit the obligation of the Lender to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/member’s available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent in writing with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
[Signature Page Follows]
 
I-2-1

			
[Lender]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
[Address]	
Dated:             , 20[    ]
 
I-2-2

EXHIBIT I-3
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among SW ACQUISITIONS CO., INC., a Delaware corporation (“ Borrower ”), the Guarantors party hereto from time to time, BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent, each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), BANK OF AMERICA, N.A., as L/C Issuer and Swing Line Lender, and DEUTSCHE BANK SECURITIES INC. and BARCLAYS BANK PLC, as Co-Syndication Agents. Capitalized terms used herein but not otherwise de-fined shall have the meaning given to such term in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) and Section 10.07(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended, (the “ Code ”), (iii) it is not a ten percent share-holder of the Borrower within the meaning of Code Section 871(h)(3)(B), (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a U.S. trade or business.
The undersigned has furnished its participating non-U.S. Lender with a certificate of its non-U.S. person status on Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such non-U.S. Lender in writing and (2) the undersigned shall have at all times furnished such Non-U.S. Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
[Signature Page Follows]
 
I-3-1

			
[Lender]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
[Address]	
Dated:             , 20[    ]
 
I-3-2

EXHIBIT I-4
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among SW ACQUISITIONS CO., INC., a Delaware corporation (“ Borrower ”), the Guarantors party hereto from time to time, BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent, each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), BANK OF AMERICA, N.A., as L/C Issuer and Swing Line Lender, and DEUTSCHE BANK SECURITIES INC, and BARCLAYS BANK PLC, as Co-Syndication Agents. Capitalized terms used herein but not otherwise de-fined shall have the meaning given to such term in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) and Section 10.07(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such participation, (iii) neither the undersigned nor any of its partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended, (the “ Code ”), (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (v) none of its partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.
The undersigned has furnished its participating non-U.S. Lender with Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption, provided that, for the avoidance of doubt, the foregoing shall not limit the obligation of the Lender to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/member’s available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the under-signed shall promptly so inform such non-U.S. Lender in writing and (2) the undersigned shall have at all times furnished such non-U.S. Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the under-signed, or in either of the two calendar years preceding such payments.
[Signature Page Follows]
 
I-4-1

			
[Lender]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
[Address]	
Dated:             , 20[    ]
 
I-4-2

EXHIBIT J
FORM OF DISCOUNTED PREPAYMENT OPTION NOTICE
Dated:             , 200[    ]
 
To:	BANK OF AMERICA, N.A., as Administrative Agent	
Ladies and Gentlemen:
This Discounted Prepayment Option Notice is delivered to you pursuant to Section 2.05(c)(ii) of that certain Credit Agreement, dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Agreement ”, the terms defined therein being used herein as therein defined), among SW Acquisitions Co., Inc., a Delaware corporation (“ Borrower ”), the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and collateral agent (in such capacity, the “ Administrative Agent ”) and the other agents, bookrunners and arrangers party thereto.
Purchasing Borrower Party hereby notifies you that, effective as of [            , 20    ], pursuant to Section 2.05(c)(ii) of the Agreement, Purchasing Borrower Party hereby notifies each Lender that it is seeking:
 
 	1.	to prepay Term Loans at a discount an aggregate principal amount of [$        ] 1 (the “ Proposed Discounted Prepayment Amount ”);	
 
 	2.	a percentage discount to the par value of the principal amount of Loans greater than or equal to     % of par value but less than or equal to [     1% of par value (the “ Discount Range ”).	
 
 	3	a Lender Participation Notice on or before [            , 20    ] 2 , as determined pursuant to Section 2.05(c)(ii) of the Agreement (the “ Acceptance Date ”), and	
Purchasing Borrower Party expressly agrees that this Discounted Prepayment Option Notice is subject to the provisions of Section 2.05(c) of the Agreement.
Purchasing Borrower Party hereby represents and warrants to the Administrative Agent on behalf of the Administrative Agent and the Lenders as follows:
 
 	1.	No Default or Event of Default has occurred and is continuing, or would result from Purchasing Borrower Party making the Discounted Voluntary Prepayment (after giving effect to any related waivers or amendments obtained in connection with such Discounted Voluntary Prepayment).	
 
 	2.	Each of the conditions to the Discounted Voluntary Prepayment contained in Section 2.05(c) of the Agreement has been satisfied.	
 
 	3.	The representations and warranties set forth in Article V of the Agreement and each other Loan Document are true and correct in all material respects on and as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).	

1  	Insert amount that is minimum of $5.0 million.	
2  	Insert date (a Business Day) that is at least five Business Days after date of the Discounted Prepayment Option Notice.	
 
J-1

 	4.	As of the date hereof, the Purchasing Borrower Party (i) has no knowledge, after reasonable inquiry, of the existence of any event or circumstance (actual or contingent), individually or in the aggregate, that will or would reasonably be expected to give rise to a mandatory prepayment of the Loans pursuant to Section 2.05(b) of the Credit Agreement (other than the accrual of Excess Cash Flow in the ordinary course) and (ii) has no Material Information with respect to Holdings, Purchasing Borrower Party or any of their respective Subsidiaries or securities that has not been disclosed to the Administrative Agent for the benefit of the Lenders or to the public. “Material Information” shall mean the disclosure of the occurrence of a material effect, or any event or condition that, individually or in the aggregate, has had or would reasonably be expected to have a material effect (in each case whether positive or negative), on (1) the business, property, operations, condition, liabilities (contingent or otherwise) or prospects of the Purchasing Borrower Party and its Subsidiaries, taken as a whole, (2) the ability of the Purchasing Borrower Party or its Subsidiaries to perform their obligations under the Loan Documents or (3) the rights or remedies available to the Agent and the Lenders under the Loan Documents.	
Purchasing Borrower Party respectfully requests that Administrative Agent promptly notify each of the Lenders party to the Agreement of this Discounted Prepayment Option Notice.
 
J-2

IN WITNESS WHEREOF , the undersigned has executed this Discounted Prepayment Option Notice as of the date first above written.

SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	 		
	 	Title:	 	[Chief Financial Officer]	
 
J-3

EXHIBIT K
FORM OF LENDER PARTICIPATION NOTICE
Dated:             , 200[    ]

To:	  	Bank of America, N.A.	
	  	1455 Market Street, 5 th Floor	
	  	Mail Code: CA5-701-05-19	
	  	San Francisco, CA 94103	
	  	Attention: Liliana Claar	
	  	Telephone: (415) 436-2770	
	  	Telecopier: (415) 503-5003	
	  	Electronic Mail: liliana.claar@bankofamerica.com	
Ladies and Gentlemen:
Reference is made to (a) that certain Credit Agreement, dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Agreement ”, the terms defined therein being used herein as therein defined), among SW Acquisitions Co., Inc., a Delaware corporation (“ Borrower ”), the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and collateral agent (in such capacity, the “ Administrative Agent ”) and the other agents, bookrunners and arrangers party thereto, and (b) that certain Discounted Prepayment Option Notice, dated             , 20    , from Borrower (the “ Discounted Prepayment Option Notice “). Capitalized terms used herein and not defined herein or in the Agreement shall have the meaning ascribed to such terms in the Discounted Prepayment Option Notice.
The undersigned Lender hereby gives you notice, pursuant to Section 2.05(c)(iii) of the Agreement, that it is willing to accept a Discounted Voluntary Prepayment on Loans held by such Lender:
 
 	1.	in a maximum aggregate principal amount of                      of Term Loans (the “ Offered Loans ”), and	
 
 	2.	at a percentage discount to par value of the principal amount of Offered Loans equal to [    ]% 1 of par value (the “ Acceptable Discount ”).	
The undersigned Lender expressly agrees that this offer is subject to the provisions of Section 2.05(c) of the Agreement. Furthermore, conditioned upon the Applicable Discount determined pursuant to Section 2.05(c)(iii) of the Agreement being a percentage of par value less than or equal to the Acceptable Discount, the undersigned Lender hereby expressly consents and agrees to a prepayment of its Loans pursuant to Section 2.05(c) of the Agreement in an aggregate principal amount equal to the Offered Loans, as such principal amount may be reduced if the aggregate proceeds required to prepay Qualifying Loans (disregarding any interest payable in connection with such Qualifying Loans) would exceed the Proposed Discounted Prepayment Amount for the relevant Discounted Voluntary Prepayment, and acknowledges and agrees that such prepayment of its Loans will be allocated at par value, but the actual payment made to such Lender will be reduced in accordance with the Applicable Discount

1  	Insert amount within Discount Range that is a multiple of 25 basis points.	
 
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IN WITNESS WHEREOF , the undersigned has executed this Lender Participation Notice as of the date first above written.

[NAME OF LENDER]	
		
By:	 	 	
	 	Name:	
	 	Title: 2	

2  	If a second signature is required.	
 
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EXHIBIT L
FORM OF DISCOUNTED VOLUNTARY PREPAYMENT NOTICE
Date:             , 20    
 
To:	BANK OF AMERICA, N.A., as Administrative Agent	
Ladies and Gentlemen:
This Discounted Voluntary Prepayment Notice is delivered to you pursuant to Section 2.05(c)(v) of that certain Credit Agreement, dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Agreement ”, the terms defined therein being used herein as therein defined), among SW Acquisitions Co., Inc., a Delaware corporation (“ Borrower ”), the lenders from time to time party thereto (each a “ Lender ” and collectively, the “ Lenders ”), Bank of America, N.A., as administrative agent and collateral agent (in such capacity, the “ Administrative Agent ”) and the other agents, bookrunners and arrangers party thereto.
A Purchasing Borrower Party (as defined in the Agreement) hereby irrevocably notifies you that, pursuant to Section 2.05(c)(v) of the Agreement, the Purchasing Borrower Party will make a Discounted Voluntary Prepayment to each Lender with Qualifying Loans, which shall be made:
 
 	1.	on or before [            , 20    ] 1 , as determined pursuant to Section 2.05(c)(ii) of the Agreement,	
 
 	2.	in the aggregate principal amount of $         of “Tenn” Loans, and	
 
 	3.	at a percentage discount to the par value of the principal amount of the Loans equal to [    ]% of par value (the “ Applicable Discount ”).	
The Purchasing Borrower Party expressly agrees that this Discounted Voluntary Prepayment Notice is irrevocable and is subject to the provisions of Section 2.05(c) of the Agreement.
Borrower hereby represents and warrants to the Administrative Agent on behalf of the Administrative Agent and the Lenders as follows:
 
 	1.	No Default or Event of Default has occurred and is continuing or would result from the Purchasing Borrower Party making the Discounted Voluntary Prepayment (after giving effect to any related waivers or amendments obtained in connection with such Discounted Voluntary Prepayment).	
 
 	2.	Each of the conditions to the Discounted Voluntary Prepayment contained in Section 2.05(c) of the Agreement has been satisfied.	

1  	Insert date (a Business Day) that is no later than three Business Days after date of this Notice and no later than five Business Days after the Acceptance Date (or such later date as the Administrative Agent shall reasonably agree, given the time required to calculate the Applicable Discount and determine the amount and holders of Qualifying Loans).	
 
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 	3.	The Purchasing Borrower Party does not have any material non-public information (“ MNPI ”) with respect to the Borrower, any of its Subsidiaries or any of their Affiliates that either (a) has not been disclosed to the Lenders (other than Lenders that do not wish to receive MNPI with respect to the Borrower, any of its Subsidiaries or Affiliates) prior to such time or (b) if not disclosed to the Lenders, could reasonably be expected to have a material effect upon, or otherwise be material, (i) to a Lender’s decision to participate in any Discounted Voluntary Prepayment, (ii) to the market price of the Tenn Loans or (iii) for purposes of United States Federal and state securities laws.	
The Purchasing Borrower Party agrees that if prior to the date of the Discounted Voluntary Prepayment, any representation or warranty made herein by it will not be true and correct as of the date of the Discounted Voluntary Prepayment as if then made, it will promptly notify the Administrative Agent in writing of such fact, who will promptly notify each participating Lender. After such notification, any participating Lender may revoke its Lender Participation Notice within two Business Days of receiving such notification.
The Purchasing Borrower Party acknowledges that the Administrative Agent and the Lenders are relying on the truth and accuracy of the foregoing in connection with extending Offered Loans and the acceptance of any Discounted Voluntary Prepayment made as a result of this Discounted Voluntary Prepayment Notice.
The Purchasing Borrower Party respectfully requests that Administrative Agent promptly notify each of the Lenders party to the Agreement of this Discounted Voluntary Prepayment Notice.
 
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IN WITNESS WHEREOF , the undersigned has executed this Discounted Voluntary Prepayment Notice as of the date first above written.

SW ACQUISITIONS CO., Inc.	
		
By:	 	 	
	 	Name:	 		
	 	Title:	 	[Chief Financial Officer]	
	
[                    ], as Purchasing Borrower Party	
		
By:	 	 	
	 	Name:	 		
	 	Title:	 		
 
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EXHIBIT M
FORM OF
AFFILIATED LENDER ASSIGNMENT AND ASSUMPTION
Reference is made to the Credit Agreement, dated as of December 1, 2009 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation, the Guarantors party thereto from time to time, each lender from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and the other Agents named therein. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
The Assignor identified on Schedule I hereto (the “ Assignor ”) and the Assignee identified on Schedule I hereto (the “ Assignee ”) agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date (as defined below), the interest described in Schedule I hereto (the “ Assigned Interest ”) in and to the Assignor’s rights and obligations under the Credit Agreement with respect to those credit facilities contained in the Credit Agreement as are set forth on Schedule I hereto (individually, an “ Assigned Facility ”; collectively, the “ Assigned Facilities ”), in a principal amount for each Assigned Facility as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document or with respect to the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto, other than that the Assignor has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim and (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers, any of their Affiliates or any other obligor or the performance or observance by the Borrowers, any of their Affiliates or any other obligor of any of their respective obligations under the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto.
3. The Assignee represents and warrants that (a) it is legally authorized to enter into this Assignment and Assumption, (b) it is an Non-Debt Fund Affiliate or a Purchasing Borrower Party pursuant to Section 10.07(k) of the Credit Agreement; (c) no Default or Event of Default has occurred or is continuing or would result therefrom; and (d) for the avoidance of doubt, Lenders shall not be permitted to assign Revolving Credit Commitments or Revolving Credit Loans to any Purchasing Borrower Party or Non-Debt Fund Affiliate;
4. The Assignee confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 6.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption; (c) agrees that it will, independently and without reliance upon the Assignor, the Agents or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Agents to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Agents by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including its obligations pursuant to Section 10.08 of the Credit Agreement.
 
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5. The effective date of this Assignment and Assumption shall be the Effective Date of Assignment described in Schedule I hereto (the “ Effective Date ”). Following the execution of this Assignment and Assumption, it will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, effective as of the Effective Date (which shall not, unless otherwise agreed to by the Administrative Agent, be earlier than five Business Days after the date of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to the Effective Date and to the Assignee for amounts which have accrued subsequent to the Effective Date.
7. From and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement, to the extent provided in this Assignment and Assumption, have the rights and obligations of a Lender under the Credit Agreement and under the other Loan Documents and shall be bound by the provisions thereof and (b) the Assignor shall, to the extent provided in this Assignment and Assumption, relinquish its rights and be released from its obligations under the Credit Agreement.
8. This Assignment and Assumption shall be governed by and construed in accordance with the laws of the State of New York.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption to be executed as of the date fast above written by their respective duly authorized officers on Schedule I hereto.

Accepted for Recordation in the Register:	 		 	Required Consents (if any):	
			
BANK OF AMERICA, N.A., as Administrative Agent	 		 	SW ACQUISITIONS CO., INC.	
					
By:	 	 	 		 	By:	 	 	
	 	Name:	 		 		 	Name:	
	 	Title:	 		 		 	Title:	
				
	 		 		 	SW HOLDCO, INC.	
					
	 		 		 	By:	 	 	
	 		 		 		 	Name:	
	 		 		 		 	Title:	
 
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EXHIBIT N
FORM OF
FIRST-LIEN INTERCREDITOR AGREEMENT
among
SW ACQUISITIONS CO., INC.,
the other Grantors party hereto,
BANK OF AMERICA, N.A.,
as Credit Agreement Collateral Agent for the Credit Agreement Secured Parties
BANK OF AMERICA, N.A.,
as Authorized Representative for the Credit Agreement Secured Parties,
[                                         ]
as the Additional First-Lien Collateral Agent
[                                         ]
as the Initial Additional Authorized Representative,
and
each additional Authorized Representative from time to time party hereto
dated as of [            ], 20[    ]
 
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FIRST-LIEN INTERCREDITOR AGREEMENT, dated as of [            ], 20[    ] (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, this “ Agreement ”), among SW ACQUISITIONS CO., INC., a Delaware corporation (the “ Company ”), the other Grantors (as defined below) from time to time party hereto, BANK OF AMERICA, N.A. (“ Bank of America ”), as collateral agent for the Credit Agreement Secured Parties (as defined below) (in such capacity and together with its successors in such capacity, the “ Credit Agreement Collateral Agent ”), BANK OF AMERICA, N.A., as Authorized Representative for the Credit Agreement Secured Parties (as each such term is defined below), [                    ], as collateral agent for the Additional First-Lien Secured Parties (as defined below) (in such capacity and together with its successors in such capacity, the “ Additional First Lien Collateral Agent ”), [                    ], as Authorized Representative for the Initial Additional First-Lien Secured Parties (as defined below) (in such capacity and together with its successors in such capacity, the “ Initial Additional Authorized Representative ”) and each additional Authorized Representative from time to time party hereto for the other Additional First-Lien Secured Parties of the Series (as defined below) with respect to which it is acting in such capacity.
In consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Collateral Agent, the Administrative Agent (for itself and on behalf of the Credit Agreement Secured Parties), the Initial Additional Authorized Representative (for itself and on behalf of the Initial Additional First-Lien Secured Parties) and each additional Authorized Representative (for itself and on behalf of the Additional First-Lien Secured Parties of the applicable Series) agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Certain Defined Terms . Capitalized terms used but not otherwise defined herein have the meanings set forth in the Credit Agreement or, if defined in the New York UCC, the meanings specified therein. As used in this Agreement, the following terms have the meanings specified below:
“ Additional First-Lien Documents ” means, with respect to the Initial Additional First-Lien Obligations or any Series of Additional Senior Class Debt, the notes, indentures, security documents and other operative agreements evidencing or governing such indebtedness and liens securing such indebtedness, including the Initial Additional First-Lien Documents and the Additional First-Lien Security Documents and each other agreement entered into for the purpose of securing the Initial Additional First-Lien Obligations or any Series of Additional Senior Class Debt; provided that, in each case, the Indebtedness thereunder (other than the Initial Additional First-Lien Obligations) has been designated as Additional First-Lien Obligations pursuant to Section 5.13 hereto.
“ Additional First-Lien Obligations ” means all amounts owing to any Additional First-Lien Secured Party (including the Initial Additional First-Lien Secured Parties) pursuant to the terms of any Additional First-Lien Document (including the Initial Additional First-Lien Documents), including, without limitation, all amounts in respect of any principal, premium, interest (including any interest accruing subsequent to the commencement of a Bankruptcy Case at the rate provided for in the respective Additional First-Lien Document, whether or not such interest is an allowed claim under any such proceeding or under applicable state, federal or foreign law), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts.
“ Additional First-Lien Secured Party ” means the holders of any Additional First-Lien Obligations and any Authorized Representative with respect thereto, and shall include the Initial Additional First-Lien Secured Parties.
“ Additional First-Lien Security Documents ” means any security agreement or any other document now existing or entered into after the date hereof that create Liens on any assets or properties of any Grantor to secure the Additional First-Lien Obligations.
“ Additional Senior Class Debt ” has the meaning assigned to such term in Section 5.13.
“ Additional Senior Class Debt Parties ” has the meaning assigned to such term in Section 5.13.
 
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“ Additional Senior Class Debt Representative ” has the meaning assigned to such term in Section 5.13.
“ Administrative Agent ” has the meaning assigned to such term in the definition of “Credit Agreement”.
“ Agreement ” has the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Applicable Authorized Representative ” means, with respect to any Shared Collateral, (i) until the earlier of (x) the Discharge of Credit Agreement Obligations and (y) the Non-Controlling Authorized Representative Enforcement Date, the Administrative Agent and (ii) from and after the earlier of (x) the Discharge of Credit Agreement Obligations and (y) the Non-Controlling Authorized Representative Enforcement Date, the Major Non-Controlling Authorized Representative.
“ Applicable Collateral Agent ” means (i) until the earlier of (x) Discharge of Credit Agreement Obligations and (y) the Non-Controlling Authorized Representative Enforcement Date, the Credit Agreement Collateral Agent and (ii) from and after the earlier of (x) the Discharge of Credit Agreement Obligations and (y) the Non-Controlling Authorized Representative Enforcement Date, the Additional First-Lien Collateral Agent.
“ Authorized Representative ” means, at any time, (i) in the case of any Credit Agreement Obligations or the Credit Agreement Secured Parties, the Administrative Agent, (ii) in the case of the Initial Additional First-Lien Obligations or the Initial Additional First-Lien Secured Parties, the Initial Additional Authorized Representative, and (iii) in the case of any other Series of Additional First-Lien Obligations or Additional First-Lien Secured Parties that become subject to this Agreement after the date hereof, the Authorized Representative named for such Series in the applicable Joinder Agreement.
“ Bank of America ” has the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Bankruptcy Case ” has the meaning assigned to such term in Section 2.05(b).
“ Bankruptcy Code ” means Title 11 of the United States Code, as amended.
“ Bankruptcy Law ” means the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.
“ Collateral ” means all assets and properties subject to Liens created pursuant to any First-Lien Security Document to secure one or more Series of First-Lien Obligations.
“ Collateral Agent ” means (i) in the case of any Credit Agreement Obligations, the Credit Agreement Collateral Agent and (ii) in the case of the Additional First-Lien Obligations, the Additional First-Lien Collateral Agent.
“ Company ” has the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Controlling Secured Parties ” means, with respect to any Shared Collateral, (i) at any time when the Credit Agreement Collateral Agent is the Applicable Collateral Agent, the Credit Agreement Secured Parties and (ii) at any other time, the Series of First-Lien Secured Parties whose Authorized Representative is the Applicable Authorized Representative for such Shared Collateral.
“ Credit Agreement ” means that certain Credit Agreement, dated as of December 1, 2009, among the Company, the lenders from time to time party thereto, Bank of America, as administrative agent (in such capacity and together with its successors in such capacity, the “ Administrative Agent ”) and the other parties thereto, as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.
“ Credit Agreement Collateral Agent ” has the meaning assigned to such teini in the introductory paragraph of this Agreement.
 
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“ Credit Agreement Collateral Documents ” means the Security Agreement, the other Collateral Documents (as defined in the Credit Agreement) and each other agreement entered into in favor of the Credit Agreement Collateral Agent for the purpose of securing any Credit Agreement Obligations.
“ Credit Agreement Obligations ” means all Obligations as defined in the Credit Agreement.
“ Credit Agreement Secured Parties ” means the “Secured Parties” as defined in the Credit Agreement.
“ DIP Financing ” has the meaning assigned to such term in Section 2.05(b).
“ DIP Financing Liens ” has the meaning assigned to such term in Section 2.05(b).
“ DIP Lenders ” has the meaning assigned to such term in Section 2.05(b).
“ Discharge ” means, with respect to any Shared Collateral and any Series of First-Lien Obligations, the date on which such Series of First-Lien Obligations is no longer secured by such Shared Collateral. The term “ Discharged ” shall have a corresponding meaning.
“ Discharge of Credit Agreement Obligations ” means, with respect to any Shared Collateral, the Discharge of the Credit Agreement Obligations with respect to such Shared Collateral; provided that the Discharge of Credit Agreement Obligations shall not be deemed to have occurred in connection with a Refinancing of such Credit Agreement Obligations with additional First-Lien Obligations secured by such Shared Collateral under an Additional First-Lien Document which has been designated in writing by the Administrative Agent (under the Credit Agreement so Refinanced) to the Additional First-Lien Collateral Agent and each other Authorized Representative as the “Credit Agreement” for purposes of this Agreement.
“ Event of Default ” means an “Event of Default” (or similarly defined term) as defined in any Secured Credit Document.
“ First-Lien Obligations ” means, collectively, (i) the Credit Agreement Obligations and (ii) each Series of Additional First-Lien Obligations.
“ First-Lien Secured Parties ” means (i) the Credit Agreement Secured Parties and (ii) the Additional First-Lien Secured Parties with respect to each Series of Additional First-Lien Obligations.
“ First-Lien Security Documents ” means, collectively, (i) the Credit Agreement Collateral Documents and (ii) the Additional First-Lien Security Documents.
“ Grantors ” means the Company and each of the Subsidiary Guarantors (as defined in the Credit Agreement) and each other Subsidiary of the Company which has granted a security interest pursuant to any First-Lien Security Document to secure any Series of First-Lien Obligations. The Grantors existing on the date hereof are set forth in Annex I hereto.
“ Impairment ” has the meaning assigned to such term in Section 1.03.
“ Initial Additional Authorized Representative ” has the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Initial Additional First-Lien Agreement ” mean that certain [Indenture] [Other Agreement], dated as of [            ], among the Company, [the Guarantors identified therein], and [                    ], as [trustee], as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.
“ Initial Additional First-Lien Documents ” means the Initial Additional First-Lien Agreement, the [notes] [loans] issued thereunder, the Initial Additional First-Lien Security Agreement and any security documents and other operative agreements evidencing or governing the Indebtedness thereunder, and the liens securing such Indebtedness, including any agreement entered into for the purpose of securing the Initial Additional First-Lien Obligations.
 
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“ Initial Additional First-Lien Obligations ” means the [Obligations] as such term is defined in the Initial Additional First-Lien Security Agreement.
“ Initial Additional First-Lien Secured Parties ” means the Additional First-Lien Collateral Agent, the Initial Additional Authorized Representative and the holders of the Initial Additional First-Lien Obligations issued pursuant to the Initial Additional First-Lien Agreement.
“ Initial Additional First-Lien Security Agreement ” means the security agreement, dated as of the date hereof, among the Company, the Additional First-Lien Collateral Agent and the other parties thereto, as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.
“ Insolvency or Liquidation Proceeding ” means:
(1) any case commenced by or against the Company or any other Grantor under any Bankruptcy Law, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any other Grantor, any receivership or assignment for the benefit of creditors relating to the Company or any other Grantor or any similar case or proceeding relative to the Company or any other Grantor or its creditors, as such, in each case whether or not voluntary;
(2) any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Company or any other Grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or
(3) any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any other Grantor are determined and any payment or distribution is or may be made on account of such claims.
“ Intervening Creditor” has the meaning assigned to such term in Section 2.01(a).
“ Joinder Agreement ” means a joinder to this Agreement in the form of Annex II hereof required to be delivered by an Authorized Representative to each Collateral Agent and each Authorized Representative pursuant to Section 5.13 hereof in order to establish an additional Series of Additional First-Lien Obligations and add Additional First-Lien Secured Parties hereunder.
“ Lien ” means any mortgage, pledge, security interest, hypothecation, assignment, lien (statutory or other) or similar encumbrance (including any agreement to give any of the foregoing), any conditional sale or other title retention agreement or any lease in the nature thereof.
“ Major Non-Controlling Authorized Representative ” means, with respect to any Shared Collateral, the Authorized Representative of the Series of Additional First-Lien Obligations that constitutes the largest outstanding principal amount of any then outstanding Series of First-Lien Obligations with respect to such Shared Collateral.
“ New York UCC ” means the Uniform Commercial Code as from time to time in effect in the State of New York.
“ Non-Controlling Authorized Representative ” means, at any time with respect to any Shared Collateral, any Authorized Representative that is not the Applicable Authorized Representative at such time with respect to such Shared Collateral.
“ Non-Controlling Authorized Representative Enforcement Date ” means, with respect to any Non-Controlling Authorized Representative, the date which is 90 days (throughout which 90 day period such Non-Controlling Authorized Representative was the Major Non-Controlling Authorized Representative) after the occurrence of both (i) an Event of Default (under and as defined in the Additional First-Lien Document under which
 
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such Non-Controlling Authorized Representative is the Authorized Representative) and (ii) each Collateral Agent’s and each other Authorized Representative’s receipt of written notice from such Non-Controlling Authorized Representative certifying that (x) such Non-Controlling Authorized Representative is the Major Non-Controlling Authorized Representative and that an Event of Default (under and as defined in the Additional First-Lien Document under which such Non-Controlling Authorized Representative is the Authorized Representative) has occurred and is continuing and (y) the Additional First-Lien Obligations of the Series with respect to which such Non-Controlling Authorized Representative is the Authorized Representative are currently due and payable in full (whether as a result of acceleration thereof or otherwise) in accordance with the terms of the applicable Additional First-Lien Document; provided that the Non-Controlling Authorized Representative Enforcement Date shall be stayed and shall not occur and shall be deemed not to have occurred with respect to any Shared Collateral (1) at any time the Administrative Agent or the Credit Agreement Collateral Agent has commenced and is diligently pursuing any enforcement action with respect to such Shared Collateral or (2) at any time the Grantor which has granted a security interest in such Shared Collateral is then a debtor under or with respect to (or otherwise subject to) any Insolvency or Liquidation Proceeding.
“ Non-Controlling Secured Parties ” means, with respect to any Shared Collateral, the First-Lien Secured Parties which are not Controlling Secured Parties with respect to such Shared Collateral.
“ Possessory Collateral ” means any Shared Collateral in the possession of a Collateral Agent (or its agents or bailees), to the extent that possession thereof perfects a Lien thereon under the Uniform Commercial Code of any jurisdiction. Possessory Collateral includes, without limitation, any Certificated Securities, Promissory Notes, Instruments, and Chattel Paper, in each case, delivered to or in the possession of the Collateral Agent under the terms of the First-Lien Security Documents.
“ Proceeds ” has the meaning assigned to such term in Section 2.01.
“ Refinance ” means, in respect of any indebtedness, to refinance, extend, renew, defease, amend, increase, modify, supplement, restructure, refund, replace or repay, or to issue other indebtedness or enter alternative financing arrangements, in exchange or replacement for such indebtedness (in whole or in part), including by adding or replacing lenders, creditors, agents, borrowers and/or guarantors, and including in each case, but not limited to, after the original instrument giving rise to such indebtedness has been terminated and including, in each case, through any credit agreement, indenture or other agreement. “ Refinanced ” and “ Refinancing ” have correlative meanings.
“ Secured Credit Document ” means (i) the Credit Agreement and each Loan Document (as defined in the Credit Agreement), (ii) each Initial Additional First-Lien Document, and (iii) each Additional First-Lien Document.
“ Security Agreement ” means the Security Agreement, dated as of December 1, 2009, among the Company, the Credit Agreement Collateral Agent and the other parties thereto, as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.
“ Series ” means (a) with respect to the First-Lien Secured Parties, each of (i) the Credit Agreement Secured Parties (in their capacities as such), (ii) the Initial Additional First-Lien Secured Parties (in their capacities as such), and (iii) the Additional First-Lien Secured Parties that become subject to this Agreement after the date hereof that are represented by a common Authorized Representative (in its capacity as such for such Additional First-Lien Secured Parties) and (b) with respect to any First-Lien Obligations, each of (i) the Credit Agreement Obligations, (ii) the Initial Additional First-Lien Obligations, and (iii) the Additional First-Lien Obligations incurred pursuant to any Additional First-Lien Document, which pursuant to any Joinder Agreement, are to be represented hereunder by a common Authorized Representative (in its capacity as such for such Additional First-Lien Obligations).
“ Shared Collateral ” means, at any time, Collateral in which the holders of two or more Series of First-Lien Obligations hold a valid and perfected security interest at such time. If more than two Series of First-Lien Obligations are outstanding at any time and the holders of less than all Series of First-Lien Obligations hold a valid and perfected security interest in any Collateral at such time, then such Collateral shall constitute Shared Collateral for those Series of First-Lien Obligations that hold a valid security interest in such Collateral at such time and shall not constitute Shared Collateral for any Series which does not have a valid and perfected security interest in such Collateral at such time.
 
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SECTION 1.02 Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument, other document, statute or regulation herein shall be construed as referring to such agreement, instrument, other document, statute or regulation as from time to time amended, supplemented or otherwise modified, (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, but shall not be deemed to include the subsidiaries of such Person unless express reference is made to such subsidiaries, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections and Annexes shall be construed to refer to Articles, Sections and Annexes of this Agreement, (v) unless otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (vi) the term “or” is not exclusive.
SECTION 1.03 Impairments . It is the intention of the First-Lien Secured Parties of each Series that the holders of First-Lien Obligations of such Series (and not the First-Lien Secured Parties of any other Series) bear the risk of (i) any determination by a court of competent jurisdiction that (x) any of the First-Lien Obligations of such Series are unenforceable under applicable law or are subordinated to any other obligations (other than another Series of First-Lien Obligations), (y) any of the First-Lien Obligations of such Series do not have an enforceable security interest in any of the Collateral securing any other Series of First-Lien Obligations and/or (z) any intervening security interest exists securing any other obligations (other than another Series of First-Lien Obligations) on a basis ranking prior to the security interest of such Series of First-Lien Obligations but junior to the security interest of any other Series of First-Lien Obligations or (ii) the existence of any Collateral for any other Series of First-Lien Obligations that is not Shared Collateral (any such condition referred to in the foregoing clauses (i) or (ii) with respect to any Series of First-Lien Obligations, an “Impairment” of such Series); provided, that the existence of a maximum claim with respect to any real property subject to a mortgage which applies to all First-Lien Obligations shall not be deemed to be an Impairment of any Series of First-Lien Obligations. In the event of any Impairment with respect to any Series of First-Lien Obligations, the results of such Impairment shall be borne solely by the holders of such Series of First-Lien Obligations, and the rights of the holders of such Series of First-Lien Obligations (including, without limitation, the right to receive distributions in respect of such Series of First-Lien Obligations pursuant to Section 2.01) set forth herein shall be modified to the extent necessary so that the effects of such Impairment are borne solely by the holders of the Series of such First-Lien Obligations subject to such Impairment. Additionally, in the event the First-Lien Obligations of any Series are modified pursuant to applicable law (including, without limitation, pursuant to Section 1129 of the Bankruptcy Code), any reference to such First-Lien Obligations or the First-Lien Security Documents governing such First-Lien Obligations shall refer to such obligations or such documents as so modified.
ARTICLE II
Priorities and Agreements with Respect to Shared Collateral
SECTION 2.01 Priority of Claims .
(a) Anything contained herein or in any of the Secured Credit Documents to the contrary notwithstanding (but subject to Section 1.03), if an Event of Default has occurred and is continuing, and the Applicable Collateral Agent or any First-Lien Secured Party is taking action to enforce rights in respect of any Shared Collateral, or any distribution is made in respect of any Shared Collateral in any Bankruptcy Case of the Company or any other Grantor or any First-Lien Secured Party receives any payment pursuant to any intercreditor agreement (other than this Agreement) with respect to any Shared Collateral, the proceeds of any sale, collection or other liquidation of any such Collateral by any First-Lien Secured Party or received by the Applicable Collateral Agent or any First-Lien Secured Party pursuant to any such intercreditor agreement with respect to such Shared
 
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Collateral and proceeds of any such distribution (subject, in the case of any such distribution, to the sentence immediately following) to which the First-Lien Obligations are entitled under any intercreditor agreement (other than this Agreement) (all proceeds of any sale, collection or other liquidation of any Collateral and all proceeds of any such distribution being collectively referred to as “ Proceeds ”), shall be applied (i) FIRST, to the payment of all amounts owing to each Collateral Agent (in its capacity as such) pursuant to the terms of any Secured Credit Document, (ii) SECOND, subject to Section 1.03, to the payment in full of the First-Lien Obligations of each Series on a ratable basis, with such Proceeds to be applied to the First-Lien Obligations of a given Series in accordance with the terms of the applicable Secured Credit Documents and (iii) THIRD, after payment of all First-Lien Obligations, to the Company and the other Grantors or their successors or assigns, as their interests may appear, or to whosoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. Notwithstanding the foregoing, with respect to any Shared Collateral for which a third party (other than a First-Lien Secured Party) has a lien or security interest that is junior in priority to the security interest of any Series of First-Lien Obligations but senior (as determined by appropriate legal proceedings in the case of any dispute) to the security interest of any other Series of First-Lien Obligations (such third party, an “ Intervening Creditor ”), the value of any Shared Collateral or Proceeds which are allocated to such Intervening Creditor shall be deducted on a ratable basis solely from the Shared Collateral or Proceeds to be distributed in respect of the Series of First-Lien Obligations with respect to which such Impairment exists.
(b) It is acknowledged that the First-Lien Obligations of any Series may, subject to the limitations set forth in the then extant Secured Credit Documents, be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, Refinanced or otherwise amended or modified from time to time, all without affecting the priorities set forth in Section 2.01(a) or the provisions of this Agreement defining the relative rights of the First-Lien Secured Parties of any Series.
(c) Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing any Series of First-Lien Obligations granted on the Shared Collateral and notwithstanding any provision of the Uniform Commercial Code of any jurisdiction, or any other applicable law or the Secured Credit Documents or any defect or deficiencies in the Liens securing the First-Lien Obligations of any Series or any other circumstance whatsoever (but, in each case, subject to Section 1.03), each First-Lien Secured Party hereby agrees that the Liens securing each Series of First-Lien Obligations on any Shared Collateral shall be of equal priority.
SECTION 2.02 Actions with Respect to Shared Collateral; Prohibition on Contesting Liens .
(a) Only the Applicable Collateral Agent shall act or refrain from acting with respect to any Shared Collateral (including with respect to any intercreditor agreement with respect to any Shared Collateral). At any time when the Credit Agreement Collateral Agent is the Applicable Collateral Agent, no Additional First-Lien Secured Party shall or shall instruct any Collateral Agent to, commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its security interest in or realize upon, or take any other action available to it in respect of, any Shared Collateral (including with respect to any intercreditor agreement with respect to any Shared Collateral), whether under any Additional First-Lien Security Document, applicable law or otherwise, it being agreed that only the Credit Agreement Collateral Agent, acting in accordance with the Credit Agreement Collateral Documents, shall be entitled to take any such actions or exercise any such remedies with respect to Shared Collateral at such time.
(b) With respect to any Shared Collateral at any time when the Additional First-Lien Collateral Agent is the Applicable Collateral. Agent, (i) the Additional First-Lien Collateral Agent shall act only on the instructions of the Applicable Authorized Representative, (ii) the Additional Collateral Agent shall not follow any instructions with respect to such Shared Collateral (including with respect to any intercreditor agreement with respect to any Shared Collateral) from any Non-Controlling Authorized Representative (or any other First-Lien Secured Party other than the Applicable Authorized Representative) and (iii) no Non-Controlling Authorized Representative or other First-Lien Secured Party (other than the Applicable Authorized Representative) shall or shall instruct the Additional First-Lien Collateral Agent to, commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its
 
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security interest in or realize upon, or take any other action available to it in respect of, any Shared Collateral (including with respect to any intercreditor agreement with respect to any Shared Collateral), whether under any First-Lien Security Document, applicable law or otherwise, it being agreed that only the Additional Collateral Agent, acting on the instructions of the Applicable Authorized Representative and in accordance with the Additional First-Lien Security Documents, shall be entitled to take any such actions or exercise any such remedies with respect to Shared Collateral.
(c) Notwithstanding the equal priority of the Liens securing each Series of First-Lien Obligations, the Applicable Collateral Agent (in the case of the Additional First-Lien Collateral Agent, acting on the instructions of the Applicable Authorized Representative) may deal with the Shared Collateral as if such Applicable Collateral Agent had a senior Lien on such Collateral. No Non-Controlling Authorized Representative or Non-Controlling Secured Party will contest, protest or object to any foreclosure proceeding or action brought by the Applicable Collateral Agent, the Applicable Authorized Representative or the Controlling Secured Party or any other exercise by the Applicable Collateral Agent, the Applicable Authorized Representative or the Controlling Secured Party of any rights and remedies relating to the Shared Collateral, or to cause the Applicable Collateral Agent to do so. The foregoing shall not be construed to limit the rights and priorities of any First-Lien Secured Party, the Applicable Collateral Agent or any Authorized Representative with respect to any Collateral not constituting Shared Collateral.
(d) Each of the First-Lien Secured Parties agrees that it will not (and hereby waives any right to) question or contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity, attachment or enforceability of a Lien held by or on behalf of any of the First-Lien Secured Parties in all or any part of the Collateral, or the provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any Collateral Agent or any Authorized Representative to enforce this Agreement.
SECTION 2.03 No Interference; Payment Over .
(a) Each First-Lien Secured Party agrees that (i) it will not challenge or question in any proceeding the validity or enforceability of any First-Lien Obligations of any Series or any First-Lien Security Document or the validity, attachment, perfection or priority of any Lien under any First-Lien Security Document or the validity or enforceability of the priorities, rights or duties established by or other provisions of this Agreement; (ii) it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Shared Collateral by the Applicable Collateral Agent, (iii) except as provided in Section 2.02, it shall have no right to (A) direct the Applicable Collateral Agent or any other First-Lien Secured Party to exercise any right, remedy or power with respect to any Shared Collateral (including pursuant to any intercreditor agreement) or (B) consent to the exercise by the Applicable Collateral Agent or any other First-Lien Secured Party of any right, remedy or power with respect to any Shared Collateral, (iv) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Applicable Collateral Agent or any other First-Lien Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Shared Collateral, and none of the Applicable Collateral Agent, any Applicable Authorized Representative or any other First-Lien Secured Party shall be liable for any action taken or omitted to be taken by the Applicable Collateral Agent, such Applicable Authorized Representative or other First-Lien Secured Party with respect to any Shared Collateral in accordance with the provisions of this Agreement, (v) it will not seek, and hereby waives any right, to have any Shared Collateral or any part thereof marshaled upon any foreclosure or other disposition of such Collateral and (vi) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any of the Applicable Collateral Agent or any other First-Lien Secured Party to enforce this Agreement.
(b) Each First-Lien Secured Party hereby agrees that if it shall obtain possession of any Shared Collateral or shall realize any proceeds or payment in respect of any such Shared Collateral, pursuant to any First-Lien Security Document or by the exercise of any rights available to it under applicable law or in any Insolvency or Liquidation Proceeding or through any other exercise of remedies (including pursuant to any intercreditor agreement), at any time prior to the Discharge of each of the First-Lien Obligations, then it shall hold such Shared Collateral, proceeds or payment in trust for the other First-Lien Secured Parties and promptly transfer such Shared Collateral, proceeds or payment, as the case may be, to the Applicable Collateral Agent, to be distributed in accordance with the provisions of Section 2.01 hereof.
 
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SECTION 2.05 Automatic Release of Liens; Amendments to First-Lien Security Documents .
(a) If, at any time the Applicable Collateral Agent forecloses upon or otherwise exercises remedies against any Shared Collateral resulting in a sale or disposition thereof, then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the other Collateral Agent for the benefit of each Series of First-Lien Secured Parties upon such Shared Collateral will automatically be released and discharged as and when, but only to the extent, such Liens of the Applicable Collateral Agent on such Shared Collateral are released and discharged; provided that any proceeds of any Shared Collateral realized therefrom shall be applied pursuant to Section 2.01.
(b) Each Collateral Agent and Authorized Representative agrees to execute and deliver (at the sole cost and expense of the Grantors) all such authorizations and other instruments as shall reasonably be requested by the Applicable Collateral Agent to evidence and confirm any release of Shared Collateral provided for in this Section.
SECTION 2.6 Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings .
(a) This Agreement shall continue in full force and effect notwithstanding the commencement of any proceeding under the Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law by or against the Company or any of its Subsidiaries.
(b) If the Company and/or any other Grantor shall become subject to a case (a “ Bankruptcy Case ”) under the Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of financing (“ DIP Financing ”) to be provided by one or more lenders (the “ DIP Lenders ”) under Section 364 of the Bankruptcy Code or any equivalent provision of any other Bankruptcy Law or the use of cash collateral under Section 363 of the Bankruptcy Code or any equivalent provision of any other Bankruptcy Law, each First-Lien Secured Party (other than any Controlling Secured Party or Authorized Representative of any Controlling Secured Party) agrees that it will raise no objection to any such financing or to the Liens on the Shared Collateral securing the same (“ DIP Financing Liens ”) or to any use of cash collateral that constitutes Shared Collateral, unless any Controlling Secured Party, or an Authorized Representative of any Controlling Secured Party, shall then oppose or object to such DIP Financing or such DIP Financing Liens or use of cash collateral (and (i) to the extent that such DIP Financing Liens are senior to the Liens on any such Shared Collateral for the benefit of the Controlling Secured Parties, each Non-Controlling Secured Party will subordinate its Liens with respect to such Shared Collateral on the same terms as the Liens of the Controlling Secured Parties (other than any Liens of any First-Lien Secured Parties constituting DIP Financing Liens) are subordinated thereto, and (ii) to the extent that such DIP Financing Liens rank pari passu with the Liens on any such Shared Collateral granted to secure the First-Lien Obligations of the Controlling Secured Parties, each Non-Controlling Secured Party will confirm the priorities with respect to such Shared Collateral as set forth herein), in each case so long as (A) the First-Lien Secured Parties of each Series retain the benefit of their Liens on all such Shared Collateral pledged to the DIP Lenders, including proceeds thereof arising after the commencement of such proceeding, with the same priority vis-à-vis all the other First-Lien Secured Parties (other than any Liens of the First-Lien Secured Parties constituting DIP Financing Liens) as existed prior to the commencement of the Bankruptcy Case, (B) the First-Lien Secured Parties of each Series are granted Liens on any additional collateral pledged to any First-Lien Secured Parties as adequate protection or otherwise in connection with such DIP Financing or use of cash collateral, with the same priority vis-à-vis the First-Lien Secured Parties as set forth in this Agreement, (C) if any amount of such DIP Financing or cash collateral is applied to repay any of the First-Lien Obligations, such amount is applied pursuant to Section 2.01, and (D) if any First-Lien Secured Parties are granted adequate protection, including in the form of periodic payments, in connection with such DIP Financing or use of cash collateral, the proceeds of such adequate protection are applied pursuant to Section 2.01; provided that the First-Lien Secured Parties of each Series shall have a right to object to the grant of a Lien to secure the DIP Financing over any Collateral subject to Liens in favor of the First-Lien Secured Parties of such Series or its Authorized Representative that shall not constitute Shared Collateral; and provided , further , that the First-Lien Secured Parties receiving adequate protection shall not object to any other First-Lien Secured Party receiving adequate protection comparable to any adequate protection granted to such First-Lien Secured Parties in connection with a DIP Financing or use of cash collateral.
 
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SECTION 2.07 Reinstatement . In the event that any of the First-Lien Obligations shall be paid in full and such payment or any part thereof shall subsequently, for whatever reason (including an order or judgment for disgorgement of a preference under the Bankruptcy Code, or any similar law, or the settlement of any claim in respect thereof), be required to be returned or repaid, the terms and conditions of this Article II shall be fully applicable thereto until all such First-Lien Obligations shall again have been paid in full in cash,
SECTION 2.08 Insurance . As between the First-Lien Secured Parties, the Applicable Collateral Agent, (and in the case of the Additional First-Lien Collateral Agent, acting at the direction of the Applicable Authorized Representative), shall have the right to adjust or settle any insurance policy or claim covering or constituting Shared Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Shared Collateral.
SECTION 2.09 Refinancings . The First-Lien Obligations of any Series may be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the Refinancing transaction wider any Secured Credit Document) of any First-Lien Secured Party of any other Series, all without affecting the priorities provided for herein or the other provisions hereof; provided that the Authorized Representative of the holders of any such Refinancing indebtedness shall have executed a Joinder Agreement on behalf of the holders of such Refinancing indebtedness.
SECTION 2.10 Possessory Collateral Agent as Gratuitous Bailee for Perfection .
(a) The Possessory Collateral shall be delivered to the Credit Agreement Collateral Agent and the Credit Agreement Collateral Agent agrees to hold any Shared Collateral constituting Possessory Collateral that is part of the Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the benefit of each other First-Lien Secured Party and any assignee solely for the purpose of perfecting the security interest granted in such Possessory Collateral, if any, pursuant to the applicable First-Lien Security Documents, in each case, subject to the terms and conditions of this Section 2.10; provided that at any time the Credit Agreement Collateral Agent in not the Applicable Collateral Agent, the Credit Agreement Collateral Agent shall, at the request of the Additional First-Lien Collateral Agent, promptly deliver all Possessory Collateral to the Additional First-Lien Collateral Agent together with any necessary endorsements (or otherwise allow the Additional First-Lien Collateral Agent to obtain control of such Possessory Collateral). The Company shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify each Collateral Agent for loss or damage suffered by such Collateral Agent as a result of such transfer except for loss or damage suffered by such Collateral Agent as a result of its own willful misconduct, gross negligence or bad faith.
(b) The Addition Collateral Agent agrees to hold any Shared Collateral constituting Possessory Collateral, from time to time in its possession, as gratuitous bailee for the benefit of each other First-Lien Secured Party and any assignee, solely for the purpose of perfecting the security interest granted in such Possessory Collateral, if any, pursuant to the applicable First-Lien Security Documents, in each case, subject to the terms and conditions of this Section 2.10.
(c) The duties or responsibilities of each Collateral Agent under this Section 2.10 shall be limited solely to holding any Shared Collateral constituting Possessory Collateral as gratuitous bailee for the benefit of each other First-Lien Secured Party for purposes of perfecting the Lien held by such First-Lien Secured Parties therein.
SECTION 2.11 Amendments to Security Documents .
(a) Without the prior written consent of the Credit Agreement Collateral Agent, the Additional First-Lien Collateral Agent agrees that no Additional First-Lien Security Document may be amended, supplemented or otherwise modified or entered into to the extent such amendment, supplement or modification, or the terms of any new Additional First-Lien Security Document would be prohibited by, or would require any Grantor to act or refrain from acting in a manner that would violate, any of the terms of this Agreement.
 
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(b) Without the prior written consent of the Additional First-Lien Collateral Agent, the Credit Agreement Collateral Agent agrees that no Credit Agreement Collateral Document may be amended, supplemented or otherwise modified or entered into to the extent such amendment, supplement or modification, or the terms of any new Credit Agreement Collateral Document would be prohibited by, or would require any Grantor to act or refrain from acting in a manner that would violate, any of the terms of this Agreement.
(c) In making determinations required by this Section 2.11, each Collateral Agent may conclusively rely on an officer’s certificate of the Company.
ARTICLE III
Existence and Amounts of Liens and Obligations
SECTION 3.01 Determinations with Respect to Amounts of Liens and Obligations . Whenever a Collateral Agent or any Authorized Representative shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any First-Lien Obligations of any Series, or the Shared Collateral subject to any Lien securing the First-Lien Obligations of any Series, it may request that such information be furnished to it in writing by each other Authorized Representative or Collateral Agent and shall be entitled to make such determination or not make any determination on the basis of the information so furnished; provided , however , that if an Authorized Representative or a Collateral Agent shall fail or refuse reasonably promptly to provide the requested information, the requesting Collateral Agent or Authorized Representative shall be entitled to make any such determination by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of the Company. Each Collateral Agent and each Authorized Representative may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to any Grantor, any First-Lien Secured Party or any other person as a result of such determination.
ARTICLE IV
The Applicable Collateral Agent
ARTICLE 4.01 Authority .
(a) Notwithstanding any other provision of this Agreement, nothing herein shall be construed to impose any fiduciary or other duty on any Applicable Collateral Agent to any Non-Controlling Secured Party or give any Non-Controlling Secured Party the right to direct any Applicable Collateral Agent, except that each Applicable Collateral Agent shall be obligated to distribute proceeds of any Shared Collateral in accordance with Section 2.01 hereof.
(b) In furtherance of the foregoing, each Non-Controlling Secured Party acknowledges and agrees that the Applicable Collateral Agent shall be entitled, for the benefit of the First-Lien Secured Parties, to sell, transfer or otherwise dispose of or deal with any Shared Collateral as provided herein and in the First-Lien Security Documents, as applicable, for which the Applicable Collateral Agent is the collateral agent of such Shared Collateral, without regard to any rights to which the Non-Controlling Secured Parties would otherwise be entitled as a result of the First-Lien Obligations held by such Non-Controlling Secured Parties. Without limiting the foregoing, each Non-Controlling Secured Party agrees that none of the Applicable Collateral Agent, the Applicable Authorized Representative or any other First-Lien Secured Party shall have any duty or obligation first to marshal or realize upon any type of Shared Collateral (or any other Collateral securing any of the First-Lien Obligations), or to sell, dispose of or otherwise liquidate all or any portion of such Shared Collateral (or any other Collateral securing any First-Lien Obligations), in any manner that would maximize the return to the Non-Controlling Secured Parties, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Non-Controlling Secured Parties from such realization, sale, disposition or liquidation. Each of the First-Lien Secured Parties waives any claim it may now or hereafter have against any Collateral Agent or the Authorized Representative of any other Series of First-Lien Obligations or any other First-Lien Secured Party of any other Series arising out of (i) any actions which any Collateral Agent, Authorized
 
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Representative or the First-Lien Secured Parties take or omit to take (including, actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the First-Lien Obligations from any account debtor, guarantor or any other party) in accordance with the First-Lien Security Documents or any other agreement related thereto or to the collection of the First-Lien Obligations or the valuation, use, protection or release of any security for the First-Lien Obligations, (ii) any election by any Applicable Authorized Representative or any holders of First-Lien Obligations, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code or (iii) subject to Section 2.05, any borrowing by, or grant of a security interest or administrative expense priority under Section 364 of the Bankruptcy Code or any equivalent provision of any other Bankruptcy Law, by the Company or any of its Subsidiaries, as debtor-in-possession. Notwithstanding any other provision of this Agreement, the Applicable Collateral Agent shall not accept any Shared Collateral in full or partial satisfaction of any First-Lien Obligations pursuant to Section 9-620 of the Uniform Commercial Code of any jurisdiction, without the consent of each Authorized Representative representing holders of First-Lien Obligations for whom such Collateral constitutes Shared Collateral.
ARTICLE V
Miscellaneous
SECTION 5.01 Notices . All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Credit Agreement Collateral Agent or the Administrative Agent, to it at [                                        ], Attention of [                ] (Fax No. [                ]);
(b) if to the Additional First-Lien Collateral Agent or the Initial Additional Authorized Representative, to it at [                    ];
(c) if to any other Additional Authorized Representative, to it at the address set forth in the applicable Joinder Agreement.
Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt (if a Business Day) and on the next Business Day thereafter (in all other cases) if delivered by hand or overnight courier service or sent by telecopy or on the date three Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 5.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 5.01. As agreed to in writing among each Collateral Agent and each Authorized Representative from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable person provided from time to time by such person.
SECTION 5.02 Waivers; Amendment; Joinder Agreements .
(a) No failure or delay on the part of any party hereto in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.
 
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(b) Neither this Agreement nor any provision hereof may be terminated, waived, amended or modified (other than pursuant to any Joinder Agreement) except pursuant to an agreement or agreements in writing entered into by each Authorized Representative and each Collateral Agent (and with respect to any such termination, waiver, amendment or modification which by the teinis of this Agreement requires the Company’s consent or which increases the obligations or reduces the rights of the Company or any other Grantor, with the consent of the Company).
(c) Notwithstanding the foregoing, without the consent of any First-Lien Secured Party, any Authorized Representative may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 5.13 and upon such execution and delivery, such Authorized Representative and the Additional First-Lien Secured Parties and Additional First-Lien Obligations of the Series for which such Authorized Representative is acting shall be subject to the terms hereof and the terms of the Additional First-Lien Security Documents applicable thereto.
(d) Notwithstanding the foregoing, without the consent of any other Authorized Representative or First-Lien Secured Party, the Collateral Agents may effect amendments and modifications to this Agreement to the extent necessary to reflect any incurrence of any Additional First-Lien Obligations in compliance with the Credit Agreement and the other Secured Credit Documents.
SECTION 5.03 Parties in Interest . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, as well as the other First-Lien Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of this Agreement.
SECTION 5.04 Survival of Agreement . All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement.
SECTION 5.05 Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
SECTION 5.06 Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 5.07 GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 5.08 Submission to Jurisdiction Waivers; Consent to Service of Process . Each Collateral Agent and each Authorized Representative, on behalf of itself and the First-Lien Secured Parties of the Series for whom it is acting, irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the First-Lien Security Documents, or for recognition and enforcement of any judgment in respect thereof, to the non exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
 
N-14

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person (or its Authorized Representative) at the address set forth in Section 5.01;
(d) agrees that nothing herein shall affect the right of any other party hereto (or any First-Lien Secured Party) to effect service of process in any other manner permitted by law or shall limit the right of any party hereto (or any First-Lien Secured Party) to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 5.08 any special, exemplary, punitive or consequential damages.
SECTION 5.09 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR FOR ANY COUNTERCLAIM THEREIN.
SECTION 5.10 Headings . Article, Section and Annex headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 5.11 Conflicts . In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any of the First-Lien Security Documents or any of the other Secured Credit Documents, the provisions of this Agreement shall control.
SECTION 5.12 Provisions Solely to Define Relative Rights . The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First-Lien Secured Parties in relation to one another. None of the Company, any other Grantor or any other creditor thereof shall have any rights or obligations hereunder, except as expressly provided in this Agreement ( provided that nothing in this Agreement (other than Section 2.04, 2.05, 2.08, 2.09 or Article V) is intended to or will amend, waive or otherwise modify the provisions of the Credit Agreement or any Additional First-Lien Documents), and none of the Company or any other Grantor may rely on the terms hereof (other than Sections 2.04, 2.05, 2.08, 2.09 and Article V). Nothing in this Agreement is intended to or shall impair the obligations of any Grantor, which are absolute and unconditional, to pay the First-Lien Obligations as and when the same shall become due and payable in accordance with their terms.
SECTION 5.13 Additional Senior Debt . To the extent, but only to the extent permitted by the provisions of the Credit Agreement and the Additional First-Lien Documents, the Company may incur additional indebtedness after the date hereof that is permitted by the Credit Agreement and the Additional First-Lien Documents to be incurred and secured on an equal and ratable basis by the liens securing the First-Lien Obligations (such indebtedness referred to as “ Additional Senior Class Debt ”). Any such Additional Senior Class Debt may be secured by a Lien and may be Guaranteed by the Grantors on a senior basis, in each case under and pursuant to the Additional First-Lien Documents, if and subject to the condition that the Authorized Representative of any such Additional Senior Class Debt (each, a “ Additional Senior Class Debt Representative ”), acting on behalf of the holders of such Additional Indebtedness (such Authorized Representative and holders in respect of any Additional Senior Class Debt being referred to as the “ Additional Senior Class Debt Parties ”), becomes a party to this Agreement by satisfying the conditions set forth in clauses (i) through (iv) of the immediately succeeding paragraph.
In order for a Additional Senior Class Debt Representative to become a party to this Agreement,
(i) such Additional Senior Class Debt Representative, each Collateral Agent, each Authorized Representative and each Grantor shall have executed and delivered an instrument substantially in the form of Annex II (with such changes as may be reasonably approved by each Collateral Agent and such Additional Senior Class Debt Representative) pursuant to which such Additional Senior Class Debt Representative becomes an Authorized Representative hereunder, and the Additional Senior Class Debt in respect of which such Additional Senior Class Debt Representative is the Authorized Representative and the related Additional Senior Class Debt Parties become subject hereto and bound hereby;
 
N-15

(ii) the Company shall have (x) delivered to each Collateral Agent true and complete copies of each of the Additional First-Lien Documents relating to such Additional Senior Class Debt, certified as being true and correct by a Responsible Officer of the Company and (y) identified in a certificate of an authorized officer the obligations to be designated as Additional First-Lien Obligations and the initial aggregate principal amount or face amount thereof;
(iii) all filings, recordations and/or amendments or supplements to the First-Lien Security Documents necessary or desirable in the reasonable judgment of the Additional Collateral Agent to confirm and perfect the Liens securing the relevant obligations relating to such Additional Senior Class Debt shall have been made, executed and/or delivered (or, with respect to any such filings or recordations, acceptable provisions to perform such filings or recordings have been taken in the reasonable judgment of the Additional Collateral Agent), and all fees and taxes in connection therewith shall have been paid (or acceptable provisions to make such payments have been taken in the reasonable judgment of the Additional Collateral Agent); and
(iv) the Additional First-Lien Documents, as applicable, relating to such Additional Senior Class Debt shall provide, in a manner reasonably satisfactory to each Collateral Agent, that each Additional Senior Class Debt Party with respect to such Additional Senior Class Debt will be subject to and bound by the provisions of this Agreement in its capacity as a holder of such Additional Senior Class Debt.
Each Authorized Representative acknowledges and agrees that upon execution and delivery of a Joinder Agreement substantially in the form of Annex II by an additional Additional Senior Class Debt Representative and each Grantor in accordance with Section 5.13, the Additional First-Lien Collateral Agent will continue to act in its capacity as Additional First Lien Collateral Agent in respect of the then existing Authorized Representatives (other than the Administrative Agent) and such additional Authorized Representative.
SECTION 5.14 Agent Capacities . Except as expressly provided herein or in the Credit Agreement Collateral Documents, Bank of America is acting in the capacities of Administrative Agent and Credit Agreement Collateral Agent solely for the Credit Agreement Secured Parties. Except as expressly provided herein or in the Additional First Lien Security Documents, [                    ] is acting in the capacity of the Additional First-Lien Collateral Agent solely for the Additional First-Lien Secured Parties. Except as expressly set forth herein, none of the Administrative Agent, the Credit Agreement Collateral Agent or the Additional First-Lien Collateral Agent shall have any duties or obligations in respect of any of the Collateral, all of such duties and obligations, if any, being subject to and governed by the applicable Secured Credit Documents.
SECTION 5.15 Integration . This Agreement together with the other Secured Credit Documents and the First-Lien Security Documents represents the agreement of each of the Grantors and the First-Lien Secured Parties with respect to the subject matter hereof and there are no promises, undertakings, representations or warranties by any Grantor, the Credit Agreement Collateral Agent, any or any other First-Lien Secured Party relative to the subject matter hereof not expressly set forth or referred to herein or in the other Secured Credit Documents or the First-Lien Security Documents.
 
N-16

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BANK OF AMERICA, N.A.,	
as Collateral Agent	
		
By:	 	 	
	 	Name:	
	 	Title:	

BANK OF AMERICA, N.A.,	
as Authorized Representative for the Credit Agreement Secured Parties	
		
By:	 	 	
	 	Name:	
	 	Title:	

[                                         ],
as Additional First-Lien Collateral Agent	
		
By:	 	 	
	 	Name:	
	 	Title:	

[                                         ],
as Initial Additional Authorized Representative	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
N-17

			
SW ACQUISITIONS CO., INC.	
		
By:	 	 	
	 	Name:	
	 	Title:	

[GRANTORS]	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
N-18

ANNEX I
Grantors
Schedule 1
 
ANNEX I-1

ANNEX II
[FORM OF] JOINDER NO. [            ] dated as of [            ], 20[    ] to the FIRST-LIEN INTERCREDITOR AGREEMENT dated as of [            ], 20[    ] (the “ First-Lien Intercreditor Agreement ”), among SW Acquisitions Co., Inc., a Delaware corporation (the “ Company ”), certain subsidiaries and affiliates of the Company (each a “ Grantor ”), Bank of America, N.A., as Credit Agreement Collateral Agent for the Credit Agreement Secured Parties under the First-Lien Security Documents (in such capacity, the “ Credit Agreement Collateral Agent ”), Bank of America, N.A., as Authorized Representative for the Credit Agreement Secured Parties, [                    ], as Additional First-Lien Collateral Agent, [                    ], as Initial Additional Authorized Representative, and the additional Authorized Representatives from time to time a party thereto. 1
A. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the First-Lien Intercreditor Agreement.
B. As a condition to the ability of the Company to incur Additional First-Lien Obligations and to secure such Additional Senior Class Debt with the liens and security interests created by the Additional First-Lien Security Documents, the Additional Senior Class Debt Representative in respect of such Additional Senior Class Debt is required to become an Authorized Representative, and such Additional Senior Class Debt and the Additional Senior Class Debt Parties in respect thereof are required to become subject to and bound by, the First-Lien Inter-creditor Agreement. Section 5.13 of the First-Lien Intercreditor Agreement provides that such Additional Senior Class Debt Representative may become an Authorized Representative, and such Additional Senior Class Debt and such Additional Senior Class Debt Parties may become subject to and bound by, the First-Lien Intercreditor Agreement, pursuant to the execution and delivery by the Senior Debt Class Representative of an instrument in the form of this Joinder and the satisfaction of the other conditions set forth in Section 5.13 of the First-Lien Intercreditor Agreement. The undersigned Additional Senior Class Debt Representative (the “ New Representative ”) are executing this Representative Joinder in accordance with the requirements of the First-Lien Intercreditor Agreement and the First-Lien Security Documents.
Accordingly, each Collateral Agent, each Authorized Representative and the New Representative agree as follows:
SECTION 1. In accordance with Section 5.13 of the First-Lien Intercreditor Agreement, the New Representative by its signature below becomes an Authorized Representative under, and the related Additional Senior Class Debt and Additional Senior Class Debt Parties become subject to and bound by, the First-Lien Intercreditor Agreement with the same force and effect as if the New Representative had originally been named therein as an Authorized Representative and the New Representative, on their behalf and on behalf of such Additional Senior Class Debt Parties, hereby agree to all the terms and provisions of the First-Lien Intercreditor Agreement applicable to it as Authorized Representative and to the Additional Senior Class Debt Parties that they represent as Additional First-Lien Secured Parties. Each reference to a “ Authorized Representative ” in the First-Lien Intercreditor Agreement shall be deemed to include the New Representative. The First-Lien Intercreditor Agreement is hereby incorporated herein by reference.
SECTION 2. The New Representative represent and warrant to each Collateral Agent, each Authorized Representative and the other First-Lien Secured Parties, individually, that (i) it has full power and authority to enter into this Joinder, in its capacity as [agent] [trustee], (ii) this Joinder has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms and (iii) the Additional First-Lien Documents relating to such Additional Senior Class Debt provide that, upon the New Representative’s entry into this Agreement, the Additional Senior Class Debt Parties in respect of such Additional Senior Class Debt will be subject to and bound by the provisions of the First-Lien Intercreditor Agreement as Additional First-Lien Secured Parties.

1  	In the event of the Refinancing of the Credit Agreement Obligations, revise to reflect joinder by a new Credit Agreement Collateral Agent	
 
ANNEX II-1

SECTION 3. This Joinder may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Joinder shall become effective when each Collateral Agent shall have received a counterpart of this Joinder that bears the signatures of the New Representative. Delivery of an executed signature page to this Joinder by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Joinder.
SECTION 4. Except as expressly supplemented hereby, the First-Lien Intercreditor Agreement shall remain in full force and effect.
SECTION 5. THIS JOINDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this Joinder should be held invalid, illegal or unenforceable in any respect, no party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the First-Lien Intercreditor Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 5.01 of the First-Lien Intercreditor Agreement. All communications and notices hereunder to the New Representative shall be given to them at their respective addresses set forth below their signatures hereto.
SECTION 8. The Company agrees to reimburse each Collateral Agent and each Authorized Representative for its reasonable out-of-pocket expenses in connection with this Joinder, including the reasonable fees, other charges and disbursements of counsel.
 
ANNEX II-2

IN WITNESS WHEREOF, the New Representative has duly executed this Joinder to the First-Lien Intercreditor Agreement as of the day and year first above written.

[NAME OF NEW REPRESENTATIVE], as	
[                    ] for the holders of [                            ],	
		
By:	 	 	
	 	Name:	
	 	Title:	

Address for notices:	

 	
attention of:	 	 	
			
Telecopy:	 	 	
 
ANNEX II-3

Acknowledged by:

BANK OF AMERICA, N.A.,	
as the Credit Agreement Collateral Agent and Authorized Representative,	
			
	 	By:	 	 	
	 		 	Name:	
	 		 	Title:	

[                                         ],	
as the Additional First-Lien Collateral Agent and Initial Additional Authorized Representative,	
			
	 	By:	 	 	
	 		 	Name:	
	 		 	Title:	
[OTHER AUTHORIZED REPRESENTATIVES]

SW ACQUISITIONS CO., INC.,
as Company	
			
	 	By:	 	 	
	 		 	Name:	
	 		 	Title:	

THE OTHER GRANTORS
LISTED ON SCHEDULE I HERETO,	
			
	 	By:	 	 	
	 		 	Name:	
	 		 	Title:	
 
ANNEX II-4

Schedule I to the
Supplement to the
First-Lien Intercreditor Agreement
Grantors
[            ]
 
Schedule I-1

Exhibit 10.9 
EXECUTION VERSION

 
PLEDGE AGREEMENT
dated as of
December 1, 2009
Between
SW HOLDCO, INC.
and
BANK OF AMERICA, N.A.
as Collateral Agent

 

TABLE OF CONTENTS

ARTICLE I Definitions	  	 	1	  	
		
SECTION 1.01. Credit Agreement	  	 	1	  	
		
SECTION 1.02. Other Defined Terms	  	 	1	  	
		
ARTICLE II Pledge of Securities	  	 	2	  	
		
SECTION 2.01. Pledge	  	 	2	  	
		
SECTION 2.02. Delivery of the Pledged Equity	  	 	2	  	
		
SECTION 2.03. Representations, Warranties and Covenants	  	 	3	  	
		
SECTION 2.04. Registration in Nominee Name; Denominations	  	 	4	  	
		
SECTION 2.05. Voting Rights; Dividends and Interest	  	 	4	  	
		
ARTICLE III Remedies	  	 	5	  	
		
SECTION 3.01. Remedies Upon Default	  	 	5	  	
		
SECTION 3.02. Application of Proceeds	  	 	7	  	
		
ARTICLE IV Miscellaneous	  	 	7	  	
		
SECTION 4.01. Notices	  	 	7	  	
		
SECTION 4.02. Waivers, Amendment	  	 	7	  	
		
SECTION 4.03. Collateral Agent’s Fees and Expenses; Indemnification	  	 	7	  	
		
SECTION 4.04. Successors and Assigns	  	 	8	  	
		
SECTION 4.05. Survival of Agreement	  	 	8	  	
		
SECTION 4.06. Counterparts; Effectiveness, Several Agreement	  	 	8	  	
		
SECTION 4.07. Severability	  	 	8	  	
		
SECTION 4.08. Right of Set-Off	  	 	8	  	
		
SECTION 4.09. Governing Law; Jurisdiction; Venue; Waiver of Jury Trial; Consent to Service of Process	  	 	9	  	
		
SECTION 4.10. Headings	  	 	9	  	
		
SECTION 4.11. Security Interest Absolute	  	 	9	  	
		
SECTION 4.12. Termination or Release	  	 	9	  	
 
i

					
SECTION 4.13. Collateral Agent Appointed Attorney-in-Fact	  	 	10	  	
		
SECTION 4.14. General Authority of the Collateral Agent	  	 	11	  	
		
SECTION 4.15. Reasonable Care	  	 	11	  	
		
SECTION 4.16. Delegation; Limitation	  	 	11	  	
		
SECTION 4.17. Reinstatement	  	 	11	  	
		
SECTION 4.18. Miscellaneous	  	 	11	  	
		
Schedule I Pledged Equity	  				
 
-ii-

PLEDGE AGREEMENT dated as of December 1, 2009, among SW Holdco, Inc., a Delaware corporation (“ Holdings ”) and Bank of America, N.A., as Collateral Agent for the Secured Parties (in such capacity, the “ Collateral Agent ”).
Reference is made to (i) that certain Credit Agreement dated as of December 1, 2009 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SW Acquisitions Co., Inc. (the “ Borrower ”), Holdings, the other Guarantors party thereto from time to time, Bank of America, N.A., as Administrative Agent and Collateral Agent, each lender from time to time party thereto (collectively, the “ Lenders ” and individually, a “ Lender ”), Bank of America, N.A., as L/C Issuer and Swing Line Lender, and the other agents named therein and (ii) that certain Security Agreement dated as of December 1, 2009 among the grantors identified therein (the “ Grantors ”) and the Collateral Agent. The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. Holdings is the direct parent of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement . (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Credit Agreement. All terms defined in the UCC (as defined herein) and not defined in this Agreement have the meanings specified therein; the term “instrument” shall have the meaning specified in Article 9 of the UCC.
(b) The rules of construction specified in Article I of the Credit Agreement also apply to this Agreement.
SECTION 1.02. Other Defined Terms . As used in this Agreement, the following terms have the meanings specified below:
“ Agreement ” means this Pledge Agreement.
“ Borrower ” has the meaning assigned to such term in the recitals of this Agreement.
“ Collateral Agent ” has the meaning assigned to such terns in the recitals of this Agreement.
“ Credit Agreement ” has the meaning assigned to such term in the preliminary statement of this Agreement.
“ Holdings ” has the meaning assigned to such term in the recitals of this Agreement.
“ Lenders ” has the meaning assigned to such term in the recitals of this Agreement.
“ Perfection Certificate ” means a certificate substantially in the form of Exhibit II to the Security Agreement, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Responsible Officer of Holdings.

“ Pledged Collateral ” has the meaning assigned to such term in Section 2.01.
“ Pledged Equity ” has the meaning assigned to such term in Section 2.01.
“ Secured Obligations ” means the “Obligations” (as defined in the Credit Agreement).
“ Secured Parties ” means, collectively, the Administrative Agent, the Collateral Agent, the Lenders, the Hedge Banks, the Cash Management Banks, the Supplemental Agents and each co-agent or sub-agent appointed by the Administrative Agent or the Collateral Agent from time to time pursuant to Section 9.02 of the Credit Agreement.
“ Security Agreement ” has the meaning assigned to such term in the recitals of this Agreement.
“ UCC ” means the Uniform Commercial Code as from time to time in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of the security interest in any Pledged Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “ UCC ” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
ARTICLE II
Pledge of Securities
SECTION 2.01. Pledge . As security for the payment or performance, as the case may be, in full of the Secured Obligations, including the Guarantees, Holdings hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in (i) all of Holdings’ right, title and interest in, to and under all Equity Interests issued by the Borrower and any successor entity (the “ Pledged Equity ”); (ii) all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the Pledged Equity; (iii) all rights and privileges of Holdings with respect to the securities and other property referred to in clauses (i) and (ii) above; and (iv) all Proceeds of any of the foregoing (the items referred to in clauses (i) through (iv) above being collectively referred to as the “ Pledged Collateral ”).
TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, forever, subject , however , to the terms, covenants and conditions hereinafter set forth.
SECTION 2.02. Delivery of the Pledged Equity . (a) Holdings agrees promptly (but in any event within 30 days after receipt by Holdings) to deliver or cause to be delivered to the Collateral Agent, for the benefit of the Secured Parties, any and all Pledged Equity to the extent certificated.
(b) Upon delivery to the Collateral Agent, any Pledged Equity shall be accompanied by stock or security powers duly executed in blank or other instruments of transfer reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request. Each delivery of Pledged Equity shall be accompanied by a schedule describing the securities, which schedule shall be deemed to supplement Schedule I and made a part hereof; provided that failure to supplement Schedule I shall not affect the validity of such pledge of such Pledged Equity. Each schedule so delivered shall supplement any prior schedules so delivered.
 
-2-

SECTION 2.03. Representations, Warranties and Covenants . Holdings represents, warrants and covenants to and with the Collateral Agent, for the benefit of the Secured Parties, that:
(a) As of the date hereof, Schedule I includes all Equity Interests required to be pledged by Holdings hereunder in order to satisfy the Collateral and Guarantee Requirement and all such Equity Interests have been delivered to the Collateral Agent;
(b) the Pledged Equity has been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable;
(c) except for the security interests granted hereunder, Holdings (i) is, subject to any transfers made in compliance with the Credit Agreement, the direct owner, beneficially and of record, of the Pledged Equity indicated on Schedule I , (ii) holds the same free and clear of all Liens, other than Liens created by the Collateral Documents, and (iii) if requested by the Collateral Agent, will defend its title or interest thereto or therein against any and all Liens (other than the Liens permitted pursuant to this Section 2.03(c)), however arising, of all Persons whomsoever;
(d) except for restrictions and limitations (i) imposed or permitted by the Loan Documents or securities laws generally or (ii) described in the Perfection Certificate, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner material and adverse to the Secured Parties the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;
(e) the execution and performance by Holdings of this Agreement are within Holdings’ corporate powers and have been duly authorized by all necessary corporate action or other organizational action;
(f) no consent or approval of any Governmental Authority, any securities exchange or any other Person was or is necessary to the validity of the pledge effected hereby, except for (i) filing of a UCC-1 financing statement with the Delaware Secretary of State naming Holdings as debtor and the Collateral Agent as secured party and describing the Pledged Collateral and (ii) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect;
(g) by virtue of the execution and delivery by Holdings of this Agreement, and delivery of the Pledged Equity to and continued possession by the Collateral Agent in the State of New York, the Collateral Agent for the benefit of the Secured Parties has a legal, valid and perfected lien upon and security interest in such Pledged Equity as security for the payment and performance of the Secured Obligations; and
(h) the pledge effected hereby is effective to vest in the Collateral Agent, for the benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral to the extent intended hereby.
Subject to the terms of this Agreement and to the extent permitted by Applicable Law, Holdings hereby agrees that upon the occurrence and during the continuance of an Event of Default, it will comply with instructions of the Collateral Agent with respect to the Equity Interests in Holdings that constitute Pledged Equity hereunder that are not certificated without further consent by the applicable owner or holder of such Equity Interests.
 
-3-

SECTION 2.04. Registration in Nominee Name; Denominations . If an Event of Default shall have occurred and be continuing and the Collateral Agent shall give Holdings prior notice of its intent to exercise such rights, (a) the Collateral Agent, on behalf of the Secured Parties, shall have the right to hold the Pledged Equity in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of Holdings, endorsed or assigned in blank or in favor of the Collateral Agent and Holdings will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Equity registered in the name of Holdings and (b) the Collateral Agent shall have the right to exchange the certificates representing Pledged Equity for certificates of smaller or larger denominations for any purpose consistent with this Agreement, to the extent permitted by the documentation governing such Pledged Equity.
SECTION 2.05. Voting Rights; Dividends and Interest . (a) Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent shall have provided prior notice to Holdings that its rights under this Section 2.05 are being suspended:
(i) Holdings shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Equity or any part thereof, and Holdings agrees that it shall exercise such rights for purposes consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents;
(ii) The Collateral Agent shall promptly (after reasonable advance notice) execute and deliver to Holdings, or cause to be executed and delivered to Holdings, all such proxies, powers of attorney and other instruments as Holdings may reasonably request for the purpose of enabling Holdings to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above; and
(iii) Holdings shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Equity to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable Laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Equity or received in exchange for Pledged Equity or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by Holdings, shall not be commingled by Holdings with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and the Secured Parties and shall be promptly (and in any event within 10 Business Days) delivered to the Collateral Agent in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent). So long as no Default or Event of Default has occurred and is continuing, the Collateral Agent shall promptly deliver to Holdings any Pledged Equity in its possession if requested to be delivered to the issuer thereof in connection with any exchange or redemption of such Pledged Equity permitted by the Credit Agreement in accordance with this Section 2.05(a)(iii).
 
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(b) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified Holdings of the suspension of its rights under paragraph (a)(iii) of this Section 2.05, then all rights of Holdings to dividends, interest, principal or other distributions that Holdings is authorized to receive pursuant to paragraph (a)(iii) of this Section 2.05 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by Holdings contrary to the provisions of this Section 2.05 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of Holdings and shall be promptly (and in any event within 10 days) delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 3.02. After all Events of Default have been cured or waived, the Collateral Agent shall promptly repay to Holdings (without interest) all dividends, interest, principal or other distributions that Holdings would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 2.05 and that remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have provided Holdings with notice of the suspension of its rights under paragraph (a)(i) of this Section 2.05, then all rights of Holdings to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 2.05, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 2.05, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit Holdings to exercise such rights. After all Events of Default have been cured or waived, Holdings shall have the exclusive right to exercise the voting and/or consensual rights and powers that Holdings would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 2.05 shall be reinstated.
(d) Any notice given by the Collateral Agent to Holdings under Section 2.04 or Section 2.05 shall be given in writing and may suspend the rights of Holdings under paragraph (a)(i) or paragraph (a)(iii) of this Section 2.05 in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
ARTICLE III
Remedies
SECTION 3.01. Remedies Upon Default . Upon the occurrence and during the continuance of an Event of Default, it is agreed that the Collateral Agent shall have the right to exercise any and all rights afforded to a secured party with respect to the Secured Obligations, including the Guarantees, under the Uniform Commercial Code or other applicable Law and also may (i) exercise any and all rights and remedies of Holdings under or in connection with the Pledged Collateral, or otherwise in respect of the Pledged Collateral; provided that the Collateral Agent shall provide Holdings with notice thereof prior to such exercise; and (ii) subject to the mandatory requirements of applicable Law and the notice requirements described below, sell or otherwise dispose of all or any part of
 
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the Pledged Collateral securing the Secured Obligations at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Pledged Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Pledged Collateral so sold. Each such purchaser at any sale of Pledged Collateral shall hold the property sold absolutely, free from any claim or right on the part of Holdings, and Holdings hereby waives (to the extent permitted by Law) all rights of redemption, stay and appraisal which Holdings now has or may at any time in the future have under any Law now existing or hereafter enacted.
The Collateral Agent shall give Holdings 10 days’ written notice (which Holdings agrees is reasonable notice within the meaning of Section 9-611 of the UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Pledged Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Pledged Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Pledged Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Pledged Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Pledged Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Pledged Collateral is made on credit or for future delivery, the Pledged Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Pledged Collateral so sold and, in case of any such failure, such Pledged Collateral may be sold again upon like notice. At any public (or, to the extent permitted by Law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by Law) from any right of redemption, stay, valuation or appraisal on the part of Holdings (all said rights being also hereby waived and released to the extent permitted by Law), the Pledged Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from Holdings as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to Holdings therefor. For purposes hereof, a written agreement to purchase the Pledged Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and Holdings shall not be entitled to the return of the Pledged Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at Law or in equity to foreclose this Agreement and to sell the Pledged Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 3.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the UCC or its equivalent in other jurisdictions.
 
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SECTION 3.02. Application of Proceeds . The Collateral Agent shall apply the proceeds of any collection or sale of Pledged Collateral, including any Pledged Collateral consisting of cash in accordance with Section 8.04 of the Credit Agreement.
The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Pledged Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Pledged Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.
The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations, provided that nothing in this sentence shall prevent Holdings from contesting any amounts claimed by any Secured Party in any information so supplied. All distributions made by the Collateral Agent pursuant to this Section 3.02 shall be (subject to any decree of any court of competent jurisdiction) final (absent manifest error), and the Collateral Agent shall have no duty to inquire as to the application by the Administrative Agent of any amounts distributed to it.
ARTICLE IV
Miscellaneous
SECTION 4.01. Notices . All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.02 of the Credit Agreement.
SECTION 4.02. Waivers, Amendment . (a) No failure or delay by any Secured Party in exercising any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges of the Secured Parties herein provided, and provided under each other Loan Document, are cumulative and are not exclusive of any rights, remedies, powers and privileges provided by Law. No waiver of any provision of this Agreement or consent to any departure by Holdings therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 4.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan, the issuance of a Letter of Credit or the provision of services under Cash Management Obligations or Secured Hedge Agreements shall not be construed as a waiver of any Default, regardless of whether any Secured Party may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and Holdings, subject to any consent required in accordance with Section 10.01 of the Credit Agreement.
SECTION 4.03. Collateral Agent’s Fees and Expenses; Indemnification . (a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of its reasonable out-of-pocket expenses incurred hereunder and indemnity for its actions in connection herewith, in each case, as provided in Sections 10.04 and 10.05 of the Credit Agreement.
 
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(b) Any such amounts payable as provided hereunder shall be additional Secured Obligations secured hereby and by the other Collateral Documents. The provisions of this Section 4.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 4.03 shall be payable within 10 days of written demand therefor.
SECTION 4.04. Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
SECTION 4.05. Survival of Agreement . All covenants, agreements, representations and warranties made by Holdings hereunder and in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents, the making of any Loans and issuance of any Letters of Credit and the provision of services under Cash Management Obligations or Secured Hedge Agreements, regardless of any investigation made by any Secured Party or on its behalf and notwithstanding that any Secured Party may have had notice or knowledge of any Default at the time any credit is extended under the Credit Agreement, and shall continue in full force and effect as long as this Agreement has not been terminated or released pursuant to Section 4.12 below.
SECTION 4.06. Counterparts; Effectiveness, Several Agreement . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by facsimile or other electronic communication of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement. This Agreement shall become effective as to Holdings when a counterpart hereof executed on behalf of Holdings shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon Holdings and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of Holdings, the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, except that Holdings shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Pledged Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement.
SECTION 4.07. Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 4.08. Right of Set-Off . In addition to any rights and remedies of the Secured Parties provided by Law, upon the occurrence and during the continuance of any Event of Default, each Secured Party and its Affiliates is authorized at any time and from time to time, without prior notice to Holdings, any such notice being waived by Holdings to the fullest extent permitted by applicable Law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Indebtedness at any time owing by, such Secured Party and its Affiliates to or for the credit or the account of Holdings against any and all Obligations owing to such Secured Party and its Affiliates hereunder, now or hereafter existing, irrespective of whether or not such Secured Party or Affiliate shall have made demand under this Agreement and although such Obligations may be contingent or unmatured
 
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or denominated in a currency different from that of the applicable deposit or Indebtedness. Each Secured Party agrees promptly to notify Holdings and the Collateral Agent after any such set-off and application made by such Secured Party; provided , that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Secured Party under this Section 4.08 are in addition to other rights and remedies (including other rights of set-off) that such Secured Party may have at Law.
SECTION 4.09. Governing Law; Jurisdiction; Venue; Waiver of Jury Trial; Consent to Service of Process .
(a) The terms of Sections 10.15 and 10.16 of the Credit Agreement with respect to governing law, submission of jurisdiction, venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis , and the parties hereto agree to such terms.
(b) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 4.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.
SECTION 4.10. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 4.11. Security Interest Absolute . To the extent permitted by Law, all rights of the Collateral Agent hereunder, the grant of a security interest in the Pledged Collateral and all obligations of Holdings hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, Holdings in respect of the Secured Obligations or this Agreement.
SECTION 4.12. Termination or Release . (a) This Agreement and all security interests granted hereby shall terminate with respect to all Secured Obligations and any Liens arising therefrom shall be automatically released upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (i) Cash Management Obligations or obligations under Secured Hedge Agreements not yet due and payable and (ii) contingent obligations not yet accrued and payable) and the expiration or termination of all Letters of Credit (other than Letters of Credit in which the Outstanding Amount of the L/C Obligations related thereto have been Cash Collateralized or, if satisfactory to the relevant L/C Issuer in its reasonable discretion, for which a backstop letter of credit is in place).
(b) Upon any sale or transfer by Holdings of any Pledged Collateral that is permitted under the Credit Agreement (other than a sale or transfer to another Grantor), or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Pledged Collateral pursuant to Section 10.01 of the Credit Agreement, the security interest in such Collateral shall be automatically released.
 
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(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section 4.12, the Collateral Agent shall execute and deliver to Holdings, at Holdings’ expense, all documents that Holdings shall reasonably request to evidence such termination or release and shall perform such other actions reasonably requested by Holdings to effect such release, including delivery of certificates, securities and instruments. Any execution and delivery of documents pursuant to this Section 4.12 shall be without recourse to or warranty by the Collateral Agent.
(d) Notwithstanding anything to the contrary set forth in this Agreement, each Hedge Bank and each Cash Management Bank by the acceptance of the benefits under this Agreement hereby acknowledges and agrees that (i) the security interests granted under this Agreement of the Obligations of Holdings under any Secured Hedge Agreement and any Cash Management Obligations shall be automatically released upon termination of the Commitments and payment in full of all other Obligations and the expiration or termination of all Letters of Credit (other than Letters of Credit in which the Outstanding Amount of the L/C Obligations related thereto have been Cash Collateralized or, if satisfactory to the relevant L/C Issuer in its reasonable discretion, for which a backstop letter of credit is in place), in each case, unless the Obligations under the Secured Hedge Agreement or the Cash Management Obligations are due and payable at such time (it being understood and agreed that this Agreement and the security interests granted herein shall survive solely as to such due and payable Obligations and until such time as such due and payable Obligations have been paid in full) and (ii) any release of Collateral effective in the manner permitted by this Agreement shall not require the consent of any Hedge Bank or any Cash Management Bank that is not a Lender.
SECTION 4.13. Collateral Agent Appointed Attorney-in-Fact . Holdings hereby appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and the attorney-in-fact) of Holdings for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest ( provided that the Collateral Agent shall provide the applicable Grantor with notice thereof prior to exercising such rights). Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default and notice by the Collateral Agent to Holdings of the Collateral Agent’s intent to exercise such rights, with full power of substitution either in the Collateral Agent’s name or in the name of Holdings (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Pledged Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Pledged Collateral; (c) to commence and prosecute any and all suits, actions or proceedings at Law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Pledged Collateral or to enforce any rights in respect of any Pledged Collateral; (d) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Pledged Collateral; (e) to endorse the name of Holdings on any check, draft, instrument or other item of payment representing or included in the Pledged Collateral; (f) to make all determinations and decisions with respect thereto; and (e) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Pledged Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Pledged Collateral for all purposes; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Pledged Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to Holdings for any act or failure to act hereunder, except for their own gross negligence, bad faith, or willful misconduct or that of any of their Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact, in each case, as determined by a final nonappealable judgment of a court of competent jurisdiction. All sums disbursed by the Collateral Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, within 10 days of demand, by Holdings to the Collateral Agent and shall be additional Secured Obligations secured hereby.
 
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SECTION 4.14. General Authority of the Collateral Agent . By acceptance of the benefits of this Agreement and any other Collateral Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably (a) to consent to the appointment of the Collateral Agent as its agent hereunder and under such other Collateral Documents, (b) to confirm that the Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for the enforcement of any provisions of this Agreement and such other Collateral Documents against Holdings, the exercise of remedies hereunder or thereunder and the giving or withholding of any consent or approval hereunder or thereunder relating to any Pledged Collateral or Holdings’ obligations with respect thereto, (c) to agree that it shall not take any action to enforce any provisions of this Agreement or any other Collateral Document against Holdings, to exercise any remedy hereunder or thereunder or to give any consents or approvals hereunder or thereunder except as expressly provided in this Agreement or any other Collateral Document and (d) to agree to be bound by the terms of this Agreement and any other Collateral Documents.
SECTION 4.15. Reasonable Care . The Collateral Agent is required to use reasonable care in the custody and preservation of any of the Pledged Collateral in its possession; provided , that the Collateral Agent shall be deemed to have used reasonable care in the custody and preservation of any of the Pledged Collateral, if such Pledged Collateral is accorded treatment substantially similar to that which the Collateral Agent accords its own property.
SECTION 4.16. Delegation; Limitation . The Collateral Agent may execute any of the powers granted under this Agreement and perform any duty hereunder either directly or by or through agents or attorneys-in-fact, and shall not be responsible for the gross negligence or willful misconduct of any agents or attorneys-in-fact selected by it with reasonable care and without gross negligence or willful misconduct.
SECTION 4.17. Reinstatement . The obligations of Holdings under this Agreement shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or other Loan Party in respect of the Secured Obligations is rescinded or must be otherwise restored by any holder of any of the Secured Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.
SECTION 4.18. Miscellaneous . The Collateral Agent shall not be deemed to have actual, constructive, direct or indirect notice or knowledge of the occurrence of any Event of Default unless and until the Collateral Agent shall have received a notice of Event of Default or a notice from Holdings or the Secured Parties to the Collateral Agent in its capacity as Collateral Agent indicating that an Event of Default has occurred.
[ Signature Pages Follow. ]
 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.

SW HOLDCO, INC.	
		
By:	 	/s/ Howard J. Demsky	
Name:	 	Howard J. Demsky	
Title:	 	Chief Financial Officer and Secretary	
Signature Page to Pledge Agreement

			
BANK OF AMERICA, N.A. ,
as Collateral Agent	
		
By:	 	/s/ Liliana Claar	
Name:	 	Liliana Claar	
Title:	 	Vice President	
Signature Page to Pledge Agreement

EQUITY INTERESTS

Pledgor	  	Pledged Interest	
SW Holdco, Inc.	  	100% equity interest in SW Acquisitions Co., Inc.	

Exhibit 10.10 
EXECUTION VERSION
PATENT SECURITY AGREEMENT
Patent Security Agreement, dated as of December 1, 2009, by BUSCH ENTERTAINMENT LLC (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as collateral agent pursuant to the Credit Agreement (in such capacity, the “ Collateral Agent ”).
W I T N E S S E T H :
WHEREAS, the Grantor is party to a Security Agreement dated as of December 1, 2009 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Patent Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Defined Terms . Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Patent Collateral . The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral (excluding any Excluded Assets) of the Grantor:
(a) Patents of the Grantor listed on Schedule I attached hereto.
SECTION 3. The Security Agreement . The security interest granted pursuant to this Patent Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Patents made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTION 4. Termination . Upon the termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form releasing the lien on and security interest in the Patents under this Patent Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Patents.
SECTION 5. Counterparts. This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow.]

			
BUSCH ENTERTAINMENT LLC	
		
By:	 	/s/ Howard J. Demsky	
	 	Name: Howard J. Demsky	
	 	Title:   Secretary	
Signature Page to Patent Security Agreement

			
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	/s/ Liliana Claar	
	 	Name: Liliana Claar	
	 	Title:   Vice President	
Signature Page to Patent Security Agreement

Schedule I
to
PATENT SECURITY AGREEMENT
UNITED STATES PATENTS AND PATENT APPLICATIONS
Patents:

Registration No.	  	Title	  	   	
6,142,368	  	Prepayment Wristband And Computer Debit System	  		
6,352,205 B1	  	Prepayment Wristband And Computer Debit System	  		
6,474,557	  	Prepayment Wristband And Computer Debit System	  		
6,663,006 B2	  	Prepayment Wristband And Computer Debit System	  		
Patent Applications:
NONE.

Exhibit 10.11
EXECUTION VERSION
TRADEMARK SECURITY AGREEMENT
Trademark Security Agreement, dated as of December 1, 2009, by BUSCH ENTERTAINMENT LLC (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as collateral agent pursuant to the Credit Agreement (in such capacity, the “ Collateral Agent ”).
W I T N E S S E T H :
WHEREAS, the Grantor is party to a Security Agreement dated as of December 1, 2009 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Trademark Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Defined Terms . Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Trademark Collateral . The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral (excluding any Excluded Assets) of the Grantor:
(a) registered Trademarks of the Grantor listed on Schedule I attached hereto.
SECTION 3. The Security Agreement . The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Trademarks made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTION 4. Termination . Upon the termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form releasing the lien on and security interest in the Trademarks under this Trademark Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Trademarks.
SECTION 5. Counterparts . This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow]

			
BUSCH ENTERTAINMENT LLC	
		
By:	 	/s/ Howard J. Demsky	
	 	Name: Howard J. Demsky	
	 	Title: Secretary	
 
Signature Page to Trademark Security Agreement

			
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By: 	 	/s/ Liliana Claar	
	 	Name: Liliana Claar	
	 	Title: Vice President	
 
Signature Page to Trademark Security Agreement

Schedule I
to
TRADEMARK SECURITY AGREEMENT
UNITED STATES TRADEMARK REGISTRATIONS AND APPLICATIONS
Trademark Registrations:

TRADEMARK	  	REGISTRATION NUMBER	
ABBEY STONE THEATRE	  	2640594	
ADVENTURE CAMPS and Design (Whale Shark Penguin Zebra)	  	2873032	
ADVENTURE ISLAND	  	2046955	
ADVENTURE ISLAND	  	1945898	
ADVENTURE ISLAND	  	1963124	
ADVENTURE ISLAND	  	1963123	
ADVENTURE ISLAND	  	1951270	
AGONY EXPRESS	  	2778522	
ALPENGEIST	  	2113059	
APOLLO’S CHARIOT	  	2261705	
APOLLO’S CHARIOT and Design	  	2363258	
AQUATICA	  	3446885	
AQUATICA SEAWORLD’S WATERPARK	  	3446880	
AQUAZOID	  	2181254	
AQUAZOID and Design	  	2181469	
ARE YOU THERE YET?	  	2909302	
BAY OF PLAY	  	3532005	
BEACHIES	  	3450627	
BIG DADDY FALLS	  	1989260	
BOUNCE TICKET	  	2680234	
CARIBBEAN COIN	  	1938076	
CARIBBEAN CORKSCREW	  	2079079	
CASABLANCA OUTFITTERS	  	2363461	
CASABLANCA OUTFITTERS and Design	  	2363467	
CHEETAH CHASE	  	2931990	
CHOICE OF ADVENTURE	  	2288307	
CONGO RIVER RAPIDS	  	1275520	
CONSERVATION. IT’S IN OUR NATURE	  	2289369	
CONSERVATION. IT’S IN OUR NATURE	  	2182469	
CORKSCREW HILL	  	3129296	
COW-A-BUNGA	  	1910495	
CROWN COLONY	  	3094067	
CROWN COLONY HOUSE	  	1770567	
DAS FESTHAUS	  	2540168	
DAS FESTHAUS	  	1961863	
DOLPHIN PLUNGE	  	3450631	
DUMPHREY THE DRAGON	  	2016068	
EDGE OF AFRICA	  	2150334	
EDGE OF AFRICA and Design	  	2150891	
EDUCATION IS WILD	  	2272420	
EMERALD ISLE	  	2566328	

			
TRADEMARK	  	REGISTRATION NUMBER	
ESCAPE FROM POMPEII	  	2066901	
EVERGLIDES	  	2077343	
FABIAN’S FUNPORT	  	1738731	
GRIFFON	  	3321767	
GRISLY GARDENS	  	2751216	
GWAZI	  	2343810	
GWAZI	  	2293675	
GWAZI and Design	  	2369469	
H2O UFO	  	2047459	
HOLIDAY IN ROMA	  	2458641	
HOO ROO RUN	  	3450629	
HOWL-O-SCREAM	  	2322507	
HOWL-O-SCREAM	  	2701725	
HUBBA HUBBA HIGHWAY	  	2820503	
IMAGINIQUE	  	2735522	
IRISH THUNDER	  	2723152	
ISLAND QUEST	  	3187294	
JUNGALA	  	3699370	
KATA’S KOOKABURRA COVE	  	3446300	
KATONGA	  	2913947	
KILLARNEY	  	2610532	
KUMBA	  	1813175	
KUMBA and Design	  	1825559	
LAGUNA GRILL	  	2501008	
LAND OF THE DRAGONS	  	2059452	
LAND OF THE DRAGONS	  	2659354	
LAND OF THE DRAGONS AND DESIGN	  	2057530	
LOCH NESS MONSTER	  	1121613	
LOCH NESS MONSTER DESIGN	  	1129697	
MALIBU PIPELINE	  	1860056	
MELTDOWN	  	2461282	
MONTU	  	2137708	
MONTU	  	2045080	
MONTU and Design	  	2068969	
MYOMBE RESERVE	  	1950969	
MYOMBE RESERVE: THE GREAT APE DOMAIN	  	1779863	
MYSTIC SHEIKS OF MOROCCO	  	1961760	
NATURE’S KINGDOM	  	2267157	
NITRO RACER	  	2300588	
PET SHENANIGANS	  	2998243	
PHOENIX	  	1339635	
POT O GOLD	  	2741597	
QUICK QUEUE	  	3665785	
RACER CHASER	  	3489820	
RHINO RALLY	  	2613246	
RHINO RALLY	  	2521253	
RHINO RALLY and Design	  	2678819	
RIPPER ROW	  	2751217	
ROA’S RAPIDS	  	3470641	
ROCK AROUND THE BLOCK	  	2131369	

			
TRADEMARK	  	REGISTRATION NUMBER	
ROCK AROUND THE BLOCK and Design	  	2131392	
ROMAN RAPIDS	  	1705532	
RUNAWAY RAPIDS	  	2075560	
SCORPION	  	1195912	
SERENGETI PLAIN	  	1972712	
SERENGETI SAFARI	  	2714927	
SHEIKRA	  	3072162	
SKY SPLASH	  	2014224	
SLIPPITY DIPPITY	  	3489821	
SPLASH ATTACK	  	2114855	
STANLEY FALLS	  	1943939	
STARFRIGHT ORCHESTRA	  	2546610	
SULTAN’S SWEETS	  	2416792	
SUNNIES N SUCH	  	3450628	
TAUMATA RACER	  	3470642	
THE BIG BAD WOLF	  	1877009	
THE DESERT GRILL	  	2884182	
THE GULF SCREAM	  	1311536	
THE MEMORY THAT NEVER FADES	  	3060376	
THE MORTUARY	  	2751215	
THE SECRETS OF CASTLE O’SULLIVAN	  	2548479	
TIMBUKTU	  	2077342	
TOYS OF THE LEPRECHAUN	  	2660394	
TUT’S TOMB and Design	  	2041821	
UNITED WE SOAR	  	2885276	
VAPOR TRAIL	  	2200408	
VAPOR TRAIL and Design	  	2204567	
WAHOO RUN	  	2445267	
WALHALLA WAVE	  	3519804	
WATER COUNTRY USA	  	1398916	
WATER MOCCASIN	  	1837477	
WHANAU WAY	  	3470645	
WILD CARD	  	1943396	
WILD CREATIONS	  	3281736	
WILD INDULGENCE	  	2924112	
WORLDS OF DISCOVERY	  	3437367	
WORLDS OF DISCOVERY PARKS	  	3432417	
XCURSIONS	  	3104865	
X-ECUTIONERS	  	2783247	
YOU’RE THIS CLOSE	  	3387830	
Z1PPITY ZAPPITY	  	3489822	
ZNN	  	2261396	
Trademark Applications:

TRADEMARK	  	SERIAL NUMBER	
WHERE WORLDS CONNECT	  	77/598661	
ADVENTURE CAMPS and Design (Giraffe Dolphins)	  	77/820180	

			
TRADEMARK	  	SERIAL NUMBER	
AQUATICA	  	78/713792	
AQUATICA SEAWORLD’S WATERPARK	  	78/894576	
AQUATICA SEAWORLD’S WATERPARK	  	78/894480	
CRITTER COMPOST	  	77/626307	
EVERWYLD	  	77/735203	
ISLAND NIGHTS	  	77/768016	
SAFARI SOIL	  	77/626682	
WORLDS OF DISCOVERY and Design (Color)	  	77/299722	

Exhibit 10.12
EXECUTION VERSION
TRADEMARK SECURITY AGREEMENT
Trademark Security Agreement , dated as of December 1, 2009, by SEA WORLD LLC (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as collateral agent pursuant to the Credit Agreement (in such capacity, the “ Collateral Agent ”). 
W I T N E S S E T H :
WHEREAS, the Grantor is party to a Security Agreement dated as of December 1, 2009 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Trademark Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Trademark Collateral. The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral (excluding any Excluded Assets) of the Grantor:
(a) registered Trademarks of the Grantor listed on Schedule I attached hereto.
SECTION 3. The Security Agreement. The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Trademarks made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTION 4. Termination. Upon the termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form releasing the lien on and security interest in the Trademarks under this Trademark Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Trademarks.
SECTION 5. Counterparts. This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow]

			
SEA WORLD LLC	
		
By:	 	/s/ Howard J. Demsky	
	 	Name: Howard J. Demsky	
	 	Title: Secretary	
 
Signature Page to Trademark Security Agreement

			
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	/s/ Liliana Claar	
Name:	 	Liliana Claar	
Title:	 	Vice President	
 
Signature Page to Trademark Security Agreement

Schedule I
to
TRADEMARK SECURITY AGREEMENT
UNITED STATES TRADEMARK REGISTRATIONS AND APPLICATIONS
Trademark Registrations:

TRADEMARK	  	REGISTRATION NUMBER	
1-800-23-SHAMU	  	2146382	
ARTHUR C. TURTLE	  	2067304	
BASE STATION WILD ARCTIC	  	2134448	
BELIEVE	  	3170123	
BELIEVE and Design (Whale)	  	3170174	
BLUE HORIZONS	  	3077787	
CAMP SEA WORLD	  	1780901	
CIRQUE DE LA MER	  	3018871	
Cirque Design	  	2605841	
CLYDE & SEAMORE TAKE PIRATE ISLAND	  	2267767	
CLYDE AND SEAMORE IN DEEP DEEP TROUBLE	  	3057571	
CLYDE SEA LION	  	2063489	
COCONUT BAY CAFE	  	2421642	
DEEP DEEP TROUBLE	  	3050810	
Design (Shamu Partial Upright)	  	1690396	
Design (Whale)	  	1181571	
DISCOVER THE FEELING	  	2953718	
DISCOVERY COVE	  	2734920	
DISCOVERY COVE	  	2732349	
DISCOVERY COVE	  	2732328	
DISCOVERY COVE	  	2732306	
DISCOVERY COVE	  	2732324	
DISCOVERY COVE	  	2587059	
DISCOVERY COVE	  	2334447	
DISCOVERY COVE	  	2704521	
DISCOVERY COVE	  	2704510	
DISCOVERY COVE	  	2704533	
DISCOVERY COVE	  	2734945	
DISCOVERY COVE	  	2093930	
DISCOVERY COVE	  	2729340	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2528945	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2702548	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2704509	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2702546	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2734946	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2732333	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2732330	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2732325	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2734923	
DISCOVERY COVE and Design (Dolphin Swimmer)	  	2747333	
DOLLY DOLPHIN	  	2073942	

			
TRADEMARK	  	REGISTRATION NUMBER	
DOLPHIN COVE	  	2010682	
Dolphin Swimmer Design	  	3694609	
Fin Design	  	2199946	
Fin Design	  	2241320	
FORBIDDEN REEF	  	2185909	
FUSION	  	2933209	
HALLOWEEN SPOOKTACULAR	  	1853881	
HIGH SEAS	  	2918909	
Ice Cream Bar Design	  	1744703	
KAT ‘N’ KABOODLE	  	2828063	
KEY WEST	  	2158007	
KEY WEST AT SEA WORLD	  	2159828	
KEY WEST AT SEA WORLD and Design	  	2154552	
KEY WEST RAPIDS	  	2011035	
KRAKEN	  	2435797	
KRAKEN	  	2434132	
KRAKEN	  	2434131	
LIL’ GATORS LAGOON	  	2258063	
LOST LAGOON	  	1850440	
MAKAHIKI LUAU	  	2950004	
MAMA STELLA’S	  	1954934	
MANATEE RESCUE	  	2221515	
MANATEES: THE LAST GENERATION?	  	1827785	
MANGO JOE’S	  	1913982	
MANTA	  	3648420	
MILES MANATEE	  	1917453	
MISTIFY	  	2970322	
MYSTIQUE DE LA MER and Design	  	2883582	
O.P. OTTER	  	2071882	
PACIFIC POINT PRESERVE	  	1855378	
PENGUIN ENCOUNTER	  	1874287	
PENNY PENGUIN	  	2071884	
PETE PENGUIN	  	2071885	
PETS AHOY	  	2547356	
PETS RULE!	  	2670205	
PETS RULE! and Design	  	2680440	
PET TALES	  	2732319	
PIRATES 4D	  	2526741	
PIRATES and Design	  	2138974	
PORTS OF CALL	  	2985616	
PRAISE WAVE	  	2817269	
RICO & ROZA’S MUSICAL FEAST	  	2828062	
RIO LOCO	  	1702645	
ROCKIN’ SKI PARTY	  	2704057	
ROCKY POINT PRESERVE	  	1851175	
SEA TO SHINING SEA	  	2795895	
SEA WORLD	  	1879779	
SEA WORLD	  	1913439	
SEA WORLD	  	1828282	
SEA WORLD	  	1841785	

			
TRADEMARK	  	REGISTRATION NUMBER	
SEA WORLD	  	1911559	
SEA WORLD	  	1811881	
SEA WORLD	  	1195498	
SEA WORLD	  	1832770	
SEA WORLD	  	1811840	
SEA WORLD	  	1907329	
SEA WORLD	  	1907192	
SEA WORLD	  	3512461	
SEA WORLD	  	1702218	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2199930	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2233027	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2556318	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2605054	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2538463	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2229670	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2556320	
SEA WORLD ADVENTURE PARK and Design (Fin)	  	2556319	
SEA WORLD INTERNATIONAL CENTER	  	1619034	
Sea World International Center Globe Design	  	1634342	
SEAFARI	  	1852695	
SEAMORE SEA LION	  	2061556	
SEASIDE LIVING	  	2924408	
SEAWORLD	  	2815140	
SEAWORLD	  	3569923	
SHAMU	  	1261685	
SHAMU	  	1909982	
SHAMU	  	1798255	
SHAMU	  	1684584	
SHAMU	  	1911501	
SHAMU & CREW	  	2269206	
SHAMU & YOU	  	1811910	
SHAMU (Stylized) and Design (Whale Tale Fluke)	  	3120795	
SHAMU (and design)	  	2723866	
SHAMU and Design (Bug)	  	2543194	
SHAMU and Design (Bug)	  	2237823	
SHAMU (and design)	  	2243858	
SHAMU EXPRESS	  	2906829	
SHAMU ROCKS	  	3397859	
SHAMU TV	  	1849647	
SHAMU TV AND DESIGN	  	1931166	
Shamu Upright Whale Design	  	1764609	
SHAMU: CLOSE UP	  	2001341	
SHAMU’S HAPPY HARBOR	  	1874285	
SHAMU’S HAPPY HARBOR and Design	  	1758872	
SHAMU’S HOUSE OF DOUSE	  	2393715	
SHAMU’S HOUSE OF DOUSE	  	2373258	
SHARK ENCOUNTER	  	1783001	
SHARK ENCOUNTER and Design (Wave Fin)	  	2780543	
SHARKS DEEP DIVE	  	2757054	
SHARKS DEEP DIVE and Design (Wave Fin)	  	2798936	

			
TRADEMARK	  	REGISTRATION NUMBER	
SHARKS UNDERWATER GRILL	  	2878244	
SHARKS UNDERWATER GRILL and Design (Wave Fin)	  	2878363	
SHIPWRECK RAPIDS	  	2323478	
SHIPWRECK REEF CAFE	  	2279897	
SHIPWRECK REEF CAFE	  	2278386	
SHIVERS	  	2261198	
SIMPLY SHAMU	  	3228854	
SIR WINSTON WALRUS	  	2073954	
SKY TUBIN’	  	1959383	
SMOKY CREEK GRILL	  	2286638	
SPLASH OF MATH	  	2443976	
STEEL EEL	  	2294784	
STEEL EEL	  	2321830	
STEEL EEL and Design	  	2363917	
STINGRAY LAGOON	  	2049989	
SWEET SAILIN’ CANDY	  	2274487	
TERRORS OF THE DEEP	  	1683318	
TEXAS SPLASHDOWN	  	2087393	
THE GREAT WHITE	  	2105885	
THE GREAT WHITE and Design	  	2227129	
THE OYSTER’S SECRET	  	3001658	
THE SHAMU ADVENTURE	  	2240701	
THE WATERFRONT AT SEA WORLD	  	2778589	
THE WATERFRONT AT SEA WORLD and Design	  	2778602	
TOUCH A WORLD THAT TOUCHES YOU	  	3063562	
TURTLE POINT	  	2065194	
TWILIGHT DISCOVERY	  	3132539	
VIVA and Design	  	2592853	
VIVA LA MUSICA	  	2771186	
VIVA!	  	2586523	
VOYAGERS WOOD FIRED PIZZA	  	2852066	
WILD ARCTIC	  	1997470	
WILDOPEDIA	  	2891568	
Trademark Applications:

TRADEMARK	  	SERIAL NUMBER	
WHERE WORLDS CONNECT	  	77/412582	

Exhibit 10.13
EXECUTION VERSION
COPYRIGHT SECURITY AGREEMENT
Copyright Security Agreement, dated as of December 1, 2009, by BUSCH ENTERTAINMENT LLC (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as collateral agent pursuant to the Credit Agreement (in such capacity, the “ Collateral Agent ”).
W I T N E S S E T H :
WHEREAS, the Grantor is party to a Security Agreement dated as of December 1, 2009 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Copyright Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTON 1. Defined Terms . Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTON 2. Grant of Security Interest in Copyright Collateral . The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral (excluding any Excluded Assets) of the Grantor:
(a) registered Copyrights of the Grantor listed on Schedule I attached hereto.
SECTON 3. The Security Agreement . The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTON 4. Termination . Upon termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form releasing the lien on and security interest in the Copyrights under this Copyright Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Copyrights.
SECTON 5. Counterparts . This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow.]

			
BUSCH ENTERTAINMENT LLC	
		
By:	 	/s/ Howard J. Demsky	
	 	Name: Howard J. Demsky	
	 	Title: Secretary	
 
Signature Page to Copyright Security Agreement

			
 
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	/s/ Liliana Claar	
	 	Name: Liliana Claar	
	 	Title: Vice President	
 
Signature Page to Copyright Security Agreement

Schedule I
to
COPYRIGHT SECURITY AGREEMENT
UNITED STATES COPYRIGHT REGISTRATIONS

COPYRIGHT TITLE	  	REGISTRATION NUMBER	
Adventure Island	  	VA0000659721	
Adventure Island, Tampa Bay, Florida	  	VA0000668236	
Airship Shamu	  	VAu000221696	
Alpengeist	  	SR0000188692	
Aruba Tuba	  	VA0000659720	
Bus[c]h Entertainment montage art.	  	VA0000668166	
Busch Gardens : guide to adventure	  	TX0004406818	
Busch Gardens, Tampa Bay, Florida : guide to adventure	  	TX0004611428	
Busch Gardens, Tampa Bay, Florida : guide to adventure	  	TX0004497303	
Escape from Pompeii	  	VAu000310232	
Gc_ di.c / author, Brownej	  	TXu000601289	
Gccntrl.c / author, Brownej	  	TXu000601290	
Gccom.c. / author, Gardner.	  	TXu000601295	
Gccreate.c / author, Brownej.	  	TXu000601294	
Gccredit.c / author, Brownej.	  	TXu000601302	
Gcdamntc.c / author, Brownej.	  	TXu000601299	
Gedayend.c / author, Brownej.	  	TXu000601303	
Gcdimntc.c / author, Brownej.	  	TXu000601300	
Gchost.c / author, Brownej	  	TXu000601304	
Gcifinntc.c / author, Brownej.	  	TXu000601301	
Gcmaint.c / author, Gardner	  	TXu000601292	
Gcprocs. c / author, Brownej	  	TXu000601296	
Gcqueue.c / author, Brownej.	  	TXu000601297	
Gcrecpt.c / author, Brownej	  	TXu000601298	
Gcreg.c / author, Brownej	  	TXu000601291	
Gcreport.c / author, McNeillt	  	TXu000601293	
Haunts of the Olde Country	  	VA0000657708	
Kurnba	  	VA0000665909	
Malibu Pipeline	  	VA0000659719	
Mermaids Myths & Monsters	  	VAu000300491	
Mission, Bermuda Triangle, dive it!	  	VA0000645679	
New for 1992, Monster Marsh, Sea World of Ohio	  	VA0000636884	
Questor	  	VA0000658839	
R.L. Stine’s Haunted lighthouse	  	PA0001226636	
[Sesame Island logo]	  	VA0000512189	
TJ the Tiger	  	VAu000337395	
Totally television / A. W. Harris	  	VA0000630409	
Water Country USA	  	VA0000645157	

Exhibit 10.14
EXECUTION VERSION
COPYRIGHT SECURITY AGREEMENT
Copyright Security Agreement , dated as of December 1, 2009, by SEA WORLD LLC (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as collateral agent pursuant to the Credit Agreement (in such capacity, the “ Collateral Agent ”). 
W I T N E S S E T H :
WHEREAS, the Grantor is party to a Security Agreement dated as of December 1, 2009 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Copyright Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Copyright Collateral. The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral (excluding any Excluded Assets) of the Grantor:
(a) registered Copyrights of the Grantor listed on Schedule I attached hereto.
SECTION 3. The Security Agreement. The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTION 4. Termination. Upon termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form releasing the lien on and security interest in the Copyrights under this Copyright Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Copyrights.
SECTION 5. Counterparts. This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow.]

			
SEA WORLD LLC	
		
By:	 	/s/ Howard J. Demsky	
Name:	 	Howard J. Demsky	
Title:	 	Secretary	
 
Signature Page to Copyright Security Agreement

			
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	/s/ Liliana Claar	
Name:	 	Liliana Claar	
Title:	 	Vice President	
 
Signature Page to Copyright Security Agreement

Schedule I
to
COPYRIGHT SECURITY AGREEMENT
UNITED STATES COPYRIGHT REGISTRATIONS

COPYRIGHT TITLE	  	REGISTRATION NUMBER	
Undersea fantasy	  	SR0000045141	
Sea World : toward a greater understanding of the world of water /managing editor, Richard C. Murphy … [et al.].	  	CSN0006970	
1988 killer whale birth.	  	PA0000547978	
1991 killer whale birth	  	PA0000547976	
All about corals and coral reefs : K-3 teacher’s guide	  	TX0003796978	
All about dolphins : K-8 : teacher’s guide	  	TX0003840237	
All about dolphins! / written by Deborah Kovacs ; featuring Sea World photography	  	TX0003860474	
All about endangered species : K-3 teacher’s guide.	  	TX0003796982	
All about penguins : 4-12 teacher’s guide.	  	TX0003840234	
All about penguins : K-3 teacher’s guide	  	TX0003796979	
All about sea turtles : K-8 teacher’s guide	  	TX0003787447	
All about sharks! / written by Jane Resnick ; featuring Sea World photography	  	TX0003860576	
All about training Shamu / written by Jane Resnick ; featuring Sea World photography	  	TX0003860475	
All about whales : 4-8 teacher’s guide.	  	TX0003859804	
All about whales! / written by Deborah Kovacs ; featuring Sea World photography	  	TX0003860473	
[Almost anything goes ski show]	  	TX0002662150	
Almost anything goes ski show : script	  	TXu000449874	
Animal adaptations : K-3 : teacher’s guide.	  	TX0003845306	
Animal adaptations : P-1 teacher’s guide	  	TX0003796987	
Animal training at Sea World	  	TX0003787444	
Barbara Ann / T. Cooper, arranger	  	PAu001498152	
Beach blanket ski party : Sea World of Texas	  	TX0002612857	
Behavioral research : 7-12 : teacher’s guide	  	TX0003840235	
Bottlenose dolphin	  	TX0003836016	
California sea lions	  	TX0003840236	
Camp Lottsawadda	  	TX0002616852	
Canadian lumberjack show, nautilus show place, San Diego, 1979	  	TX0002617637	
Cap’n Kid goes to the South Pole / by Joanna Engle ; illustrated by Pat Paris.	  	TX0001139051	
City streets ‘87	  	TX0002616210	
The Clean-up of Codfish Cove : a book about self-esteem / by Gary A. Lewis ; illustrated by William Langley Studios	  	TX0003888150	
Clyde & Seamore’s holiday movie “How the grouch stole christmas” / written by Animal Behavior Department, Entertainment Department, Sea World of Ohio.	  	TX0002616631	
Clyde and Seamore, 10,000 B.C.	  	PAu001498151	
Clyde and Seamore, 10,000 B. C. : working draft.	  	TX0002616853	
Clydesdales	  	TX0003787442	
Clydesdales : K-3 teacher’s guide	  	TX0003787445	
Corals and coral reefs	  	TX0003836017	
Dive into sea world	  	TX0003237007	

			
COPYRIGHT TITLE	  	REGISTRATION NUMBER	
Dolly dolphin and the strange new something / by Dina Anastasio ; illustrated by William Langley Studios.	  	TX0003872510	
Dolphin cove	  	VAu000318526	
Dolphin cove	  	VAu000318527	
Dolphin discovery	  	TX0002616630	
Dolphin discovery	  	TX0002617633	
Dolphynesia	  	TX0002616214	
Dr. Lovecraft’s shipwrecked medicine show	  	TX0002616211	
Ecology and conservation : 4-6 teacher’s guide to your Sea World field trip	  	TX0003845923	
Ecology and conservation : 7-12 teacher’s guide to your Sea World field trip	  	TX0003796986	
Ecology and conservation : K-3 : teacher’s guide to your Sea World field trip.	  	TX0003845307	
Fiesta Mexicana : script.	  	TX0002616213	
A Flippered fairy tale : the sleeping princess	  	TX0002622937	
The “Game-game” game : Florida dolphin show, 1976	  	TX0002616851	
Good lovin’	  	PAu001498153	
The Hatfields and McCoys water ski show / by Tom Freeburn	  	TX0002616209	
Hotel Clyde & Seamore	  	VA0000656206	
How many are there? / by Ellen Weiss ; featuring Sea World photography	  	TX0003872513	
Husbandry training as a tool for marine mammal management	  	PA0000547977	
Interim ski show outline	  	TX0002858523	
The International snow flier script	  	TX0002617634	
Killer whales	  	TX0003864233	
The Legend of baby Shamu’s birthday show : working additions	  	TX0002616968	
Legend of Shamu	  	TX0002616964	
The Lone whale	  	PAu001502453	
Manatee : curriculum guide	  	TX0003845493	
Manatees	  	TX0003840673	
Marine animal husbandry and training : teacher’s guide to your Sea World field trip	  	TX0003787443	
Marine mathematics for the elementary classroom	  	TX0003796981	
Meet Shamu	  	SRu000205330	
Meet Shamu / Sea World of Texas	  	PAu001483229	
Meet Shamu : Sea World of Texas	  	TX0002612855	
Meet Shamu with baby : Sea World of Texas	  	TX0002662152	
Merlin’s magic lantern : Ohio summer nights, May 31, 1989	  	TX0002875122	
Nautilus show, 1987 : high dive S W O	  	TX0002612853	
New friends	  	TX0002867275	
New friends : Sea World of Texas	  	TX0002616212	
Night pirates	  	TX0002622938	
North American river otters	  	TX0003864237	
Once upon a maritime	  	TX0002617635	
Pacific Point Preserve	  	VA0000671176	
Penguins	  	TX0003845308	
Pinnipeds to pets : script	  	TX0002616850	
The Pirate ski show	  	TX0002617632	
The Pirates of Pinniped	  	TX0002617631	
The Rockhopper penguin at Sea World	  	TXu000200881	
Royal Lipizzan stallion show : Sea World of Ohio, April 18, 1989	  	TX0002875121	
San Diego dolphin show “in harmony.”	  	TX0002617636	
Sea Lion Circus : seal and penguin script, April 22, 1972	  	TX0002875124	

			
COPYRIGHT TITLE	  	REGISTRATION NUMBER	
Sea lions of the silver screen II	  	TX0002616629	
Sea otters	  	TX0003864236	
Sea turtles	  	TX0003864238	
The Sea World alphabet book	  	TX0000377960	
The Sea World animal rescue and rehabilitation program	  	TX0003787446	
The Sea World animal secret : script update 2/6/87	  	TX0002832367	
The Sea World book of penguins / text and photos. by Frank S. Todd	  	TX0000749506	
The Sea World book of sharks / by Eve Bunting [i.e. Anne Eve Bunting] ; photos. by Flip Nicklin ; [editorial direction by Cynthia Edwards].	  	TX0000406622	
The Sea World book of whales / by Eve Bunting [i.e. Anne Eve Bunting] ; photos. provided by Hubbs-Sea World Research Institute.	  	TX0000557239	
Sea World coloring book	  	VA0000143638	
The Sea world engagement calendar for 1991	  	TX0003757478	
Sea World’s 1977 Christmas card / Michelle Atkinson	  	VA0000003178	
The sea’s many colors / by Elaine Lonergan ; illustrated by Paul Lopez	  	TX0003872515	
Shamu and his friends / by Ellen Weiss ; featuring Sea World photography	  	TX0003872514	
Shamu and his Sea World friends stamp fun : 32 color stamps of Shamu and his friends plus dot-to-dots, mazes, puzzles, and more!	  	VA0000143452	
Shamu and the sunken treasure / by Felice Haus ; illustrated by Pat Paris	  	TX0001199247	
Shamu: new visions	  	PAu001541991	
Shamu—new visions : the music from the new Shamu show	  	SR0000135592	
Shamu night magic	  	PAu001481652	
Shamu night magic : script	  	TX0002616627	
Shamu : sea world star / by Michael J. Smollin	  	TX0001013171	
Shamu : take a bow : script	  	TX0002616626	
Shamu TV	  	VA0000669293	
Shamu TV : Arctic adventures	  	PA0000839070	
Shamu TV : beach adventures	  	PA0000836662	
Shamu TV : creatures of the keys	  	PA0000836661	
Shamu TV : episode ti., Cool things to do for the planet	  	PA0000870118	
Shamu TV : episode ti., Creepy creatures	  	PA0000836730	
Shamu TV : episode ti., Diversity of life	  	PA0000836729	
Shamu TV : episode ti., Killer Whale families / director, Victoria Hladik.	  	PA0000841020	
Shamu TV : episode ti., Wildlife of the grasslands	  	PA0000870083	
Shamu TV : habitat is home	  	PA0000839000	
Shamu TV : investigating birds	  	PA0000836660	
Shamu TV : the diversity of life	  	PA0000839005	
Shamu TV : wild Arctic I	  	PA0000836663	
Shamu : wet, wild, and wonderful	  	TX0002616208	
Shamu’s 25th anniversary	  	SRu000205331	
Shamu’s best friend : a book about self-esteem / by Gary A. Lewis ; illustrated by William Langley Studios	  	TX0003888149	
Shamu’s Happy Harbor	  	VA0000678664	
Shamu’s secrets of the sea / by Jane Resnick ; illustrated by Paul Lopez	  	TX0003872512	
Shamu’s showboat ‘80 / by Jon Binkowski, Mike Yeakle & assorted friends	  	TX0002616628	
Shark! : 4-8 teacher’s guide	  	TX0003796980	
Shark! K-3 teacher’s guide	  	TX0003859801	
Sharks and their relatives	  	TX0003852183	
Sir Winston Walrus and the great rescue / by Elaine Lonergan ; illustrated by William Langley Studios.	  	TX0003872509	

			
COPYRIGHT TITLE	  	REGISTRATION NUMBER	
Ski cat tales	  	TX0002616960	
Ski show script, March 6, 1989	  	TX0002662151	
Sky-Tubin’ at lost lagoon	  	VA0000730122	
Small Wonders : K-8 teacher’s guide	  	TX0003796985	
This is Shamu / music and lyrics by Les Baxter	  	TX0002612858	
Undersea adventure	  	TX0002906084	
US0 water ski show	  	TX0002867276	
USO water ski show	  	TX0002617597	
A Visit to Sea World : an interdisciplinary curriculum : 3rd-6th	  	TX0003845324	
A Visit to Sea World : an interdisciplinary curriculum : 7th-12th	  	TX0003845325	
A Visit to Sea World : an interdisciplinary curriculum : preK-2nd	  	TX0003845323	
Walruses	  	TX0003864096	
Waterfowl : ducks, geese & swans of the world / by Frank S. Todd [i.e. Frank Sturtevant Todd].	  	TX0000299849	
A Whale of a rescue / by Eleanor Hudson ; illustrated by Pat Paris	  	TX0001149432	
Whales	  	TX0003787441	
Window to the sea	  	TX0002612856	
World of the sea : group one / teacher’s guide by Vilia G. Sherman ; ill. by Noel Diaz	  	PA0000000141	
World of the sea : group two / teacher’s guide by Vilia G. Sherman ; ill. by Noel Diaz	  	PA0000000142	
Just like a family / K. Ashby	  	PA0000413933	

Exhibit 10.17

REGISTRATION RIGHTS AGREEMENT
OF
SW HOLDCO, INC.
DATED AS OF DECEMBER 1, 2009
 
CONFIDENTIAL
 
1

					
Table of Contents	  	 	 	
 	  	Page	 	
		
ARTICLE I DEFINITIONS	  	 	3	  	
		
ARTICLE II GENERAL	  	 	6	  	
		
SECTION 2.1 GENERAL	  	 	6	  	
SECTION 2.2 HOLDERS OF REGISTRABLE SECURITIES.	  	 	6	  	
		
ARTICLE III DEMAND AND PIGGYBACK RIGHTS	  	 	7	  	
		
SECTION 3.1 RIGHT TO DEMAND AND BE INCLUDED IN A NON-SHELF REGISTERED OFFERING	  	 	7	  	
SECTION 3.2 RIGHT TO PIGGYBACK ON A NON-SHELF REGISTERED OFFERING	  	 	7	  	
SECTION 3.3 RIGHT TO DEMAND AND BE INCLUDED IN A SHELF REGISTRATION	  	 	7	  	
SECTION 3.4 DEMAND AND PIGGYBACK RIGHTS FOR SHELF TAKEDOWNS	  	 	7	  	
SECTION 3.5 RIGHT TO RELOAD A SHELF	  	 	8	  	
SECTION 3.6 IMITATIONS ON DEMAND AND PIGGYBACK RIGHTS	  	 	8	  	
		
ARTICLE IV NOTICES, CUTBACKS AND OTHER MATTERS	  	 	9	  	
		
SECTION 4.1 NOTIFICATIONS REGARDING REGISTRATION STATEMENTS	  	 	9	  	
SECTION 4.2 NOTIFICATIONS REGARDING REGISTRATION PIGGYBACK RIGHTS	  	 	9	  	
SECTION 4.3 NOTIFICATIONS REGARDING DEMANDED UNDERWRITTEN TAKEDOWNS	  	 	9	  	
SECTION 4.4 PLAN OF DISTRIBUTION, UNDERWRITERS AND COUNSEL	  	 	10	  	
SECTION 4.5 CUTBACKS	  	 	10	  	
SECTION 4.6 WITHDRAWALS	  	 	10	  	
SECTION 4.7 LOCKUPS	  	 	10	  	
SECTION 4.8 EXPENSES	  	 	10	  	
		
ARTICLE V FACILITATING REGISTRATIONS AND OFFERINGS	  	 	11	  	
		
SECTION 5.1 GENERAL	  	 	11	  	
SECTION 5.2 REGISTRATION STATEMENTS	  	 	11	  	
SECTION 5.3 NON-SHELF REGISTERED OFFERINGS AND SHELF TAKEDOWNS	  	 	13	  	
SECTION 5.4 DUE DILIGENCE	  	 	14	  	
SECTION 5.5 INFORMATION FROM EQUITYHOLDERS	  	 	15	  	
		
ARTICLE VI INDEMNIFICATION	  	 	15	  	
		
SECTION 6.1 INDEMNIFICATION BY THE COMPANY	  	 	15	  	
SECTION 6.2 INDEMNIFICATION BY EQUITYHOLDERS	  	 	16	  	
SECTION 6.3 INDEMNIFICATION PROCEDURES	  	 	16	  	
SECTION 6.4 CONTRIBUTION	  	 	17	  	
		
ARTICLE VII OTHER AGREEMENTS	  	 	17	  	
		
SECTION 7.1 TRANSFER OF RIGHTS	  	 	17	  	
SECTION 7.2 LIMITED LIABILITY	  	 	18	  	
SECTION 7.3 RULE 144	  	 	18	  	
SECTION 7.4 IN-KIND DISTRIBUTIONS	  	 	19	  	
SECTION 7.5 ALTERNATIVE IPO ENTITIES	  	 	19	  	
SECTION 7.6 NON-U.S. REGISTRATION RIGHTS	  	 	19	  	
		
ARTICLE VIII MISCELLANEOUS	  	 	20	  	
		
SECTION 8.1 NOTICES	  	 	19	  	
SECTION 8.2 SECTION HEADINGS	  	 	19	  	
SECTION 8.3 GOVERNING LAW	  	 	19	  	
SECTION 8.4 CONSENT TO JURISDICTION AND SERVICE OF PROCESS	  	 	19	  	
SECTION 8.5 AMENDMENTS.	  	 	20	  	
SECTION 8.6 ENTIRE AGREEMENT	  	 	21	  	
SECTION 8.7 SEVERABILITY	  	 	21	  	
SECTION 8.8 TERM.	  	 	21	  	
SECTION 8.9 COUNTERPARTS	  	 	21	  	
 
2

REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (as amended from time to time, this “ Agreement ”) is dated as of December 1, 2009, and is between SW Holdco, Inc., formerly known as Orca Holding Co., Inc. (the “ Company ” ), SW Cayman L.P., formerly known as Orca Cayman L.P. (the “ Lead Investor ” ), the other entities which, together with the Lead Investor, on the Closing Date of the Acquisition (as described below), are becoming Initial Equityholders (as described below), the holders of the Class B Warrants (as described below), which holders, upon exercise of the Class. B Warrants, may become Class B Equityholders (as described below), and the Class C Equityholders (as described below), and any other Person that becomes an Equityholder (as described below) in accordance with this Agreement.
WHEREAS, SW Acquisitions Co., Inc., formerly known as Orca Acquisition Co., Inc. ( “Buyer” ), is a wholly owned subsidiary of the Company;
WHEREAS, in accordance with the Equity Purchase Agreement, dated as of October 7, 2009 and amended and restated as of November 30, 2009, Buyer is acquiring all of the outstanding equity interests of Busch Entertainment LLC and Sea World LLC from BPOF Corp. and HSHO Corp., respectively (the “ Acquisition ” ), and this Agreement is being entered into concurrently with the closing of the Acquisition (the “ Closing ” ); 
WHEREAS, upon consummation of the Closing the Initial Equityholders will hold all of the issued and outstanding shares of common stock of the Company;
WHEREAS, upon a Monetization or an In-Kind Distribution, the holders of Class A Units participating therein may become Equityholders for purposes of this Agreement;
WHEREAS, in the future the Company may consummate an IPO; and
WHEREAS, through this Agreement the Company is initially providing registration rights to the Initial Equityholders, the Class B Equityholders and the Class C Equityholders;
NOW, THEREFORE, for and in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in the Agreement (including Exhibits and Schedules hereto) but not defined in the body hereof shall have the meanings ascribed to them as follows:
“ Affiliate ” with respect to any Person means any other Person who controls, is controlled by or is under common control with such Person. For the avoidance of doubt, with respect to the Lead Investor, “Affiliate” includes (i) Blackstone Management Associates (Cayman) V L.P. and its Affiliates, (ii) any investment fund in respect of which Blackstone Management Associates (Cayman) V L.P. and/or one of its Affiliates is the investment manager or general partner, and (iii) any Affiliate of the investment funds described in paragraph (ii) above.
 
3

“ Class A Unit ” means a Class A Unit of an Initial Equityholder, as defined in the applicable partnership agreement of such Initial Equityholder.
“ Class B Equityholders ” means, following the exercise in whole or in part of the Class B Warrants and the distribution by any Mezz Investor LP, in accordance with the applicable Mezz Investor LP Partnership Agreement, of the Shares to which the holders of the Class B Units received upon such exercise are entitled, the recipients of such Shares.
“ Class B Unit ” means a Class B Unit of a Mezz Investor LP, as defined in the Mezz Investor LP Partnership Agreement.
“ Class B Warrant ” means a Class B Warrant issued by a Mezz Investor, as defined in the applicable Mezz Investor LP Partnership Agreement.
“ Class C Equityholders ” means the holders of Class C Units of the Initial Equityholders as of the date of this Agreement and any Permitted Transferees (as defined in the applicable partnership agreement of the applicable Initial Equity Holder), to the extent of the Shares distributed to such holders in respect of their Class C Units.
“ Class C Unit ” means a Class C Unit of an Initial Equityholder, as defined in the applicable partnership agreement of such Initial Equityholder.
“ Common Stock ” means common stock of the Company, par value $0.01 per share.
“ Equityholders ” means the Persons that directly hold Shares (including for the avoidance of doubt, any Persons who received Shares in connection with the Monetization or In-Kind Distribution of their Class A Units, Class B Units or Class C Units); provided that, to the extent an In-Kind Distribution or Monetization is contemplated, an indirect holder of Shares may be considered an Equityholder for purposes of this Agreement as appropriate.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Initial Equityholders ” means the Equityholders that become such on the Closing Date together with any additional Equityholders that become such as a result of a Permitted Syndication.
“ In-Kind Distribution ” means a distribution of Shares in accordance with Section 7.3 of the Lead Investor Partnership Agreement and any corresponding provision in the partnership agreements of the other Initial Equityholders that are partnerships.
“ IPO ” means a firm commitment underwritten registered public offering of the Common Stock or other securities of the Company in connection with which such Common Stock or other securities first becomes listed on the NYSE, the Nasdaq National Market System or any other internationally recognized securities exchange or automated quotation system approved by the Lead Investor.
“ Lead Investor Partnership Agreement ” means the partnership agreement of the Lead Investor as of the Closing Date, as amended from time to time in accordance with the terms thereof.
 
4

“ Mezz Investor LP ” means each of SW Cayman (GS) L.P. and SW Cayman (GSO) L.P.
“ Mezz Investor LP Partnership Agreement ” means each of the partnership agreements of the Mezz Investors LPs as of the Closing Date, as amended from time to time in accordance with the terms thereof.
“ Monetization ” has the meaning set forth in Section 7.3 of the Lead Investor Partnership Agreement and any corresponding provision in the partnership agreements of any of the other Initial Equityholders that are partnerships.
“ Permitted Syndication ” has the meaning set forth in the Lead Investor Partnership Agreement.
“ Permitted Transferee ” has the meaning set forth in the Lead Investor Partnership Agreement.
“ Person ” means any natural person, corporation, limited partnership, general partnership, limited liability company, joint stock company, joint venture, association, company, estate, trust, bank trust company, land trust, business trust, or other organization, whether or not a legal entity, custodian, trustee-executor, administrator, nominee or entity in a representative capacity and any government or agency or political subdivision thereof.
“ Prospectus ” means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.
“ Registrable Securities ” means any Shares held by an Equityholder. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) they are sold pursuant to an effective Registration Statement under the Securities Act, (ii) they are sold in accordance with Rule 144 under the Securities Act as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC, (iii) they are eligible to be sold in accordance with Rule 144 without regard to any volume limitations described therein, (iv) they have ceased to be outstanding, or (v) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of the securities.
“ Registration Statement ” shall mean any Registration Statement of the Company under the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated, by reference or deemed to be incorporated by reference in such Registration Statement.
 
5

“ Securities Act ” means the Securities Act of 1933, as amended.
“ Shares ” means shares of Common Stock of the Company.
“ WKSI ” means a well-known seasoned issuer, as defined in the SEC’s Rule 405.
ARTICLE II
GENERAL
Section 2.1 General .
(a) The Equityholders may from time to time sell Registrable Securities directly held by them in registered public offerings. The timing and amount of such sales will be determined by the Lead Investor, subject to any constraints imposed by this Agreement. This Agreement provides the Equityholders with registration rights with respect to such sales. In addition, the direct and indirect beneficial owners of the Class A Units of the Initial Equityholders may acquire Shares as a result of an In-Kind Distribution. In such event, this Agreement provides for the shelf registration of such Shares.
(b) The Class B Equityholders may acquire Class B Units in the Mezz Investor LPs upon the exercise of the Class B Warrants. In accordance with and subject to the applicable Mezz Investor LP Partnership Agreement, the holders of such Class B Units may surrender such Class B Units and withdraw the underlying Shares to which such Class B Units are entitled. Such holders will determine the timing and amount of the sale thereof, subject to any constraints imposed by this Agreement. This Agreement provides registration rights with respect to such sales. By executing this Agreement, the holders of Class B Warrants (including their permitted transferees) agree that, upon execution of the Class B Warrants in whole or in part, they will become subject to this Agreement as Class B Equityholders.
(c) The holders of the Class C Units may acquire Shares in connection with an In-Kind Distribution. Such holders will determine the timing and amount of the sale thereof, subject to the constraints imposed by this Agreement. This Agreement provides shelf registration rights with respect to such sales.
Section 2.2 Holders of Registrable Securities. A Person is a holder of Registrable Securities only if such Person is an Equityholder who directly holds such Registrable Securities To the extent an In-Kind Distribution is contemplated, an indirect holder of Registrable Securities may be considered an Equityholder for purposes of this Agreement as appropriate.
 
6

ARTICLE III
DEMAND AND PIGGYBACK RIGHTS
Section 3.1 Right to Demand and be Included in a Non-Shelf Registered Offering.
(a) Upon the demand of the Lead Investor made at any time and from time to time, the Company will facilitate in the manner described in this Agreement a non-shelf registered offering of Registrable Securities held by the Initial Equityholders and requested by the Lead Investor to be included in such offering. Any demanded non-shelf registered offering may, at the Company’s option, include Registrable Securities to be sold by the Company for its own account.
(b) The Company will facilitate in the manner described in this Agreement any such non-shelf registered offering.
Section 3.2 Right to Piggyback on a Non-Shelf Registered Offering.
(a) In connection with any registered offering of Registrable Securities covered by a non-shelf Registration Statement pursuant to the exercise of demand rights in accordance with this Agreement, or in connection with any registered offering of Shares covered by a non-shelf Registration Statement made at the initiative of the Company, the other Equityholders may exercise piggyback rights to have included in such offering Registrable Securities then held by them and not otherwise included in the offering.
(b) The Company will facilitate in the manner described in this Agreement any such non-shelf registered offering.
Section 3.3 Right to Demand and be Included in a Shelf Registration.
(a) Upon the demand of the Lead Investor, made at any time and from time to time when the Company is eligible to utilize Form S-3 or a successor form to sell Shares in a secondary offering on a delayed or continuous basis in accordance with Rule 415, the Company will facilitate in the manner described in this Agreement a shelf registration of Registrable Securities held by the Initial Equityholders on a pro rata basis, unless a particular Initial Equityholder seeks to include less than its own pro rata share and the Lead Investor agrees to that in its sole discretion. At the request of the Equityholders who hold Registrable Securities that are not otherwise included in the shelf registration, such shelf registration will include Registrable Securities then held by them.
(b) If at the time of such request pursuant to this Section 3.3 the Company is a WKSI, such shelf registration shall, at the request of the Lead Investor, cover an unspecified number of Registrable Securities to be sold by the Company and the Equityholders.
Section 3.4 Demand and Piggyback Rights for Shelf Takedowns.
(a) Upon the demand of the Lead Investor made at any time and from time to time, the Company will facilitate in the manner described in this Agreement a “takedown” of Registrable Securities off of an effective shelf Registration Statement.
 
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(b) In connection with any underwritten shelf takedown pursuant to the exercise of demand rights by the Lead Investor, each Initial Equityholder will have included in such takedown a pro rata number of Registrable Securities held by them that are registered on such shelf, unless a particular Initial Equityholder seeks to include less than its own pro rata share and the Lead Investor agrees to that in its sole discretion
(c) Class B Equityholders and Class C Equityholders who hold Registrable Securities covered by the applicable shelf will have the right to participate in such takedown as provided in this Agreement.
Section 3.5 Right to Reload a Shelf. Upon the written request of the Lead Investor, the Company will file and seek the effectiveness of a post-effective amendment to an existing shelf in order to register up to the number of Registrable Securities previously taken down off of such shelf by Equityholders and not yet “reloaded” onto such shelf. The Lead Investor and the Company will consult and coordinate with each other and with the other Equityholders in order to accomplish such replenishments from time to time in a sensible manner.
Section 3.6 Limitations on Demand and Piggyback Rights.
(a) Any demand for the filing of a Registration Statement or for a registered offering or takedown will be subject to the constraints of any applicable lockup arrangements, and such demand must be deferred until such lockup arrangements no longer apply. If a demand has been made for a non-shelf registered offering or for an underwritten takedown, no further demands may be made so long as the related offering is still being pursued. Notwithstanding anything in this Agreement to the contrary, the Equityholders will not have piggyback or other registration rights with respect to registered primary offerings by the Company (i) covered by a Form S-8 Registration Statement or a successor form applicable to employee benefit-related offers and sales, (ii) where the Shares are not being sold for cash or (iii) where the offering is a bona fide offering of securities other than Shares, even if such securities are convertible into or exchangeable or exercisable for Shares.
(b) The Company may postpone the filing of a demanded Registration Statement or suspend the effectiveness of any shelf Registration Statement for a reasonable “blackout period” not in excess of 90 days if the board of directors of the Company determines that such registration or offering could materially interfere with a bona fide business or financing transaction of the Company or is reasonably likely to require premature disclosure of information, the premature disclosure of which could materially and adversely affect the Company. The blackout period will end upon the earlier to occur of, (i) in the case of a bona fide business or financing transaction, a date not later than 90 days from the date such deferral commenced, and (ii) in the case of disclosure of non-public information, the earlier to occur of (x) the filing by the Company of its next succeeding Form 10-K or Form 10-Q, or (y) the date upon which such information is otherwise disclosed. In no event shall there be more than two blackout periods during any rolling period of 365 days, and the number of days covered by any one or more blackout periods shall not exceed 180 days in the aggregate during any rolling period of 365 days.
 
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ARTICLE IV
NOTICES, CUTBACKS AND OTHER MATTERS
Section 4.1 Notifications Regarding Registration Statements. In order for the Lead Investor to exercise its right to demand that a Registration Statement be filed, it must so notify the Company in writing indicating the number of Registrable Securities sought to be registered and the proposed plan of distribution. The Company will keep all Equityholders that have piggyback rights in respect of an IPO or subsequent registration contemporaneously apprised of all pertinent aspects of its pursuit of an IPO or any subsequent registration, whether pursuant to a demand by the Lead Investor or otherwise, with respect to which a piggyback opportunity is available. Pending any required public disclosure and subject to applicable legal requirements, the parties will maintain the confidentiality of these discussions.
Section 4.2 Notifications Regarding Registration Piggyback Rights. Any Equityholder wishing to exercise its piggyback rights with respect to a non-shelf Registration Statement must notify the Company and the other Equityholders of the number of Registrable Securities it seeks to have included in such Registration Statement. Such notice must be given as soon as practicable, but in no event later than 5:00 pm, New York City time, on the second trading day prior to (i) if applicable, the date on which the preliminary prospectus intended to be • used in connection with pre-effective marketing efforts for the relevant offering is expected to be finalized, and (ii) in any case, the date on which the pricing of the relevant offering is expected to occur.
Section 4.3 Notifications Regarding Demanded Underwritten Takedowns.
(a) The Company will keep the Equityholders that have piggyback rights in respect of an underwritten shelf takedown contemporaneously apprised of all pertinent aspects of any underwritten shelf takedown in order that they may have a reasonable opportunity to exercise their related piggyback rights. Without limiting the Company’s obligation as described in the preceding sentence, having a reasonable opportunity requires that the Equityholders be notified by the Company of an anticipated underwritten takedown (whether pursuant to a demand made by other Equityholders or made at the Company’s own initiative) no later than 5:00 pm, New York City time, on (i) if applicable, the second trading day prior to the date on which the preliminary prospectus or prospectus supplement intended to be used in connection with pre-pricing marketing efforts for such takedown is finalized, and (ii) in all cases, the second trading day prior to the date on which the pricing of the relevant takedown occurs.
(b) Any Equityholder wishing to exercise its piggyback rights with respect to an underwritten shelf takedown must notify the Company and the other Equityholders of the number of Registrable Securities it seeks to have included in such takedown. Such notice must be given as soon as practicable, but in no event later than 5:00 pm, New York City time, on (i) if applicable, the trading day prior to the date on which the preliminary prospectus or prospectus supplement intended to be used in connection with marketing efforts for the relevant offering is expected to be finalized, and (ii) in all cases, the trading day prior to the date on which the pricing of the relevant takedown occurs.
(c) Pending any required public disclosure and subject to applicable legal requirements, the parties will maintain appropriate confidentiality of their discussions regarding a prospective underwritten takedown.
 
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Section 4.4 Plan of Distribution, Underwriters and Counsel. If a majority of the Shares proposed to be sold in an underwritten offering through a non-shelf Registration Statement or through a shelf takedown is being sold by the Company for its own account, the Company will be entitled to determine the plan of distribution and select the managing underwriters for such offering. Otherwise, the Lead Investor will be entitled to determine the plan of distribution and select the managing underwriters, and the Lead Investor will also be entitled to select counsel for the selling Equityholders (which may be the same as counsel for the Company). In the case of a shelf Registration Statement, the plan of distribution will provide as much flexibility as is reasonably possible, including with respect to resales by transferee Equityholders and distributees in an In-Kind Distribution or Monetization.
Section 4.5 Cutbacks. If the managing underwriters advise the Company and the selling Equityholders that, in their opinion, the number of Shares requested to be included in an underwritten offering exceeds the amount that can be sold in such offering without adversely affecting the distribution of the Shares being offered, such offering will include only the number of Shares that the underwriters advise can be sold in such offering. To the extent the number of Shares requested to be included in an underwritten offering exceeds the amount that can be sold in such offering, and in all other cases where the Company is not selling Shares in the relevant offering, the selling Equityholders will be subject to cutback pro rata based on the number of Shares initially requested by them to be included in such offering, without distinguishing between Equityholders based on who made the demand for such offering. Except as contemplated by Section 7.1(b), other selling stockholders (other than transferees to whom an Equityholder has assigned its rights under this Agreement) will be included in an underwritten offering only with the consent of the Lead Investor.
Section 4.6 Withdrawals. Even if Registrable Securities held by an Equityholder have been part of a registered underwritten offering, such Equityholder may, prior to the time at which the public offering price and underwriters’ discount are determined with the managing underwriter, decline to sell all or any portion of the Registrable Securities being offered for its account.
Section 4.7 Lockups. In connection with any underwritten offering of Shares, the Company and each Equityholder will agree (in the case of Equityholders, with respect to Registrable Securities respectively held by them) to be bound by the underwriting agreement’s lockup restrictions (which must apply in like manner to all of them) that are agreed to (a) by the Company, if a majority of the Shares being sold in such offering are being sold for its account, and (b) by the Lead Investor, if a majority of the Shares being sold in such offering are being sold by Equityholders.
Section 4.8 Expenses. All out-of-pocket expenses incurred in connection with any Registration Statement or registered offering covering Registrable Securities held by Equityholders, including, without limitation, all registration, filing and qualification fees, word processing, duplicating and printing expenses, fees and disbursements of counsel (including the fees and disbursements of outside counsel for Equityholders) and of the independent certified
 
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public accountants (including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance), fees and expenses of the Company and the underwriters to the road show investor presentations, including the cost of any aircraft chartered for such purpose, listing fees, messenger and delivery expenses, and all fees and expenses of complying with and qualifying such Shares under state blue sky laws, will be borne by the Company. However, underwriters’, brokers’ and dealers’ discounts and commissions applicable to Shares sold for the account of an Equityholder will be borne by such Equityholder. Notwithstanding the foregoing, the Company shall be required to pay the fees and expenses of only one counsel for all of the holders of Registrable Securities whose Shares are included in a Registration Statement, which counsel shall be selected by the Lead Investor.
ARTICLE V
FACILITATING REGISTRATIONS AND OFFERINGS
Section 5.1 General. If the Company becomes obligated under this Agreement to facilitate a registration and offering of Shares on behalf of Equityholders, the Company will do so (i) with the same degree of care and dispatch as would reasonably be expected in the case of a registration and offering by the Company of Shares for its own account, and (ii) as expeditiously as possible. Without limiting this general obligation, the Company will fulfill its specific obligations as described in this Article V.
Section 5.2 Registration Statements. In connection with each Registration Statement that is demanded by the Lead Investor or as to which piggyback rights otherwise apply, the Company will:
(a)(i) prepare and file with the SEC a Registration Statement covering the applicable Shares, (ii) file amendments thereto as warranted, (iii) seek the effectiveness thereof and cause such Registration Statement to remain effective for a minimum of two years or such longer period as required by the Lead Investor, and (iv) file with the SEC prospectuses and prospectus supplements as may be required, all in consultation with the selling Equityholders and as reasonably necessary in order to keep such Registration Statement effective for such period of time referred to in clause (iii) above and to permit the offer and sale of such Shares in accordance with the applicable plan of distribution and the Securities Act;
(b)(1) within a reasonable time prior to the filing of any Registration Statement, any prospectus, any amendment to a Registration Statement, amendment or supplement to a prospectus or any free writing prospectus, provide copies of such documents to the selling Equityholders and to the underwriter or underwriters of an underwritten offering, if applicable, and to their respective counsel; fairly consider such reasonable changes in any such documents prior to or after the filing thereof as the counsel to the Equityholders or the underwriter or the underwriters may request; and make such of the representatives of the Company as shall be reasonably requested by the selling Equityholders or any underwriter available for discussion of such documents; and (2) within a reasonable time prior to the filing of any document which is to be incorporated by reference into a Registration Statement or a prospectus, provide copies of such document to counsel for the Equityholders and underwriters; fairly consider such reasonable changes in such document prior to or after the filing thereof as counsel for such Equityholders or such underwriter shall request; and make such of the representatives of the Company as shall be reasonably requested by such counsel available for discussion of such document;
 
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(c) use all reasonable efforts to cause each Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of such Registration Statement, amendment or supplement and during the distribution of the registered Shares (x) to comply in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC and (y) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
(d) notify each Equityholder promptly, and, if requested by such Equityholder, confirm such advice in writing, (i) when a Registration Statement has been filed and when the same has become effective and when any post-effective amendments and supplements thereto become effective if such Registration Statement or post-effective amendment is not automatically effective upon filing pursuant to Rule 462, (ii) of any request by the SEC for amendments or supplements to the Registration, (iii) of the issuance by the SEC or any state securities authority of any stop order, injunction or other order or requirement suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any written notification with respect to the suspension of the qualification of any Registrable Securities for sale in any jurisdiction or the initiation or overt threat of any proceeding for such purpose; (v) if, between the effective date of a Registration Statement and the closing of any sale of securities covered thereby pursuant to any agreement to which the Company is a party, the representations and warranties of the Company contained in such agreement cease to be true and correct in all material respects or if the Company receives any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation of any proceeding for such purpose, and (iv) of the happening of any event during the period a Registration Statement is effective as a result of which such Registration Statement or the related Prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and at the request of any Equityholder promptly prepare and furnish to it a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;
(e) furnish counsel for each underwriter, if any, and for the Equityholders copies of any correspondence with the SEC or any state securities authority relating to the Registration Statement or prospectus;
(f) otherwise use all reasonable efforts to comply with all applicable rules and regulations of the SEC, including making available to its security holders an earnings statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar provision then in force);
(g) use all reasonable efforts to prevent the issuance, or obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible time;
 
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(h) use all reasonable efforts to take or cause to be taken all other actions, and do and cause to be done all other things necessary or reasonably advisable in the opinion of Equityholders’ counsel to effect the registration of such Registrable Securities contemplated hereby.
Section 5.3 Non Shelf Registered Offerings and Shelf Takedowns. In connection with any non-shelf registered offering or shelf takedown that is demanded by the Lead Investor or as to which piggyback rights otherwise apply, the Company will;
(a) cooperate with the selling Equityholders and the sole underwriter or managing underwriter of an underwritten offering of Shares, if any, to facilitate the timely preparation and delivery of certificates representing the Shares to be sold and not bearing any restrictive legends; and enable such Shares to be in such denominations (consistent with the provisions of the governing documents thereof) and registered in such names as the selling Equityholders or the sole underwriter or managing underwriter of an underwritten offering of Shares, if any, may reasonably request at least five days prior to any sale of such Shares; and use reasonable efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably requested by the selling Equityholders or the underwriters;
(b) furnish to each Equityholder and to each underwriter, if any, participating in the relevant offering, without charge, as many copies of the applicable prospectus, including each preliminary prospectus, and any amendment or supplement thereto (including financial statements and schedules thereto, and, if the Equityholder or underwriter so requests, all exhibits (including those, if any, incorporated by reference) thereto), and such other documents as such Equityholder or underwriter may reasonably request in order to facilitate the public sale or other disposition of the Shares; the Company hereby consents to the use of the prospectus, including each preliminary prospectus, by each such Equityholder and underwriter in connection with the offering and sale of the Shares covered by the prospectus or the preliminary prospectus;
(c)(i) use all reasonable efforts to register or qualify the Shares being offered and sold, no later than the time the applicable Registration Statement becomes effective, under all applicable state securities or “blue sky” laws of such jurisdictions as each underwriter, if any, or any Equityholder holding Shares covered by a Registration Statement, shall reasonably request; (ii) use all reasonable efforts to keep each such registration or qualification effective during the period such Registration Statement is required to be kept effective; and (iii) do any and all other acts and things which may be reasonably necessary or advisable to enable each such underwriter, if any, and Equityholder to consummate the disposition in each such jurisdiction of such Shares owned by such Equityholder; provided, however, that the Company shall not be obligated to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to consent to be subject to general service of process (other than service of process in connection with such registration or qualification or any sale of Shares in connection therewith) in any such jurisdiction;
(d) cause all Shares being sold to be qualified for inclusion in or listed on The New York Stock Exchange or any securities exchange or the NASDAQ National Market on which Shares issued by the Company are then so qualified or listed if so requested by the Equityholders, or if so requested by the underwriter or underwriters of an underwritten offering of Shares, if any;
 
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(e) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter in an underwritten offering;
(f) use all reasonable efforts to facilitate the distribution and sale of any Shares to be offered pursuant to this Agreement, including without limitation by making road show presentations, holding meetings with and making calls to potential investors and taking such other actions as shall be requested by the Equityholders or the lead managing underwriter of an underwritten offering; and
(g) enter into customary agreements (including, in the case of an underwritten offering, underwriting agreements in customary form, and including provisions with respect to indemnification and contribution in customary form and consistent with the provisions relating to indemnification and contribution contained herein) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Shares and in connection therewith:
1. make such representations and warranties to the selling Equityholders and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings;
2. obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the lead managing underwriter, if any) addressed to each selling Equityholder and the underwriters, if any, covering the matters customarily covered in opinions requested in sales of securities or underwritten offerings and such other matters as may be reasonably requested by such Equityholders and underwriters;
3. obtain “cold comfort” letters and updates thereof from the Company’s independent certified public accountants addressed to the selling Equityholders, if permissible, and the underwriters, if any, which letters shall be customary in form and shall cover matters of the type customarily covered in “cold comfort” letters to underwriters in connection with primary underwritten offerings;
4. to the extent requested and customary for the relevant transaction, enter into a securities sales agreement with the Equityholders providing for, among other things, the appointment of such representative as agent for the selling Equityholders for the purpose of soliciting purchases of Shares, which agreement shall be customary in form, substance and scope and shall contain customary representations, warranties and covenants
The above shall be done at such times as customarily occur in similar registered offerings or shelf takedowns.
Section 5.4 Due Diligence. In connection with each registration and underwritten offering of Shares to be sold by Equityholders, the Company will, in accordance with customary
 
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practice, make available for inspection by representatives of the Equityholders and underwriters and any counsel or accountant retained by such Equityholder or underwriters all relevant financial and other records, pertinent corporate documents and properties of the Company and cause appropriate officers, managers and employees of the Company to supply all information reasonably requested by any such representative, underwriter, counsel or accountant in connection with their due diligence exercise.
Section 5.5 Information from Equityholders. Each Equityholder that holds Shares covered by any Registration Statement will furnish to the Company such information regarding itself as is required to be included in the Registration Statement, the ownership of Shares by such Equityholder and the proposed distribution by such Equityholder of such Shares as the Company may from time to time reasonably request in writing and as shall be required in connection with any action taken by the Company pursuant to this Agreement in respect of the Registrable Securities.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification by the Company. In the event of any registration under the Securities Act by any Registration Statement pursuant to rights granted in this Agreement of Shares held by Equityholders, the Company will hold harmless each Equityholder, such Equityholder’s directors and officers, each Person who participates in the offering of such Registrable Securities, including each underwriter of such securities and each other Person, if any, who controls such Equityholder or participating Person or underwriter within the meaning of the Securities Act, against any losses, claims, damages, or liabilities (including legal fees and costs of court), joint or several, to which Equityholders or such underwriter or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or any actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (i) contained or incorporated by reference, on its effective date, in any Registration Statement under which such securities were registered under the Securities Act or any amendment or supplement to any of the foregoing, or which arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) contained in any preliminary Prospectus, if used prior to the effective date of such Registration Statement, or in the final Prospectus (as amended or supplemented if the Company shall have filed with the SEC any amendment or supplement to the final Prospectus), or which arise out of or are based upon the omission or alleged omission (if so used) to state a material fact required to be stated in such Prospectus or necessary to make the statements in such prospectus not misleading; and will reimburse each such Equityholder, such Equityholder’s directors and officers, such participating Person or controlling Person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, or liability; provided, however, that the Company shall not be liable to any Equityholder or its underwriters or controlling Persons in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement or such amendment or supplement, in reliance upon and in conformity with information furnished to the Company through a written instrument duly executed by Equityholders or such underwriter specifically for use in the preparation thereof.
 
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Section 6.2 Indemnification by Equityholders. Each Equityholder will indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 6.1) the Company, each director of the Company, each officer of the Company who shall sign the Registration Statement, and any Person who controls the Company within the meaning of the Securities Act, (i) with respect to any statement or omission from such Registration Statement, or any amendment or supplement to it, if such statement or omission was made in reliance upon and in conformity with information furnished to the Company through a written instrument duly executed by such Equityholder specifically regarding such Equityholder for use in the preparation of such Registration Statement or amendment or supplement, and (ii) with respect to compliance by Equityholders with applicable laws in effecting the sale or other disposition of the securities covered by such Registration Statement. In no event shall the liability of any selling Equityholder hereunder be greater in amount than the dollar amount of the proceeds received by such Equityholder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
Section 6.3 Indemnification Procedures. Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in the preceding Sections of this Article VI, the indemnified party will, if a resulting claim is to be made or may be made against an indemnifying party, give written notice to the indemnifying party of the commencement of the action. The failure of any indemnified party to give notice shall not relieve the indemnifying party of its obligations in this Article VI, except to the extent that the indemnifying party is actually prejudiced by the failure to give notice. If any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense of the action with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume defense of the action, the indemnifying party will not be liable to such indemnified party for any legal or other expenses incurred by the latter in connection with the action’s defense. An indemnified party shall have the right to employ separate counsel in any action or proceeding and participate in the defense thereof, but the fees and expenses of such counsel shall be at such indemnified party’s expense unless (a) the employment of such counsel has been specifically authorized in writing by the indemnifying party, which authorization shall not be unreasonably withheld, (ii) the indemnifying party has not assumed the defense and employed counsel reasonably satisfactory to the indemnified party within 30 days after notice of any such action or proceeding, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include the indemnified party and the indemnifying party and the indemnified party shall have been advised by such counsel that (A) representation of the indemnified party and the indemnifying party by the same counsel would be inappropriate under applicable standards of professional conduct, or (B) there may be one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action or proceeding on behalf of the indemnified party), it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to all local counsel which is necessary, in the good faith opinion of counsel for the
 
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indemnified party in order to adequately represent the indemnified parties) for the indemnified party and that all such fees and expenses shall be reimbursed as they are incurred upon written request and presentation of invoices. Whether or not a defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent. No indemnifying party will consent to entry of any judgment or enter into any settlement which (i) does not include as an unconditional term the giving by the claimant or plaintiff, to the indemnified party, of a release from all liability in respect of such claim or litigation (ii) involves any admission of wrongdoing on or on behalf of the indemnified party or (iii) involves the imposition of equitable remedies or the imposition of any non-financial obligations on the indemnified party.
Section 6.4 Contribution. If the indemnification required by this Article VI from the indemnifying party is unavailable to or insufficient to hold harmless an indemnified party in respect of any indemnifiable losses, claims, damages, liabilities, or expenses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities, or expenses in such proportion as is appropriate to reflect the relative fault of the indemnified and indemnifying parties, in connection with the actions which resulted in such losses, claims, damages, liabilities, or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact, has been made by, or relates to information supplied by, such indemnifying party or parties, and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damage, liabilities, and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The Company and the Equityholders agree that it would not be just and equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the prior provisions of this Section 6.4.
Notwithstanding the provisions of this Section 6.4, no indemnifying party shall be required to contribute any amount in excess of the amount by which the total price at which the securities were offered to the public by the indemnifying party exceeds the amount of any damages which the indemnifying party has otherwise been required to pay by reason of an untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such a fraudulent misrepresentation.
ARTICLE VII
OTHER AGREEMENTS
Section 7.1 Transfer of Rights.
(a) Any Equityholder (the “ Transferring Equityholder ” ) may transfer all or any portion of its rights under this Agreement to (i) any transferee (the “ Transferee ” ) of any interests in the
 
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Lead Investor or Registrable Securities held by such Transferring Equityholder or (ii) any Permitted Transferee of Class C Units in accordance with the applicable partnership agreement of the Equityholder; provided that in either event, such transfer is in accordance with the limited partnership agreement applicable to such Transferring Equityholder or any other agreement restricting transfer of Registrable Securities or Class C Units, as applicable, to which an Equityholder is a party. Any such transfer of rights under this Agreement will be effective upon receipt by the Company of (i) written notice from such Transferring Equityholder stating the name and address of any transferee and identifying the number of Registrable Securities with respect to which rights under this Agreement are being transferred and the nature of the rights so transferred, and (ii) a written agreement from the Transferee to be bound by the terms of this Agreement, upon which such Transferee will be deemed to be a party hereto and have the rights and obligations of the Transferring Equityholder hereunder with respect to the Registrable Securities transferred. However, if such Transferees are receiving Registrable Securities through an In-Kind Distribution with an ability to resell Shares off of a shelf Registration Statement, no such written agreement is required, and such in-kind Transferees will, as transferee Equityholders, be entitled as third party beneficiaries to the rights under this Agreement so transferred. In that regard, in-kind Transferees will not be given demand or piggyback rights; rather, their means of registered resale will be limited to sales off of a shelf with respect to which no special actions are required by the Company or the other Equityholders. The Company and the transferring Equityholder will notify the other Equityholders as to who the Transferees are and the nature of the rights so transferred.
(b) In the event the Company engages in a merger or consolidation in which the Shares are converted into securities of another company, appropriate arrangements will be made so that the registration rights provided under this Agreement continue to be provided to Equityholders by the issuer of such securities. To the extent such new issuer, or any other company acquired by the Company in a merger or consolidation, was bound by registration rights obligations that would conflict with the provisions of this Agreement, the Company will, unless Equityholders then holding a majority of the Shares otherwise agree, use its best efforts to modify any such “inherited” registration rights obligations so as not to interfere in any material respects with the rights provided under this Agreement.
Section 7.2 Limited Liability. Notwithstanding any other provision of this Agreement, neither the members, general partners, limited partners or managing directors, or any directors or officers of any members, general or limited partner, advisory director, nor any future members, general partners, limited partners, advisory directors, or managing directors, if any, of the Lead Investor or any other Equityholder shall have any personal liability for performance of any obligation of the Lead Investor or such Equityholder under this Agreement in excess of the respective capital contributions of such members, general partners, limited partners, advisory directors or managing directors to such Equityholder.
Section 7.3 Rule 144. If the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act, the Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act (or, if the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act but is not required to file such reports, it will, upon the request of any Equityholder, make publicly available such information) and it will take such further action as any Equityholder may reasonably request, so as to enable
 
18

such Equityholder to sell Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Equityholder, the Company will deliver to such Equityholder a written statement as to whether it has complied with such requirements.
Section 7.4 In-Kind Distributions. If any Equityholder seeks to effectuate an In-Kind Distribution of all or part of its Shares to its direct or indirect equityholders, the Company will, subject to applicable lockups, work with such Equityholder and the Company’s transfer agent to facilitate such in-kind distribution in the manner reasonably requested by such Equityholder.
Section 7.5 Alternative IPO Entities. In the event that the Company elects to effect an underwritten public offering of equity securities of any subsidiary of the Company (such entity, the “ Alternative IPO Entity ” ) rather than the equity securities of the Company whether as a result of a reorganization of the Company or otherwise, the Lead Investor, the Initial Equityholders and the Company shall cause the Alternative IPO Entity to enter into an agreement with the Equityholders that provides the Equityholders with registration rights with respect to the equity securities of the Alternative IPO Entity that are substantially the same as, and in any event no less favorable in the aggregate to, the registration rights provided to the Equityholders in this Agreement.
Section 7.6 Non-U.S. Registration Rights. The provisions of Article II to VI shall apply mutatis mutandis in respect of any registration of Registrable Securities in any jurisdiction other than the United States, solely to the extent that the Lead Investor in its absolute discretion decides to effect such a registration, together with such changes thereto as may be necessary or appropriate to reflect the applicable customs, practices and legal requirements in such jurisdiction.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices required to be given hereunder shall be in writing and shall be deemed to be duly given if personally delivered, telecopied and confirmed, or mailed by certified mail, return receipt requested, or overnight delivery service with proof of receipt maintained, at the addresses listed on Schedule B hereto (or any other address that any such party may designate by written notice to the other parties).
Section 8.2 Section Headings. The article and section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. References in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specifically indicated.
Section 8.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
Section 8.4 Consent to Jurisdiction and Service of Process The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of the courts of the State of Delaware
 
19

and the federal courts of the United States of America located in Delaware, and appropriate appellate courts therefrom, over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby, and each party hereby irrevocably agrees that all claims in respect of such dispute or proceeding may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. This consent to jurisdiction is being given solely for purposes of this Agreement and is not intended to, and shall not, confer consent to jurisdiction with respect to any other dispute in which a party to this Agreement may become involved. Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action, or proceeding of the nature specified in the paragraph above by the mailing of a copy thereof in the manner specified by the provisions of Section 8.1. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Section 8.5 Amendments. The provisions of this Agreement, including the provisions of this section, may not be amended, restated, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the written consent of the Lead Investor; provided, however, that (x) any amendment, restatement, modification, supplement, waiver or consent to departures from the provisions of this Agreement that by its express terms has a disproportionate material adverse effect on the rights, obligations, powers or interests of any Equityholder (or class or classes of Equityholders) hereunder, in their capacity as Equityholders, without similarly affecting the rights hereunder of Equityholders of the same class (or all other classes of Equityholders), in their capacities as Equityholders, shall not be effective as to any such Equityholder (or class or classes of Equityholders) without the prior written consent of such Equityholder (or the majority of such class or classes of Equityholders), (y) any amendment, restatement, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would be adverse to a right specifically granted to a specific Equityholder herein (but not to other Equityholders) shall require the agreement of that Equityholder or in the case of any class or classes of Equityholders the consent of a majority in interest of the Equityholders included in such class or classes, and (z) any amendment, restatement, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would materially expand the indemnification obligations of an Equityholder under Section 6.2 hereof or reduce the indemnification owed to an Equityholder under Section 6.1, the contribution owed to an Equityholder under Section 6.4 or the piggyback rights of an Equityholder under Section 3.2 or Section 3.4 hereof shall not be effective as to any such Equityholder without such Equityholder’s prior written consent. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other holders of Registrable Securities may be given by those holders of the Registrable Securities being sold by such holders pursuant to such Registration Statement that would be required to approve such matter under this Section 8.5 as if such holders were the only Equityholders remaining. The Company shall send to each Equityholder a copy of any amendment, restatement, modification or supplement, or material consent or waiver, to this Agreement.
 
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Section 8.6 Entire Agreement. This Agreement and the partnership agreements of the Initial Equityholders constitute the entire agreement and understanding of the parties with respect to the transactions contemplated hereby and thereby. The registration rights granted under this Agreement supersede any registration, qualification or similar rights with respect to any of the Shares granted under any other agreement, and any of such preexisting registration rights are hereby terminated.
Section 8.7 Severability. The invalidity or unenforceability of any specific provision of this Agreement shall not invalidate or render unenforceable any of its other provisions. Any provision of this Agreement held invalid or unenforceable shall be deemed reformed, if practicable, to the extent necessary to render it valid and enforceable and to the extent permitted by law and consistent with the intent of the parties to this Agreement.
Section 8.8 Term. This Agreement shall terminate with respect to an Equityholder on the date on which such Equityholder ceases to hold Registrable Securities and has no future prospect of holding Registrable Securities through the applicable partnership agreements; provided, that, such Equityholder’s rights and obligations pursuant to Article VI, as well as the Company’s obligations to pay expenses pursuant to Section 4.8, shall survive with respect to any Registration Statement in which any Registrable Securities of such Equityholders were included and, for the avoidance of doubt, any underwriter lock-up that an Equityholder has executed prior to an Equityholder’s termination in accordance with this clause shall remain in effect in accordance with its terms.
Section 8.9 Counterparts. This Agreement may be executed in multiple counterparts, including by means of facsimile, each of which shall be deemed an original, but all of which together shall constitute the same instrument.
[Signature Pages Follow]
 
21

IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be executed as of the date first above written.

SW HOLDCO, INC.	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	President	
 
22

			
SW CAYMAN L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
23

			
SW CAYMAN A L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
24

			
SW CAYMAN B L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
25

			
SW CAYMAN C L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
26

			
SW CAYMAN D L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
27

			
SW CAYMAN E L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
28

			
SW CAYMAN F L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
29

			
SW CAYMAN CO-INVEST L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
30

			
SW CAYMAN (GS) L.P.	
	
By: SW Cayman Limited, its general partner	
		
By:	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
31

			
SW CAYMAN (GSO) L.P.	
	
By: SW Cayman Limited, its general partner	
		
By: 	 	/s/ Peter Wallace	
	 	 	
Name:	 	Peter Wallace	
Title:	 	Director	
 
32

			
GSMP V ONSHORE US, LTD.	
		
By:	 	/s/ John E. Bowman	
	 	 	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
 
33

			
GSMP V ONSHORE US – AB HOLDINGS	
		
By:	 	/s/ John E. Bowman	
	 	 	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
 
34

			
GSMP V INSTITUTIONAL US – AB HOLDINGS	
		
By: 	 	/s/ John E. Bowman	
	 	 	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
 
35

			
GSLP I OFFSHORE HOLDINGS FUND A – AB HOLDINGS	
		
By: 	 	/s/ John E. Bowman	
	 	 	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
 
36

			
GSLP I OFFSHORE HOLDINGS FUND B – AB HOLDINGS	
		
By:	 	/s/ John E. Bowman	
	 	 	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
 
37

			
GSLP I OFFSHORE HOLDINGS FUND C – AB HOLDINGS	
		
By:	 	/s/ John E. Bowman	
	 	 	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
 
38

			
GSLP I ONSHORE HOLDINGS FUND, L.L.C	
	
By: Goldman Sachs & Co., as Attorney-in-Fact	
		
By:	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Attorney-in-Fact	
 
39

			
GSO CAPITAL OPPORTUNITIES FUND LP	
	
By: GSO Capital Partners LP, investment manager	
		
By :	 	/s/ George Fan	
Name:	 	George Fan	
Title:	 	Chief Legal Officer	
 
40

			
BLACKSTONE HOLDINGS FINANCE CO. LLC	
		
By:	 	/s/ Laurence A. Tosi	
	 	 	
Name:	 	Laurence A. Tosi	
Title:	 	Chief Financial Officer	
 
41

HOLDERS OF CLASS C UNITS:

ANHEUSER-BUSCH COMPANIES, INC.	
		
By:	 	/s/ Thomas D. Larson	
	 	 	
Name:	 	Thomas D. Larson	
Title:	 	Assistant Secretary	
 
42

Exhibit 10.21
SEA WORLD
DOCUMENTS
Lease Amendment
Document No RR-263507
June 24, 1985
 
 	•	 	Revision/addition to premises.	
 
 	•	 	Atlantis Restaurant added.	
 
 	•	 	Revision to the include the entire premises in the percentage rent calculation of the 2.5% of first $600,000 from dispensing of food and nonalcoholic beverages.	
 
 	•	 	Percentage rent criteria defined.	
 
 	•	 	Non-profit status of Hubbs Marine Research Institute acknowledged. No consideration unless they violate provisions, then a percentage rent of 7% applies.	
 
 	•	 	Record maintenance provision added.	
 
 	•	 	Shoreline maintenance provision added.	
 
 	•	 	Approval of Conceptual Development plan Document No. RR-263507.	
 
 	•	 	50% rent credit for mitigation measures required by an agency as condition for further development if City ordinarily would be responsible, with some limitations, Reversion if construction doesn’t begin.	
 
 	•	 	Annual submittal of implementation plan for the Development Plan/Capital Projects.	

SEA WORLD
DOCUMENTS
Lease Amendment
Document No.769275-2
December 10, 1985
 
 	•	 	Legal description revised.	
 
 	•	 	4 acre and 25 acre parcels added.	

LEASE AMENDMENT
(Sea World)
THIS LEASE AMENDMENT, executed in duplicate as of this 24 day of June, 1985, at San Diego, California, by and between THE CITY OF SAN DIEGO, a municipal corporation in the County of San Diego, State of California (“CITY”), and SEA WORLD, INC., a Delaware corporation, 1720 South Shores Road, San Diego, California 92109 (“LESSEE”), is made with reference to the following facts:
A. CITY leases to LESSEE and LESSEE leases from CITY certain property in Mission Bay Park (“Premises”), described in lease amendments dated December 14, 1977, January 29, 1979, and December 12, 1983, and filed in the office of the City Clerk of CITY as Document Nos. 762304, 765767, and RR-259814, respectively. (The foregoing lease amendments are collectively referred to in this Lease Amendment as the “Lease.”)
B. The parties hereto desire to amend the Lease as hereinafter provided.
THEREFORE, in consideration of the mutual covenants contained herein, the Lease is hereby amended to provide, and LESSEE and CITY hereby agree, as follows:
1. Article I is hereby amended by (i) changing the identification of the various parcels of the Premises so that all land areas shall be a part of and identified as Parcel “A” and all water areas shall be a part of and identified as Parcel “B,” (ii) adding to the Premises a parcel identified as Parcel “A” Property 3, which parcel has previously been used by LESSEE with the permission of CITY, and (iii) providing for the possible adjustment of the easterly boundary of new Parcel “A” Property 2. For convenience of reference, the parties hereby agree that ARTICLE I— DEMISE of the Lease shall be amended to read as follows, and Exhibits “1” and “2” to the Lease shall be amended to provide the same as Exhibits “1” and “2” to this Lease Agreement:
“I
DEMISE
CITY hereby leases to LESSEE, and LESSEE hereby leases from CITY, that certain real property, consisting of land and water area and all appurtenances thereto, situated in the City of San Diego, County of San Diego, State of California, which is described on Exhibit ‘1,’ consisting of seven (7) pages, attached hereto and made a part hereof, and delineated on the plat, consisting of one (1) sheet, attached hereto, marked Exhibit ‘2’ and made a part hereof. Said real property is herein collectively referred to as the “Premises” and is individually referred to as (i) Parcel ‘A,’ consisting of 149.473 acres (more or less) of land area (including Parcel ‘A’ Property 1, Parcel ‘A’ Property 2, and Parcel
 
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‘A’ Property 3) described on pages 1 through 5 inclusive of Exhibit ‘1,’ and (ii) Parcel ‘B’ consisting of 17.014 acres (more or less) of water area (including Parcel ‘B’ Property 1 and Parcel ‘B’ Property 2) described on pages 6 through 7 inclusive of Exhibit ‘1.’ When CITY is prepared to adopt the final map establishing the exact westerly boundary of that portion of the Mission Bay Park area known as the ‘South Shores Area Master Plan,’ LESSEE agrees that the legal description of the easterly boundary line of Parcel ‘A’ Property 2, as described and delineated on Exhibits ‘1’ and ‘2’ attached to this Lease, shall be automatically adjusted to accommodate the westerly boundary line of said ‘South Shores Area Master Plan’; provided, that (i) such adjustment shall be subject to LESSEE’S approval, which LESSEE shall not unreasonably withhold so long as it does not adversely affect its proposed uses of the Premises as generally shown and described in the Development Plan (referred to in Paragraph ‘A’ of Article III); (ii) the resulting Parcel ‘A’ Property 2 shall contain at least 25.002 acres; and (iii) parties shall prepare, date, and initial new legal descriptions and delineations of ‘A’ Property 2 reflecting such adjustment and attach the same to this Lease in lieu of the existing legal description and delineation thereof.”
2. ARTICLE III – USE OF THE PREMISES is hereby amended to read as follows:
“III
USE OF THE PREMISES
A. The Premises shall be used for the purpose of constructing, operating, and maintaining thereon the activities and uses as generally shown and described in LESSEE’s Development Plan referred to in ARTICLE XXXII below, as the same may be mutually revised in writing from time to time by CITY and LESSEE as provided in ARTICLE XXXII, and for such other incidental uses as are specifically approved in writing by the City Manager of CITY, and for no other purposes. Notwithstanding the foregoing, the approved uses existing as of the date the Development Plan was approved by the City Council of CITY shall continue to be permitted to the extent they are not changed by the implementation of the Development Plan or otherwise by agreement in writing by and between CITY and LESSEE.
B. All offices, service facilities, laboratories, and related facilities shall be utilized in the furtherance of the park and recreation activities authorized in and by this Lease.
 
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C. LESSEE’S rights to use Parcel ‘A’ Property 3 of the Premises shall extend only to those portions thereof that are not being, or not to be, used by CITY for the construction, installation, and maintenance of a bridge, related storage, and for roadway and supporting structures therefor.
D. In connection with the maintenance and operation and selling of rides on watercraft from or upon the Premises, LESSEE shall have, and CITY hereby grants and extends to LESSEE, the right and privilege to operate watercraft in the public waterways of Mission Bay. LESSEE shall also have the right to embark and disembark passengers from and at the Premises and the right to construct and maintain into the Premises from the waterways fronting on the Premises a channel at the location and of the dimension indicated on the Development Plan.
The granting of this right and privilege in connection with the use and operation of watercraft on the waters of Mission Bay may be suspended by CITY at any time when, in the opinion of the City Manager, such use becomes detrimental or hazardous to the other uses of Mission Bay. In any event, CITY shall have the right, upon ten (10) days written notice, to require LESSEE to suspend the use and operation of watercraft for limited predetermined periods when, in the opinion of the City Manager, such use and operation would unduly interfere with the use of Mission Bay for major public events.
Such suspension shall be without liability to CITY for damages of any kind suffered by LESSEE as a result of such suspension. The rights and privileges hereby granted shall be subject to the availability of operating area at approved speeds, and under such other municipal, state, and federal rules and regulations as are applicable to the operation of watercraft.
E. LESSEE shall have the right to operate an aerial sky ride over the waters of Mission Bay Park between the points Mission Bay Coordinates North 6,121.00 feet and West 12,864.36 feet, and North 6,460.00 feet and West 14,229.00 feet of the San Diego City Engineer’s Mission Bay Coordinates System. Further, LESSEE shall have the right to construct and maintain two supporting towers for the sky ride in a 20-foot square area, the center of which is located at the following points:
(a) Mission Bay Coordinates North 6,206.59 feet and West 13,205.92 feet.
 
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(b) Mission Bay Coordinates North 6,368.30 feet and West 13,919.36 feet.
F. LESSEE shall use the Premises only for the purpose of conducting thereon the businesses for which they are demised, and shall diligently conduct such businesses to produce a reasonable and substantial gross income.”
3. Subparagraph “a” of Paragraph A.1 of ARTICLE IV – RENT is hereby amended to read as follows:
“a. TWO AND ONE-HALF PERCENT (2-1/2%) of the first $600,000.00 of gross income derived from the dispensing of food and non-alcoholic beverages upon the Premises, including gross income derived from the operation of any restaurant, snack bar, cocktail lounge, bar, delicatessen, and from the sale of groceries during each year.”
4. Subparagraph “r” of Paragraph A.1 of ARTICLE IV – RENT is hereby deleted.
5. Paragraph B of ARTICLE IV – RENT is hereby amended to read as follows:
“B. For purposes of computing percentage rent pursuant to this ARTICLE IV, ‘gross income’ shall mean all income resulting from occupancy of the Premises, including gross income of sublessees or concessionaires or their agents or any other party as a result of occupancy of the Premises (including the amount of any manufacturer’s or importer’s excise tax included in the prices of property sold, even though the manufacturer or importer is also the retailer thereof and it is immaterial whether the amount of such excise tax is separately stated); provided, however, that gross income shall exclude the following:
1. Rent paid to LESSEE from sublessees, concessionaires or other occupants of the Premises in those situations where CITY receives a percentage of gross revenues from the operations of such sublessees, concessionaires, or other occupants of the Premises (provided, CITY shall not receive less rent under a sublease or concession operation than it would if that operation were conducted by LESSEE);
2. Federal, state or municipal taxes collected from the consumer (regardless of whether the amount thereof is stated to the consumer as a separate charge) and paid over periodically by LESSEE to a governmental agency accompanied by a tax return or statements required by law. Possessory interest taxes and other taxes not collected from the consumer may not be deducted from the gross income;
 
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3. Uncollected credit and installment balances determined and shown on LESSEE’S books to be bad debts, which are properly documented and detailed in the various rent categories;
4. Any income from the sale of licenses or permits for a governmental agency;
5. Any income from the sale of merchandise to other dealers, at actual cost, with no mark-ups, as a method of changing inventories and resulting in no profit to LESSEE;
6. Galley sales of food and beverages made from boats operating from the Premises when such sales occur outside of Mission Bay;
7. Allowances made by LESSEE for traded-in merchandise, provided that LESSEE keeps adequate records for all of the foregoing from which CITY can accurately determine what allowances were made; and
8. Any income from the sale or other disposition of used furniture, furnishings, fixtures and equipment used in connection with the operation of a business on the Premises and not held for sale in the ordinary course of business.
6. Paragraph “D” of ARTICLE IV – RENT is hereby amended to read as follows:
“D. Hubbs Marine Research Institute (“Hubbs”), a non-profit foundation, may occupy a portion of the Premises not to exceed 80,000 square feet in ground area as generally shown on the Development Plan, during the entire term of this Lease without payment of any rent so long as the following terms and conditions are met:
1. Hubbs shall operate solely and exclusively as a California non-profit foundation and shall be involved solely and exclusively in oceanographic research and development activities for the public good, including the benefit of Mission Bay Park and CITY’S tidelands.
2. No rental charge shall be made to LESSEE for any space, service, or activity conducted by Hubbs, nor shall LESSEE receive any income from HUBBS.
 
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3. So long as Hubbs conducts its operations in accordance with the above conditions, no rent shall be payable for the premises occupied by Hubbs. However, in the event Hubbs does not comply with any or all of the above conditions, Hubbs shall pay a rental in the amount of seven percent (7%) of all revenue received by Hubbs from any source in connection with conducting its activities on the Premises.”
7. ARTICLE V – MAINTENANCE OF RECORDS is hereby amended to read as follows:
“Whenever the rent hereunder is dependent on percentage calculations of gross income accruing to LESSEE or its sublessees, concessionaries, or any other party, LESSEE shall keep, or cause to be kept, true, accurate and complete records and double entry books from which the CITY can at all times determine the nature and amounts of income subject to rental percentage from the operation of the Premises. Such records shall show all transactions relative to the conduct of the operation, and such transactions shall be supported by documents of original entry such as sales slips, cash register tapes, purchase invoices and tickets issued. In the event of admission charges, LESSEE shall either (i) issue serially-numbered tickets for each paid admission and shall keep adequate records of said serial numbers issued and of those unused or (ii) record admission charges by means of a cash register system which automatically issues a customer’s receipt. All sales or rentals of merchandise and services rendered shall be recorded by means of a cash register system which automatically issues a customer’s receipt or certifies the amount recorded on a sales slip. All said cash register systems shall have a locked-in total which is constantly accumulating, which total cannot be reset, and at the option of the CITY, a constantly locked-in accumulating printed transaction counter which cannot be reset, and/or printed detailed audit tape located within the register. Complete beginning and ending cash register readings shall be made a matter of daily record. Said books of account and records shall be kept or made available at one location within the limits of the City of San Diego. CITY have the right at any time and all reasonable times to examine and audit said records for the purpose of determining the accuracy thereof, and of the statements of moneys accrued and sales made on said Premises submitted by LESSEE pursuant to Paragraph C of ARTICLE IV of this Lease.”
 
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8. The following provision shall be added to ARTICLE XXI – IMPROVEMENTS, REPAIRS, ALTERATIONS of the Lease:
“It is agreed that as of the effective date of the Lease Amendment adding this provision to the Lease, or when the shoreline repair work is completed pursuant to the terms of that certain agreement between the CITY and LESSEE, dated October 1, 1984, whichever date first occurs, for the entire remaining Term of this Lease LESSEE shall be responsible for all shoreline maintenance on all portions of the Premises, including those riprap areas immediately adjacent to the Premises from the top of the riprap to the toe of the riprap whether or not such riprap is within the boundary line of the Premises, to the reasonable satisfaction of CITY’s City Manager, at LESSEE’S sole expense.”
9. ARTICLE XXXII – GENERAL DEVELOPMENT PLAN is hereby amended to read as follows:
“XXXII
GENERAL DEVELOPMENT PLAN
A. From and after the effective date of the Lease Amendment amending this Article XXXII as provided below, the further development of the Premises shall be generally in accordance with the Development Plan for the Premises approved by the City Council and on file in the office of the City Clerk as Document No. RR-253507, as the same may from time to time be amended in writing by and between CITY and LESSEE (“Development Plan”), and, to the extent applicable, CITY’s Plan entitled Mission Bay Park Master Plan for Land and Water Use, 1978. It is understood that the Development Plan is a conceptual plan only, and that the depictions of the approved uses and improvements are illustrative only and are not binding as to the exact configuration and location of the uses and improvements authorized.
B. LESSEE shall implement the First Phase (as defined below) of the Development Plan as soon as practicable after LESSEE obtains the City Manager’s approval and all other required permits and approvals for the First Phase of said plan (provided that commencement of construction of the First Phase of said plan shall not be required prior to July 1, 1988), and shall proceed diligently and without undue delay to completion thereof. “First Phase” shall mean the development and construction of any project or projects included within the Development Plan involving an aggregate investment (including direct and indirect construction costs and costs for architects, engineers, consultants fees and permitting and related expenses) of at least $2,500,000, and shall include (but not necessarily be limited to) improvements to Parcel ‘A’
Property 2.
 
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C. Should LESSEE be required by any public entity, including CITY (such as, for example, the California Coastal Commission) to make any expenditures or payments in lieu of expenditures (other than the rental expressly provided for in this Lease) for permanent capital improvements on, to, or in Mission Bay Park which would normally be the responsibility of CITY (“Mitigation Expenditures”) as a condition to obtaining permission to develop, construct, install, or operate improvements, facilities, or equipment in, to, or on the Premises in excess of expenditures directly required to develop, construct, install, or operate said improvements, facilities, or equipment (such as, for example, the contribution of funds for an off-site improvement in alleged mitigation of alleged adverse environmental impacts of said development and/or activities), then LESSEE shall be given a credit in the amount of fifty percent (50%) of such Mitigation Expenditures against the rental payable under this Lease, as follows: (i) the amount of such credit shall not exceed the total rental payable pursuant to subparagraph IV.A.3 of this Lease; and (ii) said credit shall be allowed only to the extent of rental payments under subparagraph IV.A.3 previously made and as any such payments subsequently become due.
D. Should LESSEE fail to commence construction of the First Phase as provided above, subject to delays beyond LESSEE’s reasonable control, then Parcel ‘A’ Property 2 and a portion of Parcel ‘B’ Property 1 identified as Parcel ‘B’ WATER 7.216 ACRES in the Lease Amendment dated December 12, 1983, on file in the office of the City Clerk as Document No. RR-59814 (“Water Parcel”) shall revert to CITY, at CITY’s option, free and clear of this Lease or any other interest of LESSEE, unless LESSEE commences construction within thirty (30) days following receipt of written notice from CITY of its intention to cause such reversion, given on or after the date LESSEE should have commenced construction, subject to delays beyond its reasonable control. If requested by CITY, and if CITY’S notice of election is valid and LESSEE fails to commence construction within said thirty (30) day period, LESSEE shall execute, acknowledge, and deliver to CITY a quitclaim deed whereby LESSEE shall quitclaim all of its right, title and interest in Parcel ‘A’ Property 2 and the Water Parcel to CITY. Such reversion of Parcel ‘A’ Property 2 and the Water Parcel shall be CITY’s sole remedy for LESSEE’s failure to timely commence construction of the First Phase of the improvements referred to in the Development Plan. In the event Parcel ‘A’ Property 2 and the Water Parcel
 
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revert to CITY as provided above, then LESSEE’S obligation for the rent payable as provide in Paragraph A.3 of Article IV of this Lease shall cease and terminate as of the date of such reversion; such rent shall be prorated to the date of such termination on the basis of a 360-day year, and LESSEE shall receive a credit in an amount equal to any unearned advance-paid rent pursuant to said Paragraph A.3 against the next payment or payments of percentage or minimum rent due hereunder.
E. Should LESSEE timely commence construction of the First Phase of the improvements referred to in the Development Plan but fail to diligently complete such improvements (subject to causes beyond LESSEE’s reasonable control), then LESSEE shall pay to CITY an amount equal to ten percent (10%) of the then applicable minimum rent, prorated for fractions of years, during the periods of such unexcused delays, in addition to any other rent payable hereunder.
F. In addition to any other procedure specifically mandated by law or this Lease, the following procedures for implementing the Development Plan shall be in effect, until changed by written agreement between LESSEE and CITY: Each year prior to October 31, LESSEE shall submit an implementation plan to the Planning Director via the City Manager of CITY, showing all improvements proposed by LESSEE for the ensuing accounting year. The proposed improvements shall include, but not be limited to, the following: any proposed new buildings, building improvements or additions, modifications, changes, and additions, redesigns or removal of parking lots, roadways, bicycle ways, pedestrian paths, landscaped areas and entry way areas. The Planning Director’s approval shall be required prior to the City Manager’s approval. The Planning Director shall identify projects with particular concern for more detailed environmental and planning review. Building permits for these identified projects shall not be issued until the Planning Director has determined that the proposed project is in conformance with all adopted Mission Bay Park Master Plan Documents and Environmental Impact Reports. The Deputy Director of the Environmental Quality Division shall review such projects to ensure that any mitigation required by the Development Plan is implemented. LESSEE shall have the option of submitting additional proposals or modifications to previously submitted projects at any time. No such improvements, or the construction thereof, shall require City Council approval so long as the foregoing process is followed; provided that the basic concepts of the Development Plan may not be changed without the prior approval of the City Council of CITY. A document evidencing any approved changes shall be signed by the parties and filed in the office of the City Clerk of CITY.”
 
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10. Paragraph F shall be added to ARTICLE XLI – GENERAL to read as follows:
“F. If either party, except as otherwise herein specifically provided, shall be delayed or hindered in or prevented from performing any act required hereunder, by reason of strikes, lock-outs, labor problems, inability to procure materials, failure of power or other utilities, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature, not the fault of the party so delayed, then performance of such act shall be excused for a period equivalent to the period of such delay, unless such delay shall cause the other party to be in default in its obligations to a party not a party to this lease.”
11. Paragraph G shall be added to ARTICLE XLI – GENERAL to read as follows:
“G. The control and administration of CITY’s interest in this Lease are under the jurisdiction of the City Manager. The approval or consent of CITY, wherever required by the terms of this Lease, shall mean the approval or consent of the City Manager, unless otherwise specified, without the need for any consent or resolution by the City Council of CITY. The City Manager may, however, in his discretion refer any such matter involving approval or consent to the City Council.”
12. Except as provided above, the Lease shall remain in full force and effect,
IN WITNESS WHEREOF, this Lease Amendment is executed by CITY, acting by and through the City Manager under and pursuant to Resolution No. R-263507 of the City Council authorizing such execution, and by LESSEE, acting by and through its duly authorized officers, as of the date first above written.

				
	 	I HEREBY APPROVE the form
and legality of the foregoing
Agreement this 26 day of July, 1985.	 		 	THE CITY OF SAN DIEGO	
	 		 		 	By:	 	/s/ [Illegible Signature]	
	 		 		 		 	ASSISTANT TO THE CITY MANAGER	
 
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John W. Witt, City Attorney	 		 	SEA WORLD, INC.	
	 		 		 		 		
By:	 	/s/ Harold O. Valderhaug	 		 	By:	 	/s/ [Illegible Signature]	
	 	Deputy	 		 		 	President	

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DESCRIPTION OF
SEA WORLD LEASE
PARCEL A — LAND — PROPERTY 1     123.577 ACRES
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY), AND PORTION OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS A WHOLE AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 OF RESUBDIVISION OF BLOCKS 7, 8 AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL WITH AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10, THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC SURVEY TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X = 1,712,415.17 AND Y = 213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 6,789.12 FEET AND WEST 14,572.15 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY COORDINATES OF SAID TRUE POINT OF BEGINNING BEING NORTH 6,789.12 AND WEST 14,572.15; THENCE SOUTH 69°30’00” EAST 172.53 FEET TO THE BEGINNING OF A TANGENT 300.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY; THENCE SOUTHEASTERLY AND SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 69°30’00” A DISTANCE OF 363.90 FEET; THENCE SOUTH 330.46 FEET TO THE BEGINNING OF A TANGENT 347.08 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; THENCE SOUTHERLY AND SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 63°35’01” A DISTANCE OF 385.17 FEET; THENCE SOUTH 63°35’01” EAST 25.61 FEET TO THE POINT OF BEGINNING OF A 240.00 FOOT RADIUS CURVE CONCAVE NORTHERLY, THE RADIAL LINES OF SAID CURVE BEARS SOUTH 27°10’45” WEST TO SAID POINT OF BEGINNING; THENCE EASTERLY ALONG THE
 
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ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 24°56’26” A DISTANCE OF 104.47 FEET TO A POINT OF COMPOUND CURVATURE WITH AN 800.00 FOOT RADIUS CURVE CONCAVE NORTHWESTERLY, THENCE EASTERLY AND NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 39°23’51” A DISTANCE OF 550.09 FEET TO A POINT OF REVERSE CURVATURE WITH A 1,198.09 FOOT RADIUS CURVE CONCAVE SOUTHEASTERLY, A RADIAL LINE OF SAID CURVE BEARS NORTH 37°09’32” WEST TO SAID POINT; THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 29°36’42” A DISTANCE OF 619.20 FEET TO A POINT OF COMPOUND CURVATURE WITH A 514.76 FOOT RADIUS CURVE CONCAVE SOUTHERLY, A RADIAL LINE OF SAID CURVE BEARS NORTH 7°32’50” WEST TO SAID POINT; THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 25°57’10” A DISTANCE OF 233.17 FEET; THENCE SOUTH 71°35’40” EAST 973.37 FEET; THENCE SOUTH 18°24’20” WEST 50.00 FEET; THENCE SOUTH 71°35’40” EAST 598.11 FEET TO MISSION BAY PARK COORDINATES NORTH 5,597.88 AND WEST 11,113.51; THENCE SOUTH 5°59’55” WEST 1,807.81 FEET TO A POINT ON A LINE THAT IS 60.50 FEET AT RIGHT ANGLES NORTHEASTERLY FROM ENGINEER’S STATION 36 + 35.31 ON THE CENTERLINE OF SEA WORLD DRIVE AS SHOWN ON THE CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14985-1-D; THENCE NORTH 78°55’43” WEST, PARALLEL WITH SAID CENTERLINE OF SEA WORLD DRIVE 635.31 FEET TO THE BEGINNING OF A TANGENT 828.855 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY, SAID CURVE BEING CONCENTRIC WITH AND 10.00 FEET NORTHEASTERLY RADIALLY FROM THE FACE OF THE NORTHEASTERLY BERM ON THE ACCESS ROAD SHOWN ON THE CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14577-22-D; THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 21°06’00” A DISTANCE OF 305.24 FEET; THENCE NORTHWESTERLY, WESTERLY AND NORTHERLY CONTINUING ALONG A LINE THAT IS PARALLEL AND/OR CONCENTRIC WITH AND 10.00 FEET AT RIGHT ANGLES OR RADIALLY; RESPECTIVELY, FROM THE FACE OF SAID NORTHEASTERLY BERM, WHICH BERM IS ALSO SHOWN ON SAID ENGINEER’S DRAWINGS NO. 14577-21, 23, 24, 32, 33, 34 AND 36-D THE FOLLOWING COURSES AND DISTANCES: NORTH 57°49’43” WEST 53.69 FEET TO THE BEGINNING OF A TANGENT 1,032.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY; THENCE NORTHWESTERLY AND WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 36°52’29” A DISTANCE OF 664.18 FEET; THENCE TANGENT TO SAID CURVE SOUTH 85°17’48” WEST 515.45 FEET TO THE BEGINNING OF A TANGENT 568.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; THENCE WESTERLY AND NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 65°57’16” A DISTANCE OF 653.84 FEET TO A POINT OF COMPOUND CURVATURE IN THE ARC OF A 268.00 FOOT RADIUS CURVE CONCAVE EASTERLY, A RADIAL LINE OF SAID CURVE BEARS SOUTH 61°15’04” WEST TO SAID POINT; THENCE NORTHWESTERLY, NORTHERLY AND NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 73°56’28” A DISTANCE OF 345.86 FEET TO A POINT OF REVERSE CURVATURE IN THE ARC OF A 332.00 FOOT RADIUS CURVE CONCAVE
 
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NORTHWESTERLY, A RADIAL LINE OF SAID CURVE BEARS SOUTH 44°48’28” EAST TO SAID POINT; THENCE NORTHEASTERLY, NORTHERLY AND NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 116°05’26” A DISTANCE OF 672.68 FEET; THENCE DISREGARDING THE FACE OF BERM BUT TANGENT TO SAID CURVE NORTH 70°53’54” WEST 121.23 FEET TO THE BEGINNING OF A TANGENT 270.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 26°08’05” A DISTANCE OF 123.16 FEET TO A POINT ON THE WESTERLY LINE OF THAT PORTION OF LAND SHOWN ON THE CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 10966-1—B OF THE PROPOSED LEASE OF WEST PEREZ COVE MISSION BAY PARK; THENCE NORTHWESTERLY ALONG THE BOUNDARY OF SAID LAND THE FOLLOWING COURSES AND DISTANCES: NORTH 13°45’54” WEST 575.54 FEET; THENCE NORTH 175.00 FEET; THENCE NORTH 23°11’55” WEST 130.00 FEET; THENCE NORTH 39°19’34” WEST 90.00 FEET; THENCE NORTH 14°33’01” WEST 166.22 FEET; THENCE NORTH 9°04’02” WEST 267.46 FEET TO THE TRUE POINT OF BEGINNING.
 
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PARCEL “A” LAND PROPERTY 2: 25± ACRES
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY) AND A PORTION OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS A WHOLE AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 RESUBDIVISION OF BLOCKS 7, 8, AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2,000 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10; THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC SURVEY TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X=1,712,415.17 AND Y=213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 3,799.97 FEET AND WEST 11,302.44 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY PARK COORDINATES OF SAID TRUE POINT OF BEGINNING BEING NORTH 3,799.97 AND WEST 11,302.44, SAID TRUE POINT OF BEGINNING BEING A POINT ON A LINE THAT IS PARALLEL WITH AND 60.50 FEET AT RIGHT ANGLES NORTHEASTERLY FROM THE CENTERLINE OF SEA WORLD DRIVE AS SHOWN ON CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14,985-1-D, SAID POINT BEING OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 36+35.31 ON SAID CENTERLINE; THENCE NORTH 5°59’55” EAST 1807.82 FEET; THENCE SOUTH 55°43’04” EAST 660.41 FEET; THENCE SOUTH 0°17’19” EAST 1475.24 FEET TO A POINT ON A 1939.50 FOOT RADIUS CURVE, CONCAVE NORTHERLY, SAID POINT BEING 60.50 FEET NORTHERLY FROM ENGINEER’S STATION 44+01.77 ON THE HEREINABOVE MENTIONED CENTERLINE OF SEA WORLD DRIVE, A RADIAL LINE TO SAID POINT BEING SOUTH 6°51’07” EAST; THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 17°55’24” AN ARC LENGTH OF 606.71 FEET; THENCE TANGENT TO SAID CURVE NORTH 78°55’43” WEST 140.82 FEET TO THE TRUE POINT OF BEGINNING.
 
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PARCEL A, LAND PROPERTY 2; 25.002 ACRES
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY), AND A PORTION OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS A WHOLE AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 RESUBDIVISION OF BLOCKS 7, 8, AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10; THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC SURVEY TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X = 1,712,415.17 AND Y = 213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 3,799.97 FEET AND WEST 11,302.44 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY PARK COORDINATES OF SAID TRUE POINT OF BEGINNING BEING NORTH 3,799,97 AND WEST 11,302.44, SAID TRUE POINT OF BEGINNING BEING A POINT ON A LINE THAT IS PARALLEL WITH AND 60.50 FEET AT RIGHT ANGLES NORTHEASTERLY FROM THE CENTERLINE OF SEA WORLD DRIVE AS SHOWN ON CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14,985-1-0, SAID POINT BEING OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 36 + 35.31 ON SAID CENTERLINE; THENCE NORTH 5°59’55” EAST 1,807.81 FEET TO MISSION BAY PARK COORDINATES NORTH 5,597.88 AND WEST 11,113.51; THENCE SOUTH 67°17’14” EAST 900.00 FEET; THENCE SOUTH 22°50’20” WEST 1,637.89 FEET TO A POINT THAT BEARS NORTH 3°45’37” EAST 60.50 FEET FROM ENGINEER’S STATION 40 + 31.33 ON THE HEREINBEFORE MENTIONED CENTERLINE OF SEA WORLD DRIVE, SAID POINT BEING ON THE ARC OF A 1,939.50 FOOT RADIUS CURVE CONCAVE NORTHERLY; THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 7°18’40” A DISTANCE OF 247.48 FEET; THENCE TANGENT TO SAID CURVE NORTH 78°55’43” WEST PARALLEL WITH SAID CENTERLINE OF SEA WORLD DRIVE 140.82 FEET TO THE TRUE POINT OF BEGINNING.
 
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PARCEL A, LAND PROPERTY 3; 0.894 ACRES
THOSE PORTIONS OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY), AND PORTIONS OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAY WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 OF RESUBDIVISION OF BLOCKS 7, 8 AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL WITH AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10, THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC SURVEY TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X = 1,712,415.17 AND Y = 213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 6,789.12 FEET AND WEST 14,572.15 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY COORDINATES OF SAID TRUE POINT OF BEGINNING BEING NORTH 6,789.12 AND WEST 14,572.15, SAID TRUE POINT OF BEGINNING ALSO BEING THE NORTHERLY TERMINUS OF THE WESTERLY LINE OF THAT PORTION OF LAND SHOWN ON THE CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 10966-1-B OF THE PROPOSED LEASE OF WEST PEREZ COVE MISSION BAY PARK; THENCE SOUTHEASTERLY ALONG SAID WESTERLY LINE THE FOLLOWING COURSES AND DISTANCES; SOUTH 9°04’02” EAST, 267.46 FEET; SOUTH 14°33’01” EAST, 166.22 FEET; SOUTH 39°19’34’ EAST, 90.00 FEET; SOUTH 23°11’55” EAST 92.52 FEET; THENCE LEAVING SAID WESTERLY LINE NORTH 61°35’50” WEST, 124.71 FEET TO INTERSECTION WITH A LINE THAT BEARS SOUTH 30°37’22” EAST FROM A POINT OF TANGENCY WITH A 100.00 FOOT RADIUS CURVE CONCAVE EASTERLY AND BEING THE SOUTHERLY TERMINUS OF THE WESTERLY LINE OF AN AREA DESIGNATED “PARKING LOT” ON THE CITY OF SAN DIEGO ENGINEERING DRAWINGS NOS. 21296-46-D, 2I296-47-D AND 21296-97-D; THENCE NORTH 30°37’22” WEST ALONG SAID LINE 80.35 FEET TO SAID POINT OF TANGENCY WITH A 100.00 FOOT RADIUS CURVE; THENCE NORTHERLY, WESTERLY AND NORTHEASTERLY ALONG SAID WESTERLY LINE OF THE AREA DESIGNATED “PARKING LOT” THE FOLLOWING COURSES AND DISTANCES: NORTHERLY ALONG THE ARC OF SAID
 
EXHIBIT 1
Page 6 of 10

TANGENT 100.00 FOOT RADIUS CURVE THROUGH A CENTRAL ANGLE OF 20°24’39” A DISTANCE OF 35.62 FEET; THENCE NORTH 10°12’42” WEST 37.69 FEET TO THE BEGINNING OF A TANGENT 2,963.50 FOOT RADIUS CURVE CONCAVE EASTERLY; THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 3°00’00” A DISTANCE OF 155.17 FEET; THENCE NORTH 7°12’42” WEST, 36.67 FEET TO THE BEGINNING OF A TANGENT 8,036.50 FOOT RADIUS CURVE CONCAVE WESTERLY; THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 0°14’28” A DISTANCE OF 33.82 FEET TO A POINT OF COMPOUND CURVATURE WITH A 5.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY; THENCE NORTHWESTERLY AND WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 92°45’32” A DISTANCE OF 8.09 FEET; THENCE SOUTH 79°47’18” WEST, 27.86 FEET; THENCE NORTH 14°53’58” WEST, 120.00 FEET; THENCE NORTH 75°06’02- EAST, 20.00 FEET; THENCE NORTH 47°26’50” EAST, 12.66 FEET; THENCE NORTH 21°13’51” EAST ALONG SAID WESTERLY LINE OF THE AREA DESIGNATED “PARKING LOT” AND THE PROLONGATION THEREOF 47.88 FEET TO INTERSECTION WITH A LINE THAT BEARS NORTH 69°30’00” WEST FROM THE TRUE POINT OF BEGINNING; THENCE SOUTH 69°30’00” EAST, 45.71 FEET TO THE TRUE POINT OF BEGINNING.
 
EXHIBIT 1
Page 7 of 10

DESCRIPTION OF
SEA WORLD LEASE
PARCEL B – WATER – PROPERTY 1     16.932 ACRES
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY), AND PORTION OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS A WHOLE AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 OF RESUBDIVISION OF BLOCKS 7, 8 AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL WITH AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10, THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC SURVEY TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X = 1,712,415.17 AND Y = 213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 6,789.12 FEET AND WEST 14,572.15 FEET TO A POINT KNOWN AS MISSION BAY COORDINATES NORTH 6,789.12 AND WEST 14,572.15; THENCE SOUTH 69°30’00” EAST 172.53 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY; THENCE CONTINUING SOUTH 69°30’00” EAST 341.57 FEET TO A POINT; THENCE SOUTH 75°18’41” EAST 1,230.82 FEET; THENCE SOUTH 147.18 FEET TO A POINT ON THE ARC OF A 1,198.09 FOOT RADIUS CURVE CONCAVE SOUTHEASTERLY, TO WHICH POINT A RADIAL LINE OF SAID CURVE BEARS NORTH 11°28’40” WEST; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 25°40’52” A DISTANCE OF 537.01 FEET TO A POINT OF REVERSE CURVATURE WITH AN 800.00 FOOT RADIUS CURVE CONCAVE NORTHWESTERLY; THENCE SOUTHWESTERLY AND WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 39°23’51” A DISTANCE OF 550.09 FEET TO A POINT OF COMPOUND CURVATURE WITH A 240.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; THENCE
 
EXHIBIT 1
Page 8 of 10

NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 24°56’26” A DISTANCE OF 104.47 FEET; THENCE NORTH 63°35’01” WEST 25.61 FEET TO THE BEGINNING OF A TANGENT 347.08 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; THENCE NORTHWESTERLY AND NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 63°35’01” A DISTANCE OF 385.17 FEET; THENCE NORTH 330.46 FEET TO THE BEGINNING OF A TANGENT 300.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY WHICH CURVE IS ALSO TANGENT TO THE HEREIN BEFORE MENTIONED COURSE BEARING SOUTH 69°30’00” EAST FROM THE TRUE POINT OF BEGINNING; THENCE NORTHERLY AND NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 69°30’00” A DISTANCE OF 363.90 FEET TO THE TRUE POINT OF BEGINNING.
 
EXHIBIT 1
Page 9 of 10

PARCEL B – WATER PROPERTY 2; 0.082 ACRES
BEGINNING AT POINT “B” AS SET OUT AND ESTABLISHED IN THE HEREINABOVE DESCRIBED PARCEL “A”; THENCE SOUTH 71°35’40” EAST ALONG THE NORTHEASTERLY LINE OF SAID PARCEL “A” A DISTANCE OF 50.00 FEET; THENCE LEAVING SAID NORTHEASTERLY LINE NORTH 18°24’20” EAST 71.00 FEET; THENCE NORTH 71°35’ 40” WEST 50.00 FEET; THENCE SOUTH 18°24’20” WEST 71.00 FEET TO SAID POINT “B” AND THE POINT OF BEGINNING.
 
EXHIBIT 1
Page 10 of 10

			
	  	#10171A
JUNE 24, 1985	
LEGAL DESCRIPTION: PARCEL “B”
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY), AND A PORTION OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS A WHOLE AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 RESUBDIVISION OF BLOCKS 7, 8, AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10; THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC SURVEY TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X=1,712,415.17 AND Y=213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 3,799.97 FEET AND WEST 11,302.44 FEET TO A POINT ON A LINE THAT IS PARALLEL WITH AND 60.50 FEET AT RIGHT ANGLES NORTHEASTERLY FROM THE CENTERLINE OF SEA

			
	  	#10171A
PAGE 2	
WORLD DRIVE AS SHOWN ON CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14,985-1-D, SAID POINT BEING OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 36+35.31 ON SAID CENTERLINE, THENCE SOUTH 78°55’43” EAST PARALLEL WITH SAID CENTERLINE OF SEA WORLD DRIVE 140.82 FEET TO THE BEGINNING OF A TANGENT 1939.50 FOOT RADIUS CURVE CONCAVE NORTHERLY, THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18°48’34”, AN ARC LENGTH OF 636.71 FEET; THENCE TANGENT TO SAID CURVE NORTH 82°15’43” EAST 70.00 FEET TO A POINT BEING 60.50 FEET NORTHERLY AND OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 45+02.70 ON THE HEREINBEFORE MENTIONED CENTERLINE OF SEA WORLD DRIVE; THENCE NORTH 7°44”17” WEST 1000.00 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY PARK COORDINATES OF SAID TRUE POINT OF BEGINNING BEING NORTH 4754.812 AND WEST 10,595.934; THENCE NORTH 7°44’17” WEST 531.96 FEET; THENCE SOUTH 83°03’30” EAST 440.00 FEET; THENCE SOUTH 29°53’30” EAST 250.00 FEET; THENCE NORTH 83°03’30” WEST 240.00 FEET; THENCE SOUTH 3°36’25” WEST 254.71 FEET; THENCE SOUTH 82°15’43” WEST 237.64 FEET TO THE TRUE POINT OF BEGINNING.
CONTAINS 4.00 ACRES (MORE OR LESS)

			
	  	#10171A
JUNE 24, 1985	
LEGAL DESCRIPTION: PARCEL “A”
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY), AND A PORTION OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS A WHOLE AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 RESUBDIVISION OF BLOCKS 7, 8, AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10; THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC SURVEY TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X=1,712,415.17 AND Y=213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 3,799.97 FEET AND WEST 11,302.44 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY PARK COORDINATES OF SAID TRUE

			
	  	#10171A
PAGE 2	
POINT OF BEGINNING BEING NORTH 3,799.97 AND WEST 11,302.44, SAID TRUE POINT OF BEGINNING BEING A POINT ON A LINE THAT IS PARALLEL WITH AND 60.50 FEET AT RIGHT ANGLES NORTHEASTERLY FROM THE CENTERLINE OF SEA WORLD DRIVE AS SHOWN ON CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14,985-1-D, SAID POINT BEING OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 36+35.31 ON SAID CENTERLINE; THENCE NORTH 5°59’55” EAST 1807.82 FEET; THENCE SOUTH 54°40’57” EAST 546.54 FEET; THENCE SOUTH 7°44’17” EAST 1531.96 FEET TO A POINT BEING 60.50 FEET NORTHERLY AND OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 45+02.70 ON THE HEREINBEFORE MENTIONED CENTERLINE OF SEA WORLD DRIVE; THENCE PARALLEL WITH SAID CENTERLINE OF SEA WORLD DRIVE, SOUTH 82°15’43” WEST 70.00 FEET TO THE BEGINNING OF A TANGENT 1939.50 FOOT RADIUS CURVE CONCAVE NORTHERLY; THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18°48’34” AN ARC LENGTH OF 636.71 FEET; THENCE TANGENT TO SAID CURVE NORTH 78°55’43” WEST 140.82 FEET TO THE TRUE POINT OF BEGINNING.
CONTAINS 25.00 ACRES (MORE OR LESS)

(R-85-1236)
RESOLUTION NUMBER R–262370
ADOPTED ON JAN 22 1985
BE IT RESOLVED, by the Council of The City of San Diego, that the City Manager is hereby authorized to execute, for and on behalf of The City of San Diego, an agreement with SEA WORLD, INC. for the repair of the shoreline on certain City-owned property adjacent to the Sea World leasehold, and provide Sea World, Inc. a one-time rent credit not to exceed $150,000, representing the City’s share of the total cost, under the terms and conditions set forth in that agreement on file in the office of the City Clerk as Document No. RR–262370.
APPROVED: John W. Witt, City Attorney

By	  	/s/ [Illegible Signature]	  		  		
	  	for Harold O. Valderhaug	  		  		
	  	Deputy City Attorney	  		  		
HOV:ps
01/08/84
Or. Dept:Prop.
R-85-1236
Form=r.none
 
PAGE 1 of 1

															
REQUEST FOR COUNCIL ACTION
CITY OF SAN DIEGO	 	1. CERTIFICATE  NUMBER:	
TO:
 
CITY ATTORNEY	 	2. FROM (ORIGINATOR)
 
PROPERTY DEPT./PROPERTY MANAGEMENT DIVISION	 	3. DATE
 
        June 6, 1985	
4. SUBJECT
Sea World Lease Amendment	
 
5. PREPARATION OF:                 ¨ RESOLUTION(S)                  ¨ ORDINANCE(S)                  ¨  AGREEMENT(S)                  ¨   DEED(S)	
 
1. Approval of a lease amendment and conceptual master plan with Sea World, Inc.
 
2. Certifying EIR 84-0160.
 
3. Adoption of findings and statement of overriding considerations.
 	
COUNCIL DISTRICT 6
 	 		 	COMMUNITY AREA: Mission Bay 
 	 		 	REPORT TO COUNCIL

6. SUPPORTING INFORMATION: (INCLUDE ONLY INFORMATION NOT COVERED ON FORM 1472A, “DOCKET SUPPORTING INFORMATION”.
 
ACTION REQUESTED BY: Property Director.
 
DESCRIPTIVE LOCATION: Sea World – Mission Bay Park.
 
DOCUMENTS SUBMITTED: Original and 6 copies of Amendment. Provides for:
 
1. Long-range conceptual development plus approval.
 
2. Sea World shoreline maintenance.
 
3. Readjustment of easterly property line.
 
4. Addition of approximately 1-acre of land westerly of Atlantis Restaurant.
 
ENVIRONMENTAL ASSESSMENT: The City of San Diego, as lead agency, has prepared and completed an Environmental Impact Report, No. 84-0160 dated February 15, 1985.
 
HANDLING: DO NOT RECORD . Deliver documents to Property Department, Attention W. J. Punch, M.S. 503, for further handling.
 	
7. FOR INFORMATION CONTACT:
G. R. RANDOLPH/Punch	 	(NAME & MAIL STA.) 
503	 	8. TELEPHONE
6792/6985	 	9. CHECK IF “DOCKET SUPPORTING INFORMATION” ATTACHED	 	¨	
10. COMPLETE FOR ACCOUNTING PURPOSES:	 	11.	 	ROUTING AND APPROVALS	 	 	
FUND/DEPT.	 	BUDGETED	 	UNBUDGETED	 	ROUTE	 	APPROVING	 	APPROVAL	 	DATE	
 	 	 	 	 	 	( ü )	 	AUTHORITY	 	 	 	SIGNED	
ORGANIZATION	 	 	 	 	 	ü	 	DEPARTMENT	 	 	 	 	
OBJECT ACCOUNT 	 	 	 	 	 	 	 	DIRECTOR	 	 	 	 	 	 	
JOB ORDER	 	 	 	 	 	X	 	CLEARING AUTH.	 	 	 	 	
WORK ORDER NO.	 	 	 	 	 	 	 	EQD	 	 	 	 	 	 	
C.I.P. NO.	 	 	 	 	 	X	 	CLEARING AUTH.	 	 	 	 	
FACILITY	 	 	 	 	 	 	 	PARK & REC	 	 	 	 	 	 	
AMOUNT	 	 	 	 	 	X	 	DEPUTY CITY	 	 	 	 	
12. ESTIMATED COST:
Job: 218401
 
cc:    County Assessor
        Docket w/dwg
 
REDI BOOK PAGES 326 & 327
THOMAS BROS MAPS PAGE 59, C-2
 
jas	 	X	 	MANAGER	 	 	 	 	
	 	 	 	AUDITOR	 	 	 	 	
	 	ü	 	CITY ATTORNEY	 	 	 	 	
	 	ü	 	ORIGINATING DEPARTMENT	 	 	 	 	
	 	X	 	MGR. DOCKET CLERK	 	 	 	 	
	 	ü	 	RULES COMMITTEE	 	¨ CONSENT      ¨ ADOPTION
¨ REFER TO                           DATE                          	

(R-85-2422)
RESOLUTION NUMBER R–                     
ADOPTED ON                     
BE IT RESOLVED, by the Council of The City of San Diego, that the City Manager is hereby authorized and empowered to execute a lease amendment with SEA WORLD, INC., which amendment basically provides for a revised general development plan and other changes, as more particularly described in that lease amendment on file in the office of the City Clerk as Document No. RR–            .
APPROVED: JOHN W. WITT, City Attorney

By	 	/s/ Harold O. Valderhaug	
Harold O. Valderhaug	
Deputy City Attorney	
HOV:ps
06/11/85
Or.Dept:Prop.
Job:218401
R-85-2422
Form=r.none
 
PAGE 1 of 1

(R-85-2423)
RESOLUTION NUMBER R–                     
ADOPTED ON                     
BE IT RESOLVED, by the Council of The City of San Diego that it be and it is hereby certified that the information contained in ENVIRONMENTAL IMPACT REPORT EIR 84-0160, in connection with SEA WORLD, INC., on file in the office of the City Clerk, has been completed in compliance with the California Environmental Quality Act of 1970, as amended, and the State guidelines thereto, and that said Report has been reviewed and considered by this Council.
BE IT FURTHER RESOLVED, that pursuant to California Public Resources Code, Section 21081, the City Council hereby adopts the findings made with respect to the feasibility of the mitigating measures and project alternatives and the statements of overriding considerations, if any, contained within the said ENVIRONMENTAL IMPACT REPORT EIR 84-0160.
APPROVED: John W. Witt, City Attorney

By	 	/s/ Harold O. Valderhaug	
Harold O. Valderhaug	
Deputy City Attorney	
HOV:ps
06/11/85
Or.Dept:Prop.
Job:218401
R-85-2423
Form=r.eir&fd
 
PAGE 1 of 1

			
DATED ISSUED:	  	REPORT NO.        	

ATTENTION:	  	PS&S Committee, Agenda of	
		
SUBJECT:	  	Sea World Lease Amendment	
SUMMARY
Issue
 
 	1.	Should the City amend the lease with Sea World to provide for approval of its revised long-term conceptual development plan?	
 
 	2.	Should the City adopt the findings of Environmental Impact Report 84-0160?	
Manager’s Recommendation —Approve the amendment, certify the Environmental Impact Report, and adopt findings and statement of overriding considerations.
Other Recommendations —The Park and Recreation Board approved the plan on February 21, 1985.
Fiscal Impact —Unknown at this time, however, the improvements made with the proposed new development plan, including those required for mitigation measures Imposed by the EIR, should increase the park’s attendance and subsequent rental revenue. This revenue may be reduced somewhat by the provision that Sea World is allowed a 50 percent rent credit for required public improvements, including the mitigation measures.
BACKGROUND
Sea World opened its original ocean aquarium park on 18 acres in Mission Bay in March 1964. Over the years, it has expanded until it reached its current size of 149 acres of land and 17 acres of water area. Besides park exhibits, the Sea World lease premises also include the Atlantis Restaurant and a recreational boat marina. The lease requires a minimum annual rent of $1 million versus an applicable percentage of gross income, as listed in Attachment 1. In Fiscal Year 1984, the City received $2,243,312 from Sea World.
Sea World is now revising its long-term conceptual development plan. The new plan, along with other lease modifications proposed by Sea World and City staff, requires Council authorization in the form of the lease amendment outlined as follows:
 
 	1.	Development Plan . This plan is an update of Sea World’s main features, including centralizing the main entrance, new Shamu Stadium and planned new exhibits and changes over the next several years.	

 	2.	Improvements, Repairs, and Alterations . Sea World will be responsible for all shoreline (riprap) maintenance on all portions of the leasehold premises. This responsibility is not specific in the existing lease.	
 
 	3.	Change in the Eastern Boundary Leasehold Line . Sea World agrees to allow a change in its easterly boundary line to accommodate the City’s South Shores Area Master Plan when it is implemented with a revised legal description to be appended to the lease at a later date.	
 
 	4.	Atlantis Valet Parking Lot . The Atlantis valet parking lot is currently under a temporary permit from the City. Part of the parking lot will be utilized for the new Ingraham Street Bridge and its supporting structure. The remaining area of approximately one acre will be added to the Sea World leasehold. Sea World will take over the landscaping and maintenance of the area, which will eliminate costs to the Park and Recreation Department.	
The Environmental Impact Report prepared in connection with the proposed lease amendment, as well as the City Planning Commission Resolution 5460 (Attachment II), provided that Sea World make certain mitigations. They are summarized as follows:
 
 	1.	Improve Perez Cove Way/Ingraham Street Intersection (Perez Cove Way to be 66 feet wide), but not required prior to the widening of the Ingraham Street Bridge at Mission Bay Channel.	
 
 	2.	Reconstruct the driveway access to Perez Cove Way.	
 
 	3.	Provide a continuous Class 1 bikeway along and through the Sea World property lease line.	
 
 	4.	When the annual attendance at the park reaches 3.6 million, relocate Sea World Way (the main entrance) to its ultimate configuration (52 feet), plus all turn lanes to and from Sea World Way. Remove the old traffic signal and install new signals to City standards. Extend the bikeway from the present terminus to the new intersection.	
 
 	5.	When the annual attendance reaches 4 million, improve Sea World Drive along the leasehold frontage to half width of a six-lane primary arterial standard. This phasing may be revised by the Engineering and Development Department.	
 
 	6.	Provide pedestrian access to the general public through the Sea World leasehold during daylight hours.	
 
 	7.	Submit a detailed landscaping plan and irrigation plan for the parking and perimeter areas of its leasehold for approval by the Planning Director and Planning Commission prior to obtaining any building permits.	
 
-2-

Sea World has agreed to all of the mitigations with the exception of the Class 1 bikeway, which it estimates would cost approximately $380,000 to build and would negatively impact its leasehold operations. As a result, City Traffic and Engineering made a study of the issue. It recommended a Class 2 bikeway on Perez Cove Way from Ingraham Street to Sea World Drive, connecting to a Class 1 bikeway just north of Sea World Drive from Perez Cove Way to Sea World Drive; thence, a Class 1 bikeway from Sea World Way to the easterly lease line. It estimated the cost of its recommendation to be about $22,000. Sea World has indicated that it is agreeable to this recommendation.
By the terms set out in Sea World’s 1983 lease amendment (Section 13.B.), rent credits would be given for those aforesaid and future costs Sea World may incur for mitigation measures required by any public entity, including the City. The rent credit would amount to 50 percent of the mitigation cost and would be applied against the special rentals paid or due the City as a result of the 1983 amendment (to a maximum of $1.25 million, plus CPI increases). For example, if mitigation costs total $2.5 million, Sea World would be entitled to deduct $1.25 million of such costs. Mitigation measures are defined as any expenditures or payments Sea World must make for permanent capital improvements on, to, or in Mission Bay Park, which would normally be the responsibility of the City as a condition to obtaining permission to develop, construct, install, or operate improvements, facilities or equipment in, to, or on its premises.
Other costs, subject to credit, could run into the hundreds of thousands of dollars, although no estimates can be made at this time. These would include the construction of any or all of the aforementioned improvements required by the Environmental Impact Report or the Coastal Commission.
ALTERNATIVE
Deny the request.
Respectfully submitted,
John P. Fowler
Deputy City Manager
JLS:WJP:jw(11)P10
6-11-85
Attachments: Sea World Percentage Rents
    City Planning Commission Resolution 5460
 
-3-

ATTACHMENT 1
SEA WORLD PERCENTAGE RENTS

Percentage	  	Applied to all Gross Income
Attributable to:	
2-1/2 Percent	  	Admission tickets.	
		
2-1/2 Percent of first $600,000	  	Food and nonalcoholic beverages.	
		
3 Percent of all gross income over $600,000	  	Food and nonalcoholic beverages.	
		
5 Percent	  	All alcoholic beverages.	
		
7 Percent	  	Parking lot income.	
		
3 Percent	  	Boat rides, sky ride, Shamu ride, concession, and sky tower ride.	
		
3 Percent	  	From sale of animal food to spectators.	
		
5 Percent	  	From any game or amusement devise.	
		
2-1/2 Percent	  	Institutional advertising.	
		
3 Percent	  	Sale of petroleum, products, except diesel fuel.	
		
1-1/2 Percent	  	Sale of diesel fuel.	
		
2 Percent	  	Sale of boats, motors and accessories.	
		
4 Percent	  	Service on boats, motors, sale of boat and motor parts, accessories and marina hardware.	
		
7 Percent	  	Boat storage rental and related boating operations.	
		
20 Percent	  	Boat slip rentals.	
		
7 Percent	  	All other sale, service or operation.	
WJP: jw(2)pg
2-25-85

ATTACHMENT II
CITY PLANNING COMMISSION
RESOLUTION NO. 5460
CONDITIONAL APPROVAL OF SEA WORLD MASTER PLAN
AND RED LION HOTEL ON THE SEA WORLD LEASEHOLD
WHEREAS, the Planning Commission has reviewed and considered the Sea World Master Plan and plans for the Red Lion Hotel Project at Sea World; and
WHEREAS, on February 21, 1985, the Planning Commission of the City of San Diego held a public hearing and received for its consideration documentary, written and oral testimony and heard form all interested parties present at the public hearing; and
WHEREAS, the expansion program for the Sea World complex envisioned in the Sea World Master Plan provides educational and recreational benefits for residents and visitors to San Diego,
NOW, THEREFORE, BE IT RESOLVED that the Planning Commission of the City of San Diego approves the Sea World Master Plan amendment proposal, subject to conditions designed to assure consistency with the Mission Bay Master Plan and Mission Bay Coastal Access Study.
The following conditions of approval shall be assured prior to issuance of any building permits for construction of any facility within the leasehold. The Planning Director will be responsible for reviewing building plans for consistency prior to the obtaining of building permits by Sea World. Future development projects include any new buildings, outdoor exhibits, landscaping, lighting, fencing, signs, entryway redevelopment, parking lot redesign, bikeways, pedestrian paths and changes to traffic circulation systems within the Sea World leasehold. These conditions are based on the approved Mission Bay Coastal Access Study and Environmental Impact Report (EIR) No. 84-0160.
 
I.	Bicycle Access	
Sea World will construct a continuous Class I bikeway along and through the Sea World property lease which will link directly with existing or proposed bikeways to the north of Sea World along Ingraham Street and to the east of Sea World in South Shores. The bikeway will extend along Perez Cove Way from Ingraham Street to Sea World Drive and will continue from the Sea World Drive/Perez Cove Way intersection to the intersection of Sea World Drive/Sea World Way. The bikeway will be extended east from this intersection to connect with the South Shores bikeway segment. If Sea World implements changes to the vehicular access routes into the theme park which affect the bikeway, the bikeway will be reconstructed by Sea World to conform to the revised vehicular circulation system. When Sea World completes construction of the bikeway the City will assume liability and maintenance responsibility for the facility.

II.	Pedestrian Access	
Sea World will provide pedestrian access to the general public through the Sea World leasehold during daylight hours. Pathways will remain open and accessible to pedestrians entering the Sea World leasehold from connecting paths in the north (from Ingraham Street and Perez Cove), the south (from Sea World Drive) and from the east (along the Bay in South Shores). In the vicinity of the Proposed Red Lion Hotel and the Atlantis Restaurant the pedestrian way will be a promenade along the waters edge extending to-the northwestern edge of the Atlantis Restaurant. In the vicinity of the theme park, the pedestrian way will be located adjacent to and outside the fence demarcating the perimeter of the controlled access area. The alignment of the pedestrian pathway system is shown in Figure 1 (attached). All pedestrian pathways shall be paved. The alignment of the pedestrian connection from the Atlantis through the two-acre parcel under the newly reconstructed Ingraham Street bridge will be subject to future study since the city has not yet identified the utilization of this area which is currently rented to Sea World on a monthly basis. At the time the study is completed, Sea World will be required to cooperate in the establishment of a pedestrian connection to the west under the bridge.
 
III.	Landscaping	
Sea World will submit a detailed landscaping plan and irrigation plan for the parking and perimeter areas of their leasehold for approval by the Planning Director and Planning Commission prior to obtaining any building permits.
The parking lot areas will be divided into sections containing not more than 500 parking spaces. Each section will be demarcated by landscaped buffers. The buffers are to be designed in accordance with the parking lot landscape details submitted by Sea World. No less than ten percent of the parking lot area shall be covered by landscaping as required by previous agreements on Sea World permits and as a minimum to make the development consistent with Mission Bay Design Guidelines. The entire perimeter of the Sea World parking lot will be screened. Perimeter planting will include specimen size trees (24-inch or 36-inch box).
 
IV.	Traffic Circulation and Bicycle/Pedestrian Circulation : The following phasing plan will be incorporated into the Master Plan.	
 
 	A.	Prior to occupancy of the proposed hotel, the following improvements shall be completed and opened to traffic:	
 
 	1.	IMPROVE PEREZ COVE WAY/INGRAHAM STREET INTERSECTION as shown in EIR Fig. 4-4 (Perez Cove Way to be 66 feet wide), but not required prior to widening of Ingraham Street Bridge at Mission Bay Channel.	
 
 	2.	RECONSTRUCT DRIVEWAY ACCESS TO PEREZ COVE WAY as shown in EIR Fig. 4-4 (Perez Cove Way to be 66 feet wide).	

 	B.	When the annual attendance at the theme park reaches 3,600,000 per year, the following improvements shall be completed:	
 
 	1.	RELOCATE SEA WORLD WAY approximately 500 feet east along Sea World Drive and construct Sea World Way to its ultimate configuration (52 feet), plus all turn lanes to and from Sea World Way. Remove old traffic signal and install new signals to City standards. Extend Class I bikeway from present terminus to new intersection.	
 
 	C.	When the annual attendance at the theme park reaches 4,000,000 per year, the following improvement shall be implemented:	
 
 	1.	IMPROVE SEA WORLD DRIVE along leasehold frontage to half width of a six-lane primary arterial standard.	
 
V.	Biological Resources : Prior to approval of the Marina expansion, a revised dock design as shown on EIR Figure 4-8 to mitigate eelgrass impacts shall be submitted for Planning Director and Environmental Quality Division review and shall be incorporated into the marina expansion plans.	
 
VI.	Red Lion Hotel Design :	
 
 	1.	That a promenade be developed along the waters edge to link the Perez Cove building with the northwestern edge of the Atlantis Restaurant, to insure future options to link the area to the west when a new bridge is developed along Mission Bay Drive/Ingraham Street.	
 
 	2.	That the, development proposal maintain a 20% see-through with two of the guest buildings elevated and open off-the-ground to establish additional see-through opportunities.	
 
 	3.	That roof lines be varied to create design interest and focus, compatible with the desired high quality design on all Mission Bay leases, and the high visual exposure the hotel site has to the Park’s circulation network that will make it highly visible to the Visitor.	
 
 	4.	That materials and colors will be consistent with Mission Bay Design Principles.	

	
/s/ Sue Blackman	
Sue Blackman, Secretary
to the Planning Commission	
	
/s/ Bill Levin	
Bill Levin, Associate Planner	
Adopted: February 21, 1985
Vote: 6-0

Exhibit 10.22
SEA WORLD DOCUMENTS
Lease Amendment
Document No. RR-266641
September 12, 1986
 
 	•	Requires Sea World to contribute monies for traffic impact mitigation as required by any future local coastal program in Mission Bay Park.	

SEA WORLD DOCUMENTS
Resolution No. R-274591
October 17, 1989
 
 	•	Approved sale of stock to Busch Entertainment Corp.	

SEA WORLD DOCUMENTS
Resolution No, 275068
February 5, 1990
 
 	•	Resolution of mitigation issue.	
 
 	•	Use clause modified to permit Atlantis Restaurant site to be used as a banquet/conference center.	

[Sea World of California letterhead]
February 29, 1996
Mr. Jack McGrory
City Manager
The City of San Diego
202 C Street
San Diego, California 92101
Re: Revised Rental Under Sea World Leasehold
Dear Jack:
Section IV.A.5 of the existing lease between the City and Sea World provides for the adjustment of percentage rental rates at the end of each 10-year period during the term of the lease, to be determined by good faith negotiation or arbitration. The most recent 10-year period ended as of December 31, 1993. The parties have negotiated in good faith and, based thereon, have entered into an agreement which provides that, in lieu of an adjustment in percentage rates, Sea World will, effective as of January 1, 1994, pay as additional rent an amount equal to three percent (3%) on an annual basis of the rental payable pursuant to the provisions of the existing lease (the “Surcharge”).
The Surcharge will be payable concurrently with the rendering of each statement as provided in Section IV.C of the existing lease in an amount equal to three percent (3%) of the payment required to be made for the accounting period covered by such statement, provided that the amount of the Surcharge shall be adjusted at the end of each accounting year, as necessary to ensure that the Surcharge shall be no more or no less than 3% of the total rental due for such accounting year without taking the Surcharge into account. In calculating the amounts due each accounting period as provided in subsections 1 and 2 of Section IV.C, the “total rent previously paid for the accounting year” shall not include any payments of the Surcharge.
Payment of the Surcharge attributable to the period from January 1, 1994, through the date of first payment of the Surcharge shall be without interest, penalty or other additional charge.
The following provision memorializes a practice which, by mutual agreement, has been in effect for several years and which the parties wish to be in effect for the indefinite future during the term of the Lease: The concept of accounting years varying from calendar years, as provided in Article IV of the Lease has been and will be eliminated and has been and will be replaced by an accounting year which coincides with the calendar year.
If the foregoing correctly sets forth the City’s understanding of the agreement between the City and Sea World, please have an authorized representative of the City so signify by signing and returning to me the enclosed copy of this letter.

Mr. Jack McGrory
The City of San Diego
February 29, 1996
Page 2
 
Thank you for your courtesy and cooperation and that of your staff.
Sincerely,
/s/ Mike Cross
 
Mike Cross
Executive Vice President
General Manager
CMC:ak
 
cc:	Robert Collins	
  	Real Estate Assets Manager	
  	Real Estate Assets Department	

THE CITY OF SAN DIEGO HEREBY AGREES TO THE FOREGOING:	
	
THE CITY OF SAN DIEGO	
		
By:	 	/s/ Robert J. Collins	
	 	Title: Real Estate Assets Mgr.	
		
Date:	 	6/25/96	

LEASE AMENDMENT
THIS LEASE AMENDMENT, executed in duplicate as of SEP 22 1986, 1986, at San Diego, California, by and between THE CITY OF SAN DIEGO, a municipal corporation, in the County of San Diego, State of California (the “City”), and SEA WORLD, INC. a Delaware corporation, 1720 South Shores Road, San Diego, California 92109 (the “Lessee”), is made with reference to the following facts:
A. City leases to Lessee and Lessee leases from City certain real property in Mission Bay Park (the “Premises”) described in lease amendments dated December 14, 1977, January 29, 1979, December 12, 1983, and June 24, 1985, and filed in the Office of the City Clerk of San Diego as Document Nos. 762304, 765767, and RR-259814, and RR-263507, respectively (hereinafter the foregoing lease amendments are collectively referred to in this Lease Amendment as the “Lease”).
B. The parties hereto desire to amend the Lease as hereinafter provided.
THEREFORE, in consideration of the mutual covenants contained herein, the Lease is hereby amended to provide, and Lessee and City hereby agree, as follows:
1. Article XXXII GENERAL DEVELOPMENT PLAN is hereby amended by adding thereto Paragraph G, to read as follows:
 
 	“G.	Should a local coastal program (hereinafter the “Local Coastal Program”) ever be adopted for the Mission Bay Park (the “Park”) segment of the City Local Coastal Program, and should the Local Coastal Program provide for the collection of a traffic impact mitigation fee from commercial lessees within the Park in order to fund all or a portion of the cost of a beach shuttle or other substantially similar public access improvements, Lessee agrees to contribute its fair and equitable share, as calculated pursuant to the Local Coastal Program, to such a traffic impact mitigation program; provided that the amount payable by Lessee shall be reasonable and shall	
 
DOCUMENT NO. RR- 266641
FILED SEP 22 1986
OFFICE OF THE CITY CLERK
SAN DIEGO, CALIFORNIA

 	not exceed the amount Lessee would have paid had the entire amount to be funded by traffic impact mitigation fees been reasonably, equitably, and fairly apportioned among all of the commercial lessees in the Park. This Paragraph G shall not be altered or amended without the prior written approval of the California Coastal Commission or an amendment to California Coastal Permit No. 6-86-2.”	
2. Except as provided above, the Lease shall remain in full force and effect.
IN WITNESS WHEREOF, this Lease Amendment is executed by City, acting by and through the City Manager under and pursuant to Resolution No. R-                of the City Council authorizing such execution, and by Lessee, acting by and through its duly authorized officers, as of the date first above written.
 
I HEREBY APPROVE the form and legality of the foregoing Agreement this 8 day of October, 1986.
JOHN W. WITT, City Attorney

By:	 	/s/ Harold O. Valderhaug	
	 	Deputy	
THE CITY OF SAN DIEGO

By	 	/s/ [Illegible Signature]	
	 	Title: Assistant to the City Manager	
	
SEA WORLD, INC.	
		
By:	 	/s/ [Illegible Signature]	
	 	Title: Administrative V.P.	

R-266641
 
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(R-85-2422)
RESOLUTION NUMBER R- 263507
ADOPTED ON JUN 24, 1985
BE IT RESOLVED, by the Council of The City of San Diego, that the City Manager is hereby authorized and empowered to execute a lease amendment with SEA WORLD, INC., which amendment basically provides for a revised general development plan and other changes, as more particularly described in that lease amendment on file in the office of the City Clerk as Document No. RR-263507.
APPROVED: JOHN W. WITT, City Attorney

By	 	/s/ Harold O. Valderhaug	
	 	Harold O. Valderhaug	
	 	Deputy City Attorney	
HOV:ps
06/11/85
Or.Dept:Prop.
Job:218401
R-85-2422
Form=r.none
 
PAGE 1 OF 1

(R-85-2423)
RESOLUTION NUMBER R-263508
ADOPTED ON JUN 24 1985
BE IT RESOLVED, by the Council of The City of San Diego that it be and it is hereby certified that the information contained in ENVIRONMENTAL IMPACT REPORT EIR 84-0160, in connection with SEA WORLD, INC., on file in the office of the City Clerk, has been completed in compliance with the California Environmental Quality Act of 1970, as amended, and the State guidelines thereto, and that said Report has been reviewed and considered by this Council.
BE IT FURTHER RESOLVED, that pursuant to California Public Resources Code, Section 21081, the City Council hereby adopts the findings made with respect to the feasibility of the mitigating measures and project alternatives and the statements of overriding considerations, if any, contained within the said ENVIRONMENTAL IMPACT REPORT EIR 84-0160.
APPROVED: John W. Witt, City Attorney

By	 	/s/ Harold O. Valderhaug	
	 	Harold O. Valderhaug
Deputy City Attorney	
HOV:ps
06/11/85
Or.Dept:Prop.
Job:218401
R-85-2423
Form=r.eir&fd
 
PAGE 1 OF 1

NOTICE OF DETERMINATION

TO:   x	  	County Clerk
County of San Diego
220 W. Broadway
San Diego, California 92101	  	FROM:	  	City of San Diego
City Administration Building
202 “C” Street
San Diego, CA 92101	
				
         x	  	Office of Planning and Research
1400 Tenth Street, Room 121
Sacramento, California 95814	  		  		

EQD Number: 84-0160        	  	State Clearinghouse Number 84030708
(If submitted to Clearinghouse)	
Project Title: Sea World Master Plan.
Project Location: Located between Sea World Dr. and Mission Bay just east of Ingraham Street in the South Shores area of Mission Bay Park
Project Description: Master Land Use Plan as a condition of a 32-acre, 50-year ground and water lease – expansion of theme park, marina, and parking areas
This is to advise that The City of San Diego City Council (Decision-making Body) on June 24, 1985 (date) approved the above described project and made the following determinations:
 
 	1.	The project in its approved form x will, ¨ will not, have a significant effect on the environment.	
 
 	2.	x       An Environmental Impact Report was prepared for this project and certified pursuant to the provisions of	
 	  	CEQA. Resolution R-263508	
 
 	¨	A Negative Declaration was prepared for this project pursuant to the provisions of CEQA.	
The EIR or Negative Declaration and record of project approval may be examined at the address above.
 
 	3.	Mitigation measures x were, ¨ were not, made a condition of the approval of the project.	
 
 	4.	Findings x were, ¨ were not, made pursuant to CEQA.	
 
 	5.	A statement of Overriding Considerations x was, ¨ was not, adopted for this project.	

Date Received for Filing:             	  	/s/ Ellen Bovard	 	6/27/85	
	  	Signature	 		
		
	  	Deputy City Clerk	
	  	Title	 		

The City of San Diego
MANAGER’S REPORT

DATE ISSUED:  	 	September 5, 1986	  		
	 		  	REPORT NO. 86-401	
ATTENTION:	 	PF&R, Agenda of September 10, 1986	  		
			
SUBJECT:	 	Sea World Lease Amendment	  		
SUMMARY
Issue - Should the City Manager be authorized to execute a Ninth Amendment to the lease with Sea World, Inc., which provides that SeaWorld agree to contribute its fair and equitable share of money for traffic impact mitigation, as required by any future local coastal program in Mission Bay Park?
Manager’s Recommendation - Authorize execution of the agreement.
Other Recommendations - None.
Fiscal Impact - None with this action.
BACKGROUND
In certain instances, the California Coastal Commission requires specified mitigation actions or fees from applicants for coastal permits. Sea World is currently applying for such a permit and is being required to contribute traffic mitigation fees in Mission Bay Park in the event that the Commission should implement a local coastal program in the future containing this requirement. The Commission is requesting Sea World to have its lease with the City amended to include this agreement prior to issuing the permit.
PROPOSAL
It is proposed that the City Council approve the requested lease amendment. The amendment will not alter any of the other terms and conditions of Sea World’s existing lease agreement.

ALTERNATIVES
Deny the request for an amendment. This is not recommended since it would preclude Sea World from completing its 1985 Development Plan as previously approved by the Council.
Respectfully submitted,
/s/ John P. Fowler                                                  
John P. Fowler
Deputy City Manager
SPOTTS:WJP:jw(66-2)
8-1-86
Dept:Prop:MR:495
 
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REQUEST FOR COUNCIL ACTION
 
CITY OF SAN DIEGO	 	1. Certificate Number
    N/A	
TO:
 
    CITY ATTORNEY	 	2. FROM (ORIGINATOR)
 
PROPERTY DEPT./PROPERTY MANAGEMENT DIVISION	 	3. Date
 
August 4, 1986	
4. SUBJECT
 
    Lease Amendment – Sea World	
5. PREPARATION OF:         ¨  RESOLUTION(S)         ¨  ORDINANCE(S)          ¨  AGREEMENT(S)         ¨  DEED(S)
 
Authorizing the City Manager to execute a lease amendment with Sea World, which would require it to contribute monies for traffic impact mitigation as required by any future local coastal program in Mission Bay Park.
 
COUNCIL DISTRICT 6      COMMUNITY AREA: SEA WORLD       REPORT TO COUNCIL	
6. SUPPORTING INFORMATION: (INCLUDE ONLY INFORMATION NOT COVERED ON FORM 1472A, “DOCKET SUPPORTING INFORMATION”.
 
ACTION REQUESTED BY: Property Director.
 
DESCRIPTIVE LOCATION: Sea World – Mission Bay Park.
 
DOCUMENTS SUBMITTED: Original and six copies of proposed agreement.
 
ENVIRONMENTAL ASSESSMENT: This activity is exempt from CEQA Section 15301, Class 1, Existing Facilities.
 
HANDLING: DO NOT RECORD . Deliver documents to Property Department, Attention Bill Punch, M.S. 503, for further handling.
 	
7. FOR INFORMATION CONTACT: (NAME & MAIL STA.)  
    RANDOLPH/Punch 503	 	8. TELEPHONE
    6792/6985	 	9. CHECK IF “DOCKET SUPPORTING
    INFORMATION” ATTACHED	 	¨	
10. COMPLETE FOR ACCOUNTING PURPOSES:	 	11. ROUTING AND APPROVALS	
FUND/DEPT.	 	BUDGETED	 	UNBUDGETED	 	ROUTE	 	APPROVING	 	APPROVAL	 	DATE	
 	 	 	 	 	 	( ü )	 	AUTHORITY	 	 	 	SIGNED	
ORGANIZATION	 	 	 	 	 	ü	 	DEPARTMENT DIRECTOR	 	 	 	8/4/86	
OBJECT ACCOUNT	 	 	 	 	 	X	 	CLEARING AUTH.EQD	 	 	 	8/5/86	
JOB ORDER	 	 	 	 	 	 	 	CLEARING AUTH.	 	 	 	 	
WORK ORDER NO.	 	 	 	 	 	 	 	CLEARING AUTH.	 	 	 	 	
C.I.P. NO.	 	 	 	 	 	 	 	CLEARING AUTH.	 	 	 	 	
FACILITY	 	 	 	 	 	 	 	CLEARING AUTH.	 	 	 	 	
AMOUNT	 	 	 	 	 	X	 	DEPUTY CITY MANAGER	 	 	 	8/7/86	
12. ESTIMATED COST: None	 	X	 	AUDITOR	 	 	 	8/12/86	
 	 	X	 	CITY ATTORNEY	 	 	 	 	
Job 219045	 	X	 	ORIGINATING
DEPARTMENT	 	 	 	8/21/86	
cc: County Assessor
      Docket
 
REDI BOOK PAGES 326 & 327
THOMAS BROS. MAP PAGE 59
 
WJP:baa	 	ü	 	Mgr. Dkl Clerk__________
 
Council Rep____________
                                 Date	 	RULES
COMMITTEE ¨ CONSENT ¨ ADOPTION
¨  Refer to ___________ Date ___________	

 

RESOLUTION NUMBER R-                                                                                                                                  (R-87-325)
ADOPTED ON                     
BE IT RESOLVED, by the Council of The City of San Diego, that the City Manager is hereby authorized and empowered to execute, for and on behalf of The City of San Diego, a lease amendment with SEA WORLD, INC., a Delaware corporation, a copy of which is on file in the office of the City Clerk as Document No. RR-                , which lease amendment will require Sea World, Inc. to contribute monies for traffic impact mitigation as required by any future local coastal program in Mission Bay Park.
APPROVED: JOHN W. WITT, City Attorney

By:	 	/s/ Harold O. Valderhaug	
	 	Harold O. Valderhaug
Deputy City Attorney	
HOV:ps
06/11/86
Or.Dept:Prop.
Job:219045
R-87-325
Form=r.none
 
- Page 1 of 1 -

Exhibit 10.23
SEA WORLD
DOCUMENTS
Lease Amendment
Document No. OO-18538-1
June 29, 1998
 
 	•	 	Parcel “A” Property 4 added - 16.5 acres South Shores	
 
 	•	 	Parcel “A” Property 5 added - physically traveled portion of Perez Cove Way between Sea World Drive and Ingraham Street.	
 
 	•	 	Minimum rent revised to $4,500,000 and adjustments revised.	
 
 	•	 	Surcharge stated as three (3%) percent.	
 
 	•	 	Percentage rent rate adjustments beginning January 1, 2004 and every ten years thereafter.	
 
 	•	 	Insurance requirements revised to Five Million ($5,000,000) Combined Single Limit Liability.	
 
 	•	 	Environmental Matters added.	
 
 	•	 	Minimum rent change if substantial change in entitlements occurs, e.g.—Removal of the 30 foot height limit,	

SEA WORLD
DOCUMENTS
Land/Water Acreage

Parcel “A”	  	Property 1	  	Land  	  	123.577 acres	
Parcel “A”	  	Property 2	  	Land  	  	25.002 acres	
Parcel “A”	  	Property 3	  	Land  	  	0.894 acres	
Parcel “A”	  	Property 4	  	Land  	  	16.37 acres	
Parcel “A”	  	Property 5	  	Land  	  	7.34 acres	
Parcel “B”	  	Property 1	  	Water	  	16.932 acres	
Parcel “B”	  	Property 2	  	Water	  	0.082 acres	

SEA WORLD
DOCUMENTS
Maintenance Permit
Document No. OO-18538-2
June 29, 1998
 
 	•	 	Landscape maintenance permit for Perez Cove Way.	

LEASE AMENDMENT
This Lease Amendment (“Amendment”), executed in duplicate as of June 29, 1998, at San Diego, California, by and between T HE C ITY OF S AN D IEGO , a municipal corporation in the County of San Diego, State of California (“CITY”), as lessor, and SEA WORLD, INC., a Delaware corporation, 1720 South Shores Road, San Diego, California 92109 (“LESSEE”), as lessee, is made with reference to the following facts:
A. CITY leases to LESSEE and LESSEE leases from CITY certain real property in Mission Bay Park (the “Premises”) described in lease amendments dated December 14, 1977, January 29, 1979, December 12, 1983, June 24, 1985, and September 22, 1986, and filed in the office of the City Clerk of San Diego as Document Nos. 762304, 765767, RR-259814, RR-263507, and RR-266641; respectively (hereinafter the foregoing lease amendments are collectively referred to in this Amendment as the “Lease”).
B. The parties hereto desire to amend the Lease as hereinafter provided.
THEREFORE, in consideration of the mutual covenants contained herein, the Lease is hereby amended to provide, and LESSEE and CITY hereby agree, as follows:
1. Article I, DEMISE , is hereby amended by a) deleting the last sentence of the section; and b) adding to the Premises 16.5 land acres, hereinafter Parcel “A” Property 4 and the physically-traveled portion of Perez Cove Way between Sea World Drive and Ingraham Street, hereinafter Parcel “A” Property 5, described on Exhibit 3 and delineated on Exhibit 4, attached hereto.
2. Article II, TERM , is hereby amended to read as follows:
“The term of this agreement shall be fifty (50) years, commencing on the first day of July, 1998. In no event shall the term exceed the period allowed by law, and the teen shall be deemed to be the lesser of the period referred to herein or the maximum period allowed by law.”
3. The preface to Paragraph A, Article IV, RENT , is hereby amended to read as follows:
“The rent which LESSEE hereby agrees to pay to CITY shall be as follows:”
4. The first paragraph of Paragraph A, Article IV, RENT , is hereby amended to read as follows:
“LESSEE shall pay to CITY a sum of money per annum equal to the total of the sums computed on the basis of the various percentages of LESSEE’s gross income from the Premises as hereinafter set forth in this Article IV, or the minimum yearly rent as hereinafter set forth in this Article IV, whichever of the two sums is the greater, together with the “Surcharge” (as hereinafter defined in this Article IV).”
 
1

5. Subparagraph A.2 of Article IV, RENT , is hereby amended as follows:
“The minimum rent for the Premises shall be the sum of Four Million Five Hundred Thousand Dollars ($4,500,000.00) for each accounting year. The minimum rent shall be prorated for a partial accounting year, commencing with the accounting year beginning with the commencement of the term of this Lease; provided that for the period of three full accounting years commencing at the end of the three full accounting years following commencement of the term of this Lease and for each subsequent period of three full accounting years during the term of this Lease, the minimum rent shall be adjusted to an amount equal to eighty percent (80%) of the “average accounting year rent” (determined as provided below) actually paid for the three previous full accounting years, but no such adjustment shall result in a decrease in the minimum rent in effect immediately prior to the adjustment date. For purposes of adjusting the minimum rent as provided above, the “average accounting year rent” shall be the average of the rent for the three full accounting years immediately preceding an adjustment date unless the highest rent of said three years differs from the middle rent of said three years by more than ten percent (10%) of the middle rent, in which case the “average accounting year rent” shall be the average of the middle rent and the lowest rent of said three years. In addition to the foregoing, the minimum rent may be adjusted from time to time during the term of this Lease pursuant to Article XLII, ADDITIONAL RENTAL ADJUSTMENT UPON CHANGE IN ENTITLEMENTS , below.”
6. A new Subparagraph A.l.r of Article IV, RENT, is hereby added as follows:
“In addition to any other rent provided in this Lease, LESSEE shall also pay on an annual basis an amount equal to three percent (3%) of the greater of the two sums calculated in accordance with Paragraph C of this Article IV (the ‘Surcharge’).”
7. Subparagraph A.5(a) of Article IV, RENT , is hereby amended to read as follows:
“5(a) As of January 1, 2004 and thereafter as of the beginning of each tenth accounting year thereafter (the “adjustment dates”), the percentage rates used to compute the percentage rent for the succeeding period until the next adjustment date may be adjusted to reflect fair market rental rates then generally in effect; provided that there shall be no adjustment as of the final adjustment date unless there are at least five (5) years remaining of the term of this Lease. At least eighteen (18) months prior to each such adjustment date, the parties shall negotiate in good faith to determine whether one or more or none of the rates then in effect should be adjusted and, if so, the extent of any such adjustment or adjustments. In the event that such determination is not made by mutual consent of the parties prior to fifteen (15) months before each adjustment date, either party may refer the matter to arbitration pursuant to Subsection (b) below, by giving the other party a written demand therefor prior to twelve (12) months before the applicable adjustment date. Notwithstanding the foregoing, no adjustment or adjustments, if any, of the percentage rate applicable to gross income derived from the sale of general admission tickets, as provided in Subsection A.l.c of Article IV of this Lease, shall cause said rate ever to exceed four percent (4%) during the term, and, further, no one adjustment of said rate may exceed one (1) percentage point; provided, that said four
 
2

percent (4%) limitation shall not apply to gross income, if any, received by LESSEE from the sale of general admission tickets that is attributable to the furnishing of goods or services for which other particular percentage rental rates are specified in this Lease and for which a separate charge is normally made. The imposition of the foregoing limitations does not suggest or imply that the rate applicable to charges for general admission tickets should ever be adjusted at all or in any particular amount, and the arbitrators shall be instructed not to consider the existence of such limitations in any arbitration. In addition to the foregoing, the percentage rates used to compute the percentage rent may be adjusted from time to time during the term of this Lease pursuant to Article XLII, ADDITIONAL RENTAL ADJUSTMENT UPON CHANGE ENTITLEMENTS, below.”
8. Subparagraph A.5(b)(2) of Article IV, RENT, is hereby amended to read as follows:
“If the parties cannot agree on a mutually acceptable arbitrator prior to ten (10) months before the applicable adjustment date, each party, within ten (10) days thereafter, shall appoint an arbitrator and give written notice of such appointment to the other party. The two arbitrators shall immediately choose a third arbitrator to work with them. If the two arbitrators fail to select a third arbitrator within ten (10) days following the date of their appointment, on written application by either party the third arbitrator shall be promptly appointed by the then presiding judge of the Superior Court of the State of California, County of San Diego, acting in his individual capacity. The party making the application shall give the other party written notice of its application.”
9. Paragraph C of Article IV, RENT, is hereby amended to read as follows:
“For purposes of this Paragraph C, the term of this Lease shall be divided into “accounting years” and each accounting year into “accounting periods.” Each accounting year will be commensurate with each calendar year during the term of this Lease and each—accounting period shall be commensurate with each month during each calendar year; provided, however, that if the first day of the term is a date other than January 1, then the first accounting year shall commence with the commencement of the term of this Lease, as provided in Article II above, and extend through December 31 of that year, and the last accounting year shall extend from the last January 1 through the end of the term.
“On or before the last day of each accounting period LESSEE shall render to CITY, in a form prescribed by CITY, a detailed report of gross income for that portion of the accounting year which ends with and includes the last day of the immediately preceding accounting period. Each report shall be signed by LESSEE or its responsible agent under penalty of perjury, attesting to the accuracy thereof, shall be legally binding upon LESSEE, and shall include the following: (1) the total gross income for said portion of the accounting year, itemized as to each of the business categories for which a separate percentage rental rate is established; (2) the related itemized amounts of percentage rent computed as herein provided and the total thereof; and (3) the total rent previously paid by LESSEE for the accounting year within which the immediately preceding accounting period falls. Concurrently with the rendering of each report LESSEE shall pay to CITY, in payment of the percentage or minimum rent required by Section A of this Article IV, the greater of the following two amounts:
 
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 	“1.	The total percentage rent computed for that portion of the accounting year ending with and including the last day of the immediately preceding accounting period (Item (2) above), less total rent previously paid for the accounting year (Item (3) above); or	
 
 	“2.	One-twelfth (1/12) of the minimum rent, multiplied by the number of accounting periods from the beginning of the accounting year to and including the immediately preceding accounting period, less total rent previously paid for the accounting year (Item (3) above), Notwithstanding the foregoing the final accounting year and accounting period shall end on the last day of the term of this Lease, as the same may be extended, and the accounting and reporting therefor shall be furnished to CITY within thirty (30) days thereafter.	
“In addition, the Surcharge referred to in subsection A.1.r above shall be payable concurrently with the rendering of each report referred to above in an amount equal to three percent (3%) of the payment required to be made for the accounting period covered by such report provided that the amount of the Surcharge shall be adjusted at the end of each accounting year as necessary to ensure that the Surcharge shall be no more or no less than three percent (3%) of the total rental due for such accounting year without taking the Surcharge into account. In calculating the amounts due each accounting period as provided in subsections 1 and 2 of this subsection C, the ‘total rent previously paid for the accounting year’ shall not include any payments of the Surcharge. Notwithstanding the foregoing, there shall be an adjustment at the end of each accounting year, if and to the extent necessary to ensure that LESSEE shall pay no more and no less than the minimum rent or the percentage rent, computed on an annual basis, whichever is greater.”
10. Article XXIII, INSURANCE , is hereby amended to increase the amount of public liability and property damage insurance required, from an amount not less than One Million Dollars ($1,000,000) COMBINED SINGLE LIMIT LIABILITY to an amount not less than Five Million Dollars ($5,000,000) COMBINED SINGLE LIMIT LIABILITY.
11. Article XXV, ENVIRONMENTAL MATTERS , is hereby added as follows:
“ARTICLE XXV
ENVIRONMENTAL MATTERS
A. Applicable Premises . The provisions of this Article XXV shall apply only to Parcel “A” Property 4, and shall not apply to any other portion of the Premises. The rights and obligations of CITY and LESSEE, respectively, with respect to Hazardous Substances (defined below) on, in and with respect to such other portions of the Premises shall instead be governed by applicable law, The term “Hazardous Substances” means those substances designated as such by the Environmental Protection Agency at 40 C.F.R. 302 or listed under California Labor Code Section 6382(b), as such regulations and lists may be amended from time to time, Hazardous Substances include, but are not limited to, such substances and materials in the ground of Parcel “A” Property 4 due to the use of the property as a municipal solid waste site prior to the commencement of this Lease.
 
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B. Prohibited Releases. For the purposes of this Article XXV, “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leeching, dumping, or otherwise disposing of Hazardous Substances, but excludes incidental occurrences consistent with the normal use of motor vehicles’, or consumer, household or office products. Except as authorized by applicable law, permit or regulation, LESSEE will not Release any Hazardous Substance used or produced by its operations in, on, under or from Parcel “A” Property 4.
C. Notification Requirements. If LESSEE knows or has reasonable cause to believe that LESSEE has caused a Release of any Hazardous Substance on or beneath Parcel “A” Property 4, in violation of this Article, LESSEE shall give written notice to the City Manager within 24 hours. Provided, however, if LESSEE knows or has reasonable cause to believe that such substance is an imminent and substantial danger to public health and safety, LESSEE shall notify the City Manager immediately upon receipt of this knowledge or belief and shall take all actions necessary to alleviate such—danger. LESSEE will notify the City Manager immediately of LESSEE’s receipt of any notice of violation or claim received or the initiation of any environmental action, public or private, relative to any Hazardous Substances on, at or adjacent to Parcel “A” Property 4.
If CITY knows or has reasonable cause to believe that a Hazardous Substance previously Released as a result of the CITY’s prior municipal solid waste site use is continuing to Release, or otherwise constitutes an imminent and substantial danger to public health and safety, CITY shall notify the LESSEE upon receipt of this knowledge or belief and shall take all actions necessary to alleviate such danger. CITY will notify LESSEE within five (5) working days of receipt of any notice of violation or claim received or the initiation of any environmental legal proceeding, public or private, relative to any Hazardous Substance, on, at or adjacent to Parcel “A” Property 4.
D. Compliance with Postclosure Land Use Conditions . LESSEE recognizes that all improvements above previously closed landfills constitute Postclosure Land Use, and therefore these improvements must comply with all of the conditions contained in the California Code of Regulations, Title 27, Section 21190, Postclosure Land Use. LESSEE’s improvements shall be designed and maintained to protect public health and safety, and prevent public contact with waste, landfill gas and leachate.
LESSEE’s improvements shall be constructed to retain the integrity of the final cover, the component of the containment system such as drainage and erosion control systems, and the functions of the monitoring system. The foundation system shall be designed to accommodate the anticipated total and differential settlements. Buried utility conduits shall be designed with flexible couplings and must be double lined to handle differential settlement, Utility conduits leading into the site shall be designed to include automatic pressure-sensitive shutoff valves and restrained pipe joints. All trees,
 
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shrubs, plants and similar items shall be contained within precast concrete pots, and watered by means of a double sleeved, below ground, automatically controlled irrigation system. Irrigation Water inspection boxes must be included in the plan to allow for visual leak detection. The construction detail for installing water and irrigation lines must be submitted to the Local Enforcement Agency for review and approval.
Prior to implementation of the project, LESSEE shall provide to the Local Enforcement Agency, the following items for review and approval:
 
 	•	 	Community Health & Safety Plan.	
 
 	•	 	Grading Plan and drainage calculations for the parking lot.	
 
 	•	 	Irrigation Plan, which must include, among other items, the location of irrigation lines, controller valves, plants and other pertinent information as related to landscape irrigation.	
 
 	•	 	Monitoring Plan.	
 
 	•	 	Maintenance Program.	
 
 	•	 	Construction schedule.	
LESSEE shall develop and implement an aggressive maintenance plan, including inspection of the site to observe if the site suffers from settlement, leaks from water system and flexible utilities, ponding and cracks.
E. CITY Indemnity . CITY hereby agrees to indemnify, defend and hold harmless LESSEE from and against any and all claims, actions, damages, liability and expense (including. reasonable attorney’s fees and costs and damages for injury to natural resources or the public, and costs of any health assessment or health effect studies) in connection with the investigation, response to and/or remediation of the existence or Release of any Hazardous Substance existing on and in Parcel “A” Property 4 as of the commencement of the term of this Lease, except to the extent the Release is caused by the disturbance of such substances by LESSEE’s operations, including, without limitation, the construction of excavations, footings and piles. Any of the foregoing notwithstanding, a Release of any Hazardous Substance existing on and in Parcel “A” Property 4 as of the commencement of the term of this Lease shall not be deemed to be caused by the disturbance of such substances by LESSEE’s operations as a result of LESSEE’S use of Parcel “A” Property 4, as long as Lessee has continuously complied and is in current compliance with all material rules, regulations and conditions set forth in that certain Postclosure Land Use Plan for Mission Bay South Shores Phase 3, Landfill Facility No. 37-AA-0026, Revised October 1995, as may be amended from time to time as a result of a change in use or state or federal regulatory actions (the “Closure Rules”). Furthermore, LESSEE shall not be responsible for any Release or continuing Release occurring before the commencement of LESSEE’s occupancy of Parcel “A”, Property 4, that continues to emanate, spread or migrate after that date except to the extent such Release or continuing Release is solely attributable to the activities of LESSEE in violation of the Closure Rules. LESSEE shall be deemed to have continuously complied with the Closure Rules if any failure to comply has been cured to the reasonable satisfaction of the applicable authorities.
 
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F. LESSEE Indemnity . LESSEE hereby agrees to indemnify, defend and hold harmless CITY from and against any and all claims, actions, damages, liability and expense (include reasonable attorney’s fees and costs and damages for injury to natural resources or the public, and costs of any health assessment or health effect studies) in connection with the investigation, response to and/or remediation of the existence or Release of any Hazardous Substance in or from the municipal waste site located in, on and at Parcel “A” Property 4, to the extent such costs are incurred due to a Release and to the extent that such Release is caused by LESSEE’s operations, including the disturbance by LESSEE of any Hazardous Substances existing on and in Parcel “A” Property 4 as of the commencement of the term of this Lease. Any of the foregoing notwithstanding, a Release of any Hazardous Substance existing on and in Parcel “A” Property 4 as of the commencement of the term of this Lease shall not be deemed to be caused by the disturbance of such substances by LESSEE’s operations as a result of LESSEE’s use of Parcel “A” Property 4 as long as Lessee has continuously complied. and is in current compliance with all material portions of the Closure Rules. Furthermore, LESSEE shall not be responsible for any Release or continuing Release occurring before the commencement of LESSEE’s improvements or occupancy of Parcel “A” Property 4, that continues to emanate, spread, or migrate after that date except to the extent such Release or continuing Release is solely attributable to the activities of LESSEE in violation of the Closure Rules. LESSEE shall be deemed to have continuously complied with the Closure Rules if any failure to comply has been cured to the reasonable satisfaction of the applicable authorities.
G. Maintenance . LESSEE recognizes that there will be increased maintenance as a result of the location of LESSEE’s improvements over the municipal waste site. LESSEE agrees it shall be solely responsible for any increased maintenance on Parcel “A” Property 4, which occurs as a result of LESSEE’S improvements to and/or occupancy of Parcel “A” Property 4. LESSEE shall permit access to CITY and other regulatory agency representatives to inspect any Release, monitor any substance, or perform any other actions related to maintaining regulatory compliance regarding buried municipal waste located in, on and at Parcel “A” Property 4, with 24-hour advance notice. CITY shall make all best efforts to ensure that CITY’s use of LESSEE’s parking facilities shall not interfere with LESSEE’s operations. LESSEE shall respond to written requests from CITY’s Environmental Services Department, to maintain landfill surfaces according to regulatory requirements. LESSEE will also be responsible for any health and safety plans for Parcel “A” Property 4 resulting from LESSEE’s improvements to and/or occupancy of Parcel “A” Property 4.
H. CITY’s and LESSEE’s obligations under this Article XXV shall survive the expiration or earlier termination of this Lease.”
 
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12. Subparagraph A of Article XXXII, GENERAL DEVELOPMENT PLAN , is hereby amended to read as follows:
“From and after the commencement of the term of this Lease the further development of the Premises shall be generally in accordance with the Development Plan for the Premises approved by the City Council and on file in the office of the City Clerk as Document No. RR-263507, as the same may from time to time be amended in writing by and between CITY and LESSEE (“Development Plan”), and, to the extent applicable, CITY’s MISSION BAY PARK MASTER PLAN UPDATE as the same is amended from time to time. It is understood that the Development Plan is a conceptual plan only, and that the depictions of the approved uses and improvements are illustrative only and are not binding as to the exact configuration and location of the uses and improvements authorized.
13. Subparagraph B of Article XXXII, GENERAL DEVELOPMENT PLAN , is hereby amended to read as follows:
“From and after the commencement of the term of this Lease, LESSEE shall implement the First Phase (as defined below) of the development plan attached hereto as Exhibit “5” (hereinafter referred to as the “New Plan”) as soon as practicable after LESSEE obtains the City Manager’s approval and all other required permits and approvals for the. First Phase of the New Plan (provided that commencement of construction of the First Phase of said plan shall not be required prior to the expiration of two (2) years following the commencement of the term of this Lease), and shall proceed diligently and without undue delay to completion thereof. “First Phase” shall mean the development and construction of a parking area. Subsequent new development included in the New Plan shall be new animal exhibits, interactive experiences, and/or theme attractions, subject to prior approval by the City Manager. LESSEE shall submit plans to CITY for such new exhibits or attractions prior to January 1, 2001. From and after the commencement of the term of this Lease, LESSEE shall make an aggregate investment (including direct and indirect construction costs and costs for architects, engineers, consultants fees and permitting and related expenses) of at least $5,000,000, including at least $1,000,000 attributable to Parcel “A” Property 4.”
14. [intentionally omitted.]
15 Subparagraph D of Article XXXII, GENERAL DEVELOPMENT PLAN , is hereby amended to read as follows:
“Should LESSEE fail to commence construction of the First Phase as provided above, subject to delays beyond LESSEE’s reasonable control, then Parcel “A” Property 4 shall revert to CITY, at CITY’s option, free and clear of this Lease or any other interest of LESSEE, unless LESSEE commences construction within thirty (30) days following receipt of written notice from CITY of its intention to cause such reversion, given on or after the date LESSEE should have commenced construction, subject to delays beyond its reasonable control. If requested by CITY, and if CITY’s notice of election is valid and LESSEE fails to commence construction within said thirty (30) day period, LESSEE shall execute, acknowledge, and deliver to CITY a quitclaim deed whereby LESSEE shall quitclaim all of its right, title and interest in Parcel “A” Property 4. Such reversion of Parcel “A” Property 4 shall be CITY’s sole remedy for LESSEE’s failure to timely commence construction of the First Phase of the improvements referred to in Exhibit “5,” New Plan.”
 
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16. Article XXXVII, NONDISCRIMINATION , is hereby amended to read ‘ as follows:
“LESSEE agrees not to discriminate in any manner against any person or persons on account of race, color, religion, gender, sexual orientation, medical status, national origin, age, marital status, or physical disability in LESSEE’s use of the Premises, including but not limited to the providing of goods, services, facilities, privileges, advantages, and accommodations and the obtaining and holding of employment.”
17. Article XXXIX, INSTITUTIONAL ADVERTISING , is hereby amended to read as follows:
“Institutional advertising, as authorized herein, shall mean corporate sponsorship of certain exhibits and attractions of the Premises whereby the sponsors may promote, or cause to be promoted or advertised, their products and/or services on said Premises. LESSEE agrees to control said institutional advertising to whatever extent necessary to maintain compatibility thereof with the primary purpose of a Marine Life Exhibit on the Premises and with CITY standards for the general development and uses of Mission Bay Park. CITY agrees to accept such institutional advertising as exists on the Premises as of the effective date of this Amendment to Lease Agreement; thereafter, however, all new contracts for institutional advertising on the Premises shall require the prior written approval of the City Manager. The CITY shall not impose a fee for approval of institutional advertising contracts, which are renewal contracts containing the same conditions as the previous contract, except for the term of the contract.”
18. Article XL, AFFIRMATIVE ACTION , is hereby deleted and the following is added in its place:
“ARTICLE XL
COMPLIANCE WITH CITY’S EQUAL
OPPORTUNITY CONTRACTING PROGRAM
a. Equal Opportunity Contracting . LESSEE acknowledges and agrees that it is aware of, and will comply with, City Council Ordinance No. 18173 (San Diego Municipal Code Sections 22.2701 through 22.2708, as amended), EQUAL EMPLOYMENT OPPORTUNITY OUTREACH PROGRAM, a copy of which is on file in the Office of the City Clerk and by this reference is incorporated herein. LESSEE and all of its subcontractors are individually responsible to abide by its contents.
LESSEE will comply with Title VII of the Civil Rights Act of 1964, as amended; Executive Orders 11246, 11375, and 12086; the California Fair Employment Practices Act; and any other applicable federal and state laws and regulations hereafter enacted. LESSEE will not discriminate against any employee or applicant for employment on any basis prohibited by law.
LESSEE submitted and CITY acknowledges receipt of a current Work Force Report or a current Equal Employment Opportunity (EEO) Plan as required by Section 22.2705 of the San Diego Municipal Code, which sets forth the actions that LESSEE will take to achieve the CITY’S commitment to equal employment opportunities.
 
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Further, LESSEE will cause the foregoing provisions to be inserted in all subcontracts for any work covered by this lease agreement so that such provisions will be binding upon each subcontractor.
LESSEE agrees that compliance with EEO provisions flowing from the authority of both parties will be implemented, monitored, and reviewed by the CITY’S Equal Opportunity Contracting Program staff.
b. Local Business and Employment . LESSEE acknowledges that the City of San Diego seeks to promote employment and business opportunities for local residents and firms in all CITY contracts. LESSEE will, to the extent legally possible, solicit applications for employment, and bids and proposals for subcontracts, for work associated with this lease agreement from local residents and firms as opportunities occur. LESSEE agrees to hire qualified local residents and firms whenever feasible.
LESSEE understands that failure to comply with the above requirements and/or submitting false information in response to these requirements may result in termination of this lease agreement and debarment from participating in CITY contracts for a period of not less than one (1) year.”
19. The following provisions shall be added to Article XLI, GENERAL:
“H. So long as LESSEE operates a water ski and personal watercraft show in the lagoon, LESSEE agrees to conduct one boating safety class each year for the duration of this Lease. LESSEE will make a good faith effort to assemble 2,500 personal watercraft owners and operators, and working with CITY’s Lifeguard Services Division, present to the audience boating safety information. The boating safety class will include exhibition riding by professional personal watercraft operators and displays of personal watercrafts. A nominal fee may be charged to the attendees and will include admittance to Sea World park on the day of the event. LESSEE may limit the number of individual ticket orders to four tickets. Twenty-five percent (25%) of the gross revenue from this event will be donated to the San Diego Lifeguard Service Boating Safety Education Fund.
I. CITY has requested that LESSEE contribute to the development of a nature center in Mission Bay Park after CITY develops a concept for the center. LESSEE has indicated to CITY, and CITY understands, that it cannot make any binding commitments for support of a nature center but agrees to cooperate with CITY and will consider providing in-kind support by, for example, its internal graphic design personnel and facilities, provided that the expenditures are not material.
J. LESSEE agrees to comply with the California Coastal Act, at its sole cost and expense, and, to the extent legally required, to apply to the California Coastal Commission or such other authorized state or local body for necessary coastal development permits authorizing the construction of any other improvements in the coastal zone.
 
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K. LESSEE agrees to allow City to use LESSEE’S parking facilities, located on Parcel “A” Property 4, as needed by CITY for parking for patrons of the proposed Amphitheater, or for patrons of other CITY special events, during those times such parking facilities are not needed by LESSEE, City shall make all best efforts to ensure that CITY’s use of LESSEE’s parking facilities shall not interfere with LESSEE’s operations. CITY shall notify LESSEE of CITY’s desire to use LESSEE’s parking facilities as far in advance as is practical, and LESSEE shall respond to such request in a timely manner. LESSEE agrees to install a gate in the fence on the easterly side of the Premises in order to facilitate said parking, at a location to be selected by LESSEE and approved by CITY, which approval shall not be unreasonably withheld.
CITY agrees to indemnify and hold LESSEE harmless from and against any claims asserted or liability established for damages or injuries to any person or property which arise out of CITY’s use of the parking facilities; provided, however that CITY’s duty to indemnify shall not include any claims or liability arising from the established active negligence, sole negligence, or sole willful misconduct of LESSEE, its agents, officers or employees.
L. This Lease Amendment shall not become effective until it has been approved by resolution of the Board of Directors of LESSEE and of LESSEE’s parent company.”
20. Article XLII, ADDITIONAL RENTAL ADJUSTMENT UPON CHANGE OF ENTITLEMENTS, is hereby added as follows:
A. From time to time during the term of this Lease, the minimum rent shall be adjusted as set forth in this Article XLII upon the occurrence of a “Substantial Change in Entitlements,” as defined below.
B. As used herein, a “Substantial Change in Entitlements” shall mean the occurrence of an event or events pursuant to which LESSEE shall thereafter be fully and completely vested under this Lease and pursuant to all applicable laws (such that all discretionary approvals have been obtained) to use the Premises in a manner different from that contemplated by this Lease immediately prior to such Substantial Change in Entitlements such that the value of LESSEE’s leasehold interest is increased thereby. By way of an example and not as a limitation, a Substantial Change in Entitlements may include an increase in, or removal of, the statutory thirty foot (30’) height restriction currently imposed upon the Premises, together with an amendment to the Mission Bay Park Master Plan and LESSEE’s master plan to allow development of the Premises consistent therewith (including the receipt of all California Coastal Commission approvals necessary in connection therewith), LESSEE’s obtaining (on a fully vested and irrevocable basis) all other city, state, federal and other governmental approvals, permits and entitlements (other than building permits) necessary in connection therewith in order to fully vest LESSEE with the right to develop the Premises in connection therewith, and
 
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LESSEE’s obtaining such approvals of CITY as are required under this Lease to develop the Premises in connection therewith. Any of the foregoing notwithstanding, a Substantial Change in Entitlements shall not include LESSEE’s obtaining CITY’s consent to, and other necessary governmental approvals for, the further development of the Premises in a manner consistent with and contemplated by this Lease and the Development Plan and pursuant to uses already allowed under this Lease. Nor shall this Article XLII be applicable to a request by LESSEE for the addition of a new use for the Premises not currently allowed by this Lease (including but not limited to the development of a hotel on the Premises); the parties acknowledge that any such additional use not currently permitted pursuant to this Lease shall require the consent of CITY and the agreement of both parties as to the rent to be charged by CITY under this Lease in connection therewith.
C. Upon the occurrence of a Substantial Change in Entitlements, the minimum rent shall be adjusted equitably as a result of the increase in value, if any, resulting solely from the Substantial Change in Entitlements. Such adjustment in minimum rent shall not include any increase in fair market rental value arising for any other reason, including, but not limited to, improved economic conditions, a general increase in land values, inflation, improvements to the Premises made by LESSEE, or a decrease in competition for tourist or recreational spending. Such adjustment in minimum rent shall, be made only with respect to the incremental increase in value, if any, resulting solely from the Substantial Change in Entitlements. Nothing herein shall be deemed to imply that an increase in value shall result from a Substantial Change in Entitlements.
D. Upon the occurrence of a Substantial Change in Entitlements, the parties shall negotiate in good faith to determine whether the minimum rent then in effect should be adjusted pursuant hereto, and, if so, the extent of any such adjustment. In the event that such determination is not made by mutual consent of the parties within one (1) year of such Substantial Change in Entitlements, either party may refer the matter to arbitration in accordance with the following provisions:
1. If the parties cannot agree upon a mutually acceptable arbitrator within thirty (30) days after the written demand therefore, each party shall, within ten (10) days thereafter, appoint an arbitrator and give written notice of such appointment to the other party. The two (2) arbitrators shall immediately choose a third arbitrator to work with them. If the two (2) arbitrators fail to select a third arbitrator within ten (10) days following the date of their appointment, on written application by either party, the third arbitrator shall be promptly appointed by the then-presiding judge of the superior court of the State of California, County of San Diego, acting in ‘his individual capacity. The party making the application shall give the other party written notice of its application.
2. Unless the parties otherwise agree, all of the arbitrators . shall be members in good standing of the American Institute of Real Estate Appraisers with an M.A.I. designation and shall have at least five (5) years experience in appraising commercial and other properties. Each party shall bear the expenses of its own appointed appraiser and shall bear other expenses pursuant to section 1284.2 of the California Code of Civil Procedure. Hearings shall be held in the City of San Diego, California. If there
 
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are three (3) arbitrators, the decision as to the increase in minimum rent shall be the decision of not less than two (2) of the arbitrators. In the event two (2) arbitrators cannot agree, then the minimum rent shall be increased by the average of the two (2) increases in minimum rent proposed by the arbitrators which are closest in amount, and the third proposal shall be discarded. (In the event that one proposed increase determined by an arbitrator is equally higher and lower than the other two (2) proposed increases, such middle amount shall be used.) For purposes of this arbitration procedure, the arbitrators shall assume that CITY has a fee simple absolute estate. In determining the increase, if any , if any, in minimum rent arising from the Substantial Change in Entitlements, the arbitrators shall consider only the actual uses and purposes expressly authorized by CITY under this Lease and allowed by applicable law immediately prior to and immediately after the Substantial Change in Entitlements. In determining the increase, if any, in the minimum rent arising from the Substantial Change in Entitlements, the arbitrators shall use and analyze only that rental data that is found in the open marketplace, such as is demanded and received by other landlords for the same or similar uses. In all cases, the arbitrators shall be instructed that the rent determination shall be based upon recognized real estate appraisal principals and methods. The award determined by the arbitrators shall be effective and retroactive to the first day following the Substantial Change in Entitlements, and any amounts found to be owing shall be paid within 30 days of the date of final determination by the arbitrators, and if not paid by said date shall thereafter accrue interest at the lesser of ten percent (10%) per annum or the “reference rate” of Bank of America NT & SA from time to time in effect. The award shall be in writing in the form of a report that is in accordance with the powers of the arbitrators herein, supported by facts and analysis and in accordance with the law. The arbitrators shall make copies of their report available to any ethical practice committee of any recognized professional real estate organization. The arbitration shall be conducted under and subject to the California Arbitration Statute.
IN WITNESS WHEREOF, this Amendment, executed by CITY, acting by and through its City Manager under and pursuant to Resolution No. O-18533 of the City Council authorizing such execution, and by LESSEE, acting by and through its duly authorized officer, as of the date first above written.

I hereby approve the form and legality of the foregoing Amendment this          day of June 29, 1998, 199        	 	THE CITY OF SAN DIEGO	
	 	By:	 	/s/ [Illegible Signature]	
	 		 	Title: Advisory Real Estate Assets Dir.	
		
CASE G. GWINN, City Attorney	 	SEA WORLD, INC.	
			
By:  /s/ Prescilla Wayward	 	By:	 	/s/ William A. Davis 6/24/98	
                                 Deputy	 		 	Title: Ex VP & GM	
 
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EXHIBIT 3
LEGAL DESCRIPTION: PARCEL “A”; PROPERTY 4 (EAST LEASE EXPANSION)
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY) AND A PORTION OF PUEBLO LOTS 252 AND 258 OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 RESUBDIVISION OF BLOCKS 7, 8, AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2,000.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10; THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, 104.06 FEET TO THE UNITED STATES COAST AND GEODETIC TRIANGULATION, STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X=1,712,415.17 AND Y=213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING-ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 3773.34 FEET AND WEST 10,533.21 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY COORDINATES OF SAID TRUE POINT OF BEGINNING BEING NORTH 3773.34 AND WEST 10,533.21, SAID TRUE POINT OF BEGINNING BEING A POINT ON A LINE THAT IS PARALLEL WITH AND 79.50 FEET AT RIGHT ANGLES NORTHERLY FROM THE CENTERLINE OF SEA WORLD DRIVE AS SHOWN ON CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14985-1-D, SAID POINT BEING OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 44+32.70 ON SAID CENTERLINE; SAID POINT ALSO BEING THE BEGINNING OF A 1920.50 FOOT RADIUS CURVE CONCAVE NORTHERLY, A RADIAL TO WHICH BEARS SOUTH 07°44’17” EAST; (1) THENCE WESTERLY ALONG THE ARC OF SAID CURVE AND PARALLEL TO SAID CENTERLINE THROUGH A CENTRAL ANGLE OF 00°49’15” A DISTANCE OF 27.51 FEET TO THE MOST SOUTHEASTERLY CORNER OF THE SEA WORLD LEASE AREA AS DESCRIBED IN LEASE AMENDMENT PER CITY COUNCIL RESOLUTION NO. 263507, ADOPTED JUNE 24, 1985, AND ON DOCUMENT NO. 769275 ADOPTED DECEMBER 10, 1985, BOTH IN THE OFFICE OF THE CITY CLERK OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA; (2) THENCE ALONG THE EASTERLY BOUNDARY OF SAID LEASE AREA NORTH 00°17’19” WEST, 1,456.09
 
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FEET ;(3) THENCE CONTINUING ALONG THE BOUNDARY OF SAID LEASE AREA NORTH 55°43’04” WEST, 660.41 FEET; (4) THENCE ALONG SAID BOUNDARY NORTH 71°35’40” WEST, 598.11 FEET; (5) THENCE ALONG SAID BOUNDARY NORTH 18°24’20” EAST, 50.00 FEET; (6) THENCE LEAVING SAID LEASE BOUNDARY SOUTH 71°35’40” EAST, 1,192.78 FEET TO THE BEGINNING OF A TANGENT 2,200.00 FOOT RADIUS CURVE CONCAVE NORTHERLY, A RADIAL TO WHICH BEARS SOUTH 18°24’20” WEST; (7) THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 05°42’28” A DISTANCE OF 219.16 FEET; (8) THENCE SOUTH 12°41’52” WEST, 92.37 FEET TO THE BEGINNING OF A 60.00 FOOT RADIUS CURVE CONCAVE EASTERLY, A RADIAL TO WHICH BEARS NORTH 77°18’08” WEST: (9) THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 66°05’56” A DISTANCE OF 69.22 FEET TO THE BEGINNING OF A REVERSE 10.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY, A RADIAL TO WHICH BEARS NORTH 36°35’56” EAST; (10) THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 56°54104”, A DISTANCE OF 9.93 FEET; (11) THENCE SOUTH 03°30’00” WEST, 323.08 FEET TO THE BEGINNING OF A TANGENT 900.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; A RADIAL 10 WHICH BEARS NORTH 86°30’00” WEST; (12): THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 65°29’51”, A DISTANCE OF 1,028.83 FEET ; (13) THENCE SOUTH 07°44’17” EAST, 200.00 FEET TO A POINT ON THE AFOREMENTIONED LINE THAT IS PARALLEL WITH AND 79.50 FEET AT RIGHT ANGLES NORTHERLY FROM THE CENTERLINE OF SEA WORLD DRIVE; (14) THENCE WESTERLY ALONG SAID PARALLEL LINE SOUTH 82°15’43” WEST, 706.66 FEET TO THE TRUE POINT OF BEGINNING.
(SAID PARCEL OF LAND CONTAINS 16.37 ACRES MORE OF LESS).

/s/ Clinton E. Hale 06-18-96	
Clinton E. Hale, PLS 6787 Date	
Hale Engineering	
Registration Expires: 09-30-00	
 
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EXHIBIT 3
LEGAL DESCRIPTION: PARCEL “A”; PROPERTY 5 (PEREZ COVE WAY LEASE)
THAT PORTION OF THE TIDELANDS AND SUBMERGED OR FILLED LANDS OF MISSION BAY (FORMERLY FALSE BAY) AND A PORTION OF PUEBLO LOTS 246, 247, 248, 249, 250 and 252 OF THE PUEBLO LANDS OF SAN DIEGO, ACCORDING TO MAP THEREOF MADE BY JAMES PASCOE IN 1870, A COPY OF WHICH SAID MAP WAS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 14, 1921, AND IS KNOWN AS MISCELLANEOUS MAP NO. 36, ALL BEING IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF LOT 24 IN BLOCK 10 RESUBDIVISION OF BLOCKS 7, 8, AND 10 AND A PORTION OF BLOCK 9 AND LOT “A”, INSPIRATION HEIGHTS, ACCORDING TO MAP THEREOF NO. 1700, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY DECEMBER 27, 1917; THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 24, SOUTH 89°55’56” WEST, (RECORD NORTH 89°59’00” WEST), 25.00 FEET TO A POINT OF TANGENT CURVE IN THE BOUNDARY OF SAID LOT 24; THENCE SOUTH 00°04’04” EAST, 2000.00 FEET TO AN INTERSECTION WITH A LINE WHICH IS PARALLEL AND 2.00 FEET SOUTHERLY AT RIGHT ANGLES TO THE SOUTHERLY LINE OF SAID BLOCK 10; THENCE ALONG SAID PARALLEL LINE NORTH 89°55’56” EAST, 249.70 FEET; THENCE NORTH 05°30’02” WEST, =104.06 FEET TO THE UNITED STATES COAST AND GEODETIC TRIANGULATION STATION “OLD TOWN” (THE LAMBERT GRID COORDINATES, CALIFORNIA ZONE 6, FOR SAID STATION “OLD TOWN” ARE X=1,712,415.17 AND Y=213,819.22) AND SAID TRIANGULATION STATION IS LOCATED AT LATITUDE 32°45’02” NORTH AND LONGITUDE 117°11’07.200” WEST, BEING ALSO THE POINT OF ORIGIN FOR THE SAN DIEGO CITY ENGINEER’S MISSION BAY PARK COORDINATE SYSTEM; THENCE NORTH 3,921.99 FEET AND WEST 11,925.93 FEET TO THE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED PROPERTY, THE MISSION BAY COORDINATES OF SAID TRUE POINT OF BEGINNING BEING NORTH 3,921.99 AND WEST 11,925.93, SAID TRUE POINT OF BEGINNING BEING A POINT ON A LINE THAT IS PARALLEL WITH AND 60.50 FEET AT RIGHT ANGLES NORTHERLY FROM THE CENTERLINE OF SEA WORLD DRIVE AS SHOWN ON CITY OF SAN DIEGO ENGINEER’S DRAWING NO. 14985-1-D, SAID POINT BEING OPPOSITE AT RIGHT ANGLES FROM ENGINEER’S STATION 30+00.00 ON SAID CENTERLINE; (1) THENCE PARALLEL TO SAID CENTERLINE NORTH 78°55’43” WEST, 346.04 FEET; (2) THENCE NORTH 57°49’43” WEST, 29.24 FEET TO THE BEGINNING OF A TANGENT 963.00 FOOT RADIUS CURVE CONCAVE NORTHERLY, A RADIAL TO WHICH BEARS NORTH 32°10’17” EAST; (3) THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 36°52’29” A DISTANCE OF 619.77 FEET; (4) THENCE SOUTH 85°17’48” WEST, 529.75 FEET TO THE BEGINNING OF A TANGENT 600.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY, A RADIAL TO WHICH BEARS SOUTH 04°42’12” EAST; (5) THENCE WESTERLY AND NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 60°17’06” A DISTANCE OF 631.30 FEET; (6)
 
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THENCE NORTH 34°25’06” WEST, 109.04 FEET TO THE BEGINNING OF A TANGENT 223.00 FOOT RADIUS CURVE CONCAVE EASTERLY, A RADIAL TO WHICH SEARS SOUTH 55°34’54” WEST; (7) THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 26°2T23” A DISTANCE OF 102.97 FEET TO THE BEGINNING OF A COMPOUND 345.00 FOOT RADIUS CURVE CONCAVE EASTERLY, A RADIAL TO WHICH BEARS SOUTH 82°02’17” WEST; (8) THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 53°0915” A DISTANCE OF 320.06 FEET TO THE BEGINNING OF A REVERSE 255.00 FOOT RADIUS CURVE CONCAVE WESTERLY, A RADIAL TO WHICH BEARS SOUTH 44°48’28” EAST; (9) THENCE NORTHERLY, NORTHWESTERLY AND WESTERLY ALONG THE ARC OF SAID REVERSE CURVE THROUGH A CENTRAL ANGLE OF 116°05’26” A DISTANCE OF 516.67 FEET; (10) THENCE NORTH 70°53’54” WEST, 122.41 FEET TO THE BEGINNING OF A TANGENT 303.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY, A RADIAL TO WHICH BEARS SOUTH 19°06’06” WEST; (11) THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 56°55’02” A DISTANCE OF 301.00 FEET; (12) THENCE NORTH 13°58’52” WEST, 636.66 FEET; (13) THENCE NORTH 76°01’08” EAST, 2059 FEET; (14) THENCE NORTH 13°58’52” WEST, 103.91 FEET; (15) THENCE NORTH 28°24’10” EAST, 32.33 FEET TO A POINT ON THE SEA WORLD LEASE AREA AS DESCRIBED IN LEASE AMENDMENT PER CITY COUNCIL RESOLUTION NO. 263507, ADOPTED JUNE 24, 1985, AND ON DOCUMENT NO, 769275 ADOPTED DECEMBER 10, 1985, BOTH IN THE OFFICE OF THE CITY CLERK OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA; (16) THENCE ALONG THE BOUNDARY OF SAID LEASE AREA SOUTH 61 35’50” EAST, 124,71 FEET; (17) THENCE SOUTH 23°11’55” EAST, 37.48 FEET; (18) THENCE SOUTH 00’00’00” EAST, 175.00 FEET; (19) THENCE SOUTH 13°45’54” EAST, 575.54 FEET TO THE BEGINNING OF A NON-TANGENT 270.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY, A RADIAL TO WHICH BEARS SOUTH 45°14’11” WEST; (20) THENCE SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 26°08’05” A DISTANCE OF 123.16 FEET; (21) THENCE SOUTH 70°53’54” EAST, 121.23 FEET TO THE BEGINNING OF A TANGENT 332.00 FOOT RADIUS CURVE CONCAVE WESTERLY, A RADIAL TO WHICH BEARS NORTH 19°06’06” EAST; (22) THENCE SOUTHEASTERLY, SOUTHERLY AND SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 116°05’26” A DISTANCE OF 672.68 FEET; TO THE BEGINNING OF A REVERSE 268.00 FOOT RADIUS CURVE CONCAVE EASTERLY, A RADIAL TO WHICH BEARS NORTH 44048’28” WEST; (23) THENCE SOUTHERLY ALONG THE ARC OF SAID REVERSE CURVE THROUGH A CENTRAL ANGLE OF 73°56’28” A DISTANCE OF 345.86 FEET; TO THE BEGINNING OF A COMPOUND 568.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY, A RADIAL TO WHICH BEARS SOUTH 61°15’04” WEST; (24) THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 65°57’16” A DISTANCE OF 653.84 FEET; (25) THENCE NORTH 85°17’48” EAST, 515,45 FEET TO THE BEGINNING OF A TANGENT 1032,00 FOOT RADIUS CURVE CONCAVE SOUTHERLY, A RADIAL TO WHICH BEARS NORTH 04°42’12” WEST; (26) THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 36°52’29” A DISTANCE OF 664.18 FEET; (27) THENCE SOUTH 57°49’43” EAST, 53.69 FEET TO THE BEGINNING OF A TANGENT 828.86 FOOT
 
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RADIUS CURVE CONCAVE NORTHERLY, A RADIAL TO WHICH BEARS SOUTH 32°10’17” WEST; (28) THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 21°06’00” A DISTANCE OF 305.24 FEET TO THE TRUE POINT OF BEGINNING.
(SAID PARCEL OF LAND CONTAINS 7.34 ACRES MORE OR LESS).

/s/ Clinton E. Hale 06-18-96	
Clinton E. Hale, PLS 6787 Date	
Hale Engineering	
Registration Expires: 09-30-00	
 
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(R-98-1385)
RESOLUTION NUMBER R- 290216
ADOPTED ON JUN 0 8 1998
BE IT RESOLVED, by the Council of The City of San Diego, that it is hereby certified that Negative Declaration LDR No. 96-7987, on file in the office of the City Clerk, has been completed in compliance with the California Environmental Quality Act of 1970, as amended, and the State guidelines thereto (California Code of Regulations section 15000 et seq.), that the Declaration reflects the independent judgment of The City of San Diego as Lead Agency and that the information contained in said report, together with any comments received during the public review process, has been reviewed and considered by this Council in connection with the approval of the Lease Amendment for the Sea World expansion of its facilities and parking.

APPROVED: CASEY GWINN, City Attorney	
		
By:	 	/s/ William T. Griffith	
	 	Deputy City Attorney	
WTG:lc
05/27/98
Or.Dept:REA
R-98-1385
Form-ndmndgen.frm
 
PAGE 1 of 1

NOTICE OF DETERMINATION

TO:      x	 	County Clerk
County of San Diego
220 W. Broadway, MS C-11
San Diego, CA 92101	 		 	From:	  	City of San Diego
Development Services
1222 First Ave., MS 501
San Diego, CA 92101	
			
LDR No:	 	96-7987	 	SCH No. 98011076	

Project Title:	  	SEA WORLD LEASEHOLD/PARKING LOT EXPANSION	
		
Project Location:	  	The project site is located within the City’s Mission Bay Regional Park. The site is on the South Shores area of the City’s Mission Bay Park, adjoining Sea World to the east, generally south of Pacific Passage and north of Sea World Drive between 1-5 and W. Mission Bay Drive.	
		
Project Description:	  	The expansion of the Sea World leasehold by 16.5 acres. This proposal would allow the immediate use of 10.5 acres for the exclusive parking area for the amusement park visitors with the remaining 6 acres for future amusement park exhibits.	
This is to advise that the City of San Diego City Council on June 8, 1998 approved the above described project and made the following determinations:
 
1.	The project will not have a significant effect on the environment.	
 
2.	A Negative Declaration (LDR No.96-7987; SCH No.98011076) was prepared for this project and certified pursuant to the provisions of CEQA. R-290216	
 
3.	Mitigation measures were not made a condition of the approval of the project.	
It is hereby certified that the final environmental document is available to the general public at the office of the Land Development Review, Development Services, 1222 First Avenue, Mail Station 501, San Diego, CA 92101.

	 		 	Telephone: 236-268	
Analyst:	 	John M. Kovac	 		 	File by:	 	/s/ Peggy Rogers	
	 	Sr. Env. Planner	 		 		 	Peggy Rogers	
	 		 		 		 	Deputy City Clerk	

CALIFORNIA DEPARTMENT OF FISH AND GA
CERTIFICATE OF FEE EXEMPTION
De Minimis Impact Finding or
One Fee Per Project Provision
Project Title/Location: SEA WORLD LEASEHOLD/PARKING LOT EXPANSION/MISSION BAY PARK

LDR NO.  96-7987	 		  	SCH NO. 98011076	
			
Project Applicants:	 	City of San Diego
Real Estate Assets Dept,
1200 Third Avenue, MS 51A
San Diego, CA 92101	  	Sea World/Busch Entertainment Corp.
500 Sea World Drive
San Diego, CA 92109-7995	
		
Project Description: 	 	The expansion of the Sea World leasehold by 16.5 acres. This proposal would allow the immediate use of 10.5 acres for the exclusive parking area for the amusement park visitors with the remaining 6 acres for future amusement park exhibits.	
Findings of Exemption:
An Environmental Impact Report have been prepared by the Southeast San Diego Development Corporation for the project. The report concludes that the project would result in a de minimis impact to wildlife resources as all of the following apply:
 
 	1.	No significant biological resources exist on the project site.	
 
 	2.	The project would have no adverse impacts on biological resources located off-site.	
 
 	3.	No biological studies were requested for the project.	
 
 	4.	No mitigation measures are proposed to address impacts to biological resources.	
 
 	5.	No conditions in any discretionary actions associated with the project address biological resource issues.	
 
 	6.	No broader impacts on a habitat (for example—urban runoff effects on wetland) were identified.	
Certification:
I hereby certify that the lead agency has made the above findings of fact and that based upon the initial study and hearing record, the project will not individually or cumulatively have an adverse effect on wildlife resources, as defined in Section 711.2 of the Fish and Game Code.

Tina Christiansen	
Development Services Manager	

			
By:	 	/s/ Tina Christiansen	
Title:	 	Senior Environmental Planner	
Lead	 	Agency: City of San Diego	
Date:	 	June 5, 1998	

(O-98-144)
ORDINANCE NUMBER 0-18538 (NEW SERIES)
ADOPTED ON JUN 29, 1998
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE A LEASE AMENDMENT AND MAINTENANCE AGREEMENT WITH SEA WORLD, INC., FOR A 23.5 ACRE EXPANSION AREA.
BE IT ORDAINED, by the Council of The City of San Diego, as follows:
Section 1. That the City Manager is authorized to execute, for and on behalf of The City of San Diego, a Lease Amendment with Sea World, Inc., for a 16.5 acre parcel for the expansion of Sea World’s facilities and parking, and 7 acres of Perez Cove Way, for a total of 23.5 acres, the market value of which is $4,150,000 as determined by an independent fee appraisal, for a new fifty-year (50-year) term, under the terms and conditions set forth in that Lease Amendment on file in the office of the City Clerk as Document No. OO - 18538-1
Section 2. That the City Manager is authorized to execute, for and on behalf of The City of San Diego, a Maintenance Agreement with Sea World, Inc., under the terms and conditions set forth in that Maintenance Agreement on file in the office of the City Clerk as Document No. OO - 18538-2.
 
PAGE 1 OF 2

Section 3. This ordinance shall take effect and be in force on the thirtieth day from and after its passage.
APPROVED: CASEY GW1NN, City Attorney

By:	 	/s/ William T. Griffith	
	 	William T. Griffith	
	 	Deputy City Attorney	
WTG:lc
05/27/98
Or.Dept:REA
0-98-144
Foilir-leaseo.frm
 
PAGE 2 OF 2

THE CITY OF SAN DIEGO
June 1, 1998
Mr. William A. Davis
Executive Vice President
and General Manager
Sea World of California
1720 South Shores Road
San Diego, California 92109.9980
RE: Maintenance Permit - Portion of Mission Bay Park
Dear Mr. Davis:
In connection with Sea World’s use and occupancy of certain premises in Mission Bay Park known as “Sea World” pursuant to that certain lease (the “Lease”) between the City of San Diego (“City”) and Sea World, Inc., a Delaware corporation (“Permittee”) dated as of JUN 29, 1998, as amended from time to time, City hereby grants permission to Permittee, and its officers, agents and employees to enter upon that certain City-owned property (“Permit Area”), as depicted on the attached Exhibit A-1 upon the following terms and conditions:
1. Permittee’s use of the Permit Area shall be limited to entry upon the same for the purpose of maintaining the landscaping, and irrigation systems for such landscaping, located within the Permit Area. Such maintenance obligations shall include but not be limited to irrigation, weeding, pruning and landscape replacement.
2. Consideration to City for granting this permit shall be the Permittee’s assuming and discharging the responsibility for complete maintenance of the landscaping within the Permit Area, its irrigation and irrigation systems. Landscaping plans and future changes in landscaping will be subject to the prior written approval of the District Manager of Mission Bay Park, which shall not be unreasonably withheld. Permittee shall not be responsible for any other equipment, facilities or other property not owned by it located within the Permit Area including but not limited to traffic signals, street lighting, directional signs or utilities, it being understood that the operation, maintenance, repair or replacement thereof shall remain the responsibility of City.
Document No. 00-18538-2
Filed June 219, 1998
Office of the City Clerk
SAN DIEGO, CALIFORNIA
3. Permittee shall operate, repair, maintain and replace the irrigation systems required for the landscaping located within the Permit Areas, provided that City shall first provide and install (and convey to Permittee by bill of sale) a working irrigation and landscaping system initially required as part of the City’s planned development of South Shores. Water for the maintenance of such landscaping shall be provided by the City, but only to the extent that would have been required as part of the City’s planned development of South Shores. Permittee shall not be required to provide water for the City’s landscaping.

4. The term of this permit shall be the same as the term of the Lease, with the right of cancellation by the City upon six (6) months prior written notice to the Permittee; provided, that in the event this permit is no longer in effect as a result of cancellation or other action by the City, then Permittee’s obligations as set forth in this permit, including the obligation to maintain, repair and replace certain landscaping and irrigation systems of the City, shall terminate.
5. Permittee certifies that a policy of public liability and property damage insurance, in which ‘The City of San Diego” is named as an additional insured, has been secured in an amount of not less than $5 million combined single limit liability with an occurrence claims form and that said policy shall be kept in force for the duration of this permit. A certificate of said insurance shall be filed with the City Real Estate Assets Department upon execution of this permit.
6. Permittee agrees to defend, indemnify, protect, and hold City and its agents, officers, and employees harmless from and against any and all claims asserted or liability established for damages or injuries (including death) to any person or property, including, but not limited to, injury to Permittee’s employees, agents, officers or invitees, which arise from or are connected with or are caused or claimed to be caused by the acts or omissions of Permittee and its agents, officers, or employees in performing the work or services herein and all expenses of investigating and defending against same; provided, however, that Permittee’s duty to indemnify and hold harmless shall not include any claims or liability arising from the established negligence or willful misconduct of City, its agents, officers, or employees.
City agrees to defend, indemnify, protect, and hold Permittee and its agents, officers, and employees harmless from and against any and all claims asserted or liability established for damages or injuries (including death) to any person or property, including, but not limited to, injury to City’s employees, agents, officers or invitees, which arise from or are connected with or are caused or claimed to be caused by the acts or omissions of City and its agents, officers, or employees within or related to the Permit Area and all expenses of investigating and defending against same; provided, however, that City’s duty to indemnify and hold harmless shall not include any claims or liability arising from the established negligence or willful misconduct of Permittee, its agents, officers, or employees.
7. All risks in connection with Permittee’s use of the Permit Area and any damages to the improvements thereon, thereunder, or in the vicinity thereof shall be borne in full by Permittee but only to the extent such damages are not the result of the negligent acts or omissions of the City or its agents.
8. Permittee shall not use the Permit Area in any manner which, in the opinion of the City Manager, creates a nuisance or disturbs the quiet enjoyment of persons in the surrounding area.
9. As set out in Section 5 above, this permit is revocable upon six (6) months written notice to Permittee at any time by the City of San Diego. It is mutually agreed that the City of San Diego shall not be obligated for any loss, financial or otherwise, which may be incurred by Permittee as a result of termination of this permit, and, further, that Permittee expressly waives any claim for expense or loss which Permittee might incur as a result of termination of this permit.
 
2

10. Permittee recognizes and understands that this permit may create a possessory interest subject to property taxation and that Permittee may be subject to the payment of property taxes levied on such interest. Permittee further agrees that such tax payment shall not reduce any fee paid the City of San Diego hereunder and that such tax shall be paid by Permittee before becoming delinquent.
11. Permittee shall at its sole cost and expense comply with all the requirements of all municipal, state, and federal authorities now in effect or which may hereafter be in effect, which pertain to the performance of its obligations in the Permit Area.
12. Permittee shall not assign any rights granted by this permit nor any interest therein. Any assignment by operation of law shall automatically terminate this permit. Notwithstanding the foregoing, this permit may be assigned to an approved assignee of Sea World, Inc.’s Lease with the City.
13. No signs shall be displayed on the Permit Area without the prior written consent of the City Manager, which shall not be unreasonably withheld provided: all such signs are in compliance with Mission Bay Park standards, laws related to sign requirements, and acceptable to the Traffic Engineering Division of the City.
14. Permittee shall not remove any plant material from the Permit Area without the prior written consent of the Park and Recreation Department of City. Should the Permittee need to remove any plant material, a written request must be submitted to the City of San Diego, Park and Recreation Department, Coastal Division, attention District Manager, at 2581 Quivira Way, San Diego, California 92109. Permittee agrees to transplant or box trees disturbed within the Permit Area and relocate the same within Mission Bay Park as directed by the Park and Recreation Department of City. Permittee shall be responsible for the maintenance of the Permit Area and that maintenance will conform to Mission Bay Park maintenance standards.
15. Permittee will provide plans for irrigation systems that will be demolished or made obsolete by any proposed construction and showing how they will be repaired by Permittee. Plans shall be submitted to the City Park and Recreation Department and all repairs shall be done in conformance with Mission Bay Park maintenance standards with regard to parts used, etc.
16. Upon execution of this Permit, Permittee will provide a construction schedule for all improvements and will furnish updates to District Manager, City of San Diego, Park and Recreation Department, 2581 Quivira Way, San Diego, California 92109.
 
17.	This activity is categorically exempt from CEQA pursuant to State CEQA Guidelines, Section 15301.	
18. Permittee and City understand and agree that if any provisions of this permit augment, modify, remove, or conflict with the project description and/or special conditions of any required coastal development permit, further action by the Coastal Commission may be required, either through an amendment to the coastal development permit or issuance of a separate coastal development permit.
 
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19. Permittee agrees not to discriminate in any manner against any person or persons on account of race, color, religion, gender, sexual orientation, medical status, national origin, age, marital status, or physical disability in Permittee’s use of the Permit Area, including but not limited to the providing of goods, services, facilities, privileges, advantages, and accommodations, and the obtaining and holding of employment.
Please acknowledge your agreement to the foregoing terms and conditions on the enclosed copy of this letter and return it to the City Property Department, together with your insurance certificate.
If you should require additional information or have any questions, please call Linda M. Ferro, Property Agent, at 236-6985.

Very truly yours,	
	
/s/ Robert J. Collins	
ROBERT J. COLLINS	
Real Estate Assets Manager	
jmj
Attachments
cc: County Assessor
 
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THE ABOVE IS ACKNOWLEDGED AND ACCEPTED THIS 1 DAY OF JUNE, 1998	
	
SEA WORLD, INC.
a Delaware corporation	
		
By:	 	/s/ William A. Davis	

APPROVED AS TO FORM AND LEGALITY	
	
CASEY GWINN, City Attorney	
		
By:	 	/s/ Priscilla Wayward	
	 	Deputy City Attorney	
	
DEVELOPMENT AND ENVIRONMENTAL PLANNING	
	
ENVIRONMENTAL CLEARANCE:	
	
/s/ Sr. Planner/EAS	
	 	7/8/98	
	 	0-18538	
 
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6

T HE C ITY O F S AN D IEGO
M ANAGER ’ S R EPORT

DATE ISSUED:	  	June 3, 1998	  	REPORT NO. 98-116	
		
ATTENTION:	  	Honorable Mayor and City Council
Agenda of June 8, 1998	
		
SUBJECT:	  	Sea World - Lease Amendment and Expansion	
		
REFERENCE:	  	City Manager’s Report Numbers 98-59, dated March 18, 1998 and 98-90, dated April 29, 1998	
SUMMARY
Issues - 1) Should the City enter into a lease amendment to amend the terms and conditions of the lease and expand the leasehold premises with Sea World? 2) Should the City Council certify and adopt that the information contained in LDR No. 96-7987 has been completed in compliance with the California Environmental Quality Act and State CEQA Guidelines, and that said Negative Declaration reflects the independent judgement of the City of San Diego as Lead Agency?
Manager’s Recommendation - Direct the City Manager to enter into a lease amendment with Sea World and certify the Negative Declaration.
Other Recommendations - The Natural Resources and Culture Committee, at its May 6, 1998 meeting, forwarded this item to full City Council without a recommendation. The Committee also requested additional information on the appraisal and water runoff issues. The Clairemont Mesa Planning Group approved this item at its May 19, 1998 meeting. The Park & Recreation Board approved this item at its April 16, 1998 meeting. The Mission Bay Park Committee approved this item at its April 7, 1998. The Real Estate Advisory Board recommended approval of this project at its March 5, 1998 meeting.
Fiscal Impact - Sea World paid the City $5.2 million in rent during fiscal year 1997. It is estimated that an expansion of the Sea World leasehold will result in increased annual revenues (including a $1.2 million option payment) in the amount of $800,000 for the first 5 years following development (year 2000), due to increased attendance. Sea World anticipates spending approximately $20,000 to $30,000 per year, on landscape, maintenance and irrigation of adjacent Mission Bay Park land. Landscaping by Sea World will not result in a cost savings to the Park & Recreation Department, however it will allow staff time and materials to be redirected to other areas of the park.
Environmental Status - The Development Services Department issued a Final Negative Declaration on March 9, 1998.

Economic Impact - Sea World’s economic impact is estimated to be $920 million annually to the San Diego economy. By the year 2005, it is estimated to grow to $1.35 billion with the proposed expansion.
BACKGROUND
In 1994, during negotiations for a percentage rental rate adjustment for the Sea World lease agreement, Sea World proposed an expansion of its leased premises to include an adjacent 16.5 acre parcel. The parcel is identified in the Mission Bay Master Plan for future commercial development. The plan lists an expansion of Sea World as one of the potential uses for the site and identifies the parcel as 16.5 acres. It has since been determined that the parcel is approximately 12 acres. Sea World’s proposal included adjusting the boundary of the expansion parcel to achieve a total of 16.5 acres. 10.5 acres of the expansion parcel are located over the Mission Bay landfill.
Letter of Intent
In 1996, the City and Sea World negotiated a letter of intent which provided for the expansion and preparation of a lease or lease amendment, It also provided for an option fee of $1.2 million to the City and allowed Sea World to perform environmental testing on the parcel before determining whether to pursue the expansion. The terms of a new lease or lease amendment were included in the letter of intent and are as follows:
 
 	•	 	Option payment of $1.2 million (paid in 1996). One-half of this amount will be refunded to Sea World in the form of rent credits if a lease amendment is not completed by June, 1999. The full amount of $1.2 million will be refunded in cash if the amendment is not approved.	
 
 	•	 	15 year extension of the lease (a new 50 year term).	
 
 	•	 	Minimum capital improvement investment of $5 million.	
 
 	•	 	Inclusion of 16.5 acres with development to begin within two years.	
 
 	•	 	Inclusion of the physically-traveled portion of Perez Cove Way to the leasehold boundary (7 acres).	
 
 	•	 	Separate permit for landscape maintenance along Perez Cove Way, the median of Sea World Drive from the Sea World main entrance to Friars Road, and the north side of Sea World Drive from the expansion area to the South Shores Park entrance.	
 
 	•	 	Sea World to provide a boat safety class and design support for the proposed Mission Bay Nature Center.	
In addition to the provisions of the letter of intent, Sea World has agreed to allow the public to utilize the expanded guest parking area during Sea World non-peak hours, for amphitheater and other City special event parking. A separate gate will be constructed on the east side of the guest parking area for access by the public. Sea World has also agreed to an increase in the annual minimum rent (from $3.58 million to $4.1 million), and insurance coverage (from $1 million to $5 million). Attached as Exhibit 1 is a chart showing the lease provisions which will be modified by the proposed lease amendment and lease provisions which remain unchanged.
 
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In March of 1996, the Mission Bay Park Committee recommended approval of an option to lease and develop the South Shores commercial parcel (16.5 acres) with Sea World, with a caveat that if a lease was negotiated, the issue of runoff of pollutants from the Sea World parking lots be addressed. In March of 1996, the Park & Recreation Board approved an option to lease with Sea World. On June 25, 1996, the San Diego City Council approved the letter of intent with Sea World, which provided for a subsequent lease amendment and expansion of 16.5 acres. More recently, at its March 25, 1998 meeting, the Natural Resources and Culture Committee directed staff to return to its May 6 meeting with additional information regarding the development of the 16.5 acre parcel, the March 16, 1998 appraisal and City-Sea World joint use of the proposed guest parking area. Attached as Exhibit 2 is a matrix of issues raised by the public at the March 25 committee meeting.
DISCUSSION
Landfill Assessment
After the letter of intent was approved by the City Council, Sea World hired a consultant to perform a Phase 1 site assessment of the expansion parcel, Sea World’s consultant installed six monitoring wells on the parcel in order to determine the level of contamination, if any, and to verify the boundaries of the known landfill. The assessment findings confirmed the boundaries of the landfill and revealed no unknown or unexpected contamination. Sea World decided to pursue the expansion.
Development Plan
Development of the 16.5 acre parcel would be in three phases, 1) development of perimeter fencing with landscaping berm, 2) development of parking area, and 3) development of the exhibits. (See Exhibit 3.) Development of the 10.5 acre guest parking area will occur within two years. 6 acres will be used for future exhibits, along with approximately 6 acres of existing Sea World leased property, which adjoins the 16.5 acre parcel. The planning phase of development of the future exhibits will begin in 2001. Development of the exhibits require prior approval by City staff, Park & Recreation Department committees and the California Coastal Commission. Guest parking will be located over the landfill area of the expansion parcel. Any other type of development over the landfill would be severely restricted by requirements imposed by local governmental agencies. The portion of the existing pedestrian path which crosses the expansion area will be realigned onto park land by Sea World in a location approved by City staff.
In conjunction with the letter of intent, but under a separate permit, Sea World has agreed to continue maintaining the landscaping along Perez Cove Way and to begin to maintain the median landscaping along Sea World Drive from Friars Road to the Sea World entrance and the north side of Sea World Drive from the expansion area to the South Shores Park entrance. This will allow Park & Recreation Department staff to reallocate current resources to other areas of Mission Bay Park. Sea World anticipates spending $20,000 to $30,000 per year for landscape, maintenance and irrigation of these areas. The landscape maintenance agreement requires that at a minimum, Sea World maintain the landscaping according to the Mission Bay Park maintenance standards currently utilized by the City’s Park & Recreation Department. Landscaping by Sea World will not result in savings to the Park & Recreation Department, however it will allow staff time and materials to be redirected to other areas of the park.
 
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Proposed Uses for Expansion
Attached as Exhibit 4 is Table 2-2, an excerpt from Sea World’s existing Master Plan. This Master Plan was approved by City Council in 1985 and is referred to as the Development Plan in a Sea World Lease Amendment dated June 24, 1985. Table 2-2, Phase 3, identifies proposed development projects which Sea World may construct on the expansion parcel. These uses include an aviary, gift shops, snack kiosks, small animal nursery, marine aquarium, an education theater and a marine exhibit. Sea World will present a more detailed development plan by January 2001. This development plan will be subject to additional environmental review.
Sea World Appraisal
An appraisal of the land leased to Sea World was completed by a City-approved independent appraiser on March 16, 1998. The appraiser estimates the land (including the proposed expansion area of 23.5 acres) to have a fair market value of $52.5 million and suggests a fair market annual rental of $5.25 million (a 10% return on the value of the land). The City received $5.21 million in rent this past fiscal year without the expansion.
The 16.5 acre parcel was also appraised separately and the appraiser concluded the value of the parcel to be $4.1 million. A 10% return on this value would be a fair market annual rental of $400,000 per year. It is anticipated that the City will receive an average of $800,000 per year for the first five years (including the $1.2 million option payment) following development of the expansion area in 2000. This increase is a result of Sea World’s proposed expansion and ability to attract more guests to the park.
The appraiser utilized several methods for the Sea World appraisal, including the “direct comparison” method. Staff feel this is the most appropriate method since it utilizes recent and comparable real estate transactions and lease agreements as the basis for the valuation. Other methods utilize a high degree of subjective variables and data, and are therefore less favorable. Attached as Exhibit 5 is a summary of the appraisal findings.
Comparison of Sea World to other Developments
Comparisons have been made between this proposal and existing agreements for Yosemite National Park, Old Town State Park, Raging Waters in Los Angeles County and Great American. Staff has reviewed these agreements and had discussions with the lessors.
Yosemite: The federal government issued a Request for Proposals for the hotel, restaurants and gift shops in Yosemite National Park. The operator selected paid approximately $60 million to the previous operator for the cost of the improvements which the previous operator owned. The operator is obligated to pay into government ($223,000 per year) and operator’s capital improvement (5%) funds; however the franchise fee, or rent to the Federal Government, is currently 0%.
Old Town San Diego: The State of California owns the land and improvements. The State enters into short term (10 years) concession agreements for the operation of specialty shops and restaurants. These agreements do not provide for rental adjustments. The percentage rental rates currently in place for these agreements is 7.3% of the concessionaire’s gross income. Old Town State Park had 7.5 million visitors last year and generated $2 million in rent for the State of California.
 
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Raging Waters: The County of Los Angeles has a 35 year lease agreement for the operation of Raging Waters. The lease rate is 13% of the lessee’s gross annual income; 6.5% is spent on capital improvements, at the discretion of the lessee and 6.5% is paid to the County as rent. Last year the County of Los Angeles received $900,000 in rental revenue from Raging Waters.
Great American: Located in a redevelopment area in the City of Santa Clara, the Redevelopment Agency issued bonds in order to purchase this theme park from Marriott in order to retain its use as a theme park. Paramount Parks Inc. subsequently purchased the improvements and lease agreement and currently operates the theme park. The agency is a party to a loan on the property which is being amortized through the base rental payment of $5.3 million per year. The lease agreement provides for 5% of gross revenue over $56 million and 7.5% of gross revenue over $100 million. In 1996, gross revenue exceeded $56 million and Paramount paid a percentage rent of $848,696 to the City. The park is comprised of 110 acres for the park plus 50 acres of guest parking. Exhibit 6 shows a comparison of Sea World to these venues in terms of capital improvement expenditures and rental revenue received.
Mission Bay Master Plan Environmental Consistency
On March 9, 1998, the City’s Development Services Department issued a final Negative Declaration for this project. Sea World has submitted a Coastal Development Permit application to the California Coastal Commission. The project must also comply with the Post Closure Landfill Plan for Mission Bay South Shores. The project will not impact habitat, is consistent with the Mission Bay Master Plan and poses no adverse water quality effects.
Sea World treats the majority of water runoff within its exhibit area through two water treatment and discharge facilities. It also is able to capture approximately 14% of the runoff from the parking lot areas and treat it before discharging into the bay. Sea World utilizes a high flow bypass treatment system which is able to treat “first flush” stormwater during large storm events. The remainder of the parking lot runoff goes directly to the City’s storm drain system before being discharged into the bay. The City utilizes a storm drain interceptor system to divert dry weather low flow runoff from the storm drain to the sanitary sewer before it discharges into Mission Bay. This interceptor system diverts water from San Clement Canyon Creek, Rose Creek, Tecolote Creek, and portions of Pacific Beach.
San Diego Municipal Code Section 43.03, “Stormwater Management and Discharge Control”, requires all businesses within the City limits to mitigate or prevent the flow of pollutants into the City’s storm drain system to the maximum extent practicable. Federal, State and local environmental regulations do not require any business to treat stormwater runoff from their parking areas as part of their regular maintenance schedule.
Sea World cleans its parking areas daily by picking up litter and sweeping the lots. In addition, oil stains are covered with absorbent material and then discarded. To City staff’s knowledge, this level of cleaning far exceeds the maintenance efforts of any other parking area within the City. Further, Sea World is the only business that treats a portion of its stormwater runoff through its own water treatment facilities. Sea World will connect the expansion area to its existing treatment facilities by adding a diverter box to capture water runoff and divert it to one of its water treatment facilities.
 
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Summary
The City Manager recommends entering into the lease amendment with Sea World for an expansion from 149.73 land acres to 173.23 land acres (water acres would remain at 17 acres), enabling Sea World to accommodate an estimated 500,000 additional visitors by 2005. Increased attendance at Sea World benefits the local economy and results in increased percentage rental revenues to the City. Since Anheuser-Busch assumed the Sea World lease in 1989, it has invested $150 million in capital improvements. Sea World is a known lessee, with the financial ability and expertise to continue operating the premises in an outstanding manner.
ALTERNATIVES
 
1.	Do not approve the lease amendment and refund Sea World’s option fee.	
 
2.	Direct staff to issue a Request for Proposals for future development of the expansion parcel.	

	 		 	Respectfully submitted,	
			
/s/ George I. Loveland	 		 	/s/ Robert J. Collins	
Approved: GEORGE I. LOVELAND
Deputy City Manager	 		 	Submitted by: ROBERT J. COLLINS
Real Estate Assets Manager	
COLLINS/LMF
ATTACHMENTS
 
 	1.	Exhibit 1/Comparison of Lease Provisions	
 
 	2	Exhibit 2/Issues Raised at Public Testimony	
 
 	3	Exhibit 3/Development of the 16.5 Acre Parcel	
 
 	4	Exhibit 4/Existing Sea World Development Plan	
 
 	5.	Exhibit 5/Appraisal Summary	
 
 	6.	Exhibit 6/Theme Park Comparison	
 
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EXHIBIT 1
COMPARISON OF LEASE PROVISIONS

ISSUE	  	CURRENT LEASE POSITION	  	PROPOSED LEASE AMENDMENT	
1.      Term of the lease	  	50 years. Current lease will expire in 2033.	  	A new 50-year term. Amended lease will expire in 2048 (a 15-year lease extension).	
			
2.      Annual minimum rent	  	Annual minimum rent of $3,581,626.66. This amount is to be adjusted on 111999.	  	Annual minimum rent to be adjusted with commencement of amended lease. New amount: $4,162,481.	
			
3.      3% Surcharge	  	Not specifically included in the actual lease document.	  	Adds it to the Rent Section of the lease.	
			
4.      For rent payment purposes, lease is broken down into lease years or “Accounting Years.”	  	Accounting years currently fluctuate making rental calculations more difficult.	  	Accounting years would be established as each calendar year.	
			
5.       A.    Percentage Rent Adjustment Process
B.     Time period provided for negotiating & processing Percentage Rent adjustment.	  	A.     Adjusted to market rates every 10 years. 4% cap on Admission.
B.     Parties begin process 4 months before adjustment is due.	  	A.     Unchanged
B.     Parties begin process 18 months before adjustment is due.	
			
6.    General Development Plan	  	A.     Contains outdated provision for development.
B.     Requires minimum development expenditure of $2.5 million.
C.     Contains provision for mitigation rent credits of up to $500,000 for permanent capital improvements to Mission Bay Park required by a governmental agency, which would normally be the City’s responsibility (e.g., street improvements, installation of street lights). None are contemplated at this time.	  	A.     Provides for the proposed development.
B.     Requires minimum development expenditure of $5 million.
C.      Unchanged.	
 
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ISSUE	  	CURRENT LEASE POSITION	  	PROPOSED LEASE AMENDMENT	
7.      Perez Cove Way	  	In a 1993 permit, Sea World assumed possession of this park road for queuing into Sea World. Landscape & lighting maintenance was also assumed by Sea World. The permit could be terminated by either party with 6 month’s notice.	  	The physically-traveled road will be included in the lease. The City will issue a 50-year Maintenance Permit for continued maintenance of the perimeter areas. The permit may be canceled by either party with 6 month’s notice.	
			
8.      Additional Landscape	  	None.	  	Sea World would perform landscaping in center median of Sea World Drive from Friars Road to current Sea World entrance on Perez Cove Way and on the north side of Sea World Drive from the east boundary to the entrance of South Shores.	
			
9.      Sea World currently sponsors a boating safety class for Mission Bay.	  	Not currently required in the lease.	  	Will be required so long as Sea World maintains a water ski show.	
			
10.    Nature Center	  	Not currently required.	  	Sea World agrees to cooperate with City and will provide graphic design support.	
			
11.    Insurance	  	A minimum of $1 million.	  	A minimum of $5 million.	
			
12.    Environmental matters	  	Not addressed in the current lease.	  	A.     Language added to address HazMat over expansion parcel only. Sea World responsible for additional maintenance, compliance with the Postclosure Land Use Plan and disturbance to landfill caused by its development or use. City responsible for a disturbance not caused by Sea World’s development or use.
B.     Existing leased area will be governed by applicable laws.	
 
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ISSUE	  	CURRENT LEASE POSITION	  	PROPOSED LEASE AMENDMENT	
13.    Nondiscrimination	  	Existing lease contains outdated language.	  	Replaces outdated language with City’s current standard language.	
			
14.    Institutional Advertising	  	City currently charges a $360 processing fee for review of each agreement and subsequent renewals.	  	City will charge $360 processing fee for each agreement except renewal contracts containing same conditions except for term.	
			
15.    Equal Opportunity Contracting Program	  	Existing lease contains outdated Affirmative Action language.	  	Replaces outdated language with City’s current EOCP Language.	
			
16.    Use	  	Operating a theme park as generally shown in the Development Plan.	  	Unchanged.	
			
17.    Leased area	  	149.73 land acres
17.02 water acres	  	Expansion of 23.5 acres, to 173.23 land acres 17.02 water acres	
			
18.    Operation of Hubbs Research	  	May occupy 8000 sq. ft. so long as remains non- profit. No rent charge unless Hubbs does not comply, then 7% of all revenue.	  	Unchanged.	
			
19.    Improvements, Repairs, Alterations and Maintenance	  	Sea World is responsible for all, including shoreline maintenance.	  	Unchanged.	
			
20.    Percentage Rent	  	Various percentage rates by categories	  	Unchanged, however percentage rent is subject to adjustment every 10 years.	
 
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ISSUE	  	CURRENT LEASE POSITION	  	PROPOSED LEASE AMENDMENT	
21.    Assignment	  	Sea World may assign only with City Manager approval.	  	Unchanged.	
			
22.    Compliance with Law	  	Sea World must comply with all municipal, state and federal laws.	  	Unchanged.	
			
23.    Ownership of Improvements	  	When lease is terminated or expires, improvements become property of City at City’s option.	  	Unchanged.	
			
24.    Noncompetition	  	Sea World may not establish or operate another theme park within a 560 mile radius of San Diego.	  	Unchanged.	
			
25.    Damaged Equipment	  	Sunken vessels or equipment must be salvaged within 24 hours.	  	Unchanged.	
			
26.    Taxes	  	Sea World is responsible for payment of taxes.	  	Unchanged.	
			
27.    Lease Encumbrance	  	Must be approved by City Manager.	  	Unchanged.	
			
28.    Utilities	  	By Lessee.	  	Unchanged.	
			
29.    Educational Program	  	Sea World must provide an educational program for elementary school children.	  	Unchanged.	
 
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EXHIBIT 2
ISSUES RAISED AT PUBLIC TESTIMONY - SEA WORLD LEASE AMENDMENT

Staff Response:	
	
Sea World’s Best Management Practices keep some of the runoff from entering the storm sewer system. A diverter box currently in              ace on the expansion parcel will be connected to Sea World’s treatment facility and will treat the runoff before it is released into the	
	
             Assets staff are competent & are able to negotiate and recommend an equitable transaction for the City’s interest.	
	
             ct is consistent with the Mission Bay Master Plan, no Planning Commission review is required.	
	
             98 appraisal recommends an annual rental rate of $5,200,000 per year on the existing and proposed leased premises.              total payment for FY 1997 exceeded this amount without the expansion.) It is anticipated that the City will receive              al rent of $800,000 per year as a result of the expansion.	
	
             ew Sea World lease will be for a 50 year term.	
	
             nt plan included in the lease amendment identifies the guest parking area and the area which will be used for future              fic exhibit development requires the prior approval of the City Manager and public committees. The height limitation              e is 30 feet. If the voters approve a height exemption for the leased area, Sea World may propose exhibits of up to              e City Manager’s and public committees’ prior approval is still required. Sea World’s improvements (queuing for 460+              Cove Way has lowered traffic impact on Sea World Drive.	
	
             ds to control access for security, safety and liability purposes. Shoreline access is also not practical because of the              the shoreline with rip rap, which is currently in place. Other opportunities for access to the water can be made              contemplated development of Fiesta Island.	
	
             an expansion of Sea World onto the 16.5 acre parcel has been heard at nine public, noticed, meetings including the              ark Committee and City Council, since March of 1996.	
	
             ronmental staff issued a Negative Declaration for this project. An Environmental Impact Report was completed in 1985              Master Plan currently in place.	
 
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             or Council Committee may direct staff to enter into exclusive negotiations with an existing lessee. At its June 25,              eting, the City Council approved the letter of intent with Sea World, authorizing exclusive negotiations.	
	
             ay Master Plan recommends that the Boat & Ski Club relocate to a 4-acre site adjacent to the boat ramp and sell              ries and bait. If the Boat & Ski Club does not relocate, the 4-acre parcel may be developed for commercial purposes              to support the boat ramp.	
	
Mission Bay Master Plan recommends commercial development for this parcel, other areas of the park may be used for              tion uses.	
	
             ag is the only practical use of the area over the landfill. It is also the most compatible use. Parking will support entire Sea              fore it is consistent with the Master Plan.	
	
             ned. Residential uses of the park would not be allowed.	
	
             mittee may request that a particular item be brought forward as an “Action” item rather than an	
	
             tressed in the Negative Declaration and no significant impact was noted.	
	
             ent on new attractions to keep Sea World competitive and to maintain or raise attendance. This also              ased revenue and tourism. A multi-story- parking structure would be obtrusive and would dominate the              ve.	
	
             rtize its capital improvement investments which are estimated to be in excess of $160 million in the next             	
	
             rk-Restrictions upon Commercial Development,” allows a commercial lease maximum of up to 471 land              5-acre expansion, current commercial leases total 438 acres.	
 
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EXHIBIT 4
Table 2-2
PROPOSED FACILITIES AND PHASING PLANS
SEA WORLD MARINE PARK
Phase 1
Main Entrance
Preview Center
Support Facility Structures
Gift Shops
Specialty Foods Restaurant
Exit Plaza
Guest Services Structure
Restaurant/Lounge
Phase 2
Shamu Stadium
Support Facility Structures
Snack Kiosks
Restrooms
Landscape Nursery
Filter Plant
Phase 3
New Nautilus Showpiece Aviary
Support Facility Structures Gift Shops
Snack Kiosks
Small Animal Nursery
Marine Aquarium
Water Playground
Education Theater
Secondary Entrance
Restaurant and Catering Facility Marine Exhibit
Walrus Stadium
Polar Exhibit
 
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EXHIBIT 5
Summary of Important Facts and Conclusions

Project	 	Market Value Estimate	
			
Property Locations:	 	16.50-acre parcel:	 	North side of Sea World Drive, west of South Shores public boat launching area, east of existing Sea World leasehold	
			
	 	Sea World Leasehold:	 	1720 South Shores north of Sea World Drive, south of Mission Bay, east of Ingraham Street and west of South Shores public boat launching area.	
		
Effective Date	 	March 4, 1998	
		
Date of Report	 	March 16, 1998	
		
Vested Owner	 	City of San Diego	
		
Appraisal Purpose	 	1)      Provide an estimate of Market Value for a 16.50-acre parcel, as a separate parcel and in assembly with the existing Sea World leasehold; plus a seven acre parcel used for Perez Cove Way.
 
2)      Provide an estimate of an annual Market Rent for the combined Sea World leasehold.	
		
Land Area	 	165.973-acre upland; Sea World Park
 
17.014 acres submerged land; Marina
 
7.0 acre parcel; Perez Cove Way
 
16.50-acre parcel; Supplemental Assembly Parcel	
		
Zoning/Community Plan	 	Both parcels are located within the Mission Bay Master Plan Update; both parcels are designated for commercial-visitor use.	
			
Highest and Best Use	 	16.50-acre parcel:
 
Sea World Leasehold:	 	Waterfront hotel/motel development
 
Theme park development	
Estimate of Market Value and Market Rent

16.5 acre supplemental parcel	  	$	4,150,000	  	
		
166 acre assembled Sea World Leasehold including a 16.5-acre parcel and the 7.0 acre Perez Cove Way.	  	$	52,425,000	  	
		
Annual Market Rate of Return Estimate	  	 	10	% 	
		
Annual Market Rent Estimate	  	$	5,242,500	  	
DAVID J. YERKE COMPANY
City of San Diego / Sea World / 98020
 
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EXHIBIT 6: RENT/PAYMENTS COMPARISONS

Payment Class	  	Sea World
California	  	Old Town
State Park	  	Yosemite
National Park	  	Raging Waters	  	Great America	
Rent	  	4.5%	  	7.3%	  	0	  	6.5%	  	5% of annual revenues over $53 Mil. And 7.5% of revenues over $100 Mil.	
						
Capital Improvements	  	15.0%	  	N/A	  	$222,750 for govt. property plus 5% for operators property	  	6.5%	  	None specified, see note 1	
						
Payments for retiring debt used to acquire capital improvements owned by a prior lessee	  	N/A	  	N/A	  	8.8 percent	  	N/A	  	$5.3 Mil.	
						
Total rent/ capital improvements/ payments for amortizing debt	  	19.5%	  	7.3%	  	14%	  	13%	  	10% at annual revenues of $53 Million declining to 7.5% at $100 mil. and over	
 
1.	Capital improvements and alterations permitted with prior approval of lessor.	
jmj
5/29/98
 
1

The City of San Diego
MANAGER’S
REPORT

DATE ISSUED:	  	June 19, 1996	  	REPORT NO. 96-130	
			
ATTENTION:	  	Council Docket of June 25, 1996	  		
			
SUBJECT:	  	Letter of Intent - Sea World, Inc.	  		
SUMMARY
 
 	Issue :	1. Should the City Manager execute a letter of intent, which proposes the addition of 16.5 acres to Sea World’s existing leasehold area, inclusion of Perez Cove Way and an extension of the Sea World lease to 50 years?	
2. Should the City waive its interest charges of approximately $27,826, with regard to settlement of the percentage rental rate adjustment?
Manager’s Recommendation : 1. Execute the letter of intent.
2. Waive the interest charges.
Other Recommendations : The Mission Bay Park Committee, at its March 5, 1996 meeting recommended approval of Sea World’s request to lease and develop the South Shores 12.5 acre commercial parcel plus an additional 4 acres, located adjacent to the South Shores site. The recommendation contained a caveat that if a lease is negotiated, it should address the Committee’s environmental concerns regarding potential runoff of pollutants from Sea World’s parking lots into Mission Bay.
The Park and Recreation Board, at its March 21, 1996 meeting, unanimously approved Sea World’s request to lease and develop the 16.5 acre parcel.
Fiscal Impact : 1. Consideration for the additional leasehold area and 50 year lease extension is $1.2 million, payable by Sea World upon execution of the letter of intent. The City will also receive increased rents from the expansion. The consideration will be deposited into the City’s General Fund.
2. The interest charges on the percentage rental settlement amount to approximately $27,826. If waived, this amount will not be deposited into the City’s General Fund.
Consideration .
The $1.2 million consideration will be credited against Sea World’s rent as it becomes due commencing July 1, 1999, if: 1) preliminary site assessments determine development of the site is infeasible, or 2) the parties, working in good faith, have not completed the transaction within a 12 month period. However, if

Sea World determines that it does not wish to proceed with the proposed expansion, for reasons other than stated above, the City will retain $600,000 and credit the remaining $600,000 against Sea World rent as it becomes due, commencing July 1, 1999.
Consideration and Rent :
If Sea World moves forward with development of the site, it is estimated that the City will receive an average of $667,800 per year considering the option payment and additional rent which would accrue to the City for the first 5 years following expansion of the park.
Economic Impact :
In addition, it is estimated that the annual economic impact of the expansion to the local economy will amount to $26 million per year.
BACKGROUND
The Mission Bay Master Plan Update provides for development of the South Shores commercial parcel, located adjacent to Sea World. The plan states that development, such as an expansion of Sea World, a 200-room motel, or a water- oriented entertainment center, should be considered. The Master Plan refers to the parcel as 16.5 acres; however, it has since been determined that the parcel actually contains approximately 12.5 acres.
DISCUSSION
16.5 Acre Expansion : Sea World has requested to lease the 12.5 acre parcel, along with an additional 4 acres located adjacent to the South Shores parcel, for a total of 16.5 acres. Sea World proposes paying $1.2 million to the City, as consideration for the 16.5 acre expansion and lease extension to 50 years. Also, Perez Cove way, currently under a separate permit to Sea World, would be included in the amended lease. Sea World plans to develop the portion of the site situated over a closed landfill (approximately one-half of the parcel) with additional parking. The remainder of the site, which is located adjacent to the bay, will be developed with additional exhibit(s). In addition, Sea World will maintain landscaping on portions of City-owned property along Sea World Drive and conduct an annual boating safety class on Mission Bay.
Attached to the Letter of Intent is a short-term right of entry permit, which allows Sea World to perform soil and groundwater sampling and testing, in order to determine if the landfill poses a problem with respect to development. If results of the assessments are positive, Sea World and City staff would prepare: 1) a lease amendment, 2) a development plan, and 3) environmental documentation. This process would include appropriate governmental and community review and approval; If the site assessment is negative, Sea World would not pursue the lease amendment or development, and the $1.2 million would be credited against Sea World’s rent commencing July 1, 1999. If Sea World chooses not to move forward with the expansion for reasons other than the site assessment, the City would retain $600,000 and credit $600,000 to Sea World’s rent beginning in July 1999.
 
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The City has received two unsolicited offers from other parties interested in developing the site. One is for a water park similar to that located in the City of Vista. The other is for a marine theme amusement park. Staff believes it is in the City’s best interest to negotiate with Sea World rather than consider other proposals, since Sea World is a proven lessee with the expertise and financial ability to be successful. By including the South Shores commercial parcel in Sea World’s leasehold, it will allow Sea World to increase exhibit space, encourage capital investment, attract more visitors and increase rent payments to the City.
Interest Charge Waiver : Sea World’s existing lease agreement with the City provides for a percentage rental rate adjustment with interest due if the adjustment is not completed by the due date stated in the agreement. As a result of prolonged negotiations on the part of both Sea World and the City, settlement of the adjusted percentage rates was not completed by the due date. Final settlement of the adjustment was a 3% annual surcharge on all rents paid to the City by Sea World. Sea World has requested, as a good will gesture, a waiver of the interest charges for the percentage rate adjustment.
it is the Manager’s recommendation that the City execute the letter of intent and work with Sea World toward preparation of a lease amendment and development of the South Shores commercial parcel and waive the interest charges associated with the percentage rental rate adjustment.
ALTERNATIVES
 
1	Do nothing to encourage development of the site. This alternative is not recommended since the Mission Bay Master Plan provides for commercial development of this site. Commercial development would result in additional revenue to the City and improvements to a vacant parcel of land.	
 
2	Issue a Request for Proposals for the development of this site. This alternative is not recommended since Sea World is a proven lessee with the expertise and financial ability to be successful. Sea World also has a substantial economic impact on the San Diego economy. It is estimated that the expansion will have an annual economic impact of $26 million on the local economy.	
 
3	Do not waive the interest charges. This alternative is not recommended since settlement of the percentage rent adjustment resulted in increased revenue to the City and both parties worked diligently toward completing the adjustment.	
Respectfully submitted,

/s/ George Loveland	 		 	/s/ Robert J. Collins	
George Loveland
Public Works Center Manager	 		 	Robert J. Collins
Real Estate Assets Manager	
Collins/LMF
Attachment: Area map
 
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Exhibit 10.24
LEASE AMENDMENT
This Lease Amendment (“Amendment”), executed in duplicate as of July 9, 2002, at San Diego, California, by and between THE CITY OF SAN DIEGO, a municipal corporation in the County of San Diego, State of California (“CITY”), as lessor, and SEA WORLD, INC., a Delaware corporation, 500 Sea World Drive, San Diego, California 92109 (“LESSEE”); as lessee, is made with reference to the following facts:
A. CITY leases to LESSEE and LESSEE leases from CITY certain real property in Mission Bay Park (the “Premises”) described in lease amendments dated December 14, 1977, January 29, 1979, December 12, 1983, June 24, 1985, September 22, 1986, and June 29, 1998 and filed in the office of the City Clerk of San Diego as Document Nos. 762304, 765767, RR-259814, RR-263507, RR-266641, and OO-18538-1, respectively collectively referred to in this Amendment as the “Lease”).
B. On July 10, 2001, the San Diego City Council (the “City Council”) adopted Resolution Number R-295139 (the “Resolution”), which approved the SeaWorld Master Plan Update (“SeaWorld Master Plan”), and Local Coastal Program Amendment 2-2001-C (collectively, the “LCP Amendment”) and amendments to CITY’s Progress Guide and General Plan and required CITY and LESSEE to make certain modifications to the Lease. On February 7, 2002, the California Coastal Commission voted to certify the LCP Amendment subject to suggested modifications and required CITY and LESSEE to make additional modifications to the Lease.
C. The parties desire to amend the Lease to satisfy the requirements of the Resolution and the LCP Amendment as hereinafter provided.
THEREFORE, in consideration of the mutual covenants contained herein, the Lease is amended to provide, and LESSEE and CITY agree, as follows:
1. Personal Watercraft . Subparagraph D of Article HI, USE OF THE PREMISES, is amended to add the following after the last paragraph:
“The rights and privileges hereby granted extend only to the operation of personal watercraft by LESSEE. LESSEE may not rent, sell or lease personal watercraft for use by members of the public without the written consent and approval of the City Council.”
2. Identification of Mission Bay Master Park Master Plan . Subparagraph A of Article XXXII, GENERAL DEVELOPMENT PLAN, is deleted and the following is added in its place:
“A. From and after the commencement of the term of this Lease the further development of the Premises shall be generally in accordance with the SeaWorld Master Plan for the Premises as set forth in the LCP Amendment (“Development Plan”), as the same may from time to time be amended, and, to the extent applicable, CITY’S MISSION BAY PARK MASTER PLAN UPDATE as the same is amended from time to
 
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time or as otherwise approved by CITY or the California Coastal Commission. It is understood that the Development Plan is a conceptual plan only, and that the depictions of the approved uses and improvements are illustrative only and are not binding as to the exact configuration and location of the uses and improvements authorized.”
3. Subparagraph C of Article XXXII, GENERAL DEVELOPMENT PLAN, including the substantial rent credit to LESSEE, is deleted in its entirety and the following is added in its place:
“C. Traffic Mitigation Fund.
(i) LESSEE shall pay to CITY a total amount of Ten Million Two Hundred Fifty Three Thousand One Hundred Dollars ($10,253,100) plus the increase adjustment as provided below (collectively, the “Traffic Mitigation Fund”) in five (5) annual installments as provided herein for use as provided in the LCP Amendment and further detailed in section 2.C.(ii) below. CITY and LESSEE acknowledge that the Traffic Mitigation Fund constitutes the aggregate of LESSEE’s individual fair share contributions to the funding of traffic mitigation measures identified in the Mitigation Monitoring and Reporting Program (“MMRP”) of Environmental Impact Report LDR No. 99-0618 certified by the City Council on July 10, 2001 pursuant to Resolution Number R-295I38 (“EIR”) and more particularly explained in the traffic mitigation measure implementation table attached hereto as Exhibit “6” (the “Traffic Mitigation Table”) 1 . Pursuant to the MMRP, LESSEE is required to pay to CITY LESSEE’s fair share contribution for funding of an identified traffic mitigation measure only when the level of traffic impacts directly attributable to LESSEE’s park operations attain or exceed the corresponding threshold of significance for such traffic mitigation measure as identified in the MMRP and more particularly explained in the Traffic Mitigation Table. Notwithstanding the MMRP, and instead, pursuant to this Subparagraph C, LESSEE’s payment of the Traffic Mitigation Fund, representing the aggregate of its fair share contributions under the MMRP, may be made prior to the date LESSEE’s traffic impacts attain or exceed each of the requisite thresholds of significance as provided herein.
(ii) CITY shall use the Traffic Mitigation Fund only for the planning, development and construction of traffic congestion reduction measures in Mission Bay Park as provided in the LCP Amendment, and more specifically, Mitigation Measures 2.1.1, 2.4.2, 2.5.1, 2.4.3, 2.4.4, and 2.3.1 of the MMRP and Mitigation Measures 4.4-1, 4.4-4, 4.4-5, 4.4-6, and 4.4-7 of the EIR, and CIP 52-706 and CIP 52-643, The Traffic Mitigation Fund amounts for MMRP mitigation measures identified in Exhibit “6” shall be deposited into CIP 52-706 and CIP 52-643 and the required mitigation measures shall be constructed as required by the EIR and MMRP in phases as set forth in Exhibit “7,” unless otherwise agreed to by CITY, LESSEE and the California Department of Transportation (“Caltrans”). LESSEE shall be solely responsible for the performance, construction, installation and estimated costs of Four Hundred Eighty-Six Thousand Five Hundred Dollars ($486,500) for Mitigation Measures 2.2.1, 2.4.1, 2.6.1, 2.6.2 and 2.6.3 of the MMRP and Mitigation Measures 4.4-2, 4.4-3, 4.4-8, 4.4-9 and 4.4-10 of the EI.

1  	Lessee and City acknowledge and agree that Exhibits 6, 7 & 8 are provided for illustrative purposes only and are not intended to supersede the mitigation requirements of the EIR and the MMRP as certified by the City Council.	
 
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(iii) The Traffic Mitigation Fund shall be payable in five (5) annual installments adjusted annually as provided below. The installment amounts shall be revised to the extent LESSEE’s traffic impacts attain or exceed each of the requisite thresholds of significance set forth in the Traffic Mitigation Table to ensure that payment for impacts is never made later than actually due according to the thresholds. The first annual installment of the Traffic Mitigation Fund shall be due and payable upon the date of the effective certification of the LCP Amendment by the California Coastal Commission (“First Payment Date”), and consecutive annual installments shall be due and payable on each anniversary of the First Payment Date thereafter. The five (5)-year period beginning on the First Payment Date shall be the “Mitigation Payment Period.” On each anniversary of the First Payment Date, the then unpaid balance of the Traffic Mitigation Fund shall be subject to an increase adjustment calculated using the U.S. Department of Labor Consumer Price Index for the Western Urban Region (“CPI”) or three percent (3%) thereof, whichever is greater. The annual installment that is then due shall be calculated based on the remaining number of payment years and the amount of the unpaid balance of the Traffic Mitigation Fund after the foregoing increase adjustment. Exhibit “8” (“Traffic Mitigation Payment Schedule”) provides a schedule of LESSEE payments at the three percent (3%) minimum. City shall create a separate interest-bearing fund for the Traffic Mitigation Fund to be used solely for this purpose.
(iv) If LESSEE’s traffic impacts do not attain or exceed each of the requisite thresholds of significance provided in the Traffic Mitigation Table, LESSEE shall be entitled to annual refunds of prepaid mitigation payments during the succeeding five (5)-year period (“Unrealized Mitigation Reimbursement Period”) commencing upon the expiration of the Mitigation Payment Period for all traffic mitigation measures that do not attain or exceed their respective threshold of significance identified in the MMRP and the Traffic Mitigation Table during the Mitigation Payment Period. The amount of each mitigation reimbursement payment shall be calculated based on the Traffic Mitigation Payment for the corresponding year of the Mitigation Payment Period (i.e., the first year of each period will be compared, the second year of each period, and so on), less any mitigation actually due in the corresponding year of the Mitigation Payment Period because of thresholds having been attained and any interest accrued during said period. LESSEE’s Traffic Mitigation Payments shall be deposited into interest bearing accounts in accordance with City’s standard practice for deposit of development impact fees. All interest shall accrue to the benefit of the Traffic Mitigation Fund for payment of costs of mitigation measures or refund to LESSEE as provided in this Lease.
(v) When traffic impacts directly attributable to LESSEE’s park operations attain or exceed a threshold of significance for any or all of the improvements identified in the MMRP and the Traffic Mitigation Table, City shall use the Traffic Mitigation Funds to pay for the required mitigation measures in phases as set forth in Exhibit “7.” If the then existing balance of the Traffic Mitigation Fund is insufficient to cover LESSEE’s fair share contribution for the funding of any Traffic Mitigation
 
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Measure identified in the MMRP and the EIR for which a significance threshold has been met, LESSEE shall immediately pay to City an amount sufficient to cover the difference between the amount for that mitigation measure in the Traffic Mitigation Fund and LESSEE’s required fair share contribution for that mitigation measure. To the extent LESSEE has received a reimbursement for prepayment of such mitigation, LESSEE shall immediately pay such refund amount and any additional amount necessary to cover LESSEE’s required fair share contribution to CITY. For traffic mitigation measures in the MMRP that attain or exceed a threshold of significance during the Mitigation Payback Period, LESSEE will not be eligible for a refund. For traffic mitigation measures that attain or exceed a threshold of significance following the Unrealized Mitigation Reimbursement Period, LESSEE will immediately pay to City an amount equal to LESSEE’s fair share contribution for the then current cost of the required mitigation measure. All of LESSEE’s traffic mitigation payments shall be based solely on LESSEE’s fair share of the costs of only the mitigation measures identified in the MMRP and ER.
(vi) Prior to conducting the annual mitigation monitoring traffic analysis required in the EIR, LESSEE shall determine whether any of the intersections and road segments identified in the Traffic Mitigation Table have been improved since the EIR traffic analysis was conducted in 2000. For intersections or road segments where improvements have been constructed or installed since the EIR traffic analysis was conducted, the annual traffic analysis will be based on the pre-improvement condition. To determine whether the project described in the EIR has an impact relative to the pre- improvement condition, LESSEE shall determine the appropriate background traffic level to use in the analysis by comparing the traffic counts for the year monitored with the “calculated background traffic” for the same year. “Calculated background traffic” shall be derived by interpolation of the projected traffic volumes set forth in the EIR traffic study, using standard methods accepted by City traffic engineers. The annual traffic analysis shall be conducted as provided in the EIR if the annual 24-hour tube counts (ADTs) at LESSEE access points as established in the MMRP show an increase in traffic generation.
In the event LESSEE amends the SeaWorld Master Plan (the Development Plan) in a manner that requires environmental review subsequent to this Lease Amendment, any mitigation measures imposed pursuant to any subsequent environmental review shall supersede and replace the mitigation measures set forth in the MMRP and the MR and the Lease shall be amended accordingly.”
4. The following provisions shall be added to Article XXXII, GENERAL DEVELOPMENT PLAN:
H. A minimum of 75% of LESSEE’s total attractions within Area 1, the Theme Park, as designated in the Development Plan, shall include significant animal education or conservation related elements. Within the SeaWorld Theme Park, the current mix of attractions existing as of the date of this Amendment, reflect the dominant marine animal theme and the primary emphasis areas of entertainment, education, research, and conservation.
 
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Within Area I, the SeaWorld Theme Park, an element in a larger, single attraction shall be considered “significant” if, in the reasonable opinion of the City Manager (i) the education or animal-conservation related element could function as a separate exhibit, independent of the larger attraction into which it is incorporated, and (ii) the education or animal-conservation related element imparts information and knowledge about the animal and/or its environment.
I. If CITY and/or the Metropolitan Transit District or any other agency construct a public transit station (“Transit Station”) on the Premises, (I) LESSEE shall provide reasonable right-of-way for, to and from the Transit Station, at a location on the Premises mutually agreed upon by CITY and LESSEE, provided that the location of such right-of-way is no further from the entrance gate to SeaWorld Theme Park than any vehicle parking space, with the exception of spaces designated for handicap parking; and (2) LESSEE shall contribute to CITY: (1) funds sufficient to provide 50% of the total cost for siting, design, installation and construction of a standard design station, provided, however, that LESSEE’s maximum required contribution shall be limited to $500,000, as increased by the greater of CPI or 3% per annum beginning on the effective date of this Amendment; and (2) additional costs attributable to adding a SeaWorld thematic style to the Transit Station.
J. LESSEE may not submit a development permit application for construction of the hotel identified in the Development Plan prior to July 10, 2011. LESSEE agrees to give the City ninety (90) days written notice prior to the submittal of any applications for development of the hotel. City and LESSEE agree to negotiate in good faith any amendment to the lease necessary for the development of a hotel on the Premises.
K. Except for displays on July 4, LESSEE’s fireworks displays are permitted only from the “fireworks barge” and shall be limited to a maximum of one hundred fifty (150) nights per year. LESSEE agrees to relocate the fireworks barge eastwardly one-half mile toward South Shores from its [current] approved location from April 1 to September 15 of each year for the least tern nesting season.
5. Article XLIII, ANNUAL ATTENDANCE FIGURES, is hereby added as follows:
“During the entire Term of this Lease, LESSEE shall prepare and submit annually to the City Manager on or before March 1 an audit report showing LESSEE’s attendance figures for the preceding calendar year.”
 
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IN WITNESS WHEREOF, this Amendment is executed by CITY, acting by and through its City Manager under and pursuant to Resolution No. R-296787 of the City Council authorizing such execution, and by LESSEE, acting by and through its duly authorized officer, as of the date first above written.
 
Approved as to form and legality:
                                 , 2002

CASEY G. GWINN, City Attorney	
		
By:	 	/s/ [Illegible Signature]	
	 	Deputy City Attorney	
THE CITY OF SAN DIEGO

By:	 	/s/ [Illegible Signature]	
Title:	 	Deputy Director	
	
SEA WORLD, INC.	
		
By:	 	/s/ [Illegible Signature]	
Title:	 	Executive VP & General Mgr	

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EXHIBIT 6
TRAFFIC MITIGATION MEASURE IMPLEMENTATION SCHEDULE

Traffic Mitigation Measure
(Referenced by MMRP and EIR Mitigation
Measure number)	  	Implementation (Significance)
Thresholds	  	LESSEE’s Fair
Share Contribution
(Estimated Cost)	 	
MMRP 2.1.1; EIR 4.4-1 Sea World Drive between 1-5 and Sea World Way: Widen Sea World Drive to 6 lanes	  	Threshold is more than 2% increase in roadway volume over capacity ratio by LESSEE’s traffic.	  	 
 	44% 
($2,740,100)	  
  	
MMRP 2.4.2 AND 2.5.1; EIR 4.4-4 SeaWorld Drive/I-5. Intersection: Add westbound right-turn lane and northbound dual left-turn lane at northbound ramps intersections. Ramps: storage by adding an additional lane at northbound and southbound ramps.	  	Intersection threshold is a 2-second increase in the overall intersection delay by LESSEE’s traffic. Ramp threshold is adding more than 2 minutes to ramp having more than 15-minute delay.	  	 

 
 	29% of WB RT and
NB lefts
50% of NB ramps
27% of SB ramps
($1,435,000)	  

  
  	
MMRP 2.4.3; EIR 4.4-5 Seaworld Drive/Pacific Highway: Reconstruct three southbound (westbound) thru lanes on Sea World Drive across Pacific Highway and three northbound (eastbound) thru lanes on Sea World Drive across Pacific Highway and one southbound (westbound) right turn lane.	  	Threshold is a 2-second increase in the overall intersection delay by LESSEE’s traffic.	  	 
 
 	100% of NB lanes
36% of SB lanes
($773,300)	  

MMRP 2.4.4; EIR 4.4-6 West Mission Bay Drive/I-8 westbound off-ramp. Add third right-turn lane.	  	Threshold is a 2-second increase in the overall intersection delay by LESSEE’S traffic.	  	 	28% ($134,200)	  	
MMRP 2.3.1; EIR 4.4-7 West Mission Bay Drive Bridge widened to 6 lanes.	  	Threshold is more than 2% increase in roadway volume over capacity ratio by LESSEE’s traffic.	  	 
 
 	9.4% (47% of the
City’s cost)
($5,170,000)	  

	  	Estimated Cost Subtotal	  	 	$10,253,100.00	  	
		
LESSEE Will Maintain 100% Responsibility for the Following Mitigation Measures	  	Estimated Cost	 	
MMRP 2.2.1; EIR 4.4-2 Install traffic signal interconnect on Sea World Drive between Friars Rd and 1-5 northbound ramps and extend eastbound right-turn lane back 400 feet at Sea World Dr/I-5 SB ramps.	  	Upon approval of a Tier I project.	  	$	366,500	  	
MMRP 2.4.1; EIR 4.4-3 Ingraham Street/Perez Cove Way Intersection re-phasing, re-stripe and reconstruction to provide dual left turns and a shared thru/right lane westbound.	  	Threshold is a 2-second increase in the overall intersection delay by LESSEE’s traffic.	  	$	77,500	  	
MMRP 2.6.1; EIR 4.4-8 Traffic event officers at SeaWorld Drive/I-5 interchange during busy days.	  	Upon approval of a Tier I project.	  	$	36,500	  	
MMRP 2.6.2; EIR 4.4-9 improve lane management at the entrance gates to maximize vehicle storage.	  	Upon approval of a Tier I project.	  	$	5,000	  	
MMRP 2.6.3; MR 4.4-10 Distribute promotional material to employees and repeat patrons to use alternative routes.	  	Upon approval of a Tier I project.	  	$	1,000	  	
	  	Subtotal	  	$	486,500.00	  	
TOTAL	  	$	10,739,600	  	
 
Exhibit 6

EXHIBIT 7
RECOMMENDED PHASING PLAN FOR CIP 52-706

Rank	  	Mitigation, Monitoring and Reporting Program
Mitigation Measure	  	Total
Cost	 	  	Running
Total	 	
1	  	2.4.2 (Part 1) Seaworld Dr/I-5 NB Ramps: Add WB right turn lane (from Baseline Cost in Table 1, this is only half of the improvement; therefore, the total cost is estimated at one-half of $1,887,900 or $943,950).	  	$	943,950	  	  	$	943,950	  	
2	  	2.2.1 Install traffic signal interconnect on Sea World Dr btw Friars Rd and 1-5 NB ramps and extend EB RT lane back 400 feet at Sea World Dr/l-5 SB ramps (from Baseline Cost in Table 1, $198,100 + $168,400 = $366,500).	  	$	366,500	  	  	$	1,310,450	  	
3	  	2.4.3 Seaworld Dr/Pacific Highway: Reconstruct for three SB (WB) thru lanes on Sea World Dr across Pac Hwy and three NB (EB) thru lanes on Sea World Dr across Pac Hwy (from Baseline Cost in Table 1, $630,000 + $546,000 = $1,176,500).	  	$	1,176,500	  	  	$	2,486,950	  	
Fulfills Sea World’s short-term fair share obligation ($3,106,600 from Table 1). Remaining items will require funds from Sea World’s long-term fair share obligations. Sea World’s short-term obligation exceeds the total improvement by $619,650 ($3,106,600 - $2,486,950 = $619,650), which is carried over to the next phase.	    	
4	  	2.5.1 Sea World Drive northbound and southbound 1-5 on-ramps: Increase vehicle storage by adding an additional lane (from Baseline Cost in Table 1, $1,424,900 + $650,000 = $2,074,900).	  	$	2,074,900	  	  	$	4,561,850	  	
Fulfills Sea World’s fair share long-term obligation (long-term of $2,206,600 + short-term of $3,106,600 for a total of $5,315,400, from Table 1). Remaining items will require funding from other sources. After this improvement, Sea World has a credit of $753,550 ($5,315,400 - $4,561,850 = $753,550), which is not enough to pay for the next complete improvement. Therefore, the $753,550 would be applied to the next improvement when sufficient funds to complete that improvement become available.	     	
5	  	2.42 (Part II) Seaworld Dr/1-5 NB Ramps: Add NB dual left turn lane (from Baseline Cost in Table 1, this is only half of the improvement; therefore, the total cost is estimated at one-half of $1,887,900 or $943,950).	  	$	943,950	  	  	$	5,505,800	  	
6	  	2.1.1 Sea World Drive btw 1-5 and Sea World Way: Widen Sea World Drive to 6 lanes (from Baseline Cost in Table 1, $6,227,400	  	$	6,227,400	  	  	$	11,733,200	  	
 
Exhibit 7

Exhibit 8
Traffic Mitigation Payment Schedule

Balance	  	 	$10,253,100	  	
CPI (1)	  	 	3%	  	
Mitigation Payment Period	  	 	2002 - 2007	  	
Pay-in

 	  	Due	 	 	Amount	 	
Payment # 1	  	 	2002 	(2)  	 	$	2,050,620	  	
Unpaid Balance	  				 	$	8,202,480	  	
New Balance	  				 	$	8,448,554	  	
Payment # 2	  	 	2003	  	 	$	2,112,139	  	
Unpaid Balance	  				 	$	6,336,416	  	
New Balance	  				 	$	6,526,508	  	
Payment # 3	  	 	2004	  	 	$	2,175,503	  	
Unpaid Balance	  				 	$	4,351,006	  	
New Balance	  				 	$	4,481,536	  	
Payment # 4	  	 	2005	  	 	$	2,240,768	  	
Unpaid Balance	  				 	$	2,240,768	  	
New Balance	  				 	$	2,307,991	  	
Payment # 5	  	 	2006	  	 	$	2,307,991	  	
Total Pay-in	  				 	$	10,887,020	  	
Present Value	  	 	  	(3) 	 	$	10,253,100	  	
Item Explanations
 
(1)	Increase adjustment calculated using the U.S. Department of Labor Consumer Price Index for the Western Urban Region or three percent, whichever is greater.	
(2)	Date of effective certification of the LCP Amendment by the California Coastal Commission. Remaining payments due on anniversary date of certification.	
(3)	Rate = 3% from first payment date.	
 
Exhibit 8

Exhibit 10.26
Note: Material has been omitted from this Amended and Restated Agreement pursuant to a request for confidential treatment and such material has been filed separately with the Securities and Exchange Commission. Material omitted has been replaced with a bracketed asterisk (“[*]”).
CHILDREN’s TELEVISION WORKSHOP
One Lincoln Plaza
New York, New York 10023
Amended and Restated
As of April 1, 1983
SPI, Inc.
One Busch Place
St, Louis, Missouri 63118
Dear Sirs:
This letter when signed by you and us shall constitute the agreement between you and us as to the subject matter hereof,
1. Reference is made to an agreement dated as-of January 1, 1979 between Muppets, Inc., (“Muppets”) and us, and thereafter-amended, a copy of which, as Amended and Restated As of April 1, 1983, is annexed hereto as Exhibit A (the “Muppets Agreement”), pursuant to which Muppets licenses to us the right to use Muppet Elements, as such term is defined in the Muppets Agreement, and authorizes us to negotiate on its behalf with you for the use of Muppet Elements by you and Approved Subsidiaries (collectively “SPI”), as defined in Section 20 hereof, The Muppets Agreement is made a part of this Agreement and you hereby accept all of the conditions thereof as if specifically set forth in full herein and agree that Muppets shall have all of the rights and remedies against you that it has against us under the Muppets Agreement. Notwithstanding the foregoing, you shall have no obligation under the Muppets Agreement with regard to any obligation specifically provided therein as our obligation and not that of you or a sublicensee, provided, however, that satisfaction of any such obligation shall be a condition of use of Muppet Elements hereunder.

2. The rights granted herein may be used in, and only in, children’s play parks which are within the definition of Parks, as set forth below, and are operated by you or an Approved Subsidiary, and for advertising and promotion for such Parks. Such rights may not be used for any other purpose, including but not limited to products to be sold in the Parks, even if such other purpose is ancillary to, or a spinoff of, the Parks. However, we and you agree to enter into a separate products license agreement, substantially in the form of Exhibit B. “Parks” as used herein, means children’s play parks consisting principally of (a) participatory play activities, as distinct from nonparticipatory attractions such as rides, designed to appeal principally to children under the age of about thirteen (13), and that generally resemble (although they may not precisely duplicate) certain designs heretofore created by Eric McMillan, possibly together with (b) computer and other arcade games and/or (c) participative demonstrations of the sort found in science museums. Parks shall not mean, and this license does not extend to, game arcades which consist of items (b) or (c) above, in the absence of item (a) above.
3. Subject to the terms hereof, including without limitation the obligations of a “sublicensee” under the Muppets Agreement, we hereby license you to decorate and theme the Parks, specific attractions, objects and sites-therein, and all promotional, advertising and marketing material therefor, with representations (whether in two or three dimensional form and including animated or mechanical representations) of CTW Elements, as such term is defined below, and to have on the premises of the Parks agents or employees dressed and acting as one or more CTW Elements for purposes of controlled appearances (i.e. appearances in which they do not mingle directly with Parks patrons, unless with adequate protection), and to use as a service mark for the Parks the logo shown in Exhibit C hereto. “CTW Elements”, as used herein, shall mean (i) the elements set forth on Exhibit D hereto and (ii) titles, marks, names, characters, likenesses, logos and visual designs which are now or hereafter used in or in connection with the “Sesame Street” and “The Electric Company” television series, including but not limited to use
 
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of the mark “Sesame Place” as an adaptation of the mark “Sesame Street” to identify the Parks or the elements therein, provided that “CTW Elements” shall include Muppet Elements only to the extent specifically permitted in the Muppets Agreement, and further provided that “CTW Elements” shall not include (i) any character (other than Muppet Elements), title, mark, name, likeness, logo or visual design which appeared or appears on such programs if the trademark or copyright or other rights therein, are owned by someone other than us, or (ii) any person who appeared or appears on such programs. Any adaptation of CTW Elements used or created by you is hereby assigned to and shall belong exclusively to us, shall be included in CTW Elements and may be used by you only pursuant to the license granted herein. An adaptation shall include the use of any CTW Element or portion thereof in connection with any other word.
4. The term of this Agreement commenced on March 14, 1980. The license granted herein, unless sooner terminated pursuant to the provisions of this Agreement, shall terminate on a Park-by-Park basis thirty (30) years after each Park first opened.
5.1 You agree that in order to assure that the quality, style, good taste, character and artistic quality of the Parks, the uses of CTW Elements in the Parks and the advertising and promotion therefor are consonant with uses made of CTW Elements other than in the Parks and the quality, image and goodwill associated with the CTW Elements, the license granted hereunder shall be subject to the following terms and conditions;
5.1.1 Each use of CTW Elements shall be subject to our prior written approval, which we may deny or grant in our sole discretion, and each use of Muppet Elements shall also be subject to the prior approval of the Muppets pursuant to Paragraph 3 of the Muppets Agreement. Any approved use shall not be varied or modified without a new written approval. You shall furnish to us free of cost, for our prior written approval, a sample or drawing of each Muppet Element free of cost, for its prior approval, a sample or drawing of each proposed use of Muppet Elements. Any approval not given shall be deemed denied.
 
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5.1.2 We reserve the right of approval over the general quality, character and style of each-Park, as well over the quality, character and style of each item of each Park. We reserve the right to approve the creation and development of each Park and each item therein, including but not limited to all concepts, ideas, formats, designs, sketches, prototypes, models, production units, names and preliminary and final art work. If we, in our sole discretion, disapprove of the quality, character or style of any Park or any item therein, you shall promptly make any change we require. Muppets shall have such rights of approval over quality, character and style of the Parks as are set forth in Paragraph 3 of the Muppets Agreement.
5.1.3 We reserve the right at any time to withdraw our approval of any use of a CTW Element previously approved, provided, however, such withdrawal shall not be unreasonably made.
5.1.4 You shall not publish or otherwise issue any advertising, publicity or promotion concerning the Parks or any item therein or the contractual arrangement between you and us without our prior written approval. Any approval not given shall be deemed denied. Muppets shall have such rights of approval over advertising, publicity and promotion as are set forth in Paragraph 3 of the Muppets Agreement.
5.1.5 Subject to Section 5.1.3, in exercising the rights of approval set forth in Sections 5.1.1 and 5.1.2 for Parks constructed after April 1, 1983, we hereby agree to approve: (1) each use of CTW Elements in each such Park in the United States in the same manner previously approved for Parks constructed before that date; (2) the general quality,
 
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character and style of each such Park and each item therein to the extent that said general quality, character and style is the same as we previously approved for Parks constructed before that date; and (3) the creation and development of each such Park to the extent that said creation and development is the same as we previously approved for Parks constructed before that date; provided, however, that the foregoing shall not include any such approval which has been withdrawn prior to the construction of such Park.
5.2 The license granted herein shall be subject following further terms and conditions:
5.2.1 You shall not without our prior written approval represent or otherwise assert that the Park has any educational benefit for children.
5.2.2 If any proposed use of a CTW Element requires the approval of any person or entity other than us, including but not limited to the Muppets, any performer or labor union, you shall be fully responsible for obtaining and retaining, and paying all costs of obtaining and retaining, such approval.
5.2.3 Uses of the “Sesame Street” trademark shall be subordinate to identification of the Parks as “Sesame Place” and the mark “Sesame Street” shall not be more prominently displayed than the mark “Sesame Place”.
5.2.4 This Agreement is not a license to play in the Parks any record produced by or for us or licensed by us;
5.2.5 This Agreement is not a license to show all or any portion of any television program, special program or closed circuit program produced by or for us, except that you are hereby licensed to, on a nonexclusive basis, show in the Parks closed circuit programs, if any, using CTW Elements produced by or for us especially for use in the first Park (but we shall have no obligation to produce such programs except as may be provided in any separate agreement between you and us), provided that:
(1) you obtain all consents necessary for such use; and
 
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(2) you pay all residuals, royalties and other obligations due to third parties, including but not limited to writers, performers, musicians, directors and Muppets, arising out of use of such programs (no royalty shall be required to be paid to us except for any royalty to which we are entitled under this Agreement or which we are required to collect and pass through to a third party).
5.2.6 The license granted herein shall be limited to use in connection with up to five (5) Parks, construction of which is commenced on, or before December 31, 1988, provided, however, that if construction has been commenced on four (4) Parks by December 31, 1988, and provided, further, that if construction on the first four (4) Parks has been substantially completed by August 31, 1989 and said Parks have opened no later than June 30, 1990, then CTW Elements may be used in connection with a fifth Park if actual physical construction is commenced on such Park on or before December 31, 1990, The time period specified in the preceding sentence shall be defined and hereinafter be referred to as the “Exclusive Term”. In the event that actual physical construction has been commenced on four (4) Parks by December 31, 1988 but, due to force majeure circumstances including acts of God, strikes, war, governmental restrictions and the like, has not been substantially completed by August 31, 1989, the latter date shall be extended by the period of time during which construction activities were prevented from being undertaken by such circumstances, but in no event for more than one year.
 
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5.2.7 If Busch Entertainment Corporation, Anheuser-Busch Companies, Inc. or a wholly owned subsidiary of either (collectively “Busch”), becomes less than a 100 percent (100%) owner of your common stock equity or voting rights, unless assigned in its entirety to Busch in accordance with Section 20, this Agreement shall immediately terminate and you shall immediately cease all uses of CTW Elements.
5.2.8 Muppet Elements shall not be used in any Park which also uses puppet characters other than “Muppet” puppet characters without our prior written approval, which we may grant or withhold in our sole discretion. You acknowledge that you are aware that under terms of the Muppets Agreement, the approval of such use by Muppets may also be required in certain instances.
5.2.9 All references to “Muppet characters” shall include the entire phrase “Sesame Street Muppet characters” and the mark “Muppet” shall not appear in larger or more conspicuous type than the mark “Sesame Street”.
5.2.10 You acknowledge that under the Muppets Agreement Muppets has the right to disapprove any clearly inappropriate name to which you may change the name of a Park.
5.2.11 All rights to CTW Elements not specifically granted to you herein are reserved by us.
6. You agree that during the term of this Agreement you will:
(1) not harm, misuse or bring into disrepute any CTW Elements;
(2) operate the Parks in an ethical manner, in a manner consistent with the high quality associated with CTW Elements, and in accordance with the terms and conditions of this Agreement;
 
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(3) not create any expense chargeable to us without our prior written approval;
(4) in operating the Parks, comply with all applicable federal, state and local laws and not violate, infringe upon or breach in any way any rights whatsoever of others;
(5) permit us or our representatives to inspect the Parks and each item therein for the purpose of determining compliance with the terms of this Agreement; and
(6) provide to us or our representatives all information requested by us or our representatives with regard to operation of the Parks and samples or drawings of each item or display in a Park.
7. You shall have no obligations to use CTW Elements in any Park and may remove them from any Park at any time, provided, however, if you shall decide to remove all CTW Elements or all Muppet Elements from any Park where such elements are in use, you shall first give us and the Muppets one hundred and twenty (120) days’ notice. If no Muppet Elements are used in a particular Park, they shall not be used or referred to in any promotion, advertising or publicity for that Park and if no CTW Elements are used in a particular Park, they shall not be used or referred to in any promotion, advertising or publicity for that Park. Once Muppet Elements cease to be used in a Park or CTW Elements cease to be used in a Park, you may not again commence to use Muppet Elements or CTW Elements, as the case may be, without our prior written consent, which we may withhold in our sole discretion. You may not use the mark “Sesame Place” in connection with any Park which does not use CTW. Elements (other than the mark “Sesame Place”) in a material manner.
 
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8.1 This Agreement provides you exclusive worldwide rights for up to five (5) Parks during the Exclusive Term hereof. Subject to the right of first refusal contained in this Section, during the Exclusive Term you shall have no right to build more than five (5) Parks and after the Exclusive Term you shall have no rights under this Agreement to commence construction of any Park. If we decide, with Muppets’ consent, to enter into a license for one or more additional Parks, construction of which is to be commenced on or before December 31, 1993, we will first offer you the opportunity to enter into a further license if either of the following two conditions is met:
(1) We have been paid a cumulative total of at least [*] in royalties under Sections 11.1 and 11.2 of this Agreement for the period beginning April 1, 1983 and ending December 31, 1988 and you have commenced construction on at least four (4) Parks on or before that date, provided, however, that this condition will no longer be met if construction on the first four (4) Parks has not been substantially completed by August 31, 1989; or
(2) We have been paid a cumulative total of at least [*] in royalties under Sections 11.1 and 11.2 of this Agreement for the period beginning April 1, 1983 and ending December 31, 1990 and you have commenced construction on five (5) Parks on or before that date, provided, however, that this condition will no longer be met if construction of the fifth Park has not been substantially completed by August 31, 1991.
If you do not agree to enter into the license within ninety, (90) days after we offer it to you, or if you agree and thereafter you do not use your best efforts to enter into a written agreement, we may also offer it to others, but must offer it for at least six (6) months under terms at least as favorable as those we offered you. Notwithstanding the foregoing, we shall not construct or license others to construct or operate any additional Park to be located within a 100-mile radius of any Park licensed under this Agreement.
 
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8.2 Nothing in this Agreement shall be construed to limit in any manner our right to grant licenses, or otherwise exploit our rights, for use of CTW Elements other than for Parks, provided, however, we shall not, without your prior written consent, license or otherwise exploit the trademark “Sesame Place” (as distinguished from the trademark “Sesame Street” and our other trademarks and trade names, as to which we reserve complete freedom) during such time as you have the right to use the trademark “Sesame Place” in connection with any Park.
9. You recognize the great value of the publicity and goodwill associated with CTW Elements and, in such connection, acknowledge that such goodwill exclusively belongs, and shall continue to exclusively belong, to us. You shall not acquire hereunder any rights (except for the limited right specifically granted hereunder to you), titles or interests in or to any CTW Elements. You agree not to attack the validity of any trademark, copyright or other intellectual property right licensed hereunder, or to do anything, either by acting or not acting, which might impair, violate or infringe any of the rights to CTW Elements and not to claim adversely to us or Muppets, or anyone claiming through us or Muppets any right, title or interest to any CTW Element, not to misuse or harm or bring any of the same into disrespute and not to register or use any title, mark, name, character, likeness, logo, visual mark, copyright or material which in our opinion is infringingly similar to any of the CTW Elements.
10. Upon your request, we will request Muppets to provide to you, pursuant to Paragraph 5 of the Muppets Agreement, at no charge, personal services (including those of Jim Henson, subject to his personal availability, Mike Frith and/or other Muppets agents or employees) to the extent such services may be reasonably necessary for the theming of the Parks and for the implementation of such theming,
 
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11.1 In full consideration for all of the rights licensed hereunder, effective April 1, 1983, you shall pay us a royalty as follows:
(1) For the first two (2) Parks, a royalty equal to [*] of the Gross Receipts, as such term is defined in Section 11.5 below, of each Park for each quarter of your fiscal year in which CTW Elements are used in any manner during such quarter in such Park (prorated with respect to each Park which does not use CTW Elements during the entire quarter);
(2) For any additional Parks opened under this Agreement, a royalty equal to [*] of the Gross Receipts, as such term is defined in Section 11.5 below, of each Park for each quarter of your fiscal year in which CTW Elements are used in any manner during such quarter in such Park (prorated with respect to each Park which does not use CTW Elements during the entire quarter); and
(3) For each park opened under this Agreement, in addition to the royalty obligations in subsections 11.1(1) and 11.1(2), a royalty equal to [*] of the Gross Receipts to which Muppets is entitled pursuant to Section 7 of the Muppets Agreement (prorated with respect to each Park which does not use Muppet Elements during the entire quarter).
11.2 Each payment due under subsections 11.1(1), 11.1(2) or 11.1(3) above shall be made within twenty-five (25) days after the end of the applicable quarter. Each payment, which shall be in net United States of America dollars free and clear of all non-United States taxes and withholdings of all kinds, shall be accompanied by a full and complete statement and supporting documents showing the basis for calculating said royalty. If necessary to convert
 
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from a foreign currency to United States dollars, the conversion rate shall be the rate, on the day of payment if the payment is timely made and, if not timely made, it shall be the rate most favorable to us or Muppets, as the case may be, between the date payment was due and the date payment is made,
11.3 Should you fail to pay any royalty due us or Muppets, we shall have the right to terminate the license granted herein, in whole or in part, as follows:
(1) we shall serve written notice upon you of such failure to pay said royalty;
(2) if within twenty (20) days of receipt of such written notice said royalty is not paid with interest at the prime commercial rate of Citibank, N.A. prevailing from time to time during the late period, we at our option may terminate the license granted hereunder, in whole or in part, by written notice, which notice shall be effective on the day specified therein.
11.4 You shall promptly inform Muppets and us of the date your fiscal year commences, and you shall give Muppets and us at least thirty (30) days’ written notice prior to any change in such date.
11.5 As used in this Agreement, “Gross Receipts” means all receipts from all business conducted on the premises of a given Park covered by this Agreement, including related parking facilities operated by, or under license or concession from, you, Busch or any Approved Subsidiary, excluding sales and excise taxes (including but not limited to any local amusement tax) imposed by and collected on behalf of any federal, state or local taxing authority, provided, however, that where you, Busch or any Approved Subsidiary, licenses, licensees or concessionaires which are not affiliated with you to operate concessions on or near Park
 
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premises, “Gross Receipts” shall include your receipts and receipts of Busch and any Approved Subsidiary, not those of such licensees or concessionaires. “Gross Receipts” shall not include revenues from an institutional sponsorship to the extent such revenues (in the aggregate for each sponsored asset) are less than the capital cost to you, Busch or any Approved Subsidiary of such sponsored asset.
11.6 We agree that upon payment to us by you of each royalty obligation hereunder we will pay to Muppets the related royalty due under Paragraph 7 of the Muppets Agreement.
12. We and Muppets shall have the right (at our and their sole cost and expense except as set forth below) to examine, and make abstracts and copies of, the portion of your books and records which are necessary in determining your compliance with your obligations hereunder to make payments to us and Muppets and our obligations under the examination by Muppets or us shall reveal discrepancies amounting to an understatement of Your obligations to us or Muppets by more than ten percent (10%) for any of your fiscal years, then the cost of such examination shall be borne by you.
13. In the event that any dispute under the Muppets Agreement between Muppets and us or Muppets and you is settled by arbitration pursuant to Paragraph 16 of such agreement, such determination shall also serve as a binding determination under this Agreement as to the meaning of the arbitrated provision or any provision in this Agreement as to the meaning of the arbitrated provision or any provision in this Agreement dependent upon the arbitrated provision.
 
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14. You shall at your sole cost and expense include us and Muppets as an insured under all of your pertinent insurance policies, including without limitation those covering liabilities and errors and omissions. You shall provide to Muppets and us copies of all such policies. You shall indemnify and hold us harmless from and against any and all claims, costs, liabilities, damages and expenses (including without limitation attorneys’ fees reasonably incurred and any indemnity given by us to Muppets) arising out of any personal or property injury in the Parks. The provisions of Section 19 hereof shall apply to the aforesaid indemnity.
15.1 The license granted hereunder is conditioned on your providing for proper copyright and trademarks notices as specified by us. This shall include appropriate copyright trademark notices in the name of Muppets on all Muppet Elements and/or associated packaging, advertising and/or promotional materials as specified by the Muppets. You shall promptly report to us all violations or infringements of ours or Muppets’ copyright or trademark rights coming to your attention. In all uses of CTW Elements you shall comply with applicable laws, regulations and rules. You shall assist us to the extent requested by us in the procurement of any protection, or to protect any, of our or Muppets’ rights to the CTW Elements and the trademarks and copyrights therein. We may, if we so desire, at our sole expense, commence or prosecute any claim or suit for trademark or copyright’ infringement in our own name or join you as a party thereto. We shall have the sole right to determine whether or not any action shall be taken on account of any infringement and shall be entitled to retain any and all amounts received as a result of any suit or settlement. You shall not institute any suit or take any action on account of any infringement without first obtaining our written consent to do so, which we may withhold in our sole discretion.
15.2 In the event that we, in our sole judgment, deem any infringement to include an infringement of the “Sesame Place” trademark or any aspect of the Parks, we shall have the right to either (i) treat the infringement as covered by the provisions of Section 15.1
 
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above or (ii) require that you pay one-half of all costs and expenses of prosecuting any action (in which case you shall be entitled to receive one-half of all recoveries and awards with respect to such infringement). In all events we shall be entitled to determine in our sole discretion whether or not any action should be taken on account of any infringement. Furthermore, while we will consult with you as to any action taken in a lawsuit cove d by subsection 15.2(ii), we, in our sole judgment, shall be entitled to select counsel and control any action.
15.3 We will make all necessary filings with the United States Patent and Trademark Office required to maintain the registration in our name of the trademark “Sesame Place” and the logo shown in Exhibit C hereto for the following classes: International Class 41, provided you are continuing to use said trademark for such classes.
16. Nothing herein shall be deemed to create any partnership or joint venture between us, Muppets, you or any other party that may acquire rights hereunder, Neither party shall have the right to obligate or bind the other party in any matter whatsoever, except as specifically provided herein, and nothing herein contained is intended to give any rights of any kind to any third person other than Muppets.
17.1 You and we each warrant and represent that it is a duly organized and existing corporation, that it has the full power and authority to enter into this Agreement and perform its obligations hereunder, and that there are no other agreements presently in force which would encumber or prevent compliance with any of the terms of this Agreement.
17.2 We represent and warrant that in the United States (i) we own or control all current CTW Elements, other than Muppet Elements, and our licensing of the use thereof to you does not to the best of our knowledge infringe upon or violate in any way any right of any person, firm or corporation, (ii) we have not received in the last two (2) years any notice from
 
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any person, firm or corporation alleging that any CTW Elements infringes upon or violates in any way any right of such person, firm or corporation, and (iii) we have had no communications or taken any actions during the last two (2) years with regard to any such notice received theretofore. Paragraphs 3 and 7 of the Overall Products Agreement which are incorporated in the Muppets Agreement by Paragraph 17 thereof, are incorporated herein by reference,
18. You shall have the right, subject to our prior written approval, and if Muppet Elements are involved, Muppets’ prior written approval, to print, publish, reproduce, distribute and otherwise use (and to authorize others so to do) the name, voice, facsimile signature, picture and likeness of, and biographical facts concerning any, and all characters, including Sesame Street Muppet characters, comprising CTW Elements, and of those persons who may act as puppeteers and/or voices for Sesame Street Muppet characters on the Sesame Street series and of all principals of Muppets for purposes of trade and advertising in connection with Parks, but not for purposes of any direct endorsement of any article or service.
19. Each party hereto shall indemnify and hold the other party harmless from and against any and all claims, costs, liabilities, damages and expenses (including without limitation attorneys’ fees reasonably incurred and any indemnity given by us to Muppets in the Muppets Agreement) resulting from any breach by the indemnitor of any of its representations, warranties, covenants or agreements hereunder; provided, however, that the indemnitee shall promptly and fully notify the indemnitor of any claim or litigation to which said indemnity applies and the indemnitor may, at its option, assume the defense of any such claims or litigations, but the indemnitee may participate in such defense at its own cost and expense. Upon assumption of-such defense, the indemnitor’s obligations with respect to such claim or litigation shall, in addition to payment of its legal expenses in defending such action, be limited to the payment of any judgment, or of any settlement approved by it, to the extent it is covered by the indemnitor’s said indemnity hereunder.
 
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20. This Agreement shall bind and inure to our benefit and that of our successors and assigns. Neither this license nor the rights granted hereunder may be assigned, sublicensed or pledged by you, except that you may assign this Agreement, subject to the terms and conditions hereof, to any wholly-owned subsidiary of Busch and may sublicense, with our and Muppets’ consents, this Agreement, subject to the terms and conditions hereof, to Approved Subsidiaries in accordance with this Section 20. Any attempted assignment, sublicense or pledge, except as set forth above, shall be null and void and in no event shall any third party have any rights under this Agreement in any foreclosure. “Approved Subsidiary” means (i) any wholly-owned subsidiary of you or Busch or (ii) any subsidiary of the same existing for the purpose of operating a Park outside the United States, in which it is practically necessitated by the law of the foreign state in which the Park is to be constructed, to grant an interest to a national of said state, provided, however, that you or any other wholly-owned subsidiary of Busch will, in the reasonable judgment of CTW, have effective operating control of the Park and will have the highest amount of equity participation in such subsidiary permitted by the law of the foreign state and in no event less than twenty percent (20%) equity participation. In the event a foreign Park is constructed under this Agreement, you agree to reimburse us the reasonable out-of-pocket expenses we incur in visiting such Park in connection with the exercise of our approval rights under Section 5.1 of this Agreement, Each sublicense or assignment to an Approved Subsidiary shall require the Approved Subsidiary to specifically accept and assume all of the conditions of this Agreement and the Muppets Agreement, so that we and Muppets shall have the benefit directly against such Approved subsidiary of all rights and remedies which we and it have o against you under this Agreement and which Muppets has against us under the Muppets Agreement. Notwithstanding the foregoing, you shall remain liable to us and Muppets on all such sublicenses or assignments.
 
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21.1 In the event that you file a petition in bankruptcy, a petition in bankruptcy is filed against you and not dismissed within twenty (20) days, you become insolvent, you make an assignment for the benefit of creditors, you make an arrangement pursuant to any bankruptcy law, you discontinue your business, a receiver is appointed for you or your business, you in any-manner become and for thirty (30) days remain subject to any bankruptcy, insolvency or receivership proceeding of any nature, you breach any provision hereof (other than the payment of a royalty pursuant to Section 11.1 hereof, the remedy for which breach is covered by Section 11.3 hereof), including but not limited to the provisions as to quality set forth in Section 5.1 hereof, and do not cure such breach within thirty (30) days after we give you written notice thereof, the license granted hereunder, without notice, shall, except as provided in Section 21.2 hereof, terminate automatically upon expiration of such notice period. In the event the license granted hereunder is so terminated, neither you nor your receivers, representatives, trustees, agents, administrators, successors or assigns shall have any rights in any way to use CTW Elements.
21.2 In the event that this license would be terminated under Section 21.1 hereof because of an uncured violation of the provisions as to quality in Section 5.1 hereof, the license shall remain in existence with regard to any Park which is not in violation of the provisions of Section
 
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22. You acknowledge that the trademarks for CTW Elements are extremely valuable properties and that we, along with the Muppets to the extent applicable, must have absolute quality control over the use of CTW Elements and over items using CTW Elements (i.e., the Parks), Furthermore, you acknowledge that a breach by you of your obligations hereunder with regard to use or nonuse of CTW Elements or a failure by you to maintain the required quality of uses of CTW Elements will result in immediate and irremediable damage to us. You acknowledge that there is no adequate remedy in damages for such breach or failure and accordingly, in the event of such breach or failure we shall be entitled to equitable relief by way of temporary and permanent injunction and such other further relief as any court with jurisdiction may deem just and proper. Resort to such remedies shall not be construed as a waiver of any other rights and remedies to which we are entitled hereunder or otherwise.
23. Any notice to be given hereunder shall either be delivered personally or be sent by certified or registered mail, return receipt requested, to the respective party at the following address:

If to us:	  	Executive Vice President
Children’s Television Workshop
One Lincoln Plaza
New York, New York 10023	
		
If to you:	  	President
Busch Entertainment Corporation
One Busch Place
St, Louis, Missouri 63118	
		
If to Muppets:	  	President
Muppets, Inc.
117 East 69 th Street
New York, New York 10021	
		
with a copy to:	  	Albert Gottesman, Esq.
Muppets, Inc.
117 East 69 th Street
New York, New York 10021	
or such other address as a party may from time to time designate by written notice given in the manner provided above for giving notice. Notices shall be deemed given five (5) business days after mailing or when received, whichever is earlier. Statements and invoices may be sent by regular mail.
 
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24. You shall fully comply at all times during the term of this Agreement with all applicable laws, including but not limited to the following (which are incorporated herein by reference), to the extent such laws apply to your performance of this Agreement:
(i) the provisions of Executive Order 11246 and 11625, all as amended, and the regulations thereunder;
(ii) Section 402 of the Vietnam Veterans Readjustment Assistance Act of 1974, as amended, and the regulations thereunder; and
(iii) Section 503 of the Rehabilitation Act of 1973, as amended, and the regulations thereunder.
25. The rights granted hereunder to use Muppet Elements shall be of no force and effect until this Agreement has been approved in writing by Muppets.
26. This Agreement constitutes the entire understanding and agreement between us as to the matters covered herein and incorporates and cancels all prior understandings and agreements. This Agreement may not be modified or terminated orally, but only by a writing signed by the party against whom it is to be used. The failure by us to enforce at any time or for any period of time any one or more of the terms and conditions of this Agreement shall not be a waiver of such terms or conditions or of our rights thereafter to enforce each condition or of our rights thereafter to enforce each and every term and condition of this Agreement.
27. This Agreement shall be interpreted and governed in accordance with the laws of the State of New York (without reference to its conflict of law principles).
28. Nothing contained or provided for herein is intended to, or shall, affect in any way or to any extent, a modification, alteration or amendment of the said Muppets Agreement, Where there exists in this Agreement any difference from, or inconsistency with, the Muppets Agreement, the provisions of the Muppets Agreement shall prevail.
 
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Very truly yours,	
	
CHILDREN’S TELEVISION WORKSHOP	
		
By:	 	/s/ [Illegible Signature]	

Agreed:	
	
SPI, Inc.	
		
By	 	/s/ [Illegible Signature]	

Approved insofar as the Muppets, Inc.’s interests are concerned:	
	
MUPPETS, INC.	
		
By:	 	/s/ [Illegible Signature]	
 
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Exhibit A
CHILDREN’S TELEVISION WORKSHOP
One Lincoln Plaza
New York, New York 10023
Amended and Restated
As of April 1, 1983
Muppets, Inc.
117 East 69th Street
New York, New York 10021
Dear Sirs:
This letter, when executed by you (sometimes “Muppets”) and by us (sometimes “CTW”) shall constitute the agreement between you and us on the subject matter hereof.
1. Subject to the terms and conditions stated below, Muppets hereby grants to CTW a license under which CTW may use, or may directly or indirectly sublicense SPI, Inc. or any Approved Subsidiary of Anheuser-Busch Companies, Inc., Busch-Entertainment Corporation (either or both of which shall hereinafter be referred to as “Busch”), or of SPI, Inc. (collectively “SPI”) the right to use “Muppet Elements”, as that term is defined in the Overall Products Agreement between us dated as of June 1, 1974 (the “Overall Products Agreement”), in children’s play parks (the “Parks”). “Approved Subsidiary” means (i) any wholly-owned subsidiary of Busch or SPI, Inc. or (ii) any subsidiary of the same existing for the purpose of operating a Park outside the United States, in which it is practically necessitated by the law of the foreign state in which the Park is to be constructed, to grant an interest to a national of said state, provided however, that SPI, Inc. or any other wholly-owned subsidiary of Busch will, in the reasonable judgment of CTW, have effective operating control of the Park and will have the highest amount of equity participation in such subsidiary permitted by the law of the foreign

state and in no event less than twenty percent (20%) equity participation. In the event of any sublicense to an Approved Subsidiary, written notice shall be provided by SPI to Muppets of said Approved Subsidiary’s name, state or country of incorporation, and the name and address of said Approved Subsidiary’s designated agent for purpose of service of process. It is a condition to CTW’s right to sublicense to an Approved Subsidiary any rights granted to CTW hereunder, that said Approved Subsidiary agree to submit to the jurisdiction of the courts of the State of New York and to be bound by the arbitration provision of paragraph 14 below. Muppets understands that among the principal features of the Parks are that they will consist principally of (a) participatory play activities as distinct from nonparticipatory attractions such as rides; that they will be designed to appeal principally to children under the age of about thirteen (13); and that the activities will generally resemble (although they may not Precisely duplicate) certain designs heretofore created by Eric Vicmillen, possibly together with (b) computer and other arcade games and/or (c) participative demonstrations of the sort found in science museums. (This license does not extend to game arcades which consist of items (b) and/or (c), above, in the absence of item (a), although Muppets recognizes that CTW may wish to negotiate such a license.) Muppets recognizes that the design of the Parks may vary over time or from Park to Park in response to experience with actual Park operations. In addition to granting CTW the right to sublicense SPI to use, puppet Elements in the Parks, Muppets also undertakes to perform or provide the services described in paragraph 5 below, in connection with the Parks. In sublicensing SPI hereunder, CTW shall require that SPI accept all of the conditions of this agreement, so that Muppets shall have the benefit, directly against BPI, of all rights and remedies which Muppets has against CTW with respect to the subject matter of this agreement. (Where a sublicense is granted to an Approved Subsidiary, Muppets shall also have recourse to SPI, Inc. or
 
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Busch itself.) The rights and remedies referred to in the preceding sentence shall not include enforcement against SPI of The obligation of CTW to pay Muppets the amounts to be paid pursuant to paragraph 7 hereof. Further, CTW shall not, without Muppets’ consent, sublicense any entity other than SPI to use the rights granted hereunder, nor shall CTW or SPI assign its rights hereunder, provided, however, that SPI may use Muppet Elements, subject to the terms and conditions hereof, to any wholly-owned subsidiary of Busch.
2. The duration of the license granted hereunder shall be as follows: Muppets hereby licenses to CTW, and CTW may sublicense to SPI the right to use Muppet Elements in connection with up to five (5) Parks, construction of which is commenced on or before December 31, 1988, provided, however, that if construction has been commenced on four (4) Parks by December 31, 1988, and provided, further, that if construction on the first four (4) Parks has been substantially completed by August 31, 1989 and said Parks have opened no later than June 1990, then Muppet Elements may be used in connection with a fifth Park if actual physical construction is commenced on such Park on or before December 31, 1990. The time period specified in the preceding sentence shall be defined and hereinafter be referred to as the “Exclusive Term.” In the event that actual physical construction has been commenced on four (4) Parks by December 31, 1988 but, due to force majeure circumstances, including acts of God, strikes, war, governmental restrictions and the like, has not been substantially completed by August 1989, the latter date shall be extended by the period of time during which construction activities were prevented from being undertaken by such circumstances, but in no event for more than one year, The license and sublicense shall terminate on a Park-by-Park basis thirty (30) years after each Park first opened.
 
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3. The right to use Muppet Elements in the Parks shall consist of the right to decorate and theme the Parks, specific attractions, objects and sites therein, and all promotional, advertising and marketing materials therefor, with representations of Muppet Elements or any of them (whether in two or three-dimensional forms and including animated or mechanical representations); the right to exhibit at the Parks, via any medium, any SESAME STREET programs or portions thereof in which Muppet Elements or any of them appear (whether such programs or portions now exist or are hereafter created, including but not limited to programs created especially for the Parks); the right to have on the premises of the Parks agents or employees dressed and acting as one or more of the Muppet Elements for purposes of controlled appearances (i.e., appearances in which they shall not mingle directly with Parks patrons, unless with adequate protection); and the right to make other appropriate uses of Muppet Elements in the Parks, including appropriate uses in restaurants, shops, and other facilities which are operated by, or under license or concession from SPI. In addition, the rights licensed hereunder shall include the right to use, as a service mark for the Parks, the stylized version of the Big Bird character (the “BB Logo”) in conjunction with the term “Sesame Place” as part of the combined logo shown in Exhibit 1 hereto (the “Combination Logo”); the BB Logo shall not be used as a service ‘mark except as part of the Combination Logo. CTW shall not license the Combination Logo without the prior written consent of Muppets. Muppets recognizes that SPI may wish to include live stage theatrical performances in the Parks using Muppet Elements and performers supplied or trained by Muppets, and agrees to consider granting of a license therefor and negotiation of rates for such performances and/or training. Muppets shall have the right to review and approve all proposed, actual, and continuing uses of Muppet Elements in, or in connection with, the Parks. Such right to review shall consist of the right to ensure that all such
 
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uses of Muppet Elements are in good taste, in character, of suitable artistic quality, in appropriate context and location, and consistent with other uses made of Muppet Elements, e.g., on the program SESAME STREET. Muppets shall not unreasonably withhold its approval of proposed uses of Muppets Elements, nor shall Muppets withdraw its approval of any use, once approved. SPI shall have no obligation to use the Muppet Elements, and may remove them from any Park at any time, or decline to commence their use. If SPI decides to remove all Muppet Elements from any Park where such Muppet Elements are in use, it shall first give Muppets 90 days notice. If no Muppet Elements are in use in a particular Park, they shall not be used or referred to in any promotion, advertising or publicity for that Park. Muppet Elements shall not be used in any Park with non-Muppet puppet characters, except by approval of Muppets, which approval may be Withheld as a matter of discretion. Muppets, however, hereby agrees that any character which has heretofore appeared in the program The Electric Company may be used in any Park in which Muppet Elements are used. If Muppets shall cease to be an essentially independent entity or an essentially independent part of an entity, and it, in addition, Jim Henson shall cease to be the chief operating officer of Muppets or the entity of which it has become a dependent part, then Muppets’ rights of approval shall consist only of the right to insist on such quality controls as are legally necessary to preserve its trademark rights in Muppet Elements. In addition to the foregoing approvals over uses of Muppet Elements and notwithstanding anything else herein, Muppets shall have the right of approval over the quality of each Park and over the quality of any advertising, publicity or promotion of the Parks. Such approval, which shall not be unreasonably withheld, shall be based on assuring that the quality of the Parks and such advertising, publicity or promotion is consonant with uses made of Muppet Elements outside of the Parks and the quality, image and goodwill of Muppet Elements.
 
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4. The license and right to sublicense granted hereunder shall be world-wide.
5. In addition to the license granted hereunder, Muppets undertakes to make, upon request by CTW, a contribution to SPI, of personal services (including those of Jim Henson, subject to his personal availability, Mike Frith and/or Muppets’ other agents or employees) to the extent such services may be reasonably necessary for the theming of the Parks and for the implementation of such theming; and Muppets will Provide all reasonably necessary art-work at a price equal to Muppets’ cost of materials plus the value of the time expended Muppets’ personnel for this purpose, including the markup at the time customarily imposed by Muppets in billing the time of Muppets’ personnel to CTW.
6. If in the course of their performance hereunder Muppets or any of its employees shall create or develop any new puppet characters expressly for use in the Parks, such characters shall be included in the license granted hereunder.
7. In full consideration for all Muppets’ obligations hereunder, CTW, upon sublicensing its rights to SPI shall collect from SPI on Muppets’ behalf, and remit to Muppets, a quarterly royalty within 30 days after the end of each quarter of SPI’s fiscal year (together with a full and complete statement and supporting documents showing the basis for calculating said royalty). Said royalty shall be equal to [*] of the gross receipts of each Park which is in fact themed with Muppet Elements during the quarter in question (prorated with respect to each Park which is not thus themed during the entire quarter). Should CTW fail to collect such royalty on Muppets’ behalf and remit the same to Muppets, and should Muppets not be paid such royalty by any other person or entity, including SPI itself, Muppets shall have the right to terminate the license granted hereunder on the terms and conditions specified in paragraph 8, below. CTW shall not be a guarantor of SPI’s obligation to pay such royalty. CTW shall require that SPI inform Muppets in writing of the annual date on which SPI’s fiscal year commences, and that SPI give Muppets at least thirty (30) days’ written notice prior to any change in such annual date. As of April 1, 1983, the fiscal year of SPI, Inc. is the calendar year.
 
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8. Should CTW fail to remit to Muppets the quarterly royalty described in paragraph 7, above, on or before the due date for any quarter, Muppets may serve written notice upon CTW of such failure. If such notice is served, a copy shall also be served in the same manner on SPI at the following address: One Busch Place, St. Louis, MO 63118, Attn. W. Randolph Baker, Vice President, or at such other address as SPI may from time to time specify. CTW and SPI shall have 30 days from receipt of such written notice to pay or cause to be paid the full amount of any quarterly royalty which has not timely been paid to Muppets, with interest at the prime commercial rate of Citibank, N.A., prevailing from time to time during the late period. Should CTW and/or SPI fail to pay or cause to be paid said full amount with interest within said 30 days from receipt of written notice, Muppets, at its option by written notice forthwith, may terminate the license granted hereunder in whole or in part. All royalty payments shall be in net United States of America dollars free and clear of all non-United States taxes and withholdings of all kinds. If necessary to convert from a foreign currency to United States dollars, the conversion rate shall be the rate on the date of payment if the payment is timely made and, if not timely made, it shall be the rate most favorable to Muppets between the date payment was due and the date payment is made.
9. Muppets shall have the right at its sole cost and expense to examine, and make abstracts and copies of, the portions of the books and records of CTW, and of any other entity through which CTW may sublicense to SPI the rights granted hereunder to CTW, which are necessary in determining CTW’s compliance with its obligations hereunder to make
 
7

payments to Muppets. CTW shall require in granting any sublicense to GPI of the rights granted to CTW hereunder, as a condition of the grant and duration of the sublicense, that Muppets shall similarly have the right to examine, abstract, and copy the Corresponding portions of the books and records of SPI for the same purpose. If any such examination shall reveal discrepancies amounting to an understatement of CTW’s obligations to Muppets by more than ten (10) percent for any fiscal year of SPI, then the cost of said examination shall be borne by SPI.
10. For purposes of paragraph 7 above, “gross receipts” shall mean all receipts of SPI, or any other entity or entities operating a given Park pursuant to the rights granted in paragraph 3 above, from all business conducted on the premises of a given Park, including related parking facilities operated by, or under license or concession from, SPI. The term “gross receipts” shall not include sales or excise taxes (including but not limited to any local amusement tax) imposed by and collected on behalf of any federal, state or local taxing authority. Where SPI licenses licensees or concessionaries which are not affiliated with SPI or Busch to operate concessions on or near Park premises, “gross receipts” shall mean the receipts of SPI, not of such licensees or concessionaries. “Gross receipts” shall not include revenues from institutional sponsorships to the extent such revenues (in the aggregate for each sponsored asset) are less than the capital cost to SPI of such sponsored asset.
11. Muppets agrees that if CTW elects to waive royalties on products incorporating Muppet Elements, which products are sold on the premises of any of the Parks, by SPI or a licensee or concessionaire of SPI, then Muppets is not entitled, under the Overall Products Agreement to royalties on those same products. The definition of “gross receipts” in paragraph 10, above, shall not be affected by this paragraph 11.
 
8

12. Muppets acknowledges that under the Overall Products Agreement it is not entitled during the term thereof to use or license Muppets Elements for use in any park or play attraction of any description. CTW acknowledges that said Prohibition does not extend to other characters which Muppets has developed which are not covered by the Overall Products Agreement. In consideration of CTW’s obligations hereunder, Muppets agrees that within the United States, Canada, and their respective territories’ and possessions, during the Exclusive Term hereof, Muppets will not use any of its characters or elements thereof, or license them for use, in any park or play attraction for children any substantial part of which resembles the Parks, as the Parks are described in the third sentence of paragraph 1, above. If the parties disagree as to whether a given park or play attraction or substantial part thereof resembles the Parks, the matter shall be submitted for arbitration in accordance with paragraph 14, below. The parties recognize the impossibility of listing all of the relevant features of the Parks for purposes of determining resemblance, but agree that the arbitrator shall be instructed that the distinguishing characteristics which CTW considers most important are those stated in the fourth and sixth sentences of paragraph 1, above.
13. If the name of any Park is changed so it is no longer named “Sesame Place” or any other name suggestive of CTW’s program SESAME STREET, then, as to that Park, the right to use Muppet Elements shall cease when the name is so changed. Muppets shall have the right to disapprove any clearly inappropriate name to which SPI may change the name of a Park but shall not exercise that right unreasonably.
14. Disputes arising hereunder, to the extent they cannot be resolved within a reasonable time by negotiation, shall be resolved by arbitration by a single arbitrator at the behest of either party. Said arbitration shall be held in the city, County and State of New York, in
 
9

accordance with the rules of the American Arbitration Association. The order or award of that arbitrator (including any equitable relief the arbitrator may deem just) shall be binding on the parties at law and in equity. Neither party shall be entitled to litigate disputes arising hereunder, except to compel arbitration or to seek judicial enforcement of an arbitrator’s order or award. Judgment on an order or award of the arbitrator may be entered in any court of competent jurisdiction.
15. The following provisions of the Overall Products Agreement (attached hereto as Exhibit 2) are incorporated herein by reference: Paragraph 3; the first sentence of Paragraph 5(a) (except that the word “Products” shall read “Muppet Elements”); Paragraph 5(b) (except, that the word “Products,” as it appears in said Paragraph 5(b) shall read “rights”); Paragraph 6 (except that the word “Product” as it appears in the next-to-last line of said Paragraph 6 shall read “rights licensed hereunder”; Muppets covenants and agrees that upon giving of any written approval hereunder it shall have obtained all necessary consents to the per Mission granted herein from the puppeteers, voices and principals of Muppets); Paragraph 7; Paragraph 8(c); Paragraph 11; and Paragraph 17 (except that the reference to CTW’s Vice President-Products Group shall read “Executive Vice President”, the right to use notice by telegram deleted and all notices shall be deemed given when received). To the extent that any provision incorporated herein by reference may conflict with any provision expressly stated in the main body of this Agreement, the latter shall govern.
16. CTW shall require SPI to include Muppets as an insured under all of its pertinent insurance policies including without limitation those governing liabilities, errors and omissions, and shall require SPI to supply Muppets with copies of all such policies.
 
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17. The appropriate copyright and trademark notices required under the first sentence of Paragraph 5(a) of the Overall Products Agreement shall, with respect to the Parks and advertising and promotion therefor, require notices referring to “Sesame Street Muppet characters” and neither CTW nor SPI nor any other party which may acquire rights hereunder shall use the word “Muppets” in any context related to the Parks, without using the entire phrase, “Sesame Street Muppet characters”. In written references to “Sesame Street Muppet characters” in any such context, the word “Muppets” shall not appear in larger or more conspicuous type than the words “Sesame Street.”
18. Monies to which Muppets may become entitled hereunder shall not be deemed a part of, or in contribution to, the minimum royalties specified in the Overall Products Agreement.
19. This license shall terminate if SPI becomes and for thirty (30) days remains subject to any bankruptcy, insolvency or receivership proceeding of any nature.
20. Nothing herein shall be deemed to create any joint venture or other fiduciary relationship partnership, between Muppets, on the one hand, and, on the other hand, CTW, or any CTW licensee, or any other party that may acquire rights hereunder.
21. In the event of any inconsistency between the terms hereof and the terms of the CTW License Agreement between CTW and SPI amended and restated as of April 1, 1983, the terms hereof shall be controlling with respect to the rights granted by Muppets hereunder.
22. Notwithstanding anything else herein, in the event of any breach of the terms hereof (other than the nonpayment of a royalty pursuant to Paragraph 7 hereof, the remedy for which breach is covered by Paragraph 8 hereof), Muppets shall give written notice thereof to
 
11

CTW and SPI. If such breach is not cured within thirty (30) days thereafter, the license granted hereunder shall terminate; provided, however, that in the event the termination is because of an uncured violation of the provisions as to quality control the license shall remain in existence with regard to any Park which is not in violation of the provisions as to quality control.
23. The parties recognize that the BE Logo is a Muppet element and as such is owned by Muppets and that the term “Sesame Place” is owned by CTW. CTW shall be deemed the over of the Combination Logo, provided that upon the expiration or termination of the right to use Muppet Elements pursuant hereto CTW shall promptly cause all use of the BB Logo or part of the Combination Logo to cease and shall, at its sole expense, cancel all service mark registrations of the combination Logo or cause them to be amended so as to delete the BB Logo.

Very truly yours,	
	
CHILDREN’S TELEVISION WORKSHOP	
		
By:	 	/s/ [Illegible Signature]	

Accepted and approved:	
	
MUPPETS, INC.	
		
By:	 	/s/ [Illegible Signature]	
 
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EXHIBIT “2”
The Overall Products Agreement, dated as of June 1, 1974, and referred to above in Paragraph 1 of the present Agreement, defines “Muppets Elements” (paragraph 1(b), p. 2) as:
“all or any part of all or any of the characters originally [or] at any time or times created for and furnished by Muppets-for the SESAME STREET series pursuant to the various agreements between the parties hereto at any time or times entered into, with respect to the production of the SESAME STREET series (including but not limited to all the characters that appear in ‘The Muppet Character Book’ of Jim Henson’s Muppets from CTW’s SESAME STREET with drawings by Bob Taylor and photographs by Charles Rowan and copyrighted in 1973 but excluding Kermit the Frog), together with all trade and service names and marks, copyrights and all other rights and/or materials relating thereto.”
Paragraph 3 of said Overall Products Agreement provides that:
“Muppets warrants, represents, covenants and agrees that it is and will throughout the term hereof and the term of all licenses granted hereunder continue to be the sole and exclusive owner of each and every Muppet character (including but not limited to all depictions thereof and rights of copyright thereto and all other rights embodied therein and/or associated therewith) included in Muppet Elements and, to the extent that no third party has conflicting superior rights in or to the same, of all trade and service names and marks in and to said characters and their names and that, except for the rights that certain third-party licensees may have pursuant to-written licenses heretofore granted by Muppets and approved in writing by CTW or granted by CTW pursuant to agreement with Muppets and except for CTW’s rights hereunder and pursuant to other past and/or future written agreements with Muppets and/or Henson Associates, Inc., Muppets alone has the right to use or otherwise deal in, directly and/or indirectly, and any and all Muppet characters and Muppet Elements as well as much copyrights, marks and names.”
The first sentence of Paragraph 5(a) of said Overall Products Agreement provides that:
“CTW shall, except when otherwise approved Muppets include in each license hereunder involving any Muppet Elements a requirement that the licensee shall see to it that appropriate copyright and trademark notices in the name of Muppets appear on all Products (Muppet Elements) and/or associated Packaging, advertising and/or promotional materials and that the licensee shall endeavor in good faith to maintain in full force and effect said copyright and trademark rights and shall promptly report to CTW (which in turn shall in turn promptly report to same to Muppets) all violations or infringements of said copyright and trademark rights coming to said licensee’s attention and that Muppets shall have the right to take such action as it deems appropriate if in its judgment there has been any infringement of any said rights.”

Exhibit “2”
Paragraph 5(b) of said Overall Products Agreement provides that:
Muppets shall, throughout the term hereof and the term of all licenses granted hereunder, maintain in full force and effect and vigorously defend all its rights in and to Muppet Elements as they relate to Products [rights] licensed hereunder. CTW shall, throughout the term hereof and the term of all licenses granted hereunder, maintain in full force and effect and vigorously defend all its rights in and to the SESAME STREET trademark as it relates to Products [rights] licensed hereunder. If Muppets and CTW shall each cooperate with the other in the aforesaid maintenance and defense of said rights. If Muppets and CTW agree in writing that joint action is required or appropriate to prevent, or to seek redress for, any violation or infringement of, or to establish or strengthen, any Muppets and/or CTW copyright, trademark or other right, Muppets and CTW shall, if there is any monetary award or settlement, equally share, after the deduction therefrom of all said costs, such award or settlement. If CTW and Muppets do not so agree in writing that joint action is required or appropriate and if the licensee takes action to prevent or to seek redress for any violations or infringement of, CTW to establish or strengthen, any Muppets copyright, trademark or other rights, than Muppets shall be free, at its expense, to join any such proceeding as a party. Notwithstanding the foregoing, if CTW shall have entered into a license agreement hereunder which provides that the licensee shall share the cost of any such proceeding with CTW, then, if CTW and Muppets bring any such joint action, CTW and Muppets shall equally bear the costs to CTW resulting from such sharing and, if CTW and Muppets do not bring any such joint action by Muppets itself seeks to bring and brings such an action, Muppets may, subject to approval by CTW, which shall not be unreasonably withheld, require the licensee to share the costs thereof with Muppets in lieu of CTW. Muppets may also, subject to the same approval, require the licensee to participate in such action in accordance with the provisions of the licenese agreement.”
Paragraph 6 of said Overall Products Agreement provides that:
“CTW and all, licensees hereunder shall have the right, subject to Muppets’ prior written approval, to print, publish, reproduce, distribute and otherwise use (and to authorise, others so to do) the name, voice, facsimile signature, picture and/or likeness of and biographical faces concerning any and all Muppet characters hereunder and of those persons who may act as puppeteers and/or voices for said characters on the SESAME STREET series and of all principals of Muppets for purposes of trade and advertising in connection with Products (rights licensed hereunder) but not for purposes of any direct endorsement of any article or service.”
Paragraph 7 of said Overall Products Agreement provides that:
“Each of the parties hereto represents, warrants, covenants and agrees that it is and shall at all times remain free to inter into and fully perform this Agreement in all respects and Muppets represents, warrants, covenants and agrees that the use hereunder of Muppet Elements by CTW and/or by all or any licensees hereunder pursuant to licenses granted hereunder shall not infringe upon or violate in any way any rights of any person, firm or corporation.
 
2

Exhibit “2”
Paragraph 8(c) of said Overall Products Agreement provides that:
“If Muppets shall cease to do business as a result of a dissolution in connection with any voluntary or involuntary bankruptcy, then all rights of copyright and copyright renewal, and all trade and service names and marks, in and to all Muppet Elements owned by Puppets at the inception of such bankruptcy, shall thereupon automatically be transferred and assigned to CTW; it being agreed that said transfer and assignment to CTW shall be coupled with an interest therein on the part of CTW arising out of this Agreement and each
Paragraph 9 of said Overall Products Agreement provides that:
“Each party hereto shall indemnify and hold the other party harmless from and against any and All claims, costs, liabilities, damages and expense (including lawyer fees reasonably incurred) resulting from any breach by the indemnitor of any of its representations, warranties, covenants or agreements hereunder; provided, however, that the indemnitee shall promptly and fully notify the indemnitor of any claim or litigation to which said indemnity applies and the indemnitor may, as its option, assume the defense of any such claim or litigation. Upon assumption of such defense the indemnitor’s obligations with respect to such claim or litigation shall be limited to the payment of any judgment, or of any settlement approved by it, to the extent it is covered by the indemnitor’s said indemnity hereunder.”
Paragraph 11 of said Overall Products Agreement provides that:
“Muppets, in its performance of this Agreement:
(a) will not discriminate against any employee or applicant for employment because of race, creed, color, sex, age or national origin, but will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, sex, age or national origin (such action to include without being limited to employment, upgrading, demotion and transfer, recruitment and recruitment advertising, layoff and termination, rates of pay and other forms of compensation and selection for training, including apprenticeship), and will post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause or such other nondiscrimination clause as is sufficient to satisfy the requirements of the government of the United States;
(b) will, in all solicitations or advertisements for employees placed by or on its behalf, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, sex, age or national origin, that it is an Equal Opportunity Employer; and
(c) will comply with all federal rules and regulations dealing with equal employment opportunity to the same extent as if it were hereby executing an agreement with the Federal Government.
 
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Exhibit “2”
Paragraph 17 of said Overall Products Agreement provides that:
“This Agreement constitutes the entire agreement between Muppets and CTW with respect to the subject matter hereof, cannot be exchanged or terminated orally, and shall be governed in all respects by the law of the State of New York applicable to contracts fully performed therein. No waiver by either party hereto of any of the provisions hereof or any breach thereof shall be or be deemed to be a waiver of the same for the future of any other provision or breach therof. All remedies, rights, obligations and agreements contained herein are cumulative and none of them shall limit any other remedy, right, obligation or agreement herein or otherwise available in law or equity. All notices, consents, “and requests given under this Agreement shall, “except as herein otherwise specifically provided, be given in writing by personal delivery, by certified or registered mail, or by telegram paid by or charged to the sender and shall be addressed to the party (to the attention of, in the case of notices, consents and requests to CTW, CTW’s Vice President Products Group (Executive Vice President)) for whom intended at its address hereunder, as the same may be changed at any time or times by notice to the other, with a copy thereof also to be given by Muppets, in the case of notices, consents and requests to CTW, to CTW at its said address directed to the attention of CTW’s General Counsel and with a copy thereof also to be given by CTW, in the case of notices, consents and requests to Muppets, at Muppets’ said address directed to the attention of Muppets’ General Counsel.”
 
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Exhibit B
AGREEMENT made and dated as of the 1st day of April, 1980 by and between CHILDREN’S TELEVISION WORKSHOP (hereinafter sometimes referred to as “CTV”), a not-for-profit organization incorporated under the New York State Education Law and having its principal office at One Lincoln Plaza, New York, New York 10023, and SPI, INC., successor to SESAME PLACE, INC. (hereinafter sometimes referred to as “Licensee”), a corporation organized and existing under the laws of Delaware and having its principal office at One Busch Place, St. Louis, Missouri 63118, who hereby agree as follows:
1. Licensee, recognizing that CTW has in pursuance to its educational purposes created and produced the distinguished children’s television series SESAME STREET and that CTW has from time to time authorized, in accordance with its special licensing objectives in support of such purposes, the development, manufacture, production, distribution and sale of useful, educational and/or entertaining products for children that derive from and/or utilize in whole or in part one or more of certain copyrighted or otherwise protected characters, likenesses, logos, marks, names and/or materials used in or associated with said SESAME STREET series and owned or controlled by CTW alone or together with Muppets, Inc. (hereinafter sometimes referred to as “Muppets”), and has authorized Licensee to utilize certain CTW Elements (as defined in a licensing agreement between CTW and Licensee dated March 17, 1980, as amended and restated), in connection with children’s play parks presently called SESAME PLACE (hereinafter referred to as the “park Agreement”) and desiring to develop, manufacture and produce or have manufactured and produced for it and distribute and sell, in accordance with the provisions of this Agreement the product items hereinafter specified, hereby represents and warrants to CTW that Licensee is aware of, and will in its performance of this Agreement, conform with and further CTW’s said purposes and Licensee’s development, production and marketing capabilities and expertise are and will be such that its performance of this Agreement will supplement and/or further CTW’s said purposes.
2. Subject to the provisions of this Agreement, CTW hereby grants to Licensee, and Licensee hereby accepts a license during the term hereof to develop, manufacture and produce and cause to be manufactured and produced solely for Licensee in the United States of America and to the extent that Licensee can fully protect CTW’s and Muppets’ copyrights, elsewhere in the World and exclusively to distribute and sell solely through the retail outlets in SESAME PLACE play parks licensed by CTW under the Park Agreement (said play parks to be sometimes hereinafter referred to as the “Territory”), the product items (hereinafter referred to as “Products”) especially developed for SESAME PLACE play parks and specified by Product classes in Item A of Exhibit I attached hereto and hereby made a part hereof and to uses—on or in direct connection with said manufacture, sale and distribution of the Products and their associated packaging, promotion and development, if any—such SESAME PLACE and/or Sesame Street Muppet character likenesses, logos, marks, names, titles and materials is are mutually agreed upon, but never including “Kermit the Frog” and, only when specifically agreed upon in writing in each case, SESAME STREET. Additional product items may be added as Products hereunder if and when mutually agreed upon. It is understood and agreed that the grant of exclusivity to Licensee hereunder extends only to souvenir Product items utilizing the name and/or logo SESAME PLACE, and that CTW and Muppets shall be entitled to license others to manufacture and sell items in the Product classes which do not utilize the name and/or logo

SESAME PLACE. Such SESAME PLACE, Sesame Street Muppet and/or SESAME STREET characters, likenesses, logos, marks, names and/or materials so mutually agreed upon for use hereunder by Licensee are hereinafter sometimes referred to as “Licensed Elements.” Except to the extent otherwise provided in the Park Agreement, no such agreement by CTW and/or Muppets shall be or be deemed to be any representation or agreement by CTW and/or Muppets that any of the Licensed Elements are otherwise available for use hereunder by Licensee. Licensee shall at its cost and expense obtain all other approvals and/or clearances, if any, necessary and/or desirable for its use hereunder thereof.
3. (a) The term of this Agreement shall, subject to the provisions hereof, be as set forth in Item B of Exhibit I hereto and is hereinafter referred to as “Term.”
(b) Upon termination of the Term, all rights and licenses granted hereunder to Licensee shall, except as in this Agreement expressly otherwise provided, immediately and automatically revert to CTW or Muppets as their respective interests may determine.
(c) Upon the end of the Term hereof:
 
 	(i)	Licensee shall furnish to CTW a certificate of Licensee’s existing inventory of Products listing all Products in Licensee’s possession or under its control and Licensee’s cost therefor and also listing all Technical Materials (which, for purposes of this Agreement, include all artwork, graphics, photos, prints, films, silk screens, mechanicals, designs, plans, diagrams, dummies, models, plates, proofs, sketches, and all other similar technical and/or special materials whatsoever that were used in the development, manufacture and/or production of any Product and that contain any of the Licensed Elements), their physical condition and location; it being also-agreed by Licensee that CTW shall at all times have the right at its expense not only to conduct a physical inventory of all or any of said Products and Technical Materials but also to inspect any and all sites at which any of said Products and Technical Materials are made, processed and/or stored;	
 
 	(ii)	all right, title and interest in and to all said Products and Technical Materials shall automatically vest in CTW for all purposes without restriction other than as specifically provided for in this Agreement; and	
 
 	(iii)	if any of the Products and/or Technical Materials shall be subject to any patent or other proprietary right or interest owned or controlled by Licensee, Licensee shall give and be deemed to have given CTW an irrevocable, royalty-free license under said patent and/or right to use all such Products and Technical Materials (including all concepts, processes and/or features embodied therein) for the development, manufacture, production, distribution and/or sale of Products and/or any products similar thereto.	
 
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(d) CTW shall have the right but not the obligation to pay Licensee, within ninety (90) days after CTW’s receipt of said inventory list, for all or any of said Products, Licensee’s actual cost for each Product and, for all or any of said Technical Materials, their actual individual direct, out-of-pocket cost to Licensee minus all actual amortization and/or expensing taken by Licensee with respect thereto. Upon such payment, if any, CTW shall thereupon become entitled to possession of all said Products and/or Technical Materials so paid for and Licensee shall, unless otherwise directed by CTW, immediately deliver to CTW all said Products and/or Technical Materials so paid for, together with appropriate title documents therefor if requested by CTW. If CTW does not so pay for all said Products and Technical Materials, then Licensee shall promptly following said ninetieth day destroy all the Same not so paid for and furnish CTW with a certificate of such destruction. CTW shall have the right to have a representative selected by it witness such destruction.
(e) If Licensee:
 
 	(i)	without CTW’s consent assigns this Agreement or any of Licensee’s rights hereunder in whole or in part (except for an assignment to a wholly-owned subsidiary of Anheuser-Busch Companies, Inc., as permitted by the Park Agreement);	
 
 	(ii)	becomes insolvent or subject to any bankruptcy, insolvency or receivership proceeding of any nature;	
 
 	(iii)	for any reason, for a period of thirty (30) days after CTW shall have given Licensee notice thereof, is unable or unwilling to or does not cause to be manufactured Products of a quality acceptable to CTW and Muppets; or	
 
 	(iv)	is in breach or default under any of its other obligations, representations, warranties and/or agreements hereunder for a period of thirty (30) days after CTW shall have given Licensee notice of such breach or default;	
then, in any such case, CTW shall, in addition to its other rights, have the right, on notice to Licensee given at any time on or after the initial occurrence of any of the conditions specified in the above four subparagraphs of the Paragraph 3(e), to terminate, effective as of the date provided therefor in said notice, the Term in its entirety or with respect to any one or more Products.
4. a) Licensee warrants that to the extent the Products and/or their associated packaging incorporate any language other than the words SESAME PLACE and the appropriate copyright notice all said language shall be solely in the language of the country of sale or English and that each Product and/or associated packaging thereof and all promotion and advertising thereof shall, except as CTW otherwise requests, bear in legible and irremovable from the following statement, credits and/or other matter:
 
 	(i)	“This SESAME PLACE product was produced for SESAME PLACE, INC. and was developed in cooperation with Children’s Television Workshop,” except that CTW may, by notice to Licensee designate the name of an affiliate and/or of any other entity (plus additional language) to be included in such statement in lieu of or in addition to CTW (with the names of Licensee and CTW—and/or such CTW designee—in such statement to be equal in size, type and prominence of display);	
 
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 	(ii)	if any Product or the associated packaging therefor features Muppet characters, a credit substantially as follows: “Featuring Jim Henson’s Sesame Street Muppets”; and	
 
 	(iii)	all such statements, notices, claims of right, and other matter (including but not limited to appropriate copyright and trademark notices in the name of Muppets) as may be required or desirable to appear thereon under any applicable law, decision, regulation or rule and as CTW advises on notice, to Licensee on or before CTW’s final notice of approval hereunder for the Products involved.	
(b) Licensee shall, in addition, use each Product and its associated packaging and accompanying materials, if any, and all promotional, publicity and advertising material therefor, and cause all the same to be packaged, distributed and sold in full compliance with the provisions of this Agreement and the copyright laws of the United States of America and the Universal Copyright Convention, During the Term and for as long thereafter as Licensee exercises any rights hereunder, Licensee shall also cause the copyright of each copyrightable product and its accompanying materials, if any, including all translations and modifications thereof, to be maintained in the name and (insofar as Licensee is concerned) for the sole benefit of CTW and/or such other person or persons as CTW may from time to time designate (with respect to the Muppet characters, if any, CTW hereby designates Muppets as such other person). Licensee shall further cause the-translator and creator and editor of any translation or modification of or addition to any creative or intellectual matter furnished or created under this Agreement and relating to any Product and any other person who may otherwise have acquired any right or interest therein to acknowledge in writing to CTW that, insofar as said translator, creator, editor and/or other person are concerned and all those from whom they claim and all those claiming through them are concerned, CTW and/or Muppets, as their interests may determine, are for all purposes the sole and exclusive author and proprietor of, and employer for hire and commissioner of all said translators, creators and editors with respect to said translations and modifications and additions and all said rights and interests therein.
(c) Licensee represents and warrants that it has not acquired and shall not acquire (except for the limited rights specifically granted hereunder to it) any right, title or interest in or to any of the Licensed Elements or any other elements that are at any time or times created under this Agreement or used or to be used in SESAME STREET and/or SESAME PLACE and that Licensee’s said limited rights to use the Licensed Elements shall continue only as long as Licensee performs this Agreement without breach or default and that Licensee shall use the Licensed Elements only as expressly permitted under this Agreement. Licensee acknowledges that all the Licensed Elements have acquired a secondary meaning in the mind of the purchasing public. Furthermore, insofar as the law does not prevent Licensee’s agreeing not to do so or so not doing, Licensee agrees that it will not attack the validity of the license and/or rights granted hereunder to it and will not do anything, either by acting or not acting, which might impair, violate or infringe any of the Licensed Elements and will not claim adversely to CTW or anyone
 
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claiming through CTW any right, title or interest in or to any of the Licensed Elements and will not misuse or harm or bring any of the same into disrepute and that it has not, directly or indirectly, registered (or applied for registration of) or used and will not so register (or apply for registration of) or use any item which in CTW’s opinion is the same as or confusingly similar to any of the Licensed Elements or said other elements and will not use any of the same as part of Licensee’s name or the name of any other entity, except as contemplated by the Park Agreement.
(d) Licensee shall promptly notify CTW of all infringements or violations in the Territory of any copyright, trademark, patent or other rights in or to any of the Products that come to Licensee’s attention and shall consult with CTW with respect to how to respond to each such infringement or violation and, except in case of a dispute between CTW and Licensee, shall cooperate with CTW in all litigation relating in any way to this Agreement and all activities in furtherance of this Agreement and with all lawyers, accountants, auditors and others designated by CTW and shall upon request, execute, file and deliver all documentation and proof necessary or convenient for such purpose as well as such complimentary agreement or agreements and other documentation as may be necessary or convenient in connection with copyright and/or trademark matters. If CTW concludes that legal action in the Territory with respect to such or any other infringement or violation should be taken, except in case of legal action between CTW and Licensee, Licensee shall—if so requested by CTW—promptly and diligently join in the prosecution of said action and shall in any event, pay one-half of the costs and expenses incurred in any such action and shall be entitled to receive one-half of all recoveries and awards with respect to said action and CTW shall so pay or receive the other one-half and cooperate with Licensee in reasonable manner in connection With each such action. If CTW advises Licensee that no legal action should be taken, then Licensee shall take no legal action with respect thereto. If CTW advises Licensee that there is no objection to Licensee’s taking of any such legal action, then Licensee shall be free to prosecute such action, bearing all costs and expenses and receiving all awards and recoveries with respect thereto. In any other case not hereinabove provided for each party hereto shall be free to take such steps as it shall determine. In any event CTW shall be free to join in any pending action. All references to CTW in this Paragraph 4 shall, to the extent that any Muppets’ rights are involved, include Muppets.
5. (a) Licensee acknowledges that, in order to assure that the manufacture, appearance, quality, sale and distribution of each Product are consonant with CTW’s (and, if any Muppets’ rights are so involved, with Muppets) names and reputations for quality and with the goodwill associated with them and the Licensed Elements and to ensure the preservation of the copyrights and trademark rights of CTW and Muppets, the following rights are retained by CTW and, where indicated, by Muppets:
 
 	(i)	together with Muppets, the right to approve in advance each Product, including but not limited to each item within a Product class and all Technical Materials used by Licensee in the manufacture and/or production of each Product, at each stage in its development and manufacture;	
 
 	(ii)	together with Muppets, the right to approve in advance all Licensee’s advertising, publicity or promotion concerning any Product—it being agreed by Licensee that there shall be except as approved in advance by CTW in its sole discretion, no advertising, publicity or promotion on television concerning any Product; and	
 
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 	(iii)	the right to approve in advance and thereafter all Licensee’s advertising, publicity and/or promotion concerning the contractual arrangements between Licensee and CTW.	
(b) In exercising their right to grant or withhold any approval, consent or permission under this Agreement, CTW and Muppets may take into consideration such pedagogic, safety, aesethetic and other considerations as they in their sole discretion determine.
(c) Licensee agrees not to proceed with the manufacture of any product from any step at which CTW’s and/or Muppets’ approval was required if such required approval was not given and not to release, market, distribute or sell any Product (or any advertising, publicity or promotion related thereto) without CTW’s and, where applicable Muppets’, prior approval and to forward at Licensee’s expense to CTW at its New York City address hereunder all items as to which CTW and/or Muppets have rights of approval hereunder, for the purpose of facilitating such approval. Failure by CTW and/or Muppets at any point to grant approval shall not result in any liability on their part to Licensee or others on account of such failure.
(d) CTW and Muppets will notify Licensee of their approval or disapproval of any submission within two (2) weeks after their receipt of such submission except that any submission not approved within such two-week period shall be deemed disapproved.
(e) Licensee shall bear all costs and have the sole responsibility and obligation for all development, manufacturing, packaging, advertising, warehousing, distributing, selling, shipping, billing, collecting, and the like with respect to each Product and for compliance with all laws, decisions, rules and regulations of all bodies and agencies thereof having jurisdiction; and CTW and Muppets shall have no liability, responsibility and/or obligation in connection therewith.
6. Licensee shall deliver to CTW at CTW’s offices in New York City at no cost to CTW promptly upon their first being offered for sale hereunder twenty-four (24) units of each model of each Product (and Licensee shall similarly deliver to Muppets at Muppets’ offices in New York City at no cost to Muppets at the same time twelve (12) units of each model of each Product). In addition, CTW shall have the right to select, from time to time, without any payment therefor to Licensee, for quality control purposes (it being agreed that CTW shall have reasonable access to Licensee’s manufacturing facilities to audit such quality control), such reasonable number not less than ten (10) of each model of each Product produced hereunder by Licensee.
7. Licensee specifically represents, warrants and agrees that:
(a) Licensee is and shall remain free to enter into and fully perform this Agreement in all respects and shall develop, manufacture, produce, distribute and sell Products only as expressly permitted under this Agreement and, without limitation to any other rights, and recognizing that CTW and Muppets would suffer irreparable harm if product items were developed, manufactured, produced, distributed and/or sold except as herein expressly permitted, Licensee agrees that CTW and/or Muppets shall be entitled to injunctive relief to prevent Licensee from otherwise so developing, manufacturing, producing, distributing and/or selling Products;
 
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(b) Each unit of each Product manufactured, distributed or sold hereunder shall be, in all respects, safe and fit for use by the persons for whom such Product is intended to be used and free from all defects in manufacturing, and workmanship and shall not violate, infringe upon or breach in any way any rights whatsoever of others and, if Licensee at any time or times learns of any defect in or breach of warranty with respect to any such unit, Licensee shall promptly notify CTW and Muppets thereof and take all appropriate measures to remedy such defect as well as to eliminate the same in all future units of the Products;
(c) Licensee shall maintain in full force and effect reasonably adequate product liability insurance specifically covering all Products sold and/or distributed hereunder by Licensee as well as any liability on the part of Licensee, Muppets (which shall be included as an insured in such insurance) and/or CTW with respect thereto and having appropriate limits, which shall be with respect to each year, at least $1,000,000 for each occurrence and at least $3,000,000 in the aggregate;
(d) Licensee shall not, during the Term or thereafter, without CTW’s prior consent, manufacture, distribute and/or sell any items that are the same as or that are based upon or are variations of or that utilize either any of the Licensed Elements or any Product newly created hereunder and stemming in whole or in part from any idea or suggestion given by CTW in writing;
(e) Licensee shall not manufacture, distribute and/or sell any Product or Products outside the Territory or knowingly’ distribute and/or sell any Product or Products for resale o and/or redistribution outside the Territory;
(f) Licensee shall use its best efforts to register in all appropriate categories, classes and/or classifications in the Territory at the earliest possible date and in the name and for the benefit of CTW (and, with respect to Muppets’ names-and marks, in the name and for the benefit of Muppets) but at-Licensee’s expense all trade and service names and marks which Licensee creates and uses on any Product (other than-those originally, presently registered in the name of CTW, Muppets or Licensee) used hereunder by Licensee that are related to any product or products and shall keep CTW currently advised as to the status of each such registration (including the application therefor); it being agreed that CTW and/or Muppets shall have the right at its and/or their election, to take over and process directly any such registration and/or application for the same undertaken by Licensee as well as to register and/or apply for registration before or during the Term of all or any of the foregoing (in lieu of Licensee’s so registering and/or applying for registration of them) and that, in each case in which CTW and/or Muppets elects, Licensee will pay for all out-of-pocket costs and expenses at any time actually incurred by Muppets and/or CTW in conducting trade or service name or mark searches and/or in seeking to effect trade or service name or mark registrations or registration applications in support of the license granted hereunder;
 
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(g) As long as it has any rights under this Agreement, Licensee shall not discriminate against any employee or applicant for employment because of race, creed, color, religion, sex, age, national origin, or because he or she is a disabled veteran or a veteran of the Vietnam era, or, unless relevant to the duties to be performed, present or past physical or mental handicaps and shall take affirmative action (which shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship), to ensure that applicants are employed, and that employees are treated during employment, without regard to race, creed, color, religion, sex, age, national origin, veteran status or, unless relevant to the duties to be performed, present or past physical or mental handicaps or disabilities, and shall post in conspicuous places, available to employees and, applicants for employment, notices setting forth these non-discrimination provisions and shall, in all solicitations or advertisements for employees placed by or on behalf of Licensee, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, religion, sex, age, national origin, veteran status or, unless relevant to the duties to be performed, present or past physical or mental handicaps or disabilities, or that Licensee is an Equal opportunity Employer and shall comply with all applicable federal and other rules and regulations dealing with equal employment opportunity to the same extent as if Licensee were hereby executing an agreement with the Federal Government.
 
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8. As used in this Paragraph 8, “material” shall include all Technical Materials referred to in Paragraph 3(c)(i) hereof, as well as all materials referred to in Paragraph 5(a)(ii) hereof, that are contained in, or a part of, or used in the manufacture and/or production of, any item developed hereunder (whether or not it becomes a Product) which includes or embodies any of the Licensed Elements hereunder. All said material shall at all times belong entirely to CTW and may be used, consistent with the rights granted to Licensee hereunder, during the Term hereof or thereafter by CTW as it in its sole discretion shall determine. Licensee agrees that any agreements entered into by Licensee with others relating to this Agreement or to the preparation of material related to this Agreement shall contain such clauses as are in CTW’s opinion, necessary or desirable to protect CTW’s rights as set forth in this Agreement.
9. Licensee and CTW shall at all times indemnify and hold harmless the other (it being agreed that CTW as indemnitee hereunder includes Muppets) from and against any and all claims, damages, and liabilities and reasonable costs and expenses (including but not limited to lawyer fees)—to the extent that any or all such are within the scope of the indemnitor’s indemnity hereunder and are reduced to a final adverse judgment or are settled with the indemnitor’s prior consent—growing out of or based on or in connection with the performance of this Agreement by the indemnitor or any breach or default by the indemnitor of its agreements, covenants, representations, obligations or warranties herein; provided, however, that the indemnitee shall give the indemnitor prompt-notice of each and every claim and litigation to which this indemnity applies and cooperate fully in the defense of all such claims and litigation and may, at its cost and expense, participate in the defense thereof.
10. CTW represents and warrants that it is and shall remain free to enter into and fully perform this Agreement in all respects including the right to grant Licensee the license herein granted it.
11. All licenses and rights granted herein to Licensee shill be strictly construed and all licenses and rights not expressly granted hereunder to Licensee are, insofar as Licensee and those claiming through it are concerned, specifically reserved and retained by CTW and/or Muppets without any limitation or restriction and with full right of user.
12. All advices, approvals, certificates, consents, designations, disapprovals, notices, reports, requests, statements and other communication required or permitted to be given under this Agreement shall (except as otherwise specifically provided therein) be in writing and, if delivered personally or sent by prepaid telegram, cable or te1ex or by registered or certified mail with postage prepaid, as follows (or to such other address as either party shall designate by notice to the other in accordance herewith), be deemed to have been duly given as of the date of such delivery or sending:
If to CTW, at:
Children’s Television Workshop
One Lincoln Plaza
New York, New York 10023
Attention: President, Products Group
 
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with a copy thereof also going to CTW at its present address hereunder to the attention of: General Counsel and, to the extent that any such communication relates to the Muppet characters or the Interest of Muppets, to:
Muppets, Inc.
117 East 69th Street
New York, New York 10021
Attention: President
with a copy thereof also going to Muppets at its address hereunder to the attention of: General Counsel.
If to Licensee, at its then current address hereunder.
13. This Agreement sets forth the entire agreement of the parties hereto with respect to the subject matter hereof; cannot be changed or terminated orally; shall be governed in all respects by the law of the State of New York applicable to contracts fully executed and performed therein; shall be binding upon, and inure to the benefit of, CTW’s successors and assigns (including but not limited to Muppets if it is an assignee of all or any portion of any rights hereunder or of any payments hereunder to CTW)—it is being agreed that, except for the right to assign to a wholly-owned subsidiary of Anheuser-Busch Companies, Inc., Busch Entertainment Corporation or SPI, Inc., as permitted by the Park Agreement, Licensee does not and shall not have the right to assign this Agreement in whole or in part and/or any of its rights hereunder to anyone except with CTW’s prior consent and that, except if CTW does consent to any such assignment, Licensee shall nevertheless be, and remain fully liable hereunder in all respects and that no such assignee shall acquire greater rights with respect to this Agreement than Licensee and shall, including specifically the grant of rights herein relating to Muppet characters and materials, if any, be of no force or effect unless and until approved in writing below by Muppets. No waiver by Licensee or CTW of any of the provisions of this Agreement or of any breach or default hereunder shall be or be deemed to be a further or continuing waiver of the same or of any other provision or breach thereof or default hereunder. All remedies, rights, obligators and agreements contained herein or available at law or otherwise are cumulative. No signatory hereto shall by virtue of this Agreement or any action taken with respect thereto be or be deemed to be an employee, employer, or partner of, or joint venturer with, any other signatory hereto in any manner whatsoever except as specifically authorized in this agreement or otherwise in writing.
14. Nothing contained or provided for herein is intended to, or shall, affect in any way or to any extent, a modification, alteration or amendment of the Park Agreement. Where there exists in this Agreement any difference from, or inconsistency with, the Park Agreement, the provisions of the Park Agreement shall prevail.
 
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SPI, INC.	 		 	CHILDREN’S TELEVISION WORKSHOP	
					
By	 	 	 		 	By	 	 	
				
APPROVED:	 		 		 		
				
MUPPETS, INC.	 		 		 		

		
By	 	 	
 
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EXHIBIT I
Attached To and Forming Part of That Certain Agreement Made and Dated as of the 1st day of April, 1980 by and between CHILDREN’S TELEVISION WORKSHOP and SPI, INC.
Item A. The Product classes which Licensee is licensed to develop, manufacture, produce, distribute and sell pursuant to this Agreement consist solely of the following:
T-Shirts, Sweatshirts, Socks, Hats, Caps, Visors, Patches, Flags, Pennants, Tote bags, Duffle bags, Collapsible cups, plastic mugs, Buttons, Balloons, Flashlights, Magnifying glass, Pencil case, Pens, Rubber stamps and Wristbands each embodying such of the Licensed Elements as shall be mutually agreed upon.
Item B. The initial period of the Term shall, subject to the provisions of this Agreement, commence as of the date hereof and unless earlier terminated as herein provided, terminate on Park-by-Park basis for the same term provided in the Park “Agreement.”

 

EXHIBIT D
None

Exhibit 10.27

	  	sesameworkshopTM	  	One Lincoln Plaza New York NY 10023	
	  		  	tel 212 595 3456  www.sesameworkshop.org	
August 24, 2006
Busch Entertainment Corporation
231 South Bemiston Avenue, Suite 600
Clayton, Missouri 63105-1914
Re: Sesame Place Agreement
Ladies and Gentlemen:
Reference is made to the agreement (the “1983 Agreement”), amended and restated as of April 1, 1983, between SPI, Inc. (predecessor to Busch Entertainment Corporation) (“BEC”) and Children’s Television Workshop (former name of Sesame Workshop) (“Sesame”), as amended. Capitalized terms used herein and not otherwise defined shall have the meaning set forth in the 1983 Agreement.
The first sentence of Section 7 of is hereby deleted in its entirety and replaced with the following:
You shall have no obligation to use the CTW Elements in any Park and may remove them from any Park at any time, provided, however, if you shall decide to remove all CTW Elements or all Muppet Elements from any Park where such elements are in use, you shall first give us at least two (2) years’ prior written notice, and this Agreement shall terminate as of the termination date specified in such written notice.
The Term of the 1983 Agreement is hereby extended through December 31, 2021.

Except as specifically provided herein the 1983 Agreement shall remain in full force and affect and is hereby ratified and confirmed in all respects.
If this amendment meets with your understanding, please sign below in the space provided.

Very truly yours,	
	
SESAME WORKSHOP	
		
By:	 	/s/ Gary Knell	
	 	Gary Knell	
	 	President and Chief Executive Officer	
	
Acknowledged and agreed	
	
BUSCH ENTERTAINMENT CORPORATION	
		
By:	 	/s/ Keith Kasen	
	 	Keith Kasen	
	 	Chairman of the Board and President	

Exhibit 10.28
Note: Material has been omitted from this License Agreement pursuant to a request for confidential treatment and such material has been filed separately with the Securities and Exchange Commission. Material omitted has been replaced with a bracketed dagger (“[†]”).
LICENSE AGREEMENT
SESAME STREET
This agreement (“Agreement”) is made by and between SESAME WORKSHOP and BUSCH ENTERTAINMENT CORPORATION (“Licensee”) and shall be effective when signed by both parties. Sesame Workshop is a not-for-profit organization incorporated under the New York State Education Law with its principal office located at One Lincoln Plaza, New York, New York 10023. Licensee is a Delaware corporation with its principal office located at 231 South Bemiston Avenue, Suite 600, Clayton, Missouri 63105-1914. In consideration for the mutual obligations described below, Sesame Workshop and Licensee hereby agree to the following.
Sesame Workshop is the creator and producer of the television series Sesame Street in the United States (“Sesame Street”). In pursuance of its educational purposes, Sesame Workshop desires to grant Licensee rights to the “Licensed Elements” (as hereafter defined) and Licensee desires to utilize such rights as set forth in this Agreement.
I. GRANT OF RIGHTS
1.01— License . Subject to all the terms and conditions of this Agreement, Sesame Workshop hereby grants Licensee the following nontransferable rights during the Term with respect to the Licensed Elements, in their final approved form, for use at the following theme parks owned by Licensee (or a subsidiary or affiliated entity of Licensee): (i) SeaWorld San Diego, located in San Diego, California, (ii) SeaWorld San Antonio, located in San Antonio, Texas, (iii) Busch Gardens Tampa, located in Tampa Bay, Florida, (iii) Busch Gardens Williamsburg, located in Williamsburg, Virginia, and (v) SeaWorld Orlando, located in Orlando, Florida (each, a “Park” and collectively, the “Parks”):
(a) the right to use the Licensed Elements to design, build (or re-theme), install, and operate a Sesame Street themed attraction within each Park, as determined by Licensee but subject to the Minimum Attraction Criteria and in accordance with the terms of this Agreement (“Attraction”). The Minimum Attraction Criteria is defined in Paragraph 2 of this Agreement.
(b) the right to perform within each Park (any Live Presentations outside the Park require the prior written approval of Sesame Workshop) (i) character appearances using the Sesame Street Muppets as costumed characters and (ii) shows with the Sesame Street Muppets as costumed characters, and (iii) to use the Licensed Elements in association with such character appearances and shows (collectively, “Live Presentations”). Examples of the foregoing include parades, character appearances at Park events (e.g., character dining opportunities, photo opportunities), and such shows that incorporate the Licensed Elements as approved by Sesame Workshop including shows that are approved on a year-by-year basis (subject to any mutually agreed upon provisions that apply to particular shows).
(c) the right to make additional uses of the Licensed Elements within the Parks as mutually agreed; and
 
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(d) the right to use the Licensed Elements in all forms of marketing, advertising and promotions for each of the Parks, subject to Sesame Workshop’s prior written approval of the particular use, such approval not to be unreasonably withheld or delayed.
1.02— Licensed Products . Subject to all the terms and conditions of this Agreement and provided that Sesame Workshop has given its prior written approval of the specific product items (including giveaways if any) in accordance with the terms of paragraph 6, Sesame Workshop hereby grants Licensee the following nontransferable rights during the Term:
(a) the right to (i) develop and manufacture or have developed and manufactured new products that utilize the Licensed Elements (“Developed Licensed Products”), or (ii) purchase products that utilize the Licensed Elements from third parties (“Acquired Licensed Products”) (collectively, these products — which include their associated packaging—will be referred to as “Licensed Products”);
(b) the right to market, promote, advertise, distribute and sell the Licensed Products within each of the Parks, at other theme parks owned or operated by Licensee (or a subsidiary or affiliated entity thereof) within the Territory (“Other Parks”), and through online stores on the Parks’ and Other Parks’ websites, if any (collectively, the “Authorized Sales Areas”); and
(c) the right to contract with third party vendors (“Licensee’s Vendors”) to promote, distribute and sell within the Authorized Sales Areas the Licensed Products, subject to Sesame Workshop’s prior written approval of Licensee’s Vendors and the specific rights to be granted to Licensee’s Vendors, such approval not to be unreasonably withheld or delayed.
The parties agree that any Developed Licensed Products and/or any proprietary technology developed at the cost of Licensee in connection with Developed Licensed Products may not be used by any third party without Licensee’s prior written approval in each instance, not to be unreasonably withheld or delayed. Licensee acknowledges that third parties may distribute products that are similar to such Developed Licensed Products so long as such products are independently developed by or on behalf of such third party.
Except as specified herein, Licensee shall not have any rights to use the Licensed Elements for premiums or promotional items unless Sesame Workshop gives its prior written approval, such approval not to be unreasonably withheld or delayed.
1.03— Licensed Elements. “Licensed Elements” means the representations (whether in two or three dimensional form and including animated and mechanical representations) and names of the Sesame Street Muppets and other characters listed in Exhibit A (Kermit the Frog is not included), the name and logo of the Attraction within each Park (once the parties agree upon such name and logo), the Sesame Place name and logo as agreed by the parties, and the Sesame Workshop name and logo to the extent approved by Sesame Workshop for use, [†], in packaging and marketing materials. “Licensed Elements” also includes the following: (i) any new Sesame Street characters shown on Sesame Street and owned in whole or in part by Sesame Workshop; (ii) any New Show Characters (as defined in subparagraph 1.12) with respect to which Licensee has exercised its right of first negotiation as provided in subparagraph 1.12; (iii) any characters featured on the television series “Electric
 
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Company” which was originally broadcast on television from 1971 to 1977; and (iv) any additional Sesame Street intellectual property as may be licensed to Licensee from time to time hereunder.
1.04— Production of Live Presentations. (a) Licensee, at its expense, shall be responsible for producing, staffing, maintaining, and presenting the Live Presentations (in accordance with the terms of this Agreement including Sesame Workshop’s approval rights as set forth in paragraph 6 hereof) and shall be responsible for all associated costs including all production costs (and any overages) and all costs (where applicable) for hiring the producer, director, writers, performers (including Muppet performers) and other talent, and clearing all necessary third party rights (e.g., unions, music publishers, public performance rights, etc.).
(b) Sesame Workshop will be informed in the early pre-production stages of any Live Presentation and be given the opportunity to provide its feedback on the applicable production team and show concept. Sesame Workshop will be forwarded production updates and script drafts during the pre-production and production processes of the Live Presentation. Sesame Workshop will have prior written approval over each Live Presentation before it is opened to the public, such approval not to be unreasonably withheld or delayed. Such approval rights shall include approval over all creative elements including (if applicable) the treatment, storyboards, script (first draft, second draft, final draft, polish), educational content, set designs, music and costumes. Such approval rights also include approval over all Sesame Street Muppet talent, including voice talent, for the Live Presentations. Sesame Workshop’s approval rights also extend to the production quality, artistic values, technical workmanship and overall content and quality of the Live Presentation. Sesame Workshop and Licensee will mutually agree on the timeline and the particular items for delivery to Sesame Workshop for its review and approval. Any on-site visits deemed necessary by Sesame Workshop in connection with its review and approval of any and all Live Presentations shall be at Sesame Workshop’s sole cost and expense.
(c) The parties acknowledge that VEE Corporation is Sesame Workshop’s preferred producer of Sesame Street Live Presentations and provider of costumes incorporating the Licensed Elements. The parties further acknowledge that Licensee is not obligated in any way under this Agreement to engage VEE Corporation as the producer of any Live Presentation or provider of any costumes.
(d) The parties agree that any shows developed hereunder at the cost of Licensee may not be used by any third party without Licensee’s prior written approval in each instance, not to be unreasonably withheld or delayed, and for remuneration reasonably requested by Licensee.
1.05— Music. Other than with respect to the Film described in subparagraph 2.03 hereof, in regard to music to be used in the Parks that utilize the Licensed Elements (whether owned or controlled by Sesame Workshop or a third party) (“Music”), Licensee shall be responsible for obtaining all such Music, clearing all necessary third party rights, and paying all associated third party costs (including copyright fees, music publishing fees, public performance fees, etc.) for such use including any Music used in the Live Presentations (as described in subparagraph 1.04), on loudspeakers or as background in any areas of any of the Parks.
 
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1.06— Video . Other than with respect to the Film described in subparagraph 2.03 hereof, in regard to video to be used in the Parks that utilize the Licensed Elements (whether owned or controlled by Sesame Workshop or a third party) (“Video”), Licensee shall be responsible for obtaining all such Video and clearing all necessary third party rights, and paying all associated third party costs including any payments due to writers, directors, musicians, and actors appearing in such Video. Licensee’s obligations with respect to any Music included in such Video are covered in subparagraph 1.05.
1.07— Artwork . With respect to artwork (including drawings, sketches, graphics, photographs, and prints) bearing the Licensed Elements (“Artwork”) that Licensee will include in the Licensed Products or Attractions or in marketing, advertising and promotional materials (“Marketing Materials”), Sesame Workshop will either furnish the Artwork to Licensee or authorize Licensee to create the Artwork. With respect to Artwork furnished by Sesame Workshop, Licensee shall pay Sesame Workshop’s costs as mutually agreed, including costs to create the Artwork and any payments to third parties (e.g., reuse payments to an artist for preexisting Artwork). In some instances, upon written request by Sesame Workshop, Licensee will make such payments directly to the third party instead of to Sesame Workshop. With respect to Artwork that Licensee will create, Licensee will create the Artwork by itself or subject to Sesame Workshop’s written approval (not to be unreasonably withheld or delayed), retain a third party to create it. Licensee shall be responsible for contracting with the artists and obtaining all necessary third party rights for the use of such Artwork in connection with the Licensed Products, and paying all associated third party costs. Upon request by Sesame Workshop, Licensee will provide to Sesame Workshop (or its designee) duplicates of Artwork created by Licensee for Sesame Workshop’s internal use only unless otherwise agreed in writing by Licensee and Sesame Workshop. Licensee will be reimbursed for all duplication costs.
1.08— Creative Materials. With respect to all work product associated with the Live Presentations such as scripts, treatments, drafts, music, lyrics, costume, designs, characters, etc. (“Live Presentation Materials”), Music, Artwork, and any other materials that the parties agree may be used by Licensee under this Agreement, Licensee shall be responsible for entering into agreements with the appropriate third parties on terms that are consistent with the terms of this Agreement, including Sesame Workshop’s ownership rights under subparagraph 8.01, and paying all associated third party costs. Licensee will provide Sesame Workshop with a copy of such agreements before they are signed as well as an executed copy after they are signed. Licensee may not use such Live Presentation Materials, Music, Artwork and such other materials in any way other than as expressly permitted under this Agreement. Licensee shall maintain all costumes and show props used by Licensee that are provided by Sesame Workshop in good condition, ordinary wear and tear excepted, and deliver them to Sesame Workshop, at no charge to Sesame Workshop, promptly after the termination of this Agreement.
1.09— Maintenance and Improvement. Throughout the Term of this Agreement, Licensee shall maintain the Attractions at the Parks, including the Live Presentations and all uses of the Licensed Elements, as first-class attractions for families. The parties agree to discuss in good faith when improvements to the Attractions may be necessary to maintain consistency with changes in the Sesame Street brand and television series; provided, however, Licensee shall determine in its sole discretion whether to make any improvements to any of the Attractions.
 
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1.10—[†].
1.11— Other Attractions. During the Term, provided Licensee is not in breach of its obligations hereunder beyond any applicable cure period, Sesame Workshop shall grant to Licensee the right to create other Sesame Street themed attractions in Licensee owned or controlled theme parks other than the Parks in the Territory, and to create attractions in the Parks and other Licensee owned or controlled theme parks utilizing the Licensed Elements. In the event Licensee determines to create another attraction in another Licensee owned or controlled theme park other than the Parks or Sesame Place in Langhorne, Pennsylvania (“Sesame Place”), such attraction will be included within the meaning of Attraction hereunder and all of the terms of this Agreement shall apply to such attraction; provided, however, the parties shall negotiate the minimum attraction criteria and the amount of the Annual License Fee to be applicable to such attraction. In the event Licensee desires to open and/or operate a theme park based entirely on the Licensed Elements (other than Sesame Place), such matter will be subject to a separate negotiation and agreement between the parties. For the purposes of this Agreement, the wildlife preserve and historic site commonly known as Grant’s Farm located in St. Louis, Missouri shall be deemed to be a theme park controlled by Licensee.
1.12 — Right of First Negotiation. The parties acknowledge that any Sesame Street characters previously, now or hereafter regularly featured on Sesame Street and owned by Sesame Workshop shall be included in the Licensed Elements. Sesame Workshop hereby grants to Licensee a right of first negotiation to utilize as part of the Licensed Elements hereunder characters (“New Show Characters”) from television series other than Sesame Street (“New Show(s)”) that are owned by Sesame Workshop. Sesame Workshop will notify Licensee of the initial broadcast on television of each New Show, and Licensee shall have a period of eighteen (18) months from the date of such initial broadcast to determine whether it desires to utilize the New Show Characters appearing in such New Show as part of the Licensed Elements. In the event Licensee does desire to use such New Characters, the parties shall negotiate in good faith the amount of the licensee fee applicable to such New Show Character(s) to be paid by Licensee hereunder. Sesame Workshop shall not offer the rights to such New Show Characters to any
 
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third party during such eighteen (18) month period, Thereafter, Sesame Workshop shall be free to offer the rights to such New Show Characters to any third party without further obligation to Licensee. Notwithstanding the foregoing, the parties acknowledge that Sesame Workshop may have difficulty securing financing for the production of a New Show if Sesame Workshop cannot grant theme parks to a potential financing partner. In such event, Licensee will consider in good faith waiving its first negotiation rights with respect to such New Show, provided, however, Licensee shall not be obligated to waive its rights. Attached hereto and made a part hereof as Exhibit B is: (i) a list of television series which are already being broadcast as of the date hereof and for which, Licensee shall have a period of eighteen (18) months from the date of this Agreement to exercise its first negotiation rights with respect to the characters on such shows and (ii) a list of television properties to which Licensee’s first negotiation rights shall not apply because such shows were in development prior to the date of this Agreement, provided, however, in the event Sesame Workshop is able to secure theme park rights for such shows, such shows shall be considered New Shows and the characters appearing in such New Shows shall be considered New Show Characters for the purposes of this subparagraph and Licensee shall have a right of first negotiation with respect to such New Show(s) and such New Show Characters as set forth herein.
1.13— Reservation of Rights. Except as stated in subparagraphs 1.02(b) and 5,02 and except for the limited marketing and promotional rights expressly provided in this Agreement, Licensee acknowledges specifically that it shall not have any rights to the Licensed Elements outside of any of the Parks (other than Sesame Place). Except for the rights expressly granted to Licensee under this Agreement or specifically restricted under this Agreement, Sesame Workshop reserves all rights not granted to Licensee or specifically restricted hereunder and shall be free to exercise such rights at any time without any obligation to Licensee.
2. LICENSEE COMMITMENTS.
2.01— Minimum Attraction Criteria . Licensee agrees to design, build (or re-theme), install and operate Attractions in each of the San Diego Park, San Antonio Park, Williamsburg Park and Tampa Bay Park. Licensee shall determine the scope of each Attraction, but each must meet the Minimum Attraction Criteria set forth herein unless otherwise mutually agreed to in writing. The Minimum Attraction Criteria shall require Licensee to (i) create each Attraction with a capacity to provide a minimum of at least forty-five to sixty minutes of entertainment and activity for the Parks’ guests; provided, however, only one component from Level 3 shall contribute to the required total forty-five to sixty minutes of entertainment and activity, and (ii) select for each Park at least one component from each of the following levels with a minimum of six total components.
 
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Level 1	  	Level 2	  	Level 3 	
Multiple Flat Rides
Discovery (Education) Zone
Dark Ride
Kid-simulator Ride	  	Interactive Dry Play Area Interactive Water Play Area Parade
Tidal Touch Pools
Petting Zoo
Bird Feeding Aviary	  	Live Character Shows Puppet Show
4-D Film
Themed Aquariums Character Dining	
Licensee hereby agrees to open an Attraction at each of the San Diego Park, San Antonio Park, Tampa Bay Park and Williamsburg Park, with one Attraction to open per year, beginning in 2008 and ending in 2011, in the order determined by Licensee. All Attractions must be opened by no later than December 31, 2011.
2.02— Retail Space. Licensee hereby agrees that each Park will contain dedicated space (each space, a “Retail Space”) adjacent to its Attraction where it will sell Licensed Products. Licensee shall be permitted to sell other products (“Other Products”) in the Retail Space, provided there are no Licensed Products in the same category as the Other Products, the Other Products are not branded with third party characters which are competitive with the Sesame Street characters (excluding all merchandise branded with Licensee’s intellectual property, including but not limited to, Shamu the Whale), and the Licensed Products constitute at least fifty percent (50%) of all products sold in the Retail Space. The parties shall discuss in good faith the location and size of each Retail Space; provided, however, the determination of the location and size of each Retail Space shall be in Licensee’s sole discretion.
2.03— Film . Universal Studios Recreation Group and Universal Studios Japan (“USJ”) own the rights to the Sesame Street film known as Sesame Street 4D Movie Magic (the “Film”). Sesame Workshop has obtained exhibition rights to the Film from USJ. Sesame Workshop hereby licenses to Licensee the rights to exhibit the Film at the Parks (including Sesame Place) and any other theme parks owned or controlled by Licensee added hereunder pursuant to the terms of subparagraph 1.11 in accordance with the following terms:
(a) Any Park (including Sesame Place) choosing to exhibit the Film shall pay a fee in the amount of [†] per year (the “Annual Film Royalty”) for a minimum of three (3) years, payable no later than December 31 of each calendar year beginning with the first calendar year such Park chooses to exhibit the Film. At the end of such three (3) year period, each such Park shall have the right (but not the obligation) to continue to exhibit the Film for subsequent periods of three (3) years each and payment of the Annual Film Royalty.
(b) Regardless of the number of Parks that choose to exhibit the Film during calendar year 2008, Licensee shall pay a minimum fee (the “2008 Minimum Annual Film Royalty”) to Sesame Workshop of [†], payable on or before December 31, 2008. Regardless of the number of Parks that choose to exhibit the Film during the time period beginning on January 1, 2009 and ending on
 
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December 31, 2013, Licensee shall pay a minimum annual fee (the “Minimum Annual Film Royalty”) to USJ of [†] per year, payable on or before December 31 of each calendar year during such period. In the event Licensee makes either the 2008 Minimum Annual Film Royalty payment in 2008 or a Minimum Annual Film Royalty payment in any year which exceeds the amount of any Annual Film Royalty payment(s) owed by Licensee for a Park that has chosen to exhibit the Film, such overpayment shall be credited against any future Annual Film Royalty payments owed by Licensee through December 31, 2013.
(c) The total fee payable by Licensee to Sesame Workshop for the period beginning on January 1 , 2008 and ending on December 31, 2013, regardless of the number of Parks that choose to exhibit the Film and the number of years such Park chooses to exhibit the Film during such period, shall be at least [†] (the “Minimum Total Film Royalty”), payable no later than December 31, 2013. Such Minimum Total Film Royalty shall be due and payable regardless of whether: (i) this Agreement has been terminated for any reason, or (ii) Licensee has or may have any claims, counterclaims, offsets or defenses against Sesame Workshop.
(d) The parties acknowledge that Licensee may satisfy the Minimum Annual Film Royalty and the Minimum Total Film Royalty requirements from any number of Parks, including Sesame Place.
(e) Sesame Workshop shall obtain all third party clearances and approvals necessary in connection with Licensee’s exhibition of the Film at the Parks (including Sesame Place) during the Term as permitted hereunder and shall furnish copies thereof to Licensee upon request. Sesame Workshop shall be responsible for paying for all such third party and music clearance and approval costs and Licensee shall reimburse Sesame Workshop for such costs up to [†]. Sesame Workshop will provide (or cause USJ to provide) Licensee with all materials necessary for exhibition of the Film, including but not limited to, any masters, prints, publicity materials and any other materials. Licensee shall be responsible for paying all actual, direct costs incurred by Sesame Workshop or USJ, as the case may be, in connection with delivering the Film materials to Licensee and the Parks. Licensee shall, at its sole cost and expense, be responsible for duplicating the Film materials; however, Licensee may request Sesame Workshop duplicate the Film materials provided such duplication is at Licensee’s sole cost and expense. Licensee shall return all such Film materials to Sesame Workshop upon the expiration of the exhibition rights herein granted, which, provided Licensee is not in breach of its obligations under this subparagraph 2.03, shall be as of the end date of the Term.
(f) Under no circumstances will Licensee claim that Licensee was in any way involved in the conception, design or production of the Film. Without Sesame Workshop’s prior written approval, Licensee shall not, nor shall it permit any Park to, (i) base any Developed Licensed Product on the Film, (ii) edit, re-record, add, or delete any material, dialogue or music to or from the Film, including but not limited to, delete any credit or copyright notice in connection with the Film, or (iii) change the name or logo of the Film,
(g) The parties agree to execute such documents as may be necessary in order to effectuate the license of the exhibition rights to the Film hereunder, provided the terms of such documents are consistent with this subparagraph 2.03 and any other terms of such documents are acceptable to Licensee in its sole discretion.
 
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2.04— Orlando Park Commitment. With respect to Licensee’s theme park in Orlando, Florida known as SeaWorld Orlando (the “Orlando Park”), Sesame Workshop hereby grants to Licensee the rights to utilize the Licensed Elements in connection with a minimum of one (1) and a maximum of three (3) Live Presentations within the Orlando Park per year, and in connection with the marketing, advertising and promotions of the Live Presentations at the Orlando Park as provided herein. Licensee hereby agrees that it will pay [†] per year (the “Orlando Park Live Presentation Fee”) for a minimum of three (3) years payable on January 1 of each calendar year starting with January 1, 2007. Licensee and Sesame Workshop agree that Licensee may utilize the Licensed Elements in connection with more than three (3) Live Presentations at the Orlando Park, at Licensee’s discretion; provided, however, Licensee shall pay an additional fee in the amount of [†] (the “Orlando Park Additional Live Presentation Fee”) for each additional Live Presentation Licensee conducts at the Orlando Park over three (3) per year utilizing the Licensed Elements. Notwithstanding anything to the contrary in this Agreement, each Live Presentation show engagement shall be for such period of time as Licensee shall determine, not to exceed twelve (12) weeks, and Licensee shall not be required to pay the Orlando Park Additional Live Presentation Fee for each presentation of a show that is part of a show engagement nor shall more than one presentation of a particular show that is part of a show engagement count towards Licensee’s minimum obligation under this subparagraph 2.04. In the event Licensee opens an Attraction at the Orlando Park, Licensee shall pay the Annual License Fee indicated in subparagraph 4.01(a) and shall no longer be obligated to pay the Orlando Park Live Presentation Fee or the Orlando Park Additional Live Presentation Fee.
2.05— Ratings Data. At least four times per year, simultaneous with its delivery of royalty statements as described in subparagraph 4.03(a) below, Licensee shall deliver to Sesame Workshop such guest ratings surveys, guest penetration data and other applicable information it has compiled with respect to the Attractions as compared with all non-Sesame Street elements in each of the Parks (“Ratings Data”). Notwithstanding the foregoing, Sesame Workshop acknowledges that not all of the Parks operate on a year-round basis and therefore agrees that for such Parks, Licensee shall not be obligated to deliver Ratings Data for such Attractions in such Parks for the calendar quarters such Parks are not open.
2.06— Liquidated Damages. In the event Licensee fails to open one Attraction per Park (except for the Orlando Park) per year beginning in 2008 in accordance with the Minimum Attraction Criteria, then Licensee shall (i) pay to Sesame Workshop an amount equal to the lowest Annual License Fee attributable to the Parks that have not opened an Attraction for each year Licensee fails to open an Attraction, up to a maximum of five (5) years; and (ii) lose the first negotiation rights as set forth in subparagraph 1.12, All liquidated damages payments shall be due and payable as of January 1 of the year following the year in which Licensee failed to open an Attraction. [†]. The foregoing payment for any such Attraction default shall constitute a liquidated damages payment (and not a penalty) and the parties acknowledge and agree that such damages would be impossible or impractical to determine and that such liquidated damages payment, [†], shall constitute Sesame Workshop’s sole and exclusive remedies in the event of such Attraction default.
 
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3. TERM . TERRITORY. TERMINATION.
3.01— Term . The “Term” shall begin on August 24, 2006 and end on December 31, 2021 unless sooner terminated pursuant to the provisions of this Agreement.
3.02— Territory. The “Territory” means the United States, its territories and possessions.
3.03— Termination. Beginning on the date that is three (3) years after the date of the opening of an Attraction in each Park, Licensee shall have the right to close or re-theme such Attraction upon one hundred and eighty (180) days prior written notice to Sesame Workshop based on poor guest penetration and attraction ratings surveys where the Attraction’s cumulative ratings from Licensee’s guests for the preceding two (2) years average in the bottom quartile. In such event Licensee may request that Sesame Workshop approve whether Licensee can maintain its use of the Licensed Elements and/or the Licensed Products at such Park despite its closing of the Attraction. In the event Licensee does close an Attraction and Sesame Workshop elects not to allow Licensee to continue utilizing the Licensed Elements and distributing the Licensed Products at the Park, then Licensee shall no longer be obligated to pay the Annual License Fee with regard to the applicable Park and i) Licensee shall lose its first negotiation lights set forth in subparagraph 1.12 with respect to such Park; and (ii) [†]. In the event Licensee does close an Attraction and Sesame Workshop elects to allow Licensee to continue utilizing the Licensed Elements and distributing the Licensed Products at the Park, then (i) the parties will negotiate an annual license fee for such Park; (ii) Licensee shall lose its first negotiation rights set forth in subparagraph 1.12 with respect to such Park; [†]. In the event Licensee closes an Attraction pursuant to the terms of this subparagraph 3.03, the parties agree that the liquidated damages provision of subparagraph 2.06 will not apply.
4. FINANCIALS
4.01— Payments. In consideration for the rights granted to Licensee under this Agreement, Licensee shall pay Sesame Workshop the annual license fees and royalties as described below.
 
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(a) Annual License Fees. Commencing on January 1 of the calendar year of an Attraction’s scheduled opening at the Park listed below and continuing throughout each year of the Term, Licensee guarantees that it will pay Sesame Workshop the following Annual License Fees per Park:

Park	  	Amount (each calendar year)	
Orlando	  	[†]*	
San Diego	  	[†]	
San Antonio	  	[†]	
Williamsburg	  	[†]	
Tampa Bay	  	[†]	
 
*	The Annual License Fee for the Orlando Park only becomes applicable in the event Licensee opens an Attraction in the Orlando Park. If Licensee does not open an Attraction in the Orlando Park, the fees set forth in subparagraph 2.04 apply.	
(b) Royalties. In addition to the Annual License Fees payable to Sesame Workshop hereunder, during each calendar year of the Term, Licensee will pay Sesame Workshop [†] of Licensee’s Gross Receipts earned in connection with sales of the Licensed Products, all food and beverage items utilizing the Licensed Elements, and any events utilizing the Licensed Elements including but not limited to any Live Presentations for which a separate fee other than the general admission fee to the Park is charged. As used herein, “Gross Receipts” means all receipts in connection with the foregoing, less any sales, use, excise, amusement, or other taxes (excepting any income tax) collected or imposed by any local, state, and/or federal taxing authority, any refund credit or allowance given to any customer, any employee discount, and any amounts paid to any Park independent concessionaires or licensees. Gross Receipts shall not include revenue from an institutional sponsor to the extent such revenue (in the aggregate for each sponsored asset) is less that the capital cost to Licensee for such sponsored asset.
4.02— Royalty Payments. (a) “Accounting Period” means calendar quarters. No later than thirty (30) calendar days after the end of any Accounting Period in which Licensee owes Sesame Workshop royalties, Licensee shall pay Sesame Workshop all such royalties owed. Such payments are in addition to the Annual License Fees described in subparagraph 4.01(a). No royalty payments may be credited against any Annual License Fees.
(b) All payments to Sesame Workshop under this Agreement shall be in U.S. dollars. In connection with payments due to Sesame Workshop under this Agreement, Licensee shall be solely responsible for and shall pay all taxes and withholdings of any kind. However, Sesame Workshop shall be solely responsible for taxes (if any) based on Sesame Workshop’s income. Sesame Workshop represents that it is a nonprofit educational 501(c)(3) organization with charitable, tax-exempt status and therefore exempt from income tax withholding requirements and agrees that it will promptly complete and deliver to BEC all paperwork reasonably requested by BEC (including, but not limited to, California Form 590) in order for BEC to be able to rely on such exemption.
(c) All payments to Sesame Workshop under this Agreement shall be made (i) by check payable to Sesame Workshop and drawn on a bank that is a member of the United States Clearinghouse Association or (ii) by wire transfer in immediately available funds in accordance with wire transfer instructions furnished in writing from time to time during the Term to Licensee or (iii) by such other reasonable method as Sesame Workshop shall advise Licensee in writing.
 
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4.03—(a) No later than thirty (30) calendar days after the end of each Accounting Period during the Term, Licensee shall deliver to Sesame Workshop a complete and accurate royalty statement for each Park with respect to revenues generated for that Park during the applicable Accounting Period, in electronic format as well as paper copies. Licensee shall furnish such royalty statements even if no royalty payments are due for an Accounting Period. Licensee will use the royalty template in Exhibit C as the format for royalty statements.
(b) Each royalty statement shall be substantially in the form set forth as Exhibit C .
(c) Within fifteen (15) calendar days after the end of each month of the Term, Licensee shall furnish to Sesame Workshop a written estimate of its revenues for such month including sales of Licensed Products in both unit and monetary amounts.
(d) Licensee will provide Sesame Workshop with revenue forecasts upon request, but no more than four (4) times per calendar year during the Term.
4.04— Audits . (a) During the Term and for a period of at least thirty-six (36) months thereafter, Licensee shall maintain complete and accurate books and records relating to the financial terms of this Agreement, including computation of Sesame Workshop’s royalties. Sesame Workshop or its designated representative shall have the right, during the Term and for thirty-six (36) months thereafter (but not more frequently than once a year), at Sesame Workshop’s sole cost and expense, to examine and audit such books of account and records related to the financial terms of this Agreement. Such examination shall be made in a reasonable manner by prior appointment with one week’s notice during normal business hours and at the location where such books of account and associated documents are maintained. Licensee shall reasonably cooperate with Sesame Workshop in facilitating such examination.
(b) During the Term and for a period of at least twenty-four (24) months thereafter, Sesame Workshop shall maintain such books and records (collectively, “Records”) as are necessary to substantiate that all invoices and other charges submitted to Licensee for payment hereunder were valid and proper, and no payments have been made, directly or indirectly, by or on behalf of Sesame Workshop to or for the benefit of any employee or agent of Licensee who may reasonably be expected to influence Licensee’s decision to enter into this Agreement, or the amount to be paid by Licensee pursuant hereto. (As used herein, “payment” shall include money, property, services and all other forms of consideration.) Licensee and/or its representatives shall have the right at any time during normal business hours, upon two (2) weeks prior written notice, to examine said Records.
(c) If an audit indicates monies due to Sesame Workshop, then Licensee shall, within thirty (30) days of completion of the audit, pay such deficiency together with interest from the date the deficiency was due and payable until paid at an interest rate of one percent (1%) per month. If the deficiency exceeds ten percent (10%) of the amount paid to Sesame Workshop for the audited Accounting Periods, then Licensee shall also promptly pay for or reimburse Sesame Workshop for all reasonable costs of such examination. If an audit indicates monies due to
 
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Licensee, then Sesame Workshop shall, within thirty (30) days of completion of the audit, pay such overage together with interest from the date the overage was paid at an interest rate of one percent (1%) per month.
(d) Sesame Workshop’s receipt or acceptance of any statement furnished pursuant to this Agreement or of any payment shall not preclude Sesame Workshop from questioning the correctness of such statement or payment up to thirty-six (36) months after receipt of such statement or payment by Sesame Workshop and shall not limit any other rights that Sesame Workshop may have under this Agreement or otherwise. After such thirty-six (36) month period after receipt by Sesame Workshop of such statement or payment, such statement or payment shall be deemed final and binding.
(e) The provisions of this subparagraph 4.04 shall survive the expiration or earlier termination of this Agreement.
4.05— Costs Generally. Except as expressly set forth herein, each party is responsible for its own costs in connection with its activities under this Agreement.
5. OPERATION AND MARKETING OF ATTRACTIONS; SALE OF LICENSED PRODUCTS
5.01— Licensee Responsibilities Generally. Throughout the Term, Licensee shall operate the Attractions and be responsible for the maintenance, improvement, safety, quality control, marketing and promotion of the Parks and Attractions. Licensee is solely responsible for all development, production, manufacturing, packaging, warehousing, marketing, advertising, promotion, distribution, sales, shipping, billing, collection and the like, as well as all safety and quality control matters, with respect to each Licensed Product.
5.02— Promotions outside of the Parks utilizing the Sesame Street characters. The use by Licensee of costumed Sesame Street characters outside of the Parks for any reason including but not limited to promotional purposes for the Parks shall be subject to Sesame Workshop’s prior written approval, not to be unreasonably withheld or delayed. Sesame Workshop recognizes the importance of such out-of-park promotions and agrees to use commercially reasonable efforts to permit such out-of-park appearances and assist Licensee in securing any applicable third party consents.
5.03— Licensee’s and Sesame Workshop’s Names on Licensed Products. Licensee shall include its name, trade name, and address in irremovable form (i.e., on a form other than a sticker) on the packaging of each Developed Licensed Product so that the public can identify Licensee as the source and distributor of the Developed Licensed Product. Licensee also shall include in irremovable form (i.e., on a form other than a sticker) on such product packaging Sesame Workshop’s name, URL and other corporate information (e.g., description of not-for-profit status) as provided by Sesame Workshop. Except as otherwise agreed to by Sesame Workshop, Licensee shall include the Sesame Street logo on the packaging in a manner that is no less prominent than the applicable Park name.
5.04—Language. All text that will appear in or on the Developed Licensed Products (including packaging) or in Marketing Materials shall be in English and/or Spanish.
 
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6. APPROVALS
6.01— Rights of Approval. Licensee acknowledges that in order to (i) ensure that the appearance, quality, marketing and promotion of the Attractions and the appearance, quality, manufacturing, marketing, sale, distribution and other exploitation of the Licensed Products are consonant with Sesame Workshop’s name and reputation for quality and with the goodwill associated with Sesame Workshop and the Licensed Elements, (ii) to ensure the protection of Sesame Workshop’s copyrights and trademarks, and (iii) to advance Sesame Workshop’s educational and business interests, Sesame Workshop retains the right to approve: (a) all aspects of all Attractions, all Live Presentations and all Live Presentation Materials that are based on the Licensed Elements; (b) each Licensed Product (including packaging) at each stage of product development (where applicable) as specified in Exhibit D; (c) all marketing and promotional activities and all Marketing Materials prior to Licensee’s use thereof; (d) all markings, legends, and notices on or in association with the Licensed Products including packaging; and (e) any use of any element of the Licensed Elements for any purpose.
6.02— Approval Process. With respect to all approvals under any provision of this Agreement, Licensee at its expense will submit items for written approval to Sesame Workshop accompanied by Sesame Workshop’s approval submission forms if applicable (a sample is attached as Exhibit E ). Sesame Workshop will notify Licensee of its approval or disapproval of any submission within ten (10) business days after receipt of such submission. If Sesame Workshop fails to respond to such submission within such 10-business day period, the item will be deemed disapproved. In such event, Licensee may resubmit such items to the Vice President in charge of Themed Entertainment, or his or her designee, and he or she will notify Licensee of his or her approval within three (3) business days of such re-submission, providing a detailed explanation of the reasons for any disapproval. In exercising its right to grant or withhold approval in each instance, Sesame Workshop may take into consideration such pedagogic, safety, aesthetic and other considerations as it determines in its sole discretion; provided, however, any such approval shall not be unreasonably withheld or delayed. If an item approved for a particular use is being considered for another use, Licensee must re-submit such item to Sesame Workshop for a new approval; provided, however, Licensee shall not be required to re-submit an item for approval for use at one Park if Sesame Workshop has previously approved such item and such use for another Park. Sesame Workshop’s approval of any submission shall not affect Licensee’s obligations with respect to the Attractions and the Licensed Products (e.g., product safety) nor shall Sesame Workshop’s disapproval of any submission affect Licensee’s obligations to perform under this Agreement. Licensee agrees not to release, market, distribute, sell or otherwise make any use of an item requiring Sesame Workshop approval unless Sesame Workshop has approved such item in accordance with this subparagraph 6.02. Upon thirty (30) days’ prior written notice to Licensee, Sesame Workshop may withdraw any approval previously granted; provided, however, such withdrawal shall not be unreasonably made and Sesame Workshop shall promptly reimburse Licensee for all expenditures made or liabilities incurred in reliance on such prior approval; provided, however, Sesame Workshop shall not be required to reimburse Licensee for such expenditures made or liabilities incurred in the event Sesame Workshop withdraws its approval because it learns: (i) of a defect in the Developed Licensed Product, (ii) that Licensee has failed to disclose material information which would inform Sesame Workshop’s decision to approve Licensee’s submissions hereunder, or (iii) of such other information that would reasonably affect Sesame Workshop’s approval hereunder.
 
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7. SAMPLES AND SESAME WORKSHOP PURCHASES
7.01— Samples . Licensee shall deliver twelve (12) units of each SKU of each Developed Licensed Product to Sesame Workshop at Sesame Workshop’s address above, at no cost to Sesame Workshop, promptly upon or before their initial shipment to the Parks. In addition, upon request by Sesame Workshop, Licensee shall deliver to Sesame Workshop, at no cost to Sesame Workshop, up to twelve (12) additional units of each SKU of each Developed Licensed Product for quality control purposes only and not for any other use.
7.02— Purchases by Sesame Workshop. Subject to availability, Licensee shall sell to Sesame Workshop at Licensee’s actual cost to develop in the ease of a Developed Licensed Product and at Licensee’s actual cost to acquire in the case of an Acquired Licensed Product such reasonable number of units of any Licensed Product as Sesame Workshop may from time to time request. Sesame Workshop may use such Licensed Products as it deems appropriate (e.g., to sell or give to Sesame Workshop’s employees), except that Sesame Workshop may not resell such units to the general public.
7.03— No Royalty. Licensee will not pay Sesame Workshop any royalties for units of the Licensed Products given or sold to Sesame Workshop under this Paragraph 7.
7.04— Complimentary Tickets. Licensee will provide to Sesame Workshop a minimum of [†] complementary admission tickets to each Park during each year of the Term.
8. OWNERSHIP; INTELLECTUAL PROPERTY
8.01— Ownership of SW Materials. (a) In recognition of Sesame Workshop’s ownership and substantial investment in the Licensed Elements, and the need for Sesame Workshop to protect the integrity of the Licensed Elements, Sesame Workshop shall own all right, title and interest (including all trademarks, copyrights, registrations, renewals and extensions throughout the world) in and to the “SW Materials,” except for rights of use expressly granted to Licensee in this Agreement. The “SW Materials” shall mean (i) the Licensed Elements, (ii) all Live Presentations including all Live Presentation Materials, (iii) all Artwork, (iv) all Music other than pre-existing music owned by third parties, (v) all embodiments (including embodiments of the foregoing in tools, molds, models, plates and other manufacturing materials), derivations, adaptations, and versions of the foregoing, including those made by Licensee or by a third party on behalf of Licensee to the foregoing, and (vi) the overall Licensed Products (even though Licensee may own portions of the Licensed Products pursuant to subparagraph 8.06). To the extent that the Licensed Products incorporate any educational or editorial content, such content shall be included within the definition of “SW Materials.” Sesame Workshop shall have the sole right to register copyrights and trademarks in the SW Materials.
(b) Other than Licensee’s employees acting within the scope of their employment, Licensee shall obtain from all persons and entities (“Contributors”) who make derivations, adaptations, and versions of the SW Materials on behalf of Licensee written agreements establishing that their derivations, adaptations and versions of the SW Materials shall be considered works made for hire for Licensee under U.S. copyright laws. Licensee shall ensure that, to the extent that all right, title and interest to such derivations, adaptations, and versions of the SW Materials do not vest in Licensee by reason of being works made for hire, such
 
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Contributors irrevocably assign and transfer to Licensee all of their right, title and interest to their derivations, adaptations, and versions of the SW Materials. Licensee’s agreements with Contributors shall contain substantially the same provision as contained in Exhibit F, and shall otherwise be consistent with the terms of this Agreement. Licensee shall not incorporate any credit of any kind to any third party in connection with the Licensed Products without the prior written approval of Sesame Workshop, such approval not to be unreasonably withheld or delayed.
(c) Upon written notice from Sesame Workshop, Licensee shall irrevocably assign and transfer to Sesame Workshop all of its right, title and interest to any derivations, adaptations, and versions made by Licensee or by a third party on behalf of Licensee to the SW Materials subject to the restrictions on use of Developed Licensed Products and shows in subparagraph 1.10. Licensee shall notify Sesame Workshop when Licensee or any third party on behalf of Licensee makes any derivations, adaptations, and versions of the SW Materials respecting the Developed Licensed Products.
(d) Other than the rights of use expressly granted to Licensee and the restrictions imposed on Sesame Workshop under this Agreement, Sesame Workshop reserves all rights to the SW Materials and shall be free to exercise such rights at any time without any obligation to Licensee. Notwithstanding anything to the contrary in this Agreement, subject to the provisions of subparagraph 1.10, any Developed Licensed Products and any show developed by Licensee shall each be used exclusively by Licensee during the Term of this Agreement and Sesame Workshop shall not license or otherwise permit any third party to use the same without Licensee’s prior written approval in each instance, not to be unreasonably withheld or delayed.
8.02— Legal Notices. Licensee shall include in the Developed Licensed Products (both the packaging and the actual product, unless otherwise specifically agreed to by Sesame Workshop) and the Marketing Materials, in an irremovable form (i.e., in a form other than a sticker), copyright, trademark and other notices reasonably requested by Sesame Workshop in order to protect Sesame Workshop’s interests including all intellectual property rights.
8.03— Validity of Licensed Elements. Licensee acknowledges and agrees that all the Licensed Elements have acquired a secondary meaning in the mind of the purchasing public and that, except to the extent the law allows and this Agreement specifies, it (i) will not attack the validity of the rights granted under this Agreement, (ii) will not do anything that might impair or infringe any of the Licensed Elements, (iii) will not claim adversely to Sesame Workshop any right, title or interest in any of the Licensed Elements and (iv) will not use or register as a trademark any item that is the same as or confusingly similar to any of the Licensed Elements. All uses of the Licensed Elements shall inure to the benefit of Sesame Workshop, subject to the terms hereof.
8.04— New Trademarks. (a) Licensee at its own cost shall be responsible for ensuring that all new product names and new trademarks that Licensee desires to create in connection with the Developed Licensed Products will not infringe the rights of any third parties, and Licensee shall conduct all necessary searches and clearances. Without limiting the foregoing obligations of Licensee, Licensee shall obtain Sesame Workshop’s written approval, not to be unreasonably withheld or delayed, before using such product names and new trademarks.
 
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(b) Any trademark registrations for such product names and new trademarks developed in connection with the Developed Licensed Products hereunder that are based on or incorporate any of the SW Materials will be filed by Sesame Workshop — and will be treated as part of the Licensed Elements — and Licensee will reimburse Sesame Workshop’s costs (including outside counsel fees) in connection with such registrations. Any trademark registrations for such product names and new trademarks developed in connection with the Developed Licensed Products that are not based on or incorporate any of the SW Materials will be filed by Licensee at its own expense, and will be treated as part of Licensee Materials. If Sesame Workshop requires Licensee to use in connection with the Licensed Products a new trademark created by Sesame Workshop, Sesame Workshop will conduct searches and clearances and may decide to file for trademark registrations for such new trademarks, all at Sesame Workshop’s expense, and such trademarks will be treated as part of the Licensed Elements.
8.05— Protection of Sesame Workshop’s Rights. (a) Sesame Workshop will be responsible for all decisions relating to the protection of Sesame Workshop’s rights including the handling of apparent infringements of the SW Materials, and will consult with Licensee as appropriate before making such decisions. Licensee shall inform Sesame Workshop if Licensee learns of any infringement of the SW Materials. Licensee shall reasonably cooperate with Sesame Workshop in protecting Sesame Workshop’s rights in the SW Materials including executing, filing and delivering documentation reasonably requested by Sesame Workshop (e.g., proof of trademark use). Sesame Workshop will reimburse Licensee for all out-of-pocket costs incurred by Licensee in so cooperating at the request of Sesame Workshop. Sesame Workshop shall retain all amounts as a result of any suit or settlement.
(b) In the event that Sesame Workshop, in its reasonable judgment, deems any infringement to include an infringement of the applicable Attraction trademark or any aspect of the Attractions, Sesame Workshop shall have the right to either (1) treat the infringement as covered by the provisions of subparagraph 8.05(a) above or (ii) require that Licensee pay one-half of all costs and expenses of prosecuting any action (in which case Licensee shall be entitled to receive one-half of all recoveries and awards with respect to such infringement). In all events Sesame Workshop shall be entitled to determine in its reasonable discretion whether or not any action should be taken on account of any infringement. Furthermore, while Sesame Workshop will consult with Licensee as to any action taken in a lawsuit covered by subparagraph 8.05(b), Sesame Workshop in its sole judgment shall be entitled to select counsel and control any action.
8.06— Ownership of Licensee Materials. Licensee shall own all right, title and interest (including all copyrights, renewals and extensions throughout the world) in and to the Licensee Materials. The “Licensee Materials” shall mean: Licensee’s logos, trademarks, tradenames, patents and copyrighted materials but specifically excluding any SW Materials, Licensed Elements and/or any other intellectual property and/or rights owned by Sesame Workshop (including the portions of a catalog or promotional materials or the portions of Licensed Product that is SW Material, a Licensed Element and/or intellectual property owned by Sesame Workshop).
 
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9. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
9.01— Sesame Workshop. Sesame Workshop represents and warrants that:
(a) Sesame Workshop’s execution of this Agreement is duly authorized without the need of any consent of any third party and this Agreement is a valid and binding obligation of Sesame Workshop enforceable in accordance with its terms and such execution and delivery and the performance by Sesame Workshop of its obligations hereunder do not and will not violate or cause a breach of any other agreement or obligation to which it is a party or by which it is bound.
(b) Sesame Workshop owns or controls all rights in the Licensed Elements granted to Licensee under this Agreement.
(c) Licensee’s authorized use, in accordance with all the provisions of this Agreement, of any materials provided by Sesame Workshop shall not infringe the rights of any third party.
(d) Sesame Workshop will conduct its business operations in a manner consistent with its past practice in order to maintain the high quality associated with the Licensed Elements.
(e) Sesame Workshop will not create any expense chargeable to Licensee without Licensee’s prior written approval.
(f) Sesame Workshop, in conducting its activities relating to the Licensed Elements, will not knowingly infringe upon the rights of any kind of any third parties.
(g) Sesame Workshop shall use commercially reasonable efforts to ensure that all contributions (including inventions and patented matter) made by Sesame Workshop or made by third parties through Sesame Workshop to the SW Materials and used by Licensee in accordance with the terms of this Agreement will not infringe the rights of any third party.
(h) With respect to the Acquired Licensed Products, Sesame Workshop will comply, and Sesame Workshop will use commercially reasonable efforts to cause its licensees from whom Licensee purchases the Acquired Licensed Products to comply (provided Licensee does not have a separate agreement with such licensee(s) covering the same), with all applicable laws and regulations with respect to (if applicable): (i) those relating to all embodiments of the Licensed Elements, including the safety, manufacturing, pricing, advertising, sale and distribution of the any embodiments of the Licensed Elements; and, if applicable, (ii) those relating to online activities (including specifically children’s privacy), such as sales, promotions, sweepstakes, and data collection.
(i) With respect to the Acquired Licensed Products, Sesame Workshop shall use commercially reasonable efforts to ensure that each embodiment of any of the Licensed Elements distributed or sold by Licensee under a license from Sesame Workshop (provided Licensee does not have a separate license with such party) shall be, in all respects, safe and fit for use by the persons for whom such embodiment is intended to be used, and free from all defects in
 
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design, materials and workmanship. If Sesame Workshop learns of any defect or recall for any such embodiment, it shall promptly notify Licensee of such defect or recall. Sesame Workshop shall promptly provide or cause its third party licensee to provide Licensee with a plan with timeline for remedying such defect, and thereafter shall cause the party remedying the same to promptly and diligently carry out the remedy as approved by Sesame Workshop.
(j) Throughout the Term and until two (2) years after the end of the Term, Sesame Workshop shall maintain in full force and effect insurance by a reputable and financially qualified insurance company specifically covering all liability of Sesame Workshop and Licensee relative to Sesame Workshop’s exercise of its rights under this Agreement including without limitation all claims for injuries to or death of a person or persons and/or for damage to property and all claims for workers’ compensation for bodily injury including death and disease incurred by employees of Sesame Workshop who access the Park acting within the scope of their employment with Sesame Workshop. Such insurance shall (i) include coverage for premises liability, employer’s liability, contractual liability, including defense, personal injury, and products and completed operations, and shall be written for a limit of not less than $5 million per occurrence/annual aggregate, written on an recurrence form; (ii) include a waiver of subrogation in favor of Licensee; and (iii) specifically state that coverage as it pertains to Licensee shall be primary regardless of any other coverage that may be available to Licensee. Sesame Workshop shall provide Licensee with a certificate of insurance satisfying the above requirements within thirty (30) days after execution of this Agreement. Licensee shall be named as an additional insured on the above policies. Sesame Workshop shall not knowingly violate or permit to be violated, any conditions of any such policy, and shall at all times satisfy the requirements of such insurance policies. All insurance contracts shall be written so that Licensee will be notified of the cancellation or any restrictive amendment of the policies at least thirty (30) days prior to the effective date of such cancellation or amendment.
(k) With respect to the Acquired Licensed Products, Sesame Workshop shall ensure that Sesame Workshop itself and all manufacturers and third parties licensed by Sesame Workshop shall at all times comply with the manufacturing obligations set forth in Exhibit H, or substantially similar obligations as set forth in Exhibit H.
9.02— Licensee. Licensee represents and warrants that:
(a) Licensee’s execution of this Agreement is duly authorized without the need of any consent of any third party and this Agreement is a valid and binding obligation of Licensee enforceable in accordance with its terms.
(b) Licensee will operate the Attractions in a manner consistent with the high quality associated with the Licensed Elements.
(c) Licensee will not create any expense chargeable to Sesame Workshop without Sesame Workshop’s prior written approval.
(d) Licensee will operate, market and promote the Attractions, will create, develop, manufacture, market, promote, advertise, distribute, sell and otherwise exploit the Licensed Products, and will utilize the Licensed Elements, only as expressly permitted under this Agreement.
 
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(e) Licensee will not, without Sesame Workshop’s prior written consent, market, distribute or sell any Licensed Products outside the Authorized Sales Areas.
(f) Licensee in conducting its activities under this Agreement will not knowingly infringe upon the rights of any kind of any third parties; provided, however, the foregoing does not apply to any infringement of the rights of any third party from Licensee’s authorized use, in accordance with all the provisions of this Agreement, of any materials provided by Sesame Workshop (which is covered by Sesame Workshop’s representation and warranty in subparagraph 9.01(c)).
(g) Licensee shall use commercially reasonable efforts to ensure that all derivations, adaptations, and versions (including inventions and patented matter) made by Licensee or made by third parties through Licensee to the SW Materials, Licensed Products and Marketing Materials will not infringe the rights of any third party. Licensee shall ensure that all written materials produced by or on behalf of Licensee utilizing the Licensed Elements shall not infringe the rights of any third party, including without limitation, any copyrights, trademarks, and/or other intellectual property owned by third parties. Licensee will pay all reasonable costs associated with clearing third party rights and permissions in connection with such derivations, adaptations, and versions; provided, however, the foregoing does not apply to any infringement of the rights of any third party from Licensee’s authorized use, in accordance with all of the relevant provisions of this Agreement, of any materials provided by Sesame Workshop which is covered by Sesame Workshop’s representation and warranty in subparagraph 9.01(c).
(h) Licensee will comply with all applicable laws, regulations, and industry self-regulatory guidelines with respect to this Agreement, including (if applicable): (i) those relating to the safety of all aspects of the Attractions; (ii) those relating to the manufacturing of the Developed Licensed Products and the pricing, advertising, sale and distribution of the Licensed Products; and (iii) those relating to online activities (including specifically children’s privacy), such as sales, promotions, sweepstakes, and data collection.
Licensee shall use commercially reasonable efforts to ensure that each Attraction and each unit of each Developed Licensed Product distributed or sold under this Agreement shall be, in all respects, safe and fit for use by the persons for whom such Attraction or Developed Licensed Product is intended to be used, and free from all defects in design, materials and workmanship. Licensee will ensure that each Attraction and each Developed Licensed Product meets applicable safety standards including those of pertinent government and industry organizations. If Licensee learns of any defect, recall, injury or reportable incident for any Attraction or any Developed Licensed Product (or unit or component thereof), it shall promptly notify Sesame Workshop of such defect, injury, reportable incident, or recall. Within fifteen (15) days after learning of any defect in an Attraction or Developed Licensed Product, Licensee shall provide Sesame Workshop with a plan for completely remedying such defect, and thereafter shall promptly and diligently carry out the remedy.
(j) In the event Sesame Workshop requires Licensee employees to guide Sesame Workshop employees through a Park inspection for purposes of determining Licensee’s compliance with the terms of this Agreement, Sesame Workshop will provide Licensee with two (2) weeks’ prior written notice.
 
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(k) Throughout the Term and until two (2) years after the end of the Term, Licensee shall maintain in full force and effect insurance by a reputable and financially qualified insurance company specifically covering all liability of Licensee and Sesame Workshop, and, with respect to the Film, Universal City Studios, LLP, relative to Licensee’s exercise of its rights under this Agreement including the operation of the Attractions and all sales of Licensed Products, including without limitation all claims for injuries to or death of any person or persons and/or for damage to property and all claims for workers’ compensation for bodily injury including death and disease incurred by employees of the Parks. Such insurance shall (i) include coverage for premises liability, contractual including defense, personal injury and products and completed operations, and shall be written for a limit of not less than $5 million per occurrence/annual aggregate, written on an occurrence form; (ii) include a waiver of subrogation in favor of Sesame Workshop; and (iii) specifically state that coverage as it pertains to Sesame Workshop shall be primary regardless of any other coverage that may be available to Sesame Workshop. Any such insurance policies shall contain a waiver of subrogation in favor of Sesame Workshop. Licensee shall provide Sesame Workshop with a certificate of insurance satisfying the above requirements within thirty (30) days after execution of this Agreement. Sesame Workshop and, with respect to the Film, Universal City Studios, LLP shall be named as an additional insured on all of the above policies. Licensee shall not knowingly violate, or permit to be violated, any conditions of any such policy, and shall at all times satisfy the requirements of such insurance policies. All insurance contracts shall be written so that Sesame Workshop and, with respect to the Film, Universal City Studios LLP will be notified of the cancellation or any restrictive amendment of the policies at least thirty (30) days prior to the effective date of such cancellation or amendment.
(1) All materials used in the manufacture of the Attractions and Developed Licensed Products shall be prepared solely by Licensee or by a manufacturer under Licensee’s control who has executed a manufacturer’s agreement. The manufacturer’s agreements shall contain substantially the same provisions as contained in Exhibit G and shall otherwise be consistent with the terms of this Agreement; it being understood that Licensee may include additional provisions in the manufacturer’s agreements so long as they are not inconsistent with this Agreement. If any manufacturer used by Licensee utilizes the Developed Licensed Products for any unauthorized purpose, Licensee shall be fully responsible for such unauthorized use and shall bring such utilization to an immediate halt.
(m) With respect to the Developed Licensed Products, Licensee shall ensure that Licensee itself and all manufacturers and third parties used by Licensee shall at all times comply with the manufacturing obligations set forth in Exhibit H, or with substantially similar obligations as set forth in Exhibit FL
9.03— Indemnification. Licensee and Sesame Workshop shall at all times defend, indemnify and hold harmless the other and its parent, subsidiary and Affiliates and its and their trustees or directors, officers, employees and agents from and against any and all third party claims, damages and liabilities, and reasonable costs and expenses (including reasonable outside attorneys’ fees) growing out of or arising from the performance of this Agreement by the indemnitor, or any actual or alleged breach or default by the indemnitor of its agreements, covenants, representations, or obligations under this Agreement. If an indemnitee hereunder becomes aware of any matter it believes is indemnifiable hereunder involving any claim, action,
 
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suit, investigation, arbitration or other proceeding against the indemnitee by any third party, the indemnitee shall give the indemnitor prompt written notice of such claim. Such notice shall provide the basis on which indemnification is being asserted and be accompanied by copies of all relevant pleadings, demands, and other papers related to the claim and in the possession of the indemnitee. The indemnitor shall have a period of twenty (20) days after delivery of such notice to respond. If the indemnitor elects to defend the claim or does not respond within the requisite 20-day period, the indemnitor shall be obligated to defend the claim, at its own expense, and by counsel reasonably satisfactory to the indemnitee. The indemnitee shall cooperate, at the expense of the indemnitor, with the indemnitor and its counsel in the defense and the indemnitee shall have the right to participate fully, at its own expense, in the defense of such claim. If the indemnitor responds within the required 20-day period and elects not to defend such claim, the indemnitee shall be free, without prejudice to any of the indemnitee’s rights hereunder, to compromise or defend (and control the defense of) such claim. In such case, the indemnitor shall cooperate, at its own expense, with the indemnitee and its counsel in the defense against such claim and the indemnitor shall have the right to participate fully, at its own expense, in the defense of such claim. Any compromise or settlement of any claim or action shall require the prior written consent of both parties hereunder, such consent not to be unreasonably withheld or delayed. Despite the foregoing, if at any time it appears that any intellectual property right of Sesame Workshop will be in issue as part of such claim, Sesame Workshop shall have the right to defend such right at its own expense, except that such defense shall be at Licensee’s expense if Licensee’s negligence or willful misconduct caused Sesame Workshop’s intellectual property right to be in issue.
10. ASSIGNMENT; CHANGE IN CONTROL
10.01— Assignment. This Agreement is personal to Licensee who has been chosen specifically by Sesame Workshop for, among other reasons, its reputation, expertise and ability to perform this Agreement. Neither party shall assign, sublicense, encumber, pledge or otherwise transfer any or all of its rights or obligations under this Agreement without the other party’s prior written approval in its sole discretion. Despite any such approved assignment or other transfer, the assignor or transferor shall guarantee its obligations under this Agreement and shall ensure that its permitted assignee or transferee agrees in writing to be bound by all the provisions of this Agreement. No assignee or transferee shall acquire any rights greater than those of the assignor or transferor under this Agreement. The foregoing restrictions on transfer and assignment shall be binding on all subsequent permitted assignees or transferees of the original assignee or transferee of Licensee.
10.02— Change in Control. (a) A “Change in Control” shall mean any transaction or series of related transactions which would result in (0 the transfer of 50% or more of Licensee’s outstanding capital stock or voting securities whether by sale, merger, consolidation, reorganization or otherwise, (ii) the transfer of capital stock or other voting securities of Licensee possessing the voting power to elect 50% or more of the members of Licensee’s board of directors or other managing body whether by merger, consolidation, reorganization or issuance, sale or transfer of Licensee’s capital stock or voting securities, or (iii) the sale of all or substantially all of Licensee’s assets. Sesame Workshop shall have the right to either continue this Agreement or to terminate this Agreement because of a Change in Control, except for transactions described in subparagraph 10.03. In the event that Licensee intends to enter into a
 
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transaction or series of transactions that will result in a Change in Control, Licensee shall immediately give written notice to Sesame Workshop. At the time Licensee gives such notice, Licensee shall provide Sesame Workshop with all information and documentation necessary for Sesame Workshop to evaluate the contemplated transaction. Licensee will provide additional information as reasonably requested by Sesame Workshop. Within 30 days after receiving appropriate information and documentation, Sesame Workshop shall advise Licensee in writing as to whether it will continue or terminate this Agreement because of the Change in Control, pursuant to subparagraph 10.02(b).
(b) Termination of Agreement. Sesame Workshop may in its sole discretion decide to terminate this Agreement because of the impending Change in Control. Upon such termination, the provisions of paragraph 11 shall apply.
10.03— Permitted Assignments. Notwithstanding anything in this Agreement to the contrary, including subparagraphs 10.01 and 10.02, Licensee shall be free, upon thirty (30) days’ prior written notice to Sesame Workshop (with no consent required), to assign or transfer this Agreement in its entirety to one or more of Licensee’s “Affiliates” as part of a corporate reorganization; provided, however, that the transfer of Licensee’s rights under this Agreement is not the principle purpose of such reorganization and provided that the rest of the provisions of subparagraph 10.01 (other than Sesame Workshop’s consent rights) shall apply to any permitted assignment. Upon such assignment of this Agreement to Licensee’s Affiliate, such Affiliate as well as Licensee shall be subject to all the terms and conditions of this Agreement; provided such Affiliate may not modify this Agreement or extend the Term hereof without the prior written consent of Licensee and Sesame Workshop. “Affiliate” means any entity that controls, is controlled by, or is under common control with, Licensee, whether by virtue of ownership, voting power, management or otherwise.
10.04— Impermissible Assignments. Any purported assignment or other transfer of this Agreement that is not permitted under this paragraph 10 shall be null and void.
10.05 — Consequential Damages. Notwithstanding anything else to the contrary in this Agreement, Sesame Workshop and Licensee agree that neither party shall be entitled to any consequential damages as a result of any default or breach by either party hereunder.
11. EXPIRATION AND TERMINATION
11.01— Inventory Report. No less than 90 days before the expiration of the Term, or within 10 days after termination of this Agreement, Licensee shall provide Sesame Workshop with an inventory report with a listing of all unsold and completely finished goods for the Licensed Products (“Unsold Inventory”) and the location where they are stored, broken down by each SKU of each Licensed Product. For Developed Licensed Products, Licensee shall advise Sesame Workshop of the manufacturing cost which shall be Licensee’s actual, direct manufacturing costs and shall not include general and administrative or overhead costs. For Acquired Licensed Products, Licensee shall advise Sesame Workshop of Licensee’s actual purchase price to acquire such Licensed Products. Notwithstanding anything to the contrary herein, the inventory report shall not include any Unsold Inventory transferred to Sesame Place pursuant to subparagraph 11.04(e) hereof.
 
Page 23 of 40

11.02— Termination by Sesame Workshop. (a) Sesame Workshop shall have the right at any time to immediately terminate this Agreement (except, with respect to subparagraph 11.02(a)(iii), as prohibited by federal or state law) if any one of the following occurs:
(i) Licensee breaches any of its material obligations or agreements, or any representations or warranties, and such breach is not cured within 30 days after written notice of such breach from Sesame Workshop; provided, however, that Licensee shall not be deemed to be in breach of this Section 11.02(i) so long as Licensee commences to cure such breach within said 30 day period and diligently proceeds in good faith to cure such breach within a commercially reasonable period of time. The foregoing does not apply to Licensee’s obligations to account and make payments to Sesame Workshop under this Agreement.
(ii) Licensee breaches its obligations to pay the Annual License Fees, royalties or any other sums due to Sesame Workshop or has failed to deliver a royalty report when due, and such breach is not cured within 20 days after written notice of such breach from Sesame Workshop.
(iii) Licensee makes an assignment for the benefit of creditors without Sesame Workshop’s prior written consent or becomes insolvent or subject to any bankruptcy, insolvency or receivership proceeding of any nature.
(iv) In the event of a Force Majeure event continuing for more than one year with respect to two or more Parks as set forth in subparagraph 14.10 hereof.
(v) Termination of the license agreement with Licensee respecting Sesame Place.
(b) If Sesame Workshop terminates this Agreement under this subparagraph 11.02, Licensee shall not be entitled to seek injunctive relief to prevent Sesame Workshop from licensing to a third party or making any other use of the rights granted to Licensee.
11.03— Termination by Licensee. Licensee shall have the right at any time to terminate this Agreement if any one of the following occurs:
(a) Sesame Workshop breaches any of its material obligations or agreements, or any representations or warranties, under this Agreement and such breach is not cured within 30 days after written notice of such breach from Licensee; provided, however, that Sesame Workshop shall not be deemed to be in breach of this subparagraph 11.03(a) so long as Sesame Workshop commences to cure such breach within said 30-day period and diligently proceeds in good faith to cure such breach within a commercially reasonable period of time.
(b) Sesame Workshop makes an assignment for the benefit of creditors without Licensee’s prior written consent or becomes insolvent or subject to any bankruptcy, insolvency or receivership proceeding of any nature.
(c) Licensee closes the final Attraction remaining open pursuant to subparagraph 3.03 hereof.
 
Page 24 of 40

(d) In the event of a Force Majeure event continuing for more than one year with respect to two or more Parks as set forth in subparagraph 14.10 hereof.
(e) Termination of the license agreement with Sesame Workshop respecting Sesame Place; provided, however, if Licensee is terminating this Agreement because it has or is terminating the Sesame Place agreement without cause, including pursuant to Section 7 thereof, and not because of Sesame Workshop’s breach of the Sesame Place agreement beyond any applicable cure period or other termination based on cause (a “Sesame Place Non-Default Termination”), and the effective date of such termination occurs during the first five (5) years of the Term of this Agreement, Licensee shall pay Sesame Workshop a lump sum liquidated damages amount equal to the sum of each unpaid Annual License Fee for each Park then subject to this Agreement multiplied by the number of years that each such Park will not pay its respective Annual License Fee during the first five years of the Term of this Agreement (which amount is inclusive of and not in addition to, any amount payable by Licensee under Section 2.06 hereof, i.e., there will not be a double payment for a Park failing to open an Attraction and an early termination of this Agreement). The foregoing amount shall constitute liquidated and stipulated damages in the event of a Sesame Place Non-Default Termination during the first five (5) years of the Term of this Agreement, the parties agreeing that actual damages are difficult if not impossible to ascertain and that such liquidated damages amount does not constitute a penalty. After the first five (5) years of the Term of this Agreement, Licensee shall be entitled to terminate this Agreement in conjunction with a Sesame Place Non-Default Termination without the payment of any damages, liquidated or otherwise.
11.04— Effect of Expiration or Termination. Upon expiration of the Term or termination of this Agreement:
(a) All licenses granted under this Agreement to Licensee shall immediately and automatically revert to Sesame Workshop to exercise without any obligation to Licensee.
(b) All sums of money payable or past due to Sesame Workshop under this Agreement shall become due and payable within ten (10) business days, except the foregoing shall not apply if this Agreement is terminated by Licensee due to material breach by Sesame Workshop. Notwithstanding the foregoing, in the event it has not been paid prior to any termination, the Minimum Total Film Royalty shall be due and payable by Licensee without regard to the party terminating this Agreement or the date upon which this Agreement is terminated unless such termination is by Licensee pursuant to subparagraph 11.03(a) or 11.03(b) in which case Licensee shall not be obligated to pay any remaining portion of the Minimum Total Film Royalty.
(c) Licensee shall promptly deliver to Sesame Workshop, at no charge to Sesame Workshop, all Live Presentation Materials, all Music, and all Artwork furnished by Sesame Workshop or created by Licensee under this Agreement (other than materials covered in subparagraph 11.04(d)).
(d) Licensee shall promptly destroy, or remove all Licensed Elements from, all SW Materials (other than materials covered in subparagraph 11.04(c)) including all SW Materials held by third parties such as Licensee’s manufacturers. Licensee shall send Sesame Workshop a certificate of such destruction or removal signed by an officer of Licensee.
 
Page 25 of 40

(e) Licensee shall have the right to transfer any Unsold Inventory to Sesame Place. Sesame Workshop shall have the right for ninety (90) days to purchase (by payment or by crediting Licensee’s account) any remaining Unsold Inventory not transferred to Sesame Place at Licensee’s manufacturing cost or purchase price (as described in subparagraph 11.01) provided Sesame Workshop notifies Licensee of its exercise of such right within ten (10) business days after receipt of the inventory report delivered by Licensee pursuant to subparagraph 11.01 hereof. Unless Sesame Workshop agrees to purchase the remaining Unsold Inventory, Sesame Workshop and Licensee agree that Licensee shall be entitled to a commercially reasonable “sell-off’ period for the Unsold Inventory of not less than ninety (90) days from the date Sesame Workshop notifies Licensee that it does not intend to Purchase such Unsold Inventory. Licensee shall destroy all remaining Unsold Inventory not purchased by Sesame Workshop after the expiration of the sell-off period at no cost to Sesame Workshop.
(f) The parties’ obligations to account and make payment to each other under this Agreement shall survive as shall their representations, warranties and indemnities and other rights and obligations that by their nature would survive.
12. CONFIDENTIALITY
“Confidential Information” means information that the disclosing party disclosed to the receiving party, including information obtained by the receiving party during an audit, except as hereinafter provided. The terms of this Agreement shall be treated as Confidential Information. Confidential Information will not include information that (i) is in or enters the public domain without breach of this Agreement, (ii) the receiving party lawfully receives from a third party without restriction on disclosure and without breach of a nondisclosure obligation, or (iii) the receiving party knew prior to receiving such information from the disclosing party or develops independently. Each party agrees that it will not disclose to any third party or use any Confidential Information except in performing this Agreement and that it will take all reasonable measures to maintain the confidentiality of Confidential Information. Notwithstanding the foregoing, each party may disclose Confidential Information to the extent required by law or governmental authority (provided that it gives the other party written notice prior to such disclosure) or on a “need-to-know” basis under an obligation of confidentiality to its legal counsel, employees, accountants, and financing sources.
13. NOTICES
All notices under this Agreement shall be in writing and delivered by personal delivery, reputable overnight courier, confirmed facsimile or certified or registered mail (return receipt requested), and will be deemed given upon personal delivery, one day after deposit with overnight courier, upon confirmation of receipt of facsimile or five days after deposit in the mail. Notices to Sesame Workshop shall be sent in writing to Sesame Workshop’s address above, to the attention of Vice President, Themed Entertainment (fax number 212-875-7374) with a copy to the Senior Vice President and General Counsel (fax number 212-875-6124). Notices to Licensee shall be sent in writing to Licensee’s address above, to the attention of Corporate Vice President — Planning and Development (fax number 314-613-6029) with a copy to Anheuser-Busch Companies, Inc., Legal Department, One Busch Place, St. Louis, Missouri 63118, Attn: Vice President and General Counsel (fax number 314-577-0776). Either party may change its address or contacts under this Agreement by written notice to the other party. All notices, requests for approval or consent, or other communications shall be sent in writing in English.
 
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14. GENERAL
14.01— Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties concerning the subject matter of this Agreement and merges and supersedes all prior discussions, agreements and understandings of any kind between them. This Agreement may not be modified or amended except by a writing executed by both parties.
14.02— No Continuing Waiver. No waiver of any term, condition, or covenant contained in this Agreement or any breach of this Agreement shall be held to be a continuing waiver of that or any other term, condition or covenant of this Agreement or of any other or subsequent breach of this Agreement.
14.03— Cumulative Remedies. Except as expressly stated, all remedies, rights, obligations and agreements contained in this Agreement are cumulative and none of them shall limit any other remedies, rights, obligations or agreements under this Agreement or otherwise.
14.04— Relationship of Parties. This Agreement shall not be construed to create a partnership, joint venture, or the relationship of principal and agent between the parties, nor to impose upon either party any debts or obligations incurred by the other party except as expressly set forth in this Agreement.
14.05— Governing Law. This Agreement, and all modifications or extensions thereof, shall be governed in all respects by the law of the State of New York applicable to contracts to be fully executed and performed in New York State, without reference to conflict of laws. Both parties agree that service of process by personal delivery, certified or registered mail (return receipt requested), or reputable overnight courier to the other party’s address above shall be deemed good and sufficient service for purposes of jurisdiction.
14.06— Severability. If any term, clause or provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from this Agreement.
14.07— Binding on Successors. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their heirs, administrators, and successors.
14.08— Titles . The titles of paragraphs of this Agreement are for convenience only and shall not be given any legal effect.
14.09— Including . The word “including” is used in this Agreement to mean “including but not limited to.”
14.10— Force Majeure. Performance by either party hereunder shall be automatically extended by the occurrence of any force majeure for the period of time such force majeure shall exist, provided, however, (i) if the force majeure event continues for more than one year affecting
 
Page 27 of 40

two or more Parks, then either party shall have the right to terminate this Agreement; and (ii) if the force majeure event continues for more than one year with respect to a particular Park, then either party shall have the right to terminate this Agreement with respect to such Park. The term “force majeure” shall mean an act of God, fire, earthquake, floods, adverse weather conditions, explosion, unavoidable casualties, non-availability of materials or supplies in the open market, failure of transportation, condemnation, orders of government, civil, military or naval authorities, or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of the performing party, excluding, however, the inability to obtain monies to perform or fulfill the performing party’s obligations and undertakings.
14.11— Public Announcements. Neither party shall issue a press release, make any public announcement, make any statement to any third party, or make or authorize the publication of any article, either externally or internally, which identifies, relates to, or otherwise gives publicity to this Agreement or the terms hereof without the prior written approval of the other party in each instance, such approval not to be unreasonably withheld or delayed.
14.12— Payments in U.S. Dollars. All payments due hereunder shall be made in then currently available U.S. dollars.

    ACCEPTED AND AGREED:	  		
		
    SESAME WORKSHOP	  	BUSCH ENTERTAINMENT CORPORATION	
		
    By: /S/ Gary Knell	  	By: /s/ Keith Kasen	
    Gary Knell	  	Keith Kasen	
    President and Chief Executive Officer	  	Chairman of the Board and President	
		
Date: 8/24/06	  	Date: 8/24/06	
 
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EXHIBIT A
SESAME STREET MUPPET CHARACTERS
ABBY CADABY
ALICE
ANYTHING MUPPETS
BABY BEAR
BAD BART
BARKLEY
BERT
BETTY LOU
BIFF
BIG BIRD
BRUNO
BUSTER THE HORSE
COLAMBO
COOKIE MONSTER
DINGERS
DON MUSIC
ELMO
ERNIE
FAT BLUE
FORGETFUL JONES
FRED THE WONDER HORSE
GLADYS THE COW
GROVER
GRUNDGETTA
GUY SMILEY
HARVEY KNEESLAPPER
HERRY MONSTER
HONKERS
HOOTS THE OWL
JACKMAN WOLF
KINGSTON LIVINGSTON
LITTLE BIRD
MUMFORD THE MAGICIAN
NATASHA
OSCAR THE GROUCH
PRAIRIE DAWN
PRINCE CHARMING
PROFESSOR HASTINGS
ROOSEVELT FRANKLIN
ROSITA
ROXY MARIE
SAM THE SUPER-AUTOMATED ROBOT
 
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SHERLOCK HEMLOCK
SHERRY NETHERLAND
SIMON SOUNDMAN
SLIMEY THE WORM
SNUFFLEUPAGUS
SULLY
SUNNY FRIENDLY
TELLY MONSTER
THE COUNT
THE COUNTESS
THE MARTIANS
TWIDDLEBUGS
TWO HEADED MONSTER
ZOE
ADDITIONAL CHARACTERS BY MUTUAL AGREEMENT
 
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EXHIBIT D
Licensee shall have a period of eighteen months from the date of this Agreement to exercise its first negotiation rights specified in subparagraph 1.12 with respect to the following series:
Dragon Tales
Sagwa
Pinky Dinky Doo
Licensee’s first negotiation rights shall not apply to the following shows that were in development prior to the date of this Agreement:
The New Electric Company (working title)
The Upside Down Show
Little Red
The Julie Andrews Show (working title)
 
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EXHIBIT D
EXHIBIT C
TEMPLATE FOR ROYALTY REPORTS
X (“Park”)
SUMMARY INCOME
STATEMENT
PERIOD ENDING X 20XX

MONTH	 	  	 	  	YEAR-TO-DATE	 	
ACTUAL	 	  	BUDGET	 	  	VARIANCE	 	  	LAST
YEAR	 	  	 	  	ACTUAL	 	  	BUDGET	 	  	VARIANCE	 	  	LAST
YEAR	 	
			  				  				  				  	REVENUES	  				  				  				  				
									
			  				  	$	0	  	  				  	MERCHANDISE	  				  				  	$	0	  	  				
			  				  	$	0	  	  				  	FOOD & BEVERAGE	  				  				  	$	0	  	  				
			  				  	$	0	  	  				  	OTHER	  				  				  	$	0	  	  				
 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
$	0	  	  	$	0	  	  	$	0	  	  	$	0	  	  	TOTAL REVENUES	  	$	0	  	  	$	0	  	  	$	0	  	  	$	0	  	

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PROCESS FOR PRODUCT DEVELOPMENT AND APPROVAL
I. Concept
 
 	A.	Present rough sketch of concept for Sesame Workshop’s approval.	
 
 	B.	Review Sesame Workshop’s design comments.	
II. Rough Artwork
 
 	A.	Submit pencil sketch with color indications for Sesame Workshop’s art direction.	
 
 	B.	Submit script for approval.	
 
 	C.	Modify sketch or script and re-submit, if requested.	
III. Final Artwork
 
 	A.	Present final illustration, sculpture or recording for approval.	
 
 	B.	Modify and re-submit, if requested.	
IV. Pre-Production Sample
 
 	A.	Submit pre-production sample and test reports, if any.	
 
 	B.	Proceed with production, if approved .	
V. Packaging
Present all packaging designs and copy for approval.
 
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EXHIBIT E
PRODUCT APPROVAL AND SUBMISSION FORMS
Product Submission Form
Please Submit One Form Per Item
 
This is an electronic form that you may fill-out on your computer screen. Use the tab key or your mouse to move to the next field. When you are done, you can save this file, print and fax.
Type of submission: (Please Choose One) q Product q Packaging q Advertising/Sales q Press
Give a brief description (Le. T-shirt, book, mug):             
Has this item been previously submitted? q YES q NO
If YES, Provide tracking # (Product and packaging share the same tracking #)             
Contact Information

Date:                                  Property:                     
Licensee or Agency:                              Contact:                 
Street Address:                     
City:                  State:                  Zip Code:                 
e-Mail Address:                 
Telephone #:                  Fax #:                 
If you are an agency, please provide the name of the licensee you are representing:             
Submission Information
Please describe your submission in detail (include Product Name, Sku or Item Number, Wholesale and Retail Price):             
Stage of Development (Check only One)

q ww Concept	 	q Mechanical	 	q Rough Audio Tape	 	     q Copy or Text	
				
q 13/W Final Art	 	q Chromalin	 	q Final Audio Tape	 	     q Story Concept	
				
q Color Concept	 	q Prototype	 	q Rough Video Tape	 	     q Script	
				
q Final Color art	 	q Mock-up	 	q Final Video Tape	 	     q Pre-prod. Sample	
				
q Sculpt	 	q Fabric Swatch	 	q Sound Chip/Module	 	     q Production Sample	
				
q Sculpt (Painted)	 	q Embroidery Sample	 	q Storyboard	 	     q Finished Samples
        (Amount Sent)                	
				
q Other (Please Specify):	 		 		 		
Shipping Information
Would you like this item returned to you? q YES q NO
(Photos, copies and video tapes are not returned)
If YES, please check carrier preference and provide your account number below:
q FedEx CUPS     q Airborne     q DHL Account #
 
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EXHIBIT F
PROVISION TO BE INCLUDED IN
LICENSEE’S CONTRIBUTOR AGREEMENTS
Work-Made-For-Hire and Assignment. Contributor has created or will create for Busch Entertainment Corporation (“Busch”) materials that contain embodiments, derivations, adaptations or versions of the elements of the copyrights, trademarks and other intellectual property associated with “Sesame Street.” “Works” shall mean all such materials including all versions and all works of progress relating to such materials. Contributor hereby agrees that all Works furnished to Busch by Contributor, working either individually or in collaboration with others, shall be a work-made-for-hire under the U.S. Copyright Laws and Busch shall be considered the author of the Works for purposes of copyright. In the event any of the Works is not a work-made-for-hire or is not a copyrightable subject matter, Contributor hereby irrevocably assigns to Busch exclusively all of Contributor’s right, title and interest in and to the Works, for use in any and all media, now known or hereafter created, and for any and all purposes in perpetuity throughout the world. Contributor hereby waives any claim to so-called “moral rights” or rights of “droit moral” that Contributor may have now or in the future in any jurisdiction with respect to the Works. Contributor agrees to execute all documents and to take all steps as Busch or its assignee finds appropriate to evidence Busch or its assignee’s rights in the Works. This paragraph shall survive any termination of this agreement.
 
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EXHIBIT G
PROVISIONS FOR MANUFACTURER’S AGREEMENTS
Provisions for agreement between Licensee and Licensee’s Manufacturers (“Manufacturer’s Agreement”):
Manufacturer shall acknowledge Sesame Workshop’s ownership of all right, title and interest in the SW Materials. Manufacturer shall execute all documents and take all steps reasonably requested by Licensee or Sesame Workshop to evidence Sesame Workshop’s rights.
Manufacturer shall agree that it will manufacture the Licensed Products only as expressly directed by Licensee and in satisfaction of all requirements of Licensee including compliance with laws and inclusion of legal notices.
The Manufacturer’s Agreement shall automatically terminate, and all rights of Manufacturer in connection with the SW Materials, shall end upon expiration or termination of the license agreement between Sesame Workshop and Licensee.
Upon expiration or termination of the Manufacturer’s Agreement, Manufacturer shall deliver to Licensee all materials that belong to Sesame Workshop.
Manufacturer’s rights shall not be assignable or transferable to any third party.
 
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EXHIBIT II
MANUFACTURING OBLIGATIONS
Pursuant to subparagraph 9.01(k) of the License Agreement, with respect to the Acquired Licensed Products, Sesame Workshop shall ensure that Sesame Workshop itself and all manufacturers and third parties licensed by Sesame Workshop shall at all times comply with the manufacturing obligations set forth herein. Pursuant to subparagraph 9.02(m) of the License Agreement, with respect to the Developed Licensed Products, Licensee shall ensure that all manufacturers and third parties used by Licensee shall at all times comply with the manufacturing obligations set forth herein. As used herein “Responsible Party” shall mean either Sesame Workshop or Licensee, as the case may be, and “Licensed Products,” when referring to Sesame Workshop as the Responsible Party, shall mean the Acquired Licensed Products, and when referring to Licensee as the Responsible Party, shall mean the Developed Licensed Products.
PART I - COVENANTS
A. Responsible Party covenants on behalf of Responsible Party’s own manufacturing facilities, if any, and agrees to require all third-party manufacturers of Licensed Products retained by Responsible Party (“Manufacturers”), to comply with all applicable laws, statutes, regulations and ordinances (“Laws”) pertaining to the manufacturing, packaging or distribution of the Licensed Products. “Responsible Party’s own manufacturing facilities” includes wholly owned, partially owned and affiliated facilities. “Manufacturers” will include any contractor or supplier engaged in a manufacturing process, including cutting, sewing, assembling and packaging of a finished product or a component of a finished product.
B. Responsible Party covenants on behalf of Responsible Party’s own manufacturing facilities, if any, and agrees to require each of its Manufacturers to agree in writing, to perform the obligations set forth below in sub-sections (1) through (9).
1. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, not to use child labor in the manufacturing, packaging or distribution of Licensed Products. The term “child” refers to a person younger than the local legal minimum age for employment or the age for completing compulsory education, but in no case shall any child younger than fifteen (15) years of age (or fourteen (14) years of age where local law allows) be employed in the manufacturing, packaging or distribution of Licensed Products. Responsible Party and Manufacturers employing young persons who do not fall within the definition of “child” agree to comply with any Laws applicable to such persons.
2. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, only to employ persons whose presence is voluntary, and not to use any forced or involuntary labor, whether prison, bonded, indentured or otherwise.
3. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to treat each employee with dignity and respect, and not to use corporal punishment, threats of violence, or other forms of physical, sexual, psychological or verbal harassment or abuse.
4. Unless required by applicable Laws to accord special favorable treatment to a specific group of employees, Responsible Party agrees, and covenants to require each of its Manufacturers to agree, not to discriminate in hiring and in employment practices, including salary, benefits, advancement, discipline, termination, or retirement, on the basis of race, religion, age, nationality, social or ethnic origin, sexual orientation, gender, political opinion or disability.
 
Page 37 of 40

5. Responsible Party recognizes that wages are essential to meeting employees’ basic needs. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to comply, at a minimum, with all applicable wage and hour Laws, including minimum wage, overtime, maximum hours, piece rates and other elements of compensation, and to provide legally mandated benefits. If local Laws do not provide for overtime pay, Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to pay at least regular wages for overtime work. Except in extraordinary business circumstances, Responsible Party and the Manufacturers will not require employees to work more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on regular and overtime hours allowed by local law, or, where local law does not limit the hours of work, the regular work week in such country plus 12 hours overtime. In addition, except in extraordinary business circumstances, employees will be entitled to at least one day off in every seven-day period. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, that, where local industry standards are higher than applicable legal requirements, they will meet the higher standards.
6. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to provide employees with a safe and healthy workplace in compliance with all applicable laws, ensuring, at a minimum, reasonable access to potable water and sanitary facilities, fire safety, and adequate lighting and ventilation. Responsible Party also agrees, and covenants to require each of its Manufacturers to agree, to ensure that the same standards of health and safety are applied in any housing they provide for employees.
7. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to respect the rights of employees to associate, organize and bargain collectively in a lawful and peaceful manner, without penalty or interference, in accordance with applicable Laws.
8. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to comply with all applicable environmental Laws.
9. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, that Sesame Workshop or Licensee, as the case may be, and its designated agents (including third parties) may engage in monitoring activities to confirm compliance with the provisions of this Exhibit, including unannounced on-site inspections of manufacturing, packaging and distribution facilities, and employer-provided housing. Such inspections may include reviews of books and records relating to employment matters and private interviews with employees. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to maintain on site all documentation necessary to demonstrate compliance with the provisions of this Exhibit.
C. In addition to the specific covenants set forth in Sections A and B, Responsible Party agrees to develop, implement and maintain procedures to evaluate and monitor Responsible Party’s own manufacturing facilities and the facilities of each of its Manufacturers, including but not limited to, unannounced on-site inspections of manufacturing, packaging and distribution facilities and employer-provided housing, reviews of books and records relating to employment matters and private interviews with employees of Responsible Party and its Manufacturers.
D. Responsible Party agrees, and covenants to require each of its Manufacturers to agree, to take appropriate steps to ensure that the provisions of this Exhibit are communicated to all employees, including the prominent posting of a document incorporating the provisions of this Exhibit in the local language and in a place readily accessible to employees at all times. Moreover, Responsible Party agrees to formally communicate the provisions of this Exhibit (in the applicable local language) to senior officers, managers and employees of both the company and its applicable manufacturing facilities, and Manufacturers.
 
Page 38 of 40

E. Responsible Party shall establish and maintain a monitoring plan that sets forth Responsible Party’s internal and independent external monitoring programs in accordance with the requirements of Section I below, and consisting of the agreement of the Responsible Party to undertake in good faith to implement a system of monitoring compliance with the provisions of this Exhibit, including utilizing independent accredited external monitors.
F. Internal and external monitoring shall involve the periodic verification that the provisions of this Exhibit are being met by Responsible Party and its Manufacturers in connection with the manufacture, packaging and distribution of Licensed Products.
G. Internal monitoring will be conducted by employees of Responsible Party who shall be provided training on a regular basis about the workplace standards and applicable local and international law, as well as about effective monitoring practices, so as to enable such monitors to be able to assess compliance with the provisions of this Exhibit.
H. External monitoring will be conducted by independent external monitors accredited by industry associations, NGOs, human rights or labor organizations.
I. Internal and external unannounced monitors will conduct comprehensive unannounced inspections of the Responsible Party’s and Manufacturers’ factories to the extent necessary or desirable to give an appropriate sample for determining compliance with the provisions of this Exhibit. Such monitoring activities will be consistent with best practices of accredited external monitors, and will include, at minimum, the following monitoring activities:
1. Verify that Responsible Party and Manufacturers’ employees have been informed about the workplace standards orally, through the posting of standards in a prominent place (in the local languages spoken by employees and managers) and through other educational efforts.
2. Conduct independent audit, on a confidential basis, of an appropriate sampling of production records and practices and wage, hour, payroll and other employee records and practices of Responsible Party and Manufacturers’ factories in order to determine compliance with the provisions of this Exhibit.
3. Conduct periodic confidential interviews, in a manner appropriate to the culture and situation, with a random sampling of Responsible Party and Manufacturers’ employees (in their local languages) to determine employee perspective on compliance with the workplace standards.
4. Work, where appropriate, with Responsible Patty and Manufacturers’ factories to correct instances of noncompliance with the provisions of this Exhibit.
J. Responsible Party shall report to Sesame Workshop or Licensee, as the case may be, each instance of “Non-compliance.” “Noncompliance” shall mean any significant and/or persistent pattern of noncompliance, or any individual incident of serious noncompliance, with the provisions of this Exhibit, either as determined by internal or external monitoring or as alleged by any third party. Each report shall include:
1. a description of the monitoring conducted which led to the discovery of the Noncompliance;
2. a description of the Noncompliance;
3. a description of the remedial steps taken by Responsible Party in response to instances or allegations of Noncompliance; and
4. a description of remedial actions taken by Responsible Party to prevent the recurrence of such Noncompliance or alleged Noncompliance.
 
Page 39 of 40

K. If any Manufacturer fails to pass a compliance inspection, and thereafter fails requirements to remedy the cited failure(s), or if the Manufacturer otherwise breaches its obligations to perform its services in accordance herewith, the Manufacturer will be terminated immediately by Responsible Party, and Responsible Party shall not thereafter use such Manufacturer to manufacture Licensed Products, components, or related items.
L. If a reputable industry organization or NGO conducting activities in the industry in which Responsible Party operates institutes a program for the enforcement of fair labor practices like the ones set forth in the provisions of this Exhibit, and such program provides for the certification of brands of goods as manufactured in accordance with such fair labor practices, then Responsible Party agrees that it will apply for such certification for the brands associated with the Licensed Products at the earliest opportunity, but in no event later than the time at which Responsible Party seeks such certification for any house-brands or other licensed brands.
The following provisions shall apply solely to Licensee with respect to Developed Licensed Products only:
PART II - TERMINATION
Without prejudice to any other rights or remedy available to Sesame Workshop, Sesame Workshop shall have the right at any time to terminate Licensee’s ability to manufacture and distribute Developed Licensed Products, including but not limited to any existing Developed Licensed Products and any new Developed Licensed Products if Licensee fails to comply with any of the provisions of this Exhibit or any applicable Code of Conduct and such failure is not cured within 30 days after written notice. Compliance with the provisions of this Exhibit and any applicable Code of Conduct shall mean at least the following:
(1) effective implementation by Licensee of internal and independent external monitoring programs consistent with the provisions of this Exhibit and any applicable Code of Conduct;
(2) Licensee’s termination of a manufacturer as required under Section K;
(3) timely remediation by Licensee of all instances of noncompliance; and
(4) effective implementation of procedures to prevent recurrence of Noncompliance.

Page 40 of 40

Exhibit 10.29
Busch Entertainment Corporation
9205 South Park Center Loop, Suite 400
Orlando, Florida 32819
October 6, 2009
Sesame Workshop
Attn: Executive Vice President
One Lincoln Plaza
New York, New York 10023
Re: Modification Consent
To Whom It May Concern:
Anheuser-Busch Companies, Inc. (“A-8 Inc.”) and an affiliate of Blackstone Capital Partners V L.P. (“Purchaser”) have entered into an equity purchase agreement (the “Purchase Agreement”) whereby (i) A-B Inc. has agreed to convert Busch Entertainment Corporation (the “Company”) into a limited liability company (the “Conversion”) and, thereafter, (ii) A-B Inc. has agreed to sell and Purchaser has agreed to buy, in accordance with the terms of the Purchase Agreement, the entire outstanding membership interest of the Company (the “Sale”). The Conversion and the Sale are collectively referred to herein as the “Transaction”.
Section 5.23 of the Amended and Restated Letter Agreement, dated April 1, 1983, between SPI, Inc. (predecessor to the Company) and Children’s Television Workshop (now doing business as Sesame Workshop) (the “1983 Agreement”), provides that, if consummated, the Sale will result in termination of the 1983 Agreement. By this letter (“1983 Agreement Consent”), the Company hereby requests your consent, in accordance with Section 26 of the 1983 Agreement, to modify the 1983 Agreement by deleting Section 5.2.7 thereto, so as to permit the Sale and to provide the other clarifications described below.
The Company and Sesame Workshop also are parties to a license agreement dated August 24, 2006 as amended and modified in a letter agreement dated the same date as this 1983 Agreement Consent (the “2006 Agreement Consent”) in which Sesame Workshop grants to Company certain consents in regard to such agreement (the “2006 Agreement”).
The Company acknowledges that, notwithstanding anything to the contrary in the 1983 Agreement, this modification is expressly conditioned upon prohibiting the Company from further assigning, sublicensing or pledging the 1983 Agreement except as follows: Company may assign, sublicense or pledge the 1983 Agreement without consent only on the same conditions and in the same transaction in which Company is permitted under the 2006 Agreement to assign, sublicense or pledge the 2006 Agreement.
The Company also acknowledges that your waiver and consent is further expressly conditioned upon prohibiting certain further changes in control of Company. To that end, Company and Sesame Workshop hereby agree that any termination right exercised by Sesame Workshop for a “Change of Control,” pursuant to Section 10.02(a) and (b) (subject to the exception in Section 10.03, as revised by the 2006 Agreement Consent) of the 2006 Agreement will automatically terminate the 1983 Agreement.

The Company and Sesame Workshop agree that the provisions of this 1983 Agreement Consent shall prevail over any conflicting provisions contained in the 1983 Agreement, including Section 20 thereof. Further, the Company and Sesame Workshop hereby agree that Section 5.2.7 is hereby deleted from the 1983 Agreement.
As farther consideration for the waiver and amendment herein contained, Sesame Workshop hereby represents and warrants to Company that Sesame Workshop now owns all of the rights granted to Company in the 1983 Agreement including, but not limited to, the CTW Elements and the Muppet Elements (as those terms are defined the 1983 Agreement) and that no consent is needed for the Transaction from any other party to the above agreements or any other agreement between the Company and Sesame Workshop and/or their respective predecessors or affiliates.
Please indicate your consent to the proposed Transaction and the foregoing provisions with respect to the Transaction by countersigning in the space below and returning an original copy of this letter by facsimile or email, with the original to follow by mail, as soon as reasonably possible, to me at the address above, by facsimile to (407) 226-5019 or by e-mail to Jim.Atchison@WorldsofDiscovery.com. The notice provisions in any of the above- mentioned agreements are deemed modified and/or waived to permit this signing process.
If you have any questions or comments concerning the Transaction or this request, please contact me at (407) 226-5001. Thank you for your prompt attention to this matter.
[Signature Page to Follow]

			
Sincerely,	
	
BUSCH ENTERTAINMENT CORPORATION	
		
By:	 	/s/ Jim Atchison	
Name:	 	Jim Atchison	
Title:	 	President	
	
Countersigned	
	
SESAME WORKSHOP (FORMERLY KNOWN AS CHILDREN’S TELEVISION WORKSHOP)	
		
By:	 	/s/ H. Melvin Ming	
Name:	 	H. Melvin Ming	
Title:	 	Chief Operating Officer	
[Signature page to 1983 Agreement]

Exhibit 10.30
Busch Entertainment Corporation
9205 South Park Center Loop, Suite 400
Orlando, Florida 32819
October 6, 2009
Sesame Workshop
Attn: Vice President, Themed Entertainment
One Lincoln Plaza
New York, New York 10023
Re: Change in Control Notification and Consent
To Whom It May Concern:
Anheuser-Busch Companies, Inc, (“A-B Inc.”) and an affiliate of Blackstone Capital Partners V LP (“Purchaser”) have entered into an equity purchase agreement (the “Purchase Agreement”) whereby (i) A-B Inc. has agreed to convert Busch Entertainment Corporation (the “Company”) into a limited liability company (the “Conversion”) and, thereafter, (ii) A-B Inc. has agreed to sell and Purchaser has agreed to buy, in accordance with the terms of the Purchase Agreement, the entire outstanding membership interest of the Company (the “Sale”). The Conversion and the Sale are collectively referred to herein as the “Transaction”.
Under the terms of the License Agreement, dated August 24, 2006, between the Company and Sesame Workshop (the “2006 Agreement”), the Sale will constitute a Change of Control, as defined therein. Pursuant to Section 10.02(a) of the 2006 Agreement, the Company hereby seeks your consent to continue the 2006 Agreement upon completion of the Sale. By signing below, Sesame Workshop hereby (i) consents under Section 10.02(a) to continue the 2006 Agreement; (ii) agrees that this letter serves as Sesame Workshop’s advice in writing under Section 10.02(a); (iii) waives its rights under Section 10.02(a) and 10.02(b) to terminate the 2006 Agreement due to Company’s Change of Control as a result of the Sale; and (iv) agrees that Company has complied with its notice and other obligations in Section 10.02(a).
The Company acknowledges that your consent herein is expressly conditioned upon prohibiting the Company from further assigning or transferring the 2006 Agreement except to certain Affiliates (as defined herein). To that end, by signing below, Company and Sesame Workshop hereby modify the 2006 Agreement as follows:
The last sentence of Section 10.03 of the 2006 Agreement is hereby deleted, and the following language is substituted in its place:
“Affiliate” means any entity controlled by Licensee, whether by virtue of ownership, voting power, management or otherwise.

Except as expressly amended hereby, the terms and conditions of the License Agreement shall remain in full force and effect.
Please indicate your consent to the proposed Sale and the foregoing provisions by countersigning in the space below and returning an original copy of this letter by facsimile or email, with the original to follow by mail, as soon as reasonably possible, to me at the address above, by facsimile to (407) 226-5019 or by e-mail to Jim.Atchison@WorldsofDiscovery.com. The notice provisions in the License Agreement are deemed modified and/or waived to permit this signing process.
If you have any questions or comments concerning the Transaction or this request, please contact me at (407) 226-5001. Thank you for your prompt attention to this matter.
 
cc:	Sesame Workshop	
 	Vice President, General Counsel	

			
Sincerely,	
	
BUSCH ENTERTAINMENT CORPORATION	
		
By:	 	/s/ Jim Atchison	
Name:	 	Jim Atchison	
Title:	 	President	

			
Countersigned	
	
SESAME WORKSHOP	
		
By:	 	/s/ H. Melvin Ming	
Name:	 	H. Melvin Ming	
Title:	 	Chief Operating Officer	

Exhibit 10.31
SEAWORLD ENTERTAINMENT, INC.
2013 OMNIBUS INCENTIVE PLAN
1. Purpose. The purpose of the SeaWorld Entertainment, Inc. 2013 Omnibus Incentive Plan is to provide a means through which the Company and its Affiliates may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors (and prospective directors, officers, employees, consultants and advisors) of the Company and its Affiliates can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s stockholders.
2. Definitions. The following definitions shall be applicable throughout the Plan.
(a) “ Absolute Share Limit ” has the meaning given such term in Section 5(b).
(b) “ Affiliate ” means (i) any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company and/or (ii) to the extent provided by the Committee, any person or entity in which the Company has a significant interest. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise.
(c) “ Award ” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Stock-Based Award and Performance Compensation Award granted under the Plan.
(d) “ Board ” means the Board of Directors of the Company.
(e) “ Cause ” means, in the case of a particular Award, unless the applicable Award agreement states otherwise, (i) the Company or an Affiliate having “cause” to terminate a Participant’s employment or service, as defined in any employment or consulting agreement between the Participant and the Company or an Affiliate in effect at the time of such termination or (ii) in the absence of any such employment or consulting agreement (or the absence of any definition of “Cause” contained therein), (A) the Participant has failed to reasonably perform his or her duties to the Service Recipient, or has failed to follow the lawful instructions of the Board or his or her direct superiors, in each case other than as a result of his or her incapacity due to physical or mental illness or injury, that could reasonably be expected to result in harm (whether financially, reputationally or otherwise) to the Company or an Affiliate, (B) the Participant has engaged or is about to engage in conduct harmful (whether financially, reputationally or otherwise) to the Company or an Affiliate, (C) the Participant has been convicted of, or plead guilty or no contest to, a felony or any crime involving as a material element fraud or dishonesty, (D) the willful misconduct or gross neglect of the Participant that could reasonably be expected to result in harm (whether financially, reputationally or otherwise)

to the Company or an Affiliate, (E) the willful violation by the Participant of the Company’s written policies that could reasonably be expected to result in harm (whether financially, reputationally or otherwise) to the Company or an Affiliate; (F) the Participant’s fraud or misappropriation, embezzlement or misuse of funds or property belonging to the Company or an Affiliate (other than good faith expense account disputes); (G) the Participant’s act of personal dishonesty which involves personal profit in connection with the Participant’s employment or service with the Company or an Affiliate, or (H) the willful breach by the Participant of fiduciary duty owed to the Company or an Affiliate.
(f) “ Change in Control ” means:
(i) the acquisition (whether by purchase, merger, consolidation, combination or other similar transaction) by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% (on a fully diluted basis) of either (A) the then outstanding shares of Common Stock, taking into account as outstanding for this purpose such Common Stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such Common Stock (the “ Outstanding Company Common Stock ”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”); provided, however , that for purposes of this Plan, the following acquisitions shall not constitute a Change in Control: (I) any acquisition by the Company or any Affiliate, (II) any acquisition by any employee benefit plan sponsored or maintained by the Company or any Affiliate, or (III) in respect of an Award held by a particular Participant, any acquisition by the Participant or any group of persons including the Participant (or any entity controlled by the Participant or any group of persons including the Participant);
(ii) during any period of twenty-four months, individuals who, at the beginning of such period, constitute the Board (the “ Incumbent Directors ”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however , that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-12 of Regulation 14A promulgated under the Exchange Act, with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(iii) the sale, transfer or other disposition of all or substantially all of the business or assets of the Company’s Affiliates; or
 
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(iv) the consummation of a reorganization, recapitalization, merger, consolidation, or other similar transaction involving the Company (a “ Business Combination ”), unless immediately following such Business Combination 50% or more of the total voting power of the entity resulting from such Business Combination (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of sufficient voting securities eligible to elect a majority of the board of directors (or the analogous governing body) of such resulting entity), is held by the holders of the Outstanding Company Voting Securities immediately prior to such Business Combination.
(g) “ Code ” means the Internal Revenue Code of 1986, as amended, and any successor thereto. Reference in the Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance under such section, and any amendments or successor provisions to such section, regulations or guidance.
(h) “ Committee ” means the Compensation Committee of the Board or subcommittee thereof if required with respect to actions taken to comply with Section 162(m) of the Code in respect of Awards or, if no such Compensation Committee or subcommittee thereof exists, the Board.
(i) “ Common Stock ” means the common stock, par value $0.01 per share, of the Company (and any stock or other securities into which such Common Stock may be converted or into which it may be exchanged).
(j) “ Company ” means SeaWorld Entertainment, Inc., a Delaware corporation, and any successor thereto.
(k) “ Date of Grant ” means the date on which the granting of an Award is authorized, or such other date as may be specified in such authorization.
(l) “ Detrimental Activity ” means any of the following: (i) unauthorized disclosure of any confidential or proprietary information of the Company or its Affiliates, (ii) any activity that would be grounds to terminate the Participant’s employment or service with the Company or an Affiliate for Cause, (iii) whether in writing or orally, maligning, denigrating or disparaging the Company, its Affiliates or their respective predecessors and successors, or any of the current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of the foregoing, with respect to any of their respective past or present activities, or otherwise publishing (whether in writing or orally) statements that tend to portray any of the aforementioned persons or entities in an unfavorable light, or (iv) the breach of any noncompetition, nonsolicitation or other agreement containing restrictive covenants, with the Company or its Affiliates.
(m) “ Designated Foreign Subsidiaries ” means all Affiliates organized under the laws of any jurisdiction or country other than the United States of America that may be designated by the Board or the Committee from time to time.
(n) “ Disability ” means, unless in the case of a particular Award the applicable Award agreement states otherwise, the Company or an Affiliate having cause to terminate a Participant’s employment or service on account of “disability,” as defined in any then-existing employment, consulting or other similar agreement between the Participant and the Company or
 
3

an Affiliate or, in the absence of such an employment, consulting or other similar agreement, a condition entitling the Participant to receive benefits under a long-term disability plan of the Company or an Affiliate, or, in the absence of such a plan, the complete and permanent inability by reason of illness or accident to perform the duties of the occupation at which a Participant was employed or served when such disability commenced. Any determination of whether Disability exists shall be made by the Committee in its sole discretion.
(o) “ Effective Date ” means .
(p) “ Eligible Director ” means a person who is (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of the Code and (iii) an “independent director” under the rules of the NYSE or any other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted, or a person meeting any similar requirement under any successor rule or regulation.
(q) “ Eligible Person ” means any (i) individual employed by the Company or an Affiliate; provided, however , that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating thereto; (ii) director or officer of the Company or an Affiliate; (iii) consultant or advisor to the Company or an Affiliate who may be offered securities registrable pursuant to a registration statement on Form S-8 under the Securities Act; or (iv) any prospective employees, directors, officers, consultants or advisors who have accepted offers of employment or consultancy from the Company or its Affiliates (and would satisfy the provisions of clauses (i) through (iii) above once he or she begins employment with or providing services to the Company or its Affiliates), who, in the case of each of clauses (i) through (iv) above has entered into an Award agreement or who has received written notification from the Committee or its designee that they have been selected to participate in the Plan. Solely for purposes of this Section 2(q), “Affiliate” shall be limited to (1) a Subsidiary, (2) any parent corporation of the Company within the meaning of Section 424(e) of the Code (“ Parent ”), (3) any corporation, trade or business 50% or more of the combined voting power of such entity’s outstanding securities is directly or indirectly controlled by the Company or any Subsidiary or Parent, (4) any corporation, trade or business which directly or indirectly controls 50% or more of the combined voting power of the outstanding securities of the Company and (5) any other entity in which the Company or any Subsidiary or Parent has a material equity interest and which is designated as an “Affiliate” by the Committee.
(r) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.
(s) “ Exercise Price ” has the meaning given such term in Section 7(b) of the Plan.
 
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(t) “ Fair Market Value ” means, on a given date, (i) if the Common Stock is listed on a national securities exchange, the closing sales price of the Common Stock reported on the primary exchange on which the Common Stock is listed and traded on such date, or, if there are no such sales on that date, then on the last preceding date on which such sales were reported; (ii) if the Common Stock is not listed on any national securities exchange but is quoted in an inter-dealer quotation system on a last sale basis, the average between the closing bid price and ask price reported on such date, or, if there is no such sale on that date, then on the last preceding date on which a sale was reported; or (iii) if the Common Stock is not listed on a national securities exchange or quoted in an inter-dealer quotation system on a last sale basis, the amount determined by the Committee in good faith to be the fair market value of the Common Stock; provided , however , as to any Awards granted on the date of the Company’s initial public offering, “Fair Market Value” shall be equal to the per share price the Common Stock is offered to the public in connection with such initial public offering.
(u) “ Immediate Family Members ” shall have the meaning set forth in Section 14(b).
(v) “ Incentive Stock Option ” means an Option which is designated by the Committee as an incentive stock option as described in Section 422 of the Code and otherwise meets the requirements set forth in the Plan.
(w) “ Indemnifiable Person ” shall have the meaning set forth in Section 4(e) of the Plan.
(x) “ Negative Discretion ” shall mean the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size of a Performance Compensation Award consistent with Section 162(m) of the Code.
(y) “ Nonqualified Stock Option ” means an Option which is not designated by the Committee as an Incentive Stock Option.
(z) “ Non-Employee Director ” means a member of the Board who is not an employee of the Company or any Affiliate.
(aa) “ NYSE ” means the New York Stock Exchange.
(bb) “ Option ” means an Award granted under Section 7 of the Plan.
(cc) “ Option Period ” has the meaning given such term in Section 7(c) of the Plan.
(dd) “ Other Stock-Based Award ” means an Award granted under Section 10 of the Plan.
(ee) “ Participant ” means an Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award pursuant to the Plan.
(ff) “ Performance Compensation Award ” shall mean any Award designated by the Committee as a Performance Compensation Award pursuant to Section 11 of the Plan.
 
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(gg) “ Performance Criteria ” shall mean the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goals for a Performance Period with respect to any Performance Compensation Award under the Plan.
(hh) “ Performance Formula ” shall mean, for a Performance Period, the one or more objective formulae applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.
(ii) “ Performance Goals ” shall mean, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria.
(jj) “ Performance Period ” shall mean the one or more periods of time of not less than 12 months, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance Compensation Award.
(kk) “ Permitted Transferee ” shall have the meaning set forth in Section 14(b) of the Plan.
(ll) “ Person ” means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.
(mm) “ Plan ” means this SeaWorld Entertainment, Inc. 2013 Omnibus Incentive Plan.
(nn) “ Restricted Period ” means the period of time determined by the Committee during which an Award is subject to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether an Award has been earned.
(oo) “ Restricted Stock ” means Common Stock, subject to certain specified restrictions (including, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of the Plan.
(pp) “ Restricted Stock Unit ” means an unfunded and unsecured promise to deliver shares of Common Stock, cash, other securities or other property, subject to certain restrictions (including, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of the Plan.
(qq) “ SAR Period ” has the meaning given such term in Section 8(c) of the Plan.
(rr) “ Securities Act ” means the Securities Act of 1933, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Securities Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.
 
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(ss) “ Service Recipient ” means, with respect to a Participant holding a given Award, either the Company or an Affiliate of the Company by which the original recipient of such Award is, or following a Termination was most recently, principally employed or to which such original recipient provides, or following a Termination was most recently providing, services, as applicable.
(tt) “ Stock Appreciation Right ” or “ SAR ” means an Award granted under Section 8 of the Plan.
(uu) “ Strike Price ” has the meaning given such term in Section 8(b) of the Plan.
(vv) “ Subsidiary ” means, with respect to any specified Person:
(i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of such entity’s voting securities (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
(ii) any partnership (or any comparable foreign entity) (A) the sole general partner (or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (B) the only general partners (or functional equivalents thereof) of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).
(ww) “ Substitute Award ” has the meaning given such term in Section 5(e).
(xx) “ Sub Plans ” means, any sub-plan to this Plan that has been adopted by the Board or the Committee for the purpose of permitting the offering of Awards to employees of certain Designated Foreign Subsidiaries or otherwise outside the United States of America, with each such sub-plan designed to comply with local laws applicable to offerings in such foreign jurisdictions. Although any Sub Plan may be designated a separate and independent plan from the Plan in order to comply with applicable local laws, the Absolute Share Limit shall apply in the aggregate to the Plan and any Sub Plan adopted hereunder.
(yy) “ Termination ” means the termination of a Participant’s employment or service, as applicable, with the Service Recipient.
3. Effective Date; Duration. The Plan shall be effective as of the Effective Date. The expiration date of the Plan, on and after which date no Awards may be granted hereunder, shall be the tenth anniversary of the Effective Date; provided, however , that such expiration shall not affect Awards then outstanding, and the terms and conditions of the Plan shall continue to apply to such Awards.
 
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4. Administration.
(a) The Committee shall administer the Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the Board is not acting as the Committee under the Plan) or necessary to obtain the exception for performance-based compensation under Section 162(m) of the Code, as applicable, it is intended that each member of the Committee shall, at the time he or she takes any action with respect to an Award under the Plan, be an Eligible Director. However, the fact that a Committee member shall fail to qualify as an Eligible Director shall not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.
(b) Subject to the provisions of the Plan and applicable law, the Committee shall have the sole and plenary authority, in addition to other express powers and authorizations conferred on the Committee by the Plan, to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of shares of Common Stock to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, shares of Common Stock, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash, Common Stock, other securities, other Awards or other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant or of the Committee; (vii) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
(c) Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time. Without limiting the generality of the foregoing, the Committee may delegate to one or more officers of the Company or any Subsidiary the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Committee herein, and which may be so delegated as a matter of law, except for grants of Awards to persons (i) who are non-employee members of the Board or otherwise are subject to Section 16 of the Exchange Act or (ii) who are, or who are reasonably expected to be, “covered employees” for purposes of Section 162(m) of the Code.
 
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(d) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award or any documents evidencing Awards granted pursuant to the Plan shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities, including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder of the Company.
(e) No member of the Board, the Committee or any employee or agent of the Company (each such person, an “ Indemnifiable Person ”) shall be liable for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award hereunder (unless constituting fraud or a willful criminal act or omission). Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken or determination made under the Plan or any Award agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnifiable Person, and the Company shall advance to such Indemnifiable Person any such expenses promptly upon written request (which request shall include an undertaking by the Indemnifiable Person to repay the amount of such advance if it shall ultimately be determined as provided below that the Indemnifiable Person is not entitled to be indemnified); provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions or determinations of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of Incorporation or Bylaws. The foregoing right of indemnification shall not be exclusive of or otherwise supersede any other rights of indemnification to which such Indemnifiable Persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, individual indemnification agreement or contract or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them harmless.
(f) Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to such Awards. Any such actions by the Board shall be subject to the applicable rules of the NYSE or any other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted. In any such case, the Board shall have all the authority granted to the Committee under the Plan.
 
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5. Grant of Awards; Shares Subject to the Plan; Limitations.
(a) The Committee may, from time to time, grant Awards to one or more Eligible Persons.
(b) Awards granted under the Plan shall be subject to the following limitations: (i) subject to Section 12 of the Plan, no more than     shares of Common Stock (the “ Absolute Share Limit ”) shall be available for Awards under the Plan; (ii) subject to Section 12 of the Plan, grants of Options or SARs under the Plan in respect of no more than     shares of Common Stock may be made to any individual Participant during any single fiscal year of the Company (for this purpose, if a SAR is granted in tandem with an Option (such that the SAR expires with respect to the number of shares of Common Stock for which the Option is exercised), only the shares underlying the Option shall count against this limitation); (iii) subject to Section 12 of the Plan, no more than the number of shares of Common Stock equal to the Absolute Share Limit may be delivered in the aggregate pursuant to the exercise of Incentive Stock Options granted under the Plan; (iv) subject to Section 12 of the Plan, no more than shares of Common Stock may be delivered in respect of Performance Compensation Awards denominated in shares of Common Stock granted pursuant to Section 11 of the Plan to any individual Participant for a single fiscal year during a Performance Period (or with respect to each single fiscal year in the event a Performance Period extends beyond a single fiscal year), or in the event such share denominated Performance Compensation Award is paid in cash, other securities, other Awards or other property, no more than the Fair Market Value of such shares of Common Stock on the last day of the Performance Period to which such Award relates; and (v) the maximum amount that can be paid to any individual Participant for a single fiscal year during a Performance Period (or with respect to each single fiscal year in the event a Performance Period extends beyond a single fiscal year) pursuant to a Performance Compensation Award denominated in cash (described in Section 11(a) of the Plan) shall be $        .
(c) Other than with respect to Substitute Awards, to the extent that an Award expires or is canceled, forfeited, terminated, settled in cash, or otherwise is settled without a delivery to the Participant of the full number of shares of Common Stock to which the Award related, the undelivered shares will again be available for grant. Shares of Common Stock withheld in payment of the exercise price or taxes relating to an Award and shares equal to the number of shares surrendered in payment of any Exercise Price or Strike Price, or taxes relating to an Award, shall be deemed to constitute shares not delivered to the Participant and shall be deemed to again be available for Awards under the Plan; provided, however , that such shares shall not become available for issuance hereunder if either (i) the applicable shares are withheld or surrendered following the termination of the Plan or (ii) at the time the applicable shares are withheld or surrendered, it would constitute a material revision of the Plan subject to stockholder approval under any then-applicable rules of the national securities exchange on which the Common Stock is listed.
(d) Shares of Common Stock delivered by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the open market or by private purchase or a combination of the foregoing.
 
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(e) Awards may, in the sole discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity directly or indirectly acquired by the Company or with which the Company combines (“ Substitute Awards ”). Substitute Awards shall not be counted against the Absolute Share Limit; provided , that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding options intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code shall be counted against the aggregate number of shares of Common Stock available for Awards of Incentive Stock Options under the Plan. Subject to applicable stock exchange requirements, available shares under a stockholder approved plan of an entity directly or indirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect the acquisition or combination transaction) may be used for Awards under the Plan and shall not reduce the number of shares of Common Stock available for delivery under the Plan.
6. Eligibility. Participation in the Plan shall be limited to Eligible Persons.
7. Options.
(a) General . Each Option granted under the Plan shall be evidenced by an Award agreement, in written or electronic form, which agreement need not be the same for each Participant. Each Option so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award agreement. All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award agreement expressly states that the Option is intended to be an Incentive Stock Option. Incentive Stock Options shall be granted only to Eligible Persons who are employees of the Company and its Affiliates, and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under the Code. No Option shall be treated as an Incentive Stock Option unless the Plan has been approved by the stockholders of the Company in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of the Code, provided that any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained. In the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or portion thereof shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan.
(b) Exercise Price . Except as otherwise provided by the Committee in the case of Substitute Awards, the exercise price (“ Exercise Price ”) per share of Common Stock for each Option shall not be less than 100% of the Fair Market Value of such share (determined as of the Date of Grant); provided, however , that in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate, the Exercise Price per share shall be no less than 110% of the Fair Market Value per share on the Date of Grant.
 
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(c) Vesting and Expiration .
(i) Options shall vest and become exercisable in such manner and on such date or dates determined by the Committee and shall expire after such period, not to exceed ten years, as may be determined by the Committee (the “ Option Period ”); provided , that if the Option Period (other than in the case of an Incentive Stock Option) would expire at a time when trading in the shares of Common Stock is prohibited by the Company’s insider trading policy (or Company-imposed “blackout period”), the Option Period shall be automatically extended until the 30 th day following the expiration of such prohibition; provided, however , that in no event shall the Option Period exceed five years from the Date of Grant in the case of an Incentive Stock Option granted to a Participant who on the Date of Grant owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate.
(ii) Unless otherwise provided by the Committee, in the event of (A) a Participant’s Termination other than for Cause or (B) a Participant’s Termination due to death or Disability, in each case within 12 months following a Change in Control, each outstanding Option granted to such Participant shall become fully vested and immediately exercisable as of the date of such Termination; provided , that in the event the vesting or exercisability of any Option would otherwise be subject to the achievement of performance conditions, the portion of any such Option that shall become fully vested and immediately exercisable shall be based on (x) actual performance through the date of termination as determined by the Committee, or (y) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, in each case prorated based on the time elapsed from the date of grant to the date of Termination.
(iii) Unless otherwise provided by the Committee, in the event of (A) a Participant’s Termination by the Company for Cause, all outstanding Options granted to such Participant shall immediately terminate and expire, (B) a Participant’s Termination due to death or Disability, after taking into account any accelerated vesting under the preceding clause (ii), each outstanding unvested Option granted to such Participant shall immediately terminate and expire, and each outstanding vested Option shall remain exercisable for one (1) year thereafter (but in no event beyond the expiration of the Option Period) and (C) a Participant’s Termination for any other reason, after taking into account any accelerated vesting under the preceding clause (ii), each outstanding unvested Option granted to such Participant shall immediately terminate and expire, and each outstanding vested Option shall remain exercisable for ninety (90) days thereafter (but in no event beyond the expiration of the Option Period).
(d) Method of Exercise and Form of Payment . No shares of Common Stock shall be delivered pursuant to any exercise of an Option until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an amount equal to any Federal, state, local and non-U.S. income and employment taxes required to be withheld. Options which have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company (or telephonic instructions to the extent provided by the Committee) in accordance with the terms of the Option accompanied by payment of the Exercise Price. The Exercise Price shall be payable (i) in cash, check, cash equivalent and/or shares of Common Stock valued at the Fair Market Value at the time the Option is exercised
 
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(including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of shares of Common Stock in lieu of actual delivery of such shares to the Company); provided , that such shares of Common Stock are not subject to any pledge or other security interest; or (ii) by such other method as the Committee may permit in its sole discretion, including without limitation: (A) in other property having a fair market value on the date of exercise equal to the Exercise Price or (B) if there is a public market for the shares of Common Stock at such time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered (including telephonically to the extent permitted by the Committee) a copy of irrevocable instructions to a stockbroker to sell the shares of Common Stock otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price or (C) a “net exercise” procedure effected by withholding the minimum number of shares of Common Stock otherwise deliverable in respect of an Option that are needed to pay the Exercise Price and all applicable required withholding taxes. Any fractional shares of Common Stock shall be settled in cash.
(e) Notification upon Disqualifying Disposition of an Incentive Stock Option . Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date he or she makes a disqualifying disposition of any Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such Common Stock before the later of (A) two years after the Date of Grant of the Incentive Stock Option or (B) one year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession, as agent for the applicable Participant, of any Common Stock acquired pursuant to the exercise of an Incentive Stock Option until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Common Stock.
(f) Compliance With Laws, etc . Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in a manner which the Committee determines would violate the Sarbanes-Oxley Act of 2002, or any other applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.
8. Stock Appreciation Rights.
(a) General . Each SAR granted under the Plan shall be evidenced by an Award agreement. Each SAR so granted shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award agreement. Any Option granted under the Plan may include tandem SARs. The Committee also may award SARs to Eligible Persons independent of any Option.
(b) Strike Price . Except as otherwise provided by the Committee in the case of Substitute Awards, the strike price (“ Strike Price ”) per share of Common Stock for each SAR shall not be less than 100% of the Fair Market Value of such share (determined as of the Date of Grant). Notwithstanding the foregoing, a SAR granted in tandem with (or in substitution for) an Option previously granted shall have a Strike Price equal to the Exercise Price of the corresponding Option.
 
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(c) Vesting and Expiration .
(i) A SAR granted in connection with an Option shall become exercisable and shall expire according to the same vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall vest and become exercisable and shall expire in such manner and on such date or dates determined by the Committee and shall expire after such period, not to exceed ten years, as may be determined by the Committee (the “ SAR Period ”); provided , that if the SAR Period would expire at a time when trading in the shares of Common Stock is prohibited by the Company’s insider trading policy (or Company-imposed “blackout period”), the SAR Period shall be automatically extended until the 30th day following the expiration of such prohibition.
(ii) Unless otherwise provided by the Committee, in the event of (A) a Participant’s Termination other than for Cause or (B) a Participant’s Termination due to death or Disability, in each case within 12 months following a Change in Control, each outstanding SAR granted to such Participant shall become fully vested and immediately exercisable as of the date of such Termination; provided , that in the event the vesting or exercisability of any SAR would otherwise be subject to the achievement of performance conditions, the portion of any such SAR that shall become fully vested and immediately exercisable shall be based on (x) actual performance through the date of termination as determined by the Committee, or (y) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, in each case prorated based on the time elapsed from the date of grant to the date of Termination.
(iii) Unless otherwise provided by the Committee, in the event of (A) a Participant’s Termination by the Company for Cause, all outstanding SARs granted to such Participant shall immediately terminate and expire, (B) a Participant’s Termination due to death or Disability, after taking into account any accelerated vesting under the preceding clause (ii), each outstanding unvested SAR granted to such Participant shall immediately terminate and expire, and each outstanding vested SAR shall remain exercisable for one (1) year thereafter (but in no event beyond the expiration of the SAR Period) and (C) a Participant’s Termination for any other reason, after taking into account any accelerated vesting under the preceding clause (ii), each outstanding unvested SAR granted to such Participant shall immediately terminate and expire, and each outstanding vested SAR shall remain exercisable for ninety (90) days thereafter (but in no event beyond the expiration of the SAR Period).
(d) Method of Exercise . SARs which have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such SARs were awarded.
 
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(e) Payment . Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of shares subject to the SAR that are being exercised multiplied by the excess, if any, of the Fair Market Value of one share of Common Stock on the exercise date over the Strike Price, less an amount equal to any Federal, state, local and non-U.S. income and employment taxes required to be withheld. The Company shall pay such amount in cash, in shares of Common Stock valued at Fair Market Value, or any combination thereof, as determined by the Committee. Any fractional shares of Common Stock shall be settled in cash.
(f) Substitution of SARs for Nonqualified Stock Options . The Committee shall have the authority in its sole discretion to substitute, without the consent of the affected Participant or any holder or beneficiary of SARs, SARs settled in shares of Common Stock (or settled in shares or cash in the sole discretion of the Committee) for outstanding Nonqualified Stock Options, provided that (i) the substitution shall not otherwise result in a modification of the terms of any such Nonqualified Stock Option, (ii) the number of shares of Common Stock underlying the substituted SARs shall be the same as the number of shares of Common Stock underlying such Nonqualified Stock Options and (iii) the Strike Price of the substituted SARs shall be equal to the Exercise Price of such Nonqualified Stock Options; provided, however , that if, in the opinion of the Company’s independent public auditors, the foregoing provision creates adverse accounting consequences for the Company, such provision shall be considered null and void.
9. Restricted Stock and Restricted Stock Units.
(a) General . Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award agreement. Each Restricted Stock and Restricted Stock Unit grant shall be subject to the conditions set forth in this Section 9, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award agreement.
(b) Stock Certificates and Book Entry; Escrow or Similar Arrangement . Upon the grant of Restricted Stock, the Committee shall cause a stock certificate registered in the name of the Participant to be issued or shall cause share(s) of Common Stock to be registered in the name of the Participant and held in book-entry form subject to the Company’s directions and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable, and (ii) the appropriate stock power (endorsed in blank) with respect to the Restricted Stock covered by such agreement. If a Participant shall fail to execute and deliver (in a manner permitted under Section 14(a) or as otherwise determined by the Committee) an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank stock power within the amount of time specified by the Committee, the Award shall be null and void. Subject to the restrictions set forth in this Section 9 and the applicable Award agreement, the Participant generally shall have the rights and privileges of a stockholder as to such Restricted Stock, including without limitation the right to vote such Restricted Stock ( provided that if the lapsing of restrictions with respect to any grant of Restricted Stock is contingent on satisfaction of performance conditions (other than or in addition to the passage of time), any dividends payable on such shares of Restricted Stock shall be held by the Company and delivered (without interest) to the
 
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Participant within 15 days following the date on which the restrictions on such Restricted Stock lapse (and the right to any such accumulated dividends shall be forfeited upon the forfeiture of the Restricted Stock to which such dividends relate). To the extent shares of Restricted Stock are forfeited, any stock certificates issued to the Participant evidencing such shares shall be returned to the Company, and all rights of the Participant to such shares and as a stockholder with respect thereto shall terminate without further obligation on the part of the Company.
(c) Vesting; Acceleration of Lapse of Restrictions .
(i) The Restricted Period with respect to Restricted Stock and Restricted Stock Units shall lapse in such manner and on such date or dates determined by the Committee, and the Committee shall determine the treatment of the unvested portion of Restricted Stock and Restricted Stock Units upon Termination of the Participant granted the applicable Award.
(ii) Unless otherwise provided by the Committee, in the event of (A) a Participant’s Termination by the Company other than for Cause, or (B) a Participant’s Termination due to death or Disability, in each case within 12 months following a Change in Control, outstanding Restricted Stock and Restricted Stock Units granted to such Participant shall become fully vested and the restrictions thereon shall immediately lapse as of the date of such Termination; provided , that in the event the vesting or lapse of restrictions of any Restricted Stock or Restricted Stock Units would otherwise be subject to the achievement of performance conditions, the portion of any such Restricted Stock or Restricted Stock Units that shall become fully vested and free from such restrictions shall be based on (x) actual performance through the date of termination as determined by the Committee, or (y) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, in each case prorated based on the time elapsed from the date of grant to the date of Termination.
(d) Delivery of Restricted Stock and Settlement of Restricted Stock Units .
(i) Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in the applicable Award agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the stock certificate (or, if applicable, a notice evidencing a book entry notation) evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (rounded down to the nearest full share). Dividends, if any, that may have been withheld by the Committee and attributable to any particular share of Restricted Stock shall be distributed to the Participant in cash or, at the sole discretion of the Committee, in shares of Common Stock having a Fair Market Value (on the date of distribution) equal to the amount of such dividends, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall have no right to such dividends.
 
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(ii) Unless otherwise provided by the Committee in an Award agreement, upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock (or other securities or other property, as applicable) for each such outstanding Restricted Stock Unit; provided, however , that the Committee may, in its sole discretion, elect to (i) pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock in respect of such Restricted Stock Units or (ii) defer the delivery of Common Stock (or cash or part Common Stock and part cash, as the case may be) beyond the expiration of the Restricted Period if such extension would not cause adverse tax consequences under Section 409A of the Code. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed with respect to such Restricted Stock Units. To the extent provided in an Award agreement, the holder of outstanding Restricted Stock Units shall be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on shares of Common Stock) either in cash or, at the sole discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such dividends ( and interest may, at the sole discretion of the Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Committee), which accumulated dividend equivalents (and interest thereon, if applicable) shall be payable at the same time as the underlying Restricted Stock Units are settled following the release of restrictions on such Restricted Stock Units, and, if such Restricted Stock Units are forfeited, the Participant shall have no right to such dividend equivalent payments.
(e) Legends on Restricted Stock . Each certificate representing Restricted Stock awarded under the Plan, if any, shall bear a legend substantially in the form of the following, in addition to any other information the Company deems appropriate, until the lapse of all restrictions with respect to such Common Stock:
TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED PURSUANT TO THE TERMS OF THE SEAWORLD ENTERTAINMENT, INC. 2013 OMNIBUS INCENTIVE PLAN AND A RESTRICTED STOCK AWARD AGREEMENT, BETWEEN SEAWORLD ENTERTAINMENT, INC. AND PARTICIPANT. A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SEAWORLD ENTERTAINMENT, INC.
10. Other Stock-Based Awards.
(a) The Committee may issue unrestricted Common Stock, rights to receive grants of Awards at a future date, or other Awards denominated in Common Stock (including, without limitation, performance shares or performance units), under the Plan to Eligible Persons, alone or in tandem with other Awards, in such amounts as the Committee shall from time to time in its sole discretion determine. Each Other Stock-Based Award granted under the Plan shall be evidenced by an Award agreement. Each Other Stock-Based Award so granted shall be subject to such conditions not inconsistent with the Plan as may be reflected in the applicable Award agreement.
 
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(b) Unless otherwise provided by the Committee, in the event of (A) a Participant’s Termination by the Company other than for Cause, or (B) a Participant’s Termination due to death or Disability, in each case within 12 months following a Change in Control, outstanding Other Stock-Based Awards granted to such Participant shall become fully vested and the restrictions thereon shall immediately lapse as of the date of such Termination; provided , that in the event the vesting or lapse of restrictions of any Other Stock-Based Awards would otherwise be subject to the achievement of performance conditions, the portion of any such Other Stock-Based Awards that shall become fully vested and free from such restrictions shall be based on (x) actual performance through the date of termination as determined by the Committee, or (y) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, in each case prorated based on the time elapsed from the date of grant to the date of Termination.
11. Performance Compensation Awards.
(a) General . The Committee shall have the authority, at or before the time of grant of any Award, to designate such Award as a Performance Compensation Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code. The Committee shall also have the authority to make an award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code. Notwithstanding anything in the Plan to the contrary, if the Company determines that a Participant who has been granted an Award designated as a Performance Compensation Award is not (or is no longer) a “covered employee” (within the meaning of Section 162(m) of the Code), the terms and conditions of such Award may be modified without regard to any restrictions or limitations set forth in this Section 11 (but subject otherwise to the provisions of Section 13 of the Plan).
(b) Discretion of Committee with Respect to Performance Compensation Awards . With regard to a particular Performance Period, the Committee shall have sole discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) that is (are) to apply and the Performance Formula. Within the first 90 days of a Performance Period (or, within any other maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing.
(c) Performance Criteria . The Performance Criteria that will be used to establish the Performance Goal(s) may be based on the attainment of specific levels of performance of the Company (and/or one or more Affiliates, divisions or operational and/or business units, product lines, brands, business segments, administrative departments, or any combination of the foregoing) and shall be limited to the following: (i) net earnings or net income (before or after taxes); (ii) basic or diluted earnings per share (before or after taxes); (iii) net revenue or net
 
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revenue growth; (iv) gross revenue or gross revenue growth, gross profit or gross profit growth; (v) net operating profit (before or after taxes); (vi) return measures (including, but not limited to, return on investment, assets, capital, employed capital, invested capital, equity, or sales); (vii) cash flow measures (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital), which may but are not required to be measured on a per share basis; (viii) earnings before or after taxes, interest, depreciation and/or amortization (including EBIT and EBITDA); (ix) gross or net operating margins; (x) productivity ratios; (xi) share price (including, but not limited to, growth measures and total stockholder return); (xii) expense targets or cost reduction goals, general and administrative expense savings; (xiii) operating efficiency; (xiv) objective measures of customer satisfaction; (xv) working capital targets; (xvi) measures of economic value added or other ‘value creation’ metrics; (xvii) inventory control; (xviii) enterprise value; (xix) sales; (xx) stockholder return; (xxi) client retention; (xxii) competitive market metrics; (xxiii) employee retention; (xxiv) timely completion of new product rollouts; (xxv) timely launch of new facilities; (xxvi) measurements related to a new purchasing “co-op”; (xxvii) objective measures of personal targets, goals or completion of projects (including but not limited to succession and hiring projects, completion of specific acquisitions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional or project budgets); (xxviii) system-wide revenues; (xxix) royalty income; (xxx) comparisons of continuing operations to other operations; (xxxi) market share; (xxxii) cost of capital, debt leverage year-end cash position or book value; (xxxiii) strategic objectives, development of new product lines and related revenue, sales and margin targets, franchisee growth and retention, menu design and growth, co-branding or international operations; or (xxxiv) any combination of the foregoing. Any one or more of the Performance Criteria may be stated as a percentage of another Performance Criteria, or used on an absolute or relative basis to measure the performance of the Company and/or one or more Affiliates as a whole or any divisions or operational and/or business units, product lines, brands, business segments, administrative departments of the Company and/or one or more Affiliates or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Criteria may be compared to the performance of a selected group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph. To the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days of a Performance Period (or, within any other maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period.
(d) Modification of Performance Goal(s) . In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Criteria without obtaining stockholder approval of such alterations, the Committee shall have sole discretion to make such alterations without obtaining stockholder approval. Unless otherwise determined by the Committee at the time a Performance Compensation Award is granted, the Committee shall, during the first 90 days of a Performance Period (or, within any other maximum period allowed under Section 162(m) of the Code), or at any time thereafter to the extent the exercise of such authority at such time would not cause the Performance Compensation Awards granted to any Participant for such Performance Period to fail to qualify
 
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as “performance-based compensation” under Section 162(m) of the Code, specify adjustments or modifications to be made to the calculation of a Performance Goal for such Performance Period, based on and in order to appropriately reflect the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring items as described in Accounting Standards Codification Topic 225-20 (or any successor pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific, unusual or nonrecurring events, or objectively determinable category thereof; (viii) foreign exchange gains and losses; (ix) discontinued operations and nonrecurring charges; and (x) a change in the Company’s fiscal year.
(e) Payment of Performance Compensation Awards .
(i) Condition to Receipt of Payment . Unless otherwise provided in the applicable Award agreement, a Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.
(ii) Limitation . Unless otherwise provided in the applicable Award agreement, a Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (A) the Performance Goals for such period are achieved; and (B) all or some of the portion of such Participant’s Performance Compensation Award has been earned for the Performance Period based on the application of the Performance Formula to such achieved Performance Goals; provided, however , that in the event of (x) a Participant’s Termination by the Company other than for Cause, or (y) a Participant’s Termination due to death or Disability, in each case within 12 months following a Change in Control, the Participant shall receive payment in respect of a Performance Compensation Award based on (1) actual performance through the date of Termination as determined by the Committee, or (2) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee (but not to the extent that application of this clause (2) would cause Section 162(m) of the Code to result in the loss of the deduction of the compensation payable in respect of such Performance Compensation Award for any Participant reasonably expected to be a “covered employee” within the meaning of Section 162(m) of the Code), in each case prorated based on the time elapsed from the date of grant to the date of Termination.
(iii) Certification . Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the amount of each Participant’s Performance Compensation Award actually payable for the Performance Period and, in so doing, may apply Negative Discretion.
 
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(iv) Use of Negative Discretion . In determining the actual amount of an individual Participant’s Performance Compensation Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of Negative Discretion. Unless otherwise provided in the applicable Award agreement, the Committee shall not have the discretion to (A) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained; or (B) increase a Performance Compensation Award above the applicable limitations set forth in Section 5 of the Plan.
(f) Timing of Award Payments . Unless otherwise provided in the applicable Award agreement, Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively practicable following completion of the certifications required by this Section 11. Any Performance Compensation Award that has been deferred shall not (between the date as of which the Award is deferred and the payment date) increase (i) with respect to a Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Committee or (ii) with respect to a Performance Compensation Award that is payable in shares of Common Stock, by an amount greater than the appreciation of a share of Common Stock from the date such Award is deferred to the payment date. Any Performance Compensation Award that is deferred and is otherwise payable in shares of Common Stock shall be credited (during the period between the date as of which the Award is deferred and the payment date) with dividend equivalents (in a manner consistent with the methodology set forth in the last sentence of Section 9(d)(ii)).
12. Changes in Capital Structure and Similar Events. In the event of (a) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of Common Stock or other securities of the Company, issuance of warrants or other rights to acquire shares of Common Stock or other securities of the Company, or other similar corporate transaction or event (including, without limitation, a Change in Control) that affects the shares of Common Stock, or (b) unusual or nonrecurring events (including, without limitation, a Change in Control) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate, then the Committee shall make any such adjustments in such manner as it may deem equitable, including without limitation, any or all of the following:
(i) adjusting any or all of (A) the Absolute Share Limit, or any other limit applicable under the Plan with respect to the number of Awards which may be granted hereunder, (B) the number of shares of Common Stock or other securities of the Company (or number and kind of other securities or other property) which may be delivered in respect of Awards or with respect to which Awards may be granted under the Plan (including, without limitation, adjusting any or all of the limitations under Section 5
 
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of the Plan) and (C) the terms of any outstanding Award, including, without limitation, (1) the number of shares of Common Stock or other securities of the Company (or number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the Exercise Price or Strike Price with respect to any Award or (3) any applicable performance measures (including, without limitation, Performance Criteria and Performance Goals);
(ii) providing for a substitution or assumption of Awards (or awards of an acquiring company), accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time (which shall not be required to be more than ten (10) days) for Participants to exercise outstanding Awards prior to the occurrence of such event (and any such Award not so exercised shall terminate upon the occurrence of such event); and
(iii) cancelling any one or more outstanding Awards and causing to be paid to the holders holding vested Awards (including any Awards that would vest as a result of the occurrence of such event but for such cancellation) the value of such Awards, if any, as determined by the Committee (which if applicable may be based upon the price per share of Common Stock received or to be received by other stockholders of the Company in such event), including without limitation, in the case of an outstanding Option or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the shares of Common Stock subject to such Option or SAR over the aggregate Exercise Price or Strike Price of such Option or SAR, respectively (it being understood that, in such event, any Option or SAR having a per share Exercise Price or Strike Price equal to, or in excess of, the Fair Market Value of a share of Common Stock subject thereto may be canceled and terminated without any payment or consideration therefor);
provided, however , that in the case of any “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor pronouncement thereto)), the Committee shall make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring. Any adjustment in Incentive Stock Options under this Section 12 (other than any cancellation of Incentive Stock Options) shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code, and any adjustments under this Section 12 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Any such adjustment shall be conclusive and binding for all purposes. Payments to holders pursuant to clause (iii) above shall be made in cash or, in the sole discretion of the Committee, in the form of such other consideration necessary for a Participant to receive property, cash, or securities (or combination thereof) as such Participant would have been entitled to receive upon the occurrence of the transaction if the Participant had been, immediately prior to such transaction, the holder of the number of shares of Common Stock covered by the Award at such time (less any applicable Exercise Price or Strike Price). In addition, prior to any payment or adjustment contemplated under this Section 12, the Committee may require a Participant to (A) represent and warrant as to the unencumbered title to his Awards, (B) bear such Participant’s pro rata share of any post-closing indemnity obligations, and be subject to the same post-closing purchase price adjustments, escrow terms, offset rights, holdback terms, and similar conditions as the other holders of Stock, and (C) deliver customary transfer documentation as reasonably determined by the Committee.
 
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13. Amendments and Termination.
(a) Amendment and Termination of the Plan . The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided , that no such amendment, alteration, suspension, discontinuation or termination shall be made without stockholder approval if (i) such approval is necessary to comply with any regulatory requirement applicable to the Plan (including, without limitation, as necessary to comply with any rules or regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company may be listed or quoted) or for changes in GAAP to new accounting standards, (ii) it would materially increase the number of securities which may be issued under the Plan (except for increases pursuant to Section 5 or 12), or (iii) it would materially modify the requirements for participation in the Plan; provided, further , that any such amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary. Notwithstanding the foregoing, no amendment shall be made to the last proviso of Section 13(b) without stockholder approval.
(b) Amendment of Award Agreements . The Committee may, to the extent consistent with the terms of any applicable Award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award agreement, prospectively or retroactively (including after a Participant’s Termination with the Company); provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant; provided, further , that without stockholder approval, except as otherwise permitted under Section 12 of the Plan, (i) no amendment or modification may reduce the Exercise Price of any Option or the Strike Price of any SAR, (ii) the Committee may not cancel any outstanding Option or SAR and replace it with a new Option or SAR (with a lower Exercise Price or Strike Price, as the case may be) or other Award or cash payment that is greater than the value of the cancelled Option or SAR, and (iii) the Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted.
14. General.
(a) Award Agreements . Each Award under the Plan shall be evidenced by an Award agreement, which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including without limitation, the effect on such Award of the death, Disability or Termination of a Participant, or of such other events as may be determined by the Committee. For purposes of the Plan, an Award agreement may be in any such form (written or electronic) as determined by the Committee (including, without limitation, a Board or Committee resolution, an employment agreement, a notice, a certificate or a letter) evidencing the Award. The Committee need not require an Award agreement to be signed by the Participant or a duly authorized representative of the Company.
 
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(b) Nontransferability . (i) Each Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(ii) Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to be transferred by a Participant, without consideration, subject to such rules as the Committee may adopt consistent with any applicable Award agreement to preserve the purposes of the Plan, to: (A) any person who is a “family member” of the Participant, as such term is used in the instructions to Form S-8 under the Securities Act or any successor form of registration statement promulgated by the Securities and Exchange Commission (collectively, the “ Immediate Family Members ”); (B) a trust solely for the benefit of the Participant and his or her Immediate Family Members; (C) a partnership or limited liability company whose only partners or stockholders are the Participant and his or her Immediate Family Members; or (D) a beneficiary to whom donations are eligible to be treated as “charitable contributions” for federal income tax purposes;
(each transferee described in clauses (A), (B), (C) and (D) above is hereinafter referred to as a “ Permitted Transferee ”); provided that the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that such a transfer would comply with the requirements of the Plan.
(iii) The terms of any Award transferred in accordance with the immediately preceding sentence shall apply to the Permitted Transferee and any reference in the Plan, or in any applicable Award agreement, to a Participant shall be deemed to refer to the Permitted Transferee, except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration statement on an appropriate form covering the shares of Common Stock to be acquired pursuant to the exercise of such Option if the Committee determines, consistent with any applicable Award agreement, that such a registration statement is necessary or appropriate; (C) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise; and (D) the consequences of the Termination of the Participant under the terms of the Plan and the applicable Award agreement shall continue to be applied with respect to the Participant, including, without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award agreement.
 
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(c) Dividends and Dividend Equivalents . The Committee in its sole discretion may provide a Participant as part of an Award with dividends or dividend equivalents, payable in cash, shares of Common Stock, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Committee in its sole discretion, including without limitation, payment directly to the Participant, withholding of such amounts by the Company subject to vesting of the Award or reinvestment in additional shares of Common Stock, Restricted Stock or other Awards; provided , that no dividends or dividend equivalents shall be payable in respect of outstanding (i) Options or SARs or (ii) unearned Performance Compensation Awards or other unearned Awards subject to performance conditions (other than or in addition to the passage of time) (although dividends and dividend equivalents may be accumulated in respect of unearned Awards and paid within 15 days after such Awards are earned and become payable or distributable).
(d) Tax Withholding .
(i) A Participant shall be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold, from any cash, shares of Common Stock, other securities or other property deliverable under any Award or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Stock, other securities or other property) of any required withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such withholding and taxes.
(ii) Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole or in part, the foregoing withholding liability by (A) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) owned by the Participant having a Fair Market Value equal to such withholding liability or (B) having the Company withhold from the number of shares of Common Stock otherwise issuable or deliverable pursuant to the exercise or settlement of the Award a number of shares with a Fair Market Value equal to such withholding liability, provided that with respect to shares withheld pursuant to clause (B), the number of such shares may not have a Fair Market Value greater than the minimum required statutory withholding liability.
(e) No Claim to Awards; No Rights to Continued Employment; Waiver . No employee of the Company or an Affiliate, or other person, shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated. Neither the Plan nor any action taken hereunder shall
 
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be construed as giving any Participant any right to be retained in the employ or service of the Company or an Affiliate, nor shall it be construed as giving any Participant any rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or any Award agreement. By accepting an Award under the Plan, a Participant shall thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the Award beyond the period provided under the Plan or any Award agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Company and its Affiliates and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
(f) International Participants . With respect to Participants who reside or work outside of the United States of America and who are not (and who are not expect to be) “covered employees” within the meaning of Section 162(m) of the Code, the Committee may in its sole discretion amend the terms of the Plan or Sub-Plans or outstanding Awards with respect to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant, the Company or its Affiliates.
(g) Designation and Change of Beneficiary . Each Participant may file with the Committee a written designation of one or more persons as the beneficiary(ies) who shall be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan upon his or her death. A Participant may, from time to time, revoke or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however , that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate.
(h) Termination . Except as otherwise provided in an Award agreement, unless determined otherwise by the Committee at any point following such event: (i) neither a temporary absence from employment or service due to illness, vacation or leave of absence (including, without limitation, a call to active duty for military service through a Reserve or National Guard unit) nor a transfer from employment or service with one Service Recipient to employment or service with another Service recipient (or vice-versa) shall be considered a Termination; and (ii) if a Participant’s undergoes a Termination of employment, but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity, such change in status shall not be considered a Termination for purposes of the Plan. Further, unless otherwise determined by the Committee, in the event that any Service Recipient ceases to be an Affiliate of the Company (by reason of sale, divestiture, spin-off, or other similar transaction), unless a Participant’s employment or service is transferred to another entity that would constitute a Service Recipient immediately following such transaction, such Participant shall be deemed to have suffered a Termination hereunder as of the date of the consummation of such transaction.
 
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(i) No Rights as a Stockholder . Except as otherwise specifically provided in the Plan or any Award agreement, no person shall be entitled to the privileges of ownership in respect of shares of Common Stock which are subject to Awards hereunder until such shares have been issued or delivered to that person.
(j) Government and Other Regulations .
(i) The obligation of the Company to settle Awards in Common Stock or other consideration shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any shares of Common Stock pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the shares of Common Stock to be offered or sold under the Plan. The Committee shall have the authority to provide that all shares of Common Stock or other securities of the Company or any Affiliate delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, the applicable Award agreement, the Federal securities laws, or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of Section 9 of the Plan, the Committee may cause a legend or legends to be put on certificates representing shares of Common Stock or other securities of the Company or any Affiliate delivered under the Plan to make appropriate reference to such restrictions or may cause such Common Stock or other securities of the Company or any Affiliate delivered under the Plan in book-entry form to be held subject to the Company’s instructions or subject to appropriate stop-transfer orders. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to any Award granted under the Plan that it in its sole discretion deems necessary or advisable in order that such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.
(ii) The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of Common Stock to the Participant, the Participant’s acquisition of Common Stock from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, the Company shall pay to the Participant an amount equal
 
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to the excess of (A) the aggregate Fair Market Value of the shares of Common Stock subject to such Award or portion thereof canceled (determined as of the applicable exercise date, or the date that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of shares of Common Stock (in the case of any other Award). Such amount shall be delivered to the Participant as soon as practicable following the cancellation of such Award or portion thereof.
(k) No Section 83(b) Elections Without Consent of Company . No election under Section 83(b) of the Code or under a similar provision of law may be made unless expressly permitted by the terms of the applicable Award agreement or by action of the Committee in writing prior to the making of such election. If a Participant, in connection with the acquisition of shares of Common Stock under the Plan or otherwise, is expressly permitted to make such election and the Participant makes the election, the Participant shall notify the Company of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to Section 83(b) of the Code or other applicable provision.
(l) Payments to Persons Other Than Participants . If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his or her affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his or her estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his or her spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.
(m) Nonexclusivity of the Plan . Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.
(n) No Trust or Fund Created . Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other person or entity, on the other hand. No provision of the Plan or any Award shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.
 
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(o) Reliance on Reports . Each member of the Committee and each member of the Board shall be fully justified in acting or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance upon any report made by the independent public accountant of the Company and its Affiliates and/or any other information furnished in connection with the Plan by any agent of the Company or the Committee or the Board, other than himself.
(p) Relationship to Other Benefits . No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan.
(q) Governing Law . The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof.
(r) Severability . If any provision of the Plan or any Award or Award agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
(s) Obligations Binding on Successors . The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.
(t) 409A of the Code .
(i) Notwithstanding any provision of the Plan to the contrary, it is intended that the provisions of this Plan comply with Section 409A of the Code, and all provisions of this Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. Each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of such Participant in connection with this Plan or any other plan maintained by the Company (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any Affiliate shall have any obligation to indemnify or otherwise hold such Participant (or any beneficiary) harmless from any or all of such taxes or penalties. With respect to any Award that is considered “deferred compensation” subject to Section 409A of the Code, references in the Plan to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of any Award granted under the Plan is designated as separate payments.
 
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(ii) Notwithstanding anything in the Plan to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments in respect of any Awards that are “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service” or, if earlier, the Participant’s date of death. Following any applicable six month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
(iii) Unless otherwise provided by the Committee, in the event that the timing of payments in respect of any Award (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (A) a Change in Control, no such acceleration shall be permitted unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code and any Treasury Regulations promulgated thereunder or (B) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code and any Treasury Regulations promulgated thereunder.
(u) Clawback/Forfeiture . Notwithstanding anything to the contrary contained herein, an Award agreement may provide that the Committee may in its sole discretion cancel such Award if the Participant, without the consent of the Company, while employed by or providing services to the Company or any Affiliate or after Termination, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise has engaged in or engages in Detrimental Activity that is in conflict with or adverse to the interest of the Company or any Affiliate, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Committee in its sole discretion. The Committee may also provide in an Award agreement that if the Participant otherwise has engaged in or engages in any activity referred to in the preceding sentence, the Participant will forfeit any gain realized on the vesting or exercise of such Award, and must repay the gain to the Company. The Committee may also provide in an Award agreement that if the Participant receives any amount in excess of what the Participant should have received under the terms of the Award for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be required to repay any such excess amount to the Company. Without limiting the foregoing, all Awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with applicable law.
(v) Expenses; Gender; Titles and Headings . The expenses of administering the Plan shall be borne by the Company and its Affiliates. Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control.
 
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Exhibit 10.32
FORM OF AMENDED AND RESTATED 2009 ADVISORY AGREEMENT
This AMENDED AND RESTATED 2009 ADVISORY AGREEMENT (this “ Agreement ”) is dated as of                 , 2013, and is between SeaWorld Parks & Entertainment, Inc. (formerly known as SW Acquisitions Co., Inc.), a Delaware corporation (“ SWPE ), SeaWorld Parks & Entertainment LLC, a Delaware limited liability company, Sea World LLC, a Delaware limited liability company (collectively with SWPE, SeaWorld Parks & Entertainment LLC and their respective successors, the “ Companies ”) Blackstone Real Estate Advisors VI L.P., a Delaware limited partnership (“ BREP ”) and Blackstone Management Partners V L.L.C., a Delaware limited liability company (“ BMP ” and together with BREP, “ Blackstone ”). This Agreement amends and restates in its entirety the Transaction and Advisory Fee Agreement dated as December 1, 2009 between the parties hereto.
BACKGROUND
1. SWPE entered into an Equity Purchase Agreement, dated as of October 7, 2009 as amended, supplemented or modified (the “ Acquisition Agreement ”), by among Anheuser-Busch Companies, Inc., Anheuser-Busch Inbev SA/NV, SW Cayman L.P. (formerly known as Orca Cayman L.P.) and SWPE.
2. In accordance with the Acquisition Agreement, SWPE acquired all of the outstanding equity of SeaWorld Parks & Entertainment LLC and Sea World LLC (the “ Acquisition ”).
3. Blackstone has expertise in the areas of finance, strategy, investment, acquisitions and other matters relating to the Companies and their business and facilitated the Acquisition and certain other related transactions (collectively, the “ Transactions ”) through its provision of financial and structural analysis, due diligence investigations, other advice and negotiation assistance with all relevant parties to the Transactions. Blackstone also provided advice and negotiation assistance with relevant parties in connection with the financing of the Transactions as contemplated by the Acquisition Agreement.
4. The Companies desire to avail themselves, for the term of this Agreement, of Blackstone’s expertise in providing financial and structural analysis, due diligence investigations, corporate strategy, other advice and negotiation assistance, which the Companies believe will be beneficial to them, and Blackstone desires to provide the services to the Companies as set forth in this Agreement in consideration of the payment of the fees described below.
5. The rendering by Blackstone of the services described in this Agreement has been made and will be made on the basis that the Companies will pay, or cause to be paid, the fees described below.
In consideration of the premises and agreements contained herein and of other good and valuable consideration, the sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
SECTION 1. Appointment . The Companies hereby engage Blackstone to render the Services (as defined in Section 2(a), below) on the terms and subject to the conditions of this Agreement.

SECTION 2. Services .
(a) Blackstone agrees that until the Termination Date (as defined below) or the earlier termination of its obligations under this Section 2(a) pursuant to Section 3(e) hereof, it will render to the Companies, by and through itself and its affiliates and such of their respective officers, employees, representatives, agents and third parties as Blackstone in its sole discretion may designate from time to time (“ Representatives ”), monitoring, advisory and consulting services in relation to the affairs of the Companies and their subsidiaries, including, without limitation, (i) advice regarding the structure, distribution and timing of private or public debt or equity offerings and advice regarding relationships with the Companies and their subsidiaries’ lenders and bankers, including in relation to the selection, retention and supervision of independent auditors, outside legal counsel, investment bankers or other financial advisors or consultants, (ii) advice regarding the strategy of the Companies and their subsidiaries, (iii) advice regarding the structuring and implementation of equity participation plans, employee benefit plans and other incentive arrangements for certain key executives of the Companies, (iv) general advice regarding dispositions and/or acquisitions, (v) advice regarding the business of the Companies and their subsidiaries, (vi) advice relating to and approving major capital projects and (vii) such other advice directly related to or ancillary to the above financial advisory services as may be reasonably requested by the Companies (collectively, the “ Services ”). Blackstone will have no obligation to provide any other services to the Company absent an agreement between Blackstone and the Companies over the scope of such other services and the payment therefor.
(b) It is expressly agreed that the Services to be rendered hereunder will not include investment banking or other financial advisory services which may be provided by Blackstone or any of its affiliates to the Companies, or any of their affiliates, in connection with any specific acquisition, divestiture, disposition, merger, consolidation, restructuring, refinancing, recapitalization, issuance of private or public debt or equity securities (including, without limitation, an initial public offering of equity securities), financing or similar transaction by the Companies or any of their subsidiaries. Blackstone may be entitled to receive additional compensation for providing services of the type specified in the preceding sentence by mutual agreement of the Companies or such subsidiary, on the one hand, and Blackstone or its relevant affiliate, on the other hand. In the absence of an express agreement regarding the provision by Blackstone or its affiliate of such services and the compensation therefor in connection with any such transaction specified in this Section 2(b), in lieu of being engaged to provide such services on mutually agreeable terms Blackstone shall be entitled to receive upon consummation of:
(i) any such acquisition, divestiture, disposition, merger, consolidation, restructuring or recapitalization, a non-refundable and irrevocable fee equal to (x) 1% of the aggregate enterprise value of the acquired, divested, merged, consolidated, restructured or recapitalized entity (calculated, on a consolidated basis for such entity, as the sum of (1) the market value of its common equity (or the fair market value thereof if not publicly traded), (2) the value of its preferred stock (at liquidation value), (3) the book value of its minority interests and (4) its aggregate long- and short-term debt, less its cash and cash equivalents(other than $10 million of cash deemed to be permanently required in the business)), or (y) if such transaction is structured as an asset purchase or sale, 1% of the consideration paid for or received in respect of the assets acquired or disposed of (including the amount of any liabilities assumed by the buyer in the transaction);
(ii) any such refinancing, a non-refundable and irrevocable fee equal to 1% of the aggregate value of the securities subject to such refinancing; and
 
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(iii) any such issuance other than an issuance in an initial public offering, a non-refundable and irrevocable fee equal to 1% of the aggregate value of the securities subject to such issuance.
(c) Without affecting the rights of Blackstone under Section 2(b) hereof, if the Companies or any of their subsidiaries determines that it is advisable for the Companies or such subsidiary to hire a financial advisor, consultant, investment banker or any similar advisor in connection with any acquisition, divestiture, disposition, merger, consolidation, restructuring, refinancing, recapitalization, issuance of private or public debt or equity securities (including, without limitation, an initial public offering of equity securities), financing or similar transaction, it will notify Blackstone of such determination in writing. Promptly thereafter, upon the request of Blackstone, the parties will negotiate in good faith to agree upon appropriate services, compensation and indemnification in respect of the Companies or such subsidiary hiring Blackstone or one of its affiliates to provide such services. The Companies and their subsidiaries may not hire any person, other than Blackstone or one of its affiliates to perform any such services unless all of the following conditions have been satisfied: (i) the parties are unable to agree upon the terms of the engagement of Blackstone or its affiliate to render such services after 10 days following receipt by Blackstone of such written notice; (ii) such other person has a reputation that is at least equal to the reputation of Blackstone or its affiliate in respect of such services; (iii) five business days have elapsed after the Companies or such subsidiary provides a written notice to Blackstone of its intention to hire such other person, which notice shall identify such other person and shall describe in reasonable detail the nature of the services to be provided, the compensation to be paid and the indemnification to be provided; (iv) the compensation to be paid is not more than the amount (including the amount of any fee to which Blackstone was entitled in accordance with Section 2(b) above) Blackstone or its affiliate was willing to accept in the negotiations described above; and (v) the indemnification to be provided to such other person is not more favorable to it than the indemnification that Blackstone or its affiliate was willing to accept in the negotiations described above.
SECTION 3. Advisory Fee .
(a) In consideration of the Services being rendered by Blackstone in accordance with Section 2(a), the Companies will pay, or will cause to be paid, to Blackstone, in advance of the relevant fiscal year, an annual non-refundable advisory fee (the “ Advisory Fee ”) equal to 1.5% of Consolidated EBITDA (as defined in the Credit Agreement dated as of December 1, 2009 (the “ Closing Date ”), as amended, by and among SeaWorld Entertainment, Inc., SWPE, the guarantors party thereto and the lenders from time to time party thereto) for such twelve-month period (the “ EBITDA Amount ”).
(b) The Advisory Fee for the 13-month period ending December 31, 2010 shall be paid on the closing of the Acquisition in respect of Services to be rendered from the closing of the Acquisition to December 31, 2010 (which Advisory Fee for such period shall initially be estimated to be equal to $4,000,000). Thereafter, the Advisory Fee for each subsequent 12-month period shall be paid in advance on the first business day of January in each year, beginning on January 1, 2011.
(c) The Advisory Fee paid on the relevant payment date for each relevant period shall be based on management’s then most current estimate of the projected EBITDA Amount for such period (or, in the case of the Advisory Fee paid on the Closing Date, based on the fixed amount of $4,000,000). Following the availability of audited financial statements for such period, the Companies shall recalculate the EBITDA Amount and the Advisory Fee on the basis of such actual results, and based on such recalculation, (A) if the applicable recalculated Advisory Fee is more than the Advisory Fee previously paid by the Companies to Blackstone in respect of such period, the Companies shall pay to Blackstone the difference between such
 
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amounts and (B) if the applicable recalculated Advisory Fee is less than the Advisory Fee previously paid by the Companies to Blackstone in respect of such period, then Blackstone shall pay to the Companies the difference between such recalculated Advisory Fee and the Advisory Fee actually received from the Companies in respect of such period. Any payment required by the preceding sentence shall be paid by the Companies or Blackstone, as applicable, no later than two business days following the determination of the amount of such payment.
(d) To the extent the Companies cannot pay, or cause to be paid, the Advisory Fee for any reason, including by reason of any prohibition on such payment pursuant to any applicable law or the terms of any debt financing of the Companies or their subsidiaries, the payment by the Companies or any of their subsidiaries to Blackstone of the accrued and payable Advisory Fee will be deferred and will be payable immediately on the earlier of (i) the first date on which the payment of such deferred Advisory Fee is no longer prohibited under any contract applicable to the Companies or their subsidiaries, as applicable, is otherwise able to make such payment, or cause such payment to be made and (ii) total or partial liquidation, dissolution or winding up of the Companies. Notwithstanding anything to the contrary herein, under any applicable law or under any contract applicable to the Companies or their subsidiaries, any forbearance of collection of the Advisory Fee by Blackstone shall not be deemed to be a subordination of such payments to any other person, entity or creditor of the Companies or their subsidiaries. Any such forbearance shall be at Blackstone’s sole option and discretion and shall in no way impair Blackstone’s right to collect such payments. Any installment of the Advisory Fee not paid on the scheduled due date will bear interest, payable in cash when the underlying installment is paid, at an annual rate of 10%, compounded quarterly, from the date due until paid.
(e) Upon the occurrence of (i) a change of control, (ii) a sale of all or substantially all of the assets of the Companies or (iii) an initial public offering of the equity of the Companies, their parent, or their respective successors (or at any time thereafter) (a “ Trigger Event ”), the Companies or their successors will, on a joint and several basis, pay or cause to be paid to Blackstone a “ Milestone Payment ” with respect to such Trigger Event. The Milestone Payment will be equal to the present value of all Advisory Fee payments that, absent the occurrence of the Trigger Event, would otherwise have accrued and been payable through the tenth anniversary of the Closing Date, based on the continued payment of a Advisory Fee in an amount equal to the then applicable estimate for the Advisory Fee for the fiscal year of the Company in which the Trigger Event occurs, discounted at a rate equal to the yield to maturity on the close of business on the second business day immediately preceding the date the Milestone Payment is payable of the class of outstanding U.S. government bonds having a final maturity closest to such tenth anniversary date. 
(f) To the extent the Companies do not pay, or cause to be paid, any portion of the Milestone Payment by reason of any prohibition on such payment pursuant to any applicable law, the terms of any agreement or indenture governing indebtedness of the Companies or their subsidiaries, any unpaid portion of the Milestone Payment shall be paid to Blackstone immediately on the earlier of (i) the first date on which the payment of such unpaid amount is no longer prohibited under any such agreement or indenture applicable to the Companies and the Companies or their subsidiaries, as applicable, is otherwise able to make such payment, or cause such payment to be made and (ii) total or partial liquidation, dissolution or winding up of the Companies. Notwithstanding anything to the contrary herein, under any applicable law or under any contract applicable to the Companies or their subsidiaries, any forbearance of collection of the Milestone Fee by Blackstone shall not be deemed to be a subordination of such payments to any other person, entity or creditor of the Companies or their subsidiaries. Any such forbearance shall be at Blackstone’s sole option and discretion and shall in no way impair Blackstone’s right to collect such payments. Any portion of the Milestone Payment not paid on the scheduled due date shall bear interest at an annual rate equal to 10% per annum, compounded quarterly, from the date due until paid.
 
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(g) Any payments made to Blackstone by the Companies pursuant to this Section 3, and any post-payment adjustments in respect thereof, shall be paid to (or, in the case of post-payment adjustments owed to the Companies, shall be paid by), Blackstone in the following manner: (i) 90.1% of any such payments shall be payable to (or refunded by, as applicable) BMP and (ii) 9.9% of any such payments shall be payable to (or refunded by, as applicable) BREP (such percentage for each of BMP and BREP, their “ Pro Rata Amount ”).
SECTION 4. Reimbursements . In addition to the fees payable pursuant to this Agreement, the Companies will pay, or cause to be paid, directly, or reimburse Blackstone and its affiliates for, their respective Out-of-Pocket Expenses (as defined below). For the purposes of this Agreement, the term “ Out-of-Pocket Expenses ” means the out-of-pocket costs and expenses incurred by Blackstone and its affiliates in connection with the Services or other services provided by them under this Agreement, or otherwise incurred by Blackstone or its affiliates from time to time in the future in connection with their ownership (such as complying with reporting requirements of the Securities and Exchange Commission) or subsequent direct or indirect sale or transfer of capital stock of the Companies or their respective successors, including, without limitation, (a) fees and disbursements of any independent professionals and organizations, including independent accountants, outside legal counsel or consultants, retained by Blackstone or any of its affiliates, (b) costs of any outside services or independent contractors such as financial printers, couriers, business publications, on-line financial services or similar services, retained or used by Blackstone or any of its affiliates, and (c) transportation, per diem costs, word processing expenses or any similar expense not associated with Blackstone or its affiliates’ ordinary operations. All payments or reimbursements for Out-of-Pocket Expenses will be made by wire transfer in same-day funds promptly upon or as soon as practicable following request for payment or reimbursement in accordance with this Agreement, to the bank account indicated to the Companies by the relevant payee.
SECTION 5. Indemnification . The Companies will, as primary obligors, indemnify and hold harmless Blackstone, its affiliates and their respective partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives (each such person being an “ Indemnified Party ”) from and against any and all actions, suits, investigations, losses, claims, damages and liabilities, including in connection with seeking indemnification, whether joint or several (the “ Liabilities ”), related to, arising out of or in connection with the Transactions, the Services or other services contemplated by this Agreement or the engagement of Blackstone pursuant to, and the performance by Blackstone of the Services or other services contemplated by, this Agreement, whether or not pending or threatened, whether or not an Indemnified Party is a party, whether or not resulting in any liability and whether or not such action, claim, suit, investigation or proceeding is initiated or brought by the Companies. The Companies will reimburse any Indemnified Party for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses and any other litigation-related expenses) as they are incurred in connection with investigating, preparing, pursuing, defending or assisting in the defense of any action, claim, suit, investigation or proceeding for which the Indemnified Party would be entitled to indemnification under the terms of the previous sentence, or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. The Companies agree that they will not, without the prior written consent of the Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the Indemnified Party from all liability, without future obligation or prohibition on the part of the Indemnified Party, arising or that may arise out of such claim, action or proceeding, and does not contain an admission of guilt or liability on the part of the Indemnified Party. The Companies will not be liable under the foregoing indemnification provision with respect to any particular loss, claim, damage, liability, cost or expense of an Indemnified Party that is
 
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determined by a court, in a final judgment from which no further appeal may be taken, to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party. The attorneys’ fees and other expenses of an Indemnified Party shall be paid by the Companies as they are incurred upon receipt, in each case, of an undertaking by or on behalf of the Indemnified Party to repay such amounts if it is finally judicially determined that the Liabilities in question resulted solely from the gross negligence or willful misconduct of such Indemnified Party.
The rights of an Indemnified Party to indemnification hereunder will be in addition to any other rights and remedies any such person may have under any other agreement or instrument to which each Indemnified Party is or becomes a party or is or otherwise becomes a beneficiary or under any law or regulation.
SECTION 7. Accuracy of Information . The Companies shall furnish or cause to be furnished to Blackstone such information as Blackstone believes reasonably appropriate to rendering the Services and other services contemplated by this Agreement and to comply with the Securities and Exchange Commission or other legal requirements relating to the beneficial ownership by Blackstone or its affiliates and their respective members, officers and employees of equity securities of the Companies (all such information so furnished, the “ Information ”). The Companies recognize and confirm that Blackstone (a) will use and rely primarily on the Information and on information available from generally recognized public sources in performing the Services and other services contemplated by this Agreement without having independently verified the same, (b) does not assume responsibility for the accuracy or completeness of the Information and such other information and (c) is entitled to rely upon the Information without independent verification.
SECTION 8. Term . This Agreement will become effective as of the Closing and (except as otherwise provided herein) will continue until the “ Termination Date ,” which is the earlier of (i) the tenth anniversary of the original date hereof and (ii) such earlier date as the Companies and Blackstone may mutually agree upon in writing; provided , that (x) the occurrence of the Termination Date will not affect the obligations of the Companies to pay, or cause to be paid, any amounts accrued but not yet paid as of such date, (y) Section 4 hereof will remain in effect after the Termination Date with respect to Out-of-Pocket Expenses that were incurred prior to or within a reasonable period of time after the Termination Date, but which have not been paid to Blackstone or its affiliates in accordance with Section 4 hereof, and (z) the provisions of Sections 3(d), 3(f), 5, 6, 7, 8 and 9 hereof will survive after the Termination Date. The Advisory Fee will accrue and be payable with respect to the entire fiscal year of the Companies in which the Termination Date occurs, except as otherwise provided in Section 3(e). 
SECTION 9. Disclaimer, Opportunities, Release and Limitation of Liability .
(a) Disclaimer; Standard of Care . Blackstone makes no representations or warranties, express or implied, in respect of the Services to be provided hereunder. In no event shall Blackstone or any Indemnified Party be liable to the Companies or any of their affiliates for any act, alleged act, omission or alleged omission that does not constitute gross negligence or willful misconduct of Blackstone as determined by a final, non-appealable determination of a court of competent jurisdiction.
(b) Freedom to Pursue Opportunities . In recognition of the fact that Blackstone and its affiliates (i) currently have, and will in the future have or will consider acquiring, investments in other enterprises that engage or may engage in the same or similar activities or lines of business as the Companies or which the Companies may be interested in acquiring (collectively, “ Competing Activities ”), (ii) may serve as an advisor, a director or in some other capacity in connection with one or more Competing Activities, and (iii) and in further recognition of the fact that Blackstone and its affiliates have myriad duties to various
 
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investors and partners, and in further recognition of the benefits to be derived by the Companies hereunder and the difficulties which may confront any advisor who desires and endeavors fully to satisfy such advisor’s duties in determining the full scope of such duties in any particular situation, the provisions of this Section 8(b) are set forth to regulate, define and guide the conduct of certain affairs of the Companies as they may involve Blackstone and its affiliates. Except as Blackstone may otherwise agree in writing after the date hereof:
(i) Blackstone and its affiliates shall have the right: (A) to directly or indirectly engage in any business (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with, the Companies and their subsidiaries); (B) to directly or indirectly do business with any client or customer of the Companies and their subsidiaries; (C) to take any other action that Blackstone believes in good faith is necessary to or appropriate to fulfill its obligations as described in the first sentence of this Section 8(b); and (D) not to present potential transactions, matters or business opportunities to the Companies or any of their subsidiaries, and to pursue, directly or indirectly, any such opportunity for themselves, and to direct any such opportunity to another person.
(ii) Blackstone and its affiliates shall have no duty (contractual or otherwise) to communicate or present any corporate opportunities to the Companies or any of their affiliates or to refrain from any actions specified in Section 8(b)(i) hereof, and the Companies, on their own behalf and on behalf of their affiliates, hereby irrevocably waives any right to require Blackstone or any of their affiliates to act in a manner inconsistent with the provisions of this Section 8(b).
(iii) Neither Blackstone nor any of its affiliates shall be liable to the Companies or any of their affiliates for breach of any duty (contractual or otherwise) by reason of any activities or omissions of the types referred to in this Section 8(b) or of any such person’s participation therein.
(c) Release . The Companies hereby irrevocably and unconditionally release and forever discharge Blackstone and its affiliates and their respective partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives from any and all liabilities, claims and causes of action related to, arising out of or in connection with the Transactions, the Services or other services contemplated by this Agreement or the engagement of Blackstone pursuant to, and the performance by Blackstone of the Services or other services contemplated by, this Agreement that the Companies may have, or may claim to have, on or after the date hereof, or otherwise as a result of engaging in Competing Activities, except with respect to any act or omission that constitutes gross negligence or willful misconduct as determined by a final, non-appealable determination of a court of competent jurisdiction.
(d) Limitation of Liability . In no event will Blackstone or any Indemnified Party be liable to the Companies or any of their affiliates (i) for any indirect, special, incidental or consequential damages, including, without limitation, lost profits or savings, whether or not such damages are foreseeable, or for any third-party claims (whether based in contract, tort or otherwise), related to, arising out of or in connection with the Transactions, the Services or other services contemplated by this Agreement or the engagement of Blackstone pursuant to, and the performance by Blackstone of the Services or other services contemplated by, this Agreement, or otherwise as a result of engaging in Competing Activities, that the Companies may have, or may claim to have, on or after the date hereof, except with respect to any act or omission that constitutes gross negligence or willful misconduct as determined by a final, non-appealable determination of a court of competent jurisdiction or (ii) for an amount in excess of the fees actually received by Blackstone hereunder.
 
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SECTION 10. Miscellaneous . 
(a) No amendment or waiver of any provision of this Agreement, or consent to any departure by any party hereto from any such provision, will be effective unless it is in writing and signed by each of the parties hereto. Any amendment, waiver or consent will be effective only in the specific instance and for the specific purpose for which given. The waiver by any party of any breach of this Agreement will not operate as or be construed to be a waiver by such party of any subsequent breach.
(b) Any notices or other communications required or permitted hereunder shall be made in writing and will be sufficiently given if delivered personally or sent by facsimile with confirmed receipt, or by overnight courier, addressed as follows or to such other address of which the parties may have given written notice:
if to Blackstone:
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attention: Peter Wallace
Facsimile: (212) 583-5710
if to the Companies:
c/o SeaWorld Parks & Entertainment, Inc.
9205 S. Park Center Loop, Ste 400
Orlando, FL 32819
Attention: Chief Legal Officer
Unless otherwise specified herein, such notices or other communications will be deemed received (i) on the date delivered, if delivered personally or sent by facsimile with confirmed receipt, and (ii) one business day after being sent by overnight courier.
(c) This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof, and supersedes all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings relating hereto.
(d) This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware.
(e) Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware for the purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its subsidiaries to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof or thereof may not be enforced in or by such court and (iii) hereby agrees not to commence or maintain any action,
 
8

claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof or thereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Notwithstanding the foregoing, to the extent that any party hereto is or becomes a party in any litigation in connection with which it may assert indemnification rights set forth in this agreement, the court in which such litigation is being heard shall be deemed to be included in clause (i) above. Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by Delaware law, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 9(b) hereof is reasonably calculated to give actual notice.
(f) Neither this Agreement nor any of the rights or obligations hereunder may be assigned by the Companies without the prior written consent of Blackstone; provided, however, that Blackstone may assign or transfer its duties or interests hereunder to any of its affiliates at the sole discretion of Blackstone. Subject to the foregoing, the provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the next sentence, no person or party other than the parties hereto and their respective successors or permitted assigns is intended to be a beneficiary of this Agreement. The parties acknowledge and agree that Blackstone and its affiliates and their respective partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives are intended to be third-party beneficiaries under Section 5 hereof.
(g) This Agreement may be executed by one or more parties to this Agreement on any number of separate counterparts (including by facsimile), and all of said counterparts taken together will be deemed to constitute one and the same instrument.
(h) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.
(i) Each payment made by the Companies pursuant to this Agreement shall be paid by wire transfer of immediately available federal funds to such account or accounts as specified by Blackstone to the Company prior to such payment.
SECTION 11. Joint and Several Liability . All references herein to any liability or obligation of the Companies shall be deemed to be a liability or obligation of SWPE, SeaWorld Parks & Entertainment LLC and Sea World LLC, which entities shall be jointly and severally liable to discharge such liabilities and/or perform such obligations.
[Signature page follows]
 
9

IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Transaction and Advisory Fee Agreement as of the date first written above.

BLACKSTONE MANAGEMENT PARTNERS V L.L.C.	
		
By:	 	   	
	 	Name:	
	 	Title:	
	
BLACKSTONE REAL ESTATE ADVISORS VI L.P.	
		
By:	 	Blackstone Real Estate Advisors VI L.P., its
general partner	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
10

			
SEAWORLD PARKS & ENTERTAINMENT, INC.	
		
By:	 	   	
	 	Name:	
	 	Title:	
	
SEAWORLD PARKS & ENTERTAINMENT LLC	
		
By:	 	   	
	 	Name:	
	 	Title:	
	
SEA WORLD LLC	
		
By:	 	   	
	 	Name:	
	 	Title:	
 
11

Exhibit 10.33
January 17, 2012
Mr. James M. Heaney
905 Jasmine Street
Celebration Florida 34747
Dear Jim,
This letter will confirm our offer for the position of Chief Finance Officer for SeaWorld Parks & Entertainment (“SEA”). Included with this letter is a brief outline of your total compensation package. As plan sponsor, SeaWorld reserves the right to amend or terminate any of the benefits outlined below. This document is intended as a summary of benefits and is not intended as a complete reference guide or substitute to official plan documents or summary plan descriptions.
Base Compensation

Effective date:	  	1/23/12	
		
Base annual salary:	  	$300,000	
		
Monthly salary:	  	$25,000	
Equity
Your equity distribution is approximately 5% of the total pool with an estimated “at work” dollar value of $3,750,000.
Bonus
The SEA bonus plan is formula driven and incorporates key components tied to company and individual performance. Because the bonus plan is formula driven, there is potential to increase the pool and conversely, if the company does not achieve the budgeted target, your payout potential lessens accordingly.
If SEA achieves the budgeted EBITDA target, your bonus pool will be calculated and funded at 75% of your base salary (pro-rated for 2012). For the 2012 plan year (January 1 - December 31), the bonus specific plan details regarding targets and formulation calculations will be formally announced in the very near future.
Vacation
The SEA vacation schedule entitles you up to two weeks of vacation upon employment. Our vacation plan is based upon years of service, as per below:
1 year     = Two weeks
5 years   = Three weeks
10 years = Four weeks
15 years = Five weeks
20 years = Six weeks
401K
SEA offers a 401k plan with a variety of investment options. Currently our match rate is 100% on the first 1% of your salary deferral and 50% on each percent thereafter, up to a total maximum of 6%. You will be eligible for participation in the plan after 30 days of employment. After two years of employment you will be 100% vested in the employer match.

Holidays
The 2012 SEA corporate holiday schedule is listed below.

HOLIDAYS-2012	  	DAY	  	DATE	
New Year’s Day	  	Monday	  	Jan. 2	
Memorial Day	  	Monday	  	May 28	
Independence Day	  	Wednesday	  	July 4	
Labor Day	  	Monday	  	Sept. 3	
Thanksgiving	  	Thursday	  	Nov. 22	
Day after Thanksgiving	  	Friday	  	Nov. 23	
Christmas Holidays	  	Monday	  	Dec. 24	
	  	Tuesday	  	Dec. 25	
New Year’s Eve	  	Monday	  	Dec. 31st	
In addition to the above 9 designated holidays, Team Members are eligible for four (4) “Floating Holidays” which can be used at the employees’ personal discretion. Floating Holidays must be scheduled and approved in advance. Team Members will not be paid for unused Floating Holidays. In addition, Floating Holidays must be used within the calendar year and cannot be carried over for subsequent years.
SEA Employee Complimentary Park Passes
Annually, you will receive 12 complimentary park passes. Each pass is good for a single visit; passes can be used at any of our SEA parks with the exception of Discovery Cove.
In addition, as a corporate employee you will receive a Corporate Executive Card which will allow you and an unlimited number of guests to complimentary enter any of SEA’s parks, excluding Discovery Cove. Please note you must be present and accompany your guests to use this card. You will also receive complimentary parking and a 30% discount on park food and merchandise.
Health Insurance
You and your eligible dependents will be eligible to participate in the company’s Health & Welfare plans effective the first of the month following your date of hire . We offer the choice of two types of medical plans which include an HMO plan and a Preferred Provider Option (PRO) plan, all administered by AETNA. All medical plans include a prescription drug benefit. The HMO and PPO plans require an employee contribution through a payroll deduction. We also offer a Dental plan with options ($1000/$3000 Annual maximum) and a vision plan.
The current (2012) monthly contribution schedule is as follows:

 	  	HMO	 	  	PPO	 	  	Dental	 	  	Vision	 	
Employee	  	$	70	  	  	$	174	  	  	$	11	  	  	$	4.92	  	
Emp + Sp	  	$	149	  	  	$	365	  	  	$	24	  	  	$	9.82	  	
Emp + Child	  	$	128	  	  	$	313	  	  	$	21	  	  	$	10.51	  	
Family	  	$	218	  	  	$	539	  	  	$	33	  	  	$	16.80	  	
 
2

Life Insurance
You will receive two times your annual salary in company paid term life insurance as well as $10,000 company paid life insurance for your spouse and $5,000 for each eligible child, if applicable. Our benefit plan also includes the option to purchase supplemental life insurance for yourself (up to 3x your annual salary) as well as supplemental life insurance for your eligible dependents.
Sick Pay
Upon your first day of employment you will be eligible for three months of sick pay, payable at 100% of your base salary. There is no carry over of sick time; once you have reached five years of credited service, your annual sick pay will be up to six months, payable at 100% of your base salary.
Disability Benefits
The company provides up to 26 weeks of short term disability (STD) coverage annually, should you become disabled. You will receive 60% of your base pay.
In addition, you may elect to participate in the Long Term Disability (LTD) plan. The plan pays up to 60% of your monthly salary should you become disabled. If you elect to participate, the company will pay 20% of the cost of the premium and you will pay 80% of the cost through a payroll deduction. Premium costs are based your annual salary amount.
This offer of employment is contingent upon successfully completing and passing a reference check of your current/last employer and a background check (educational and criminal). You must also successfully pass a drug screen for controlled substances. On average, results for both the drug test screen and background check can take approximately 5-7 business days. Once we receive word of satisfactory results, your start date will be determined.
SEA uses a Dispute Resolution Program (“DRP”) for all employment-related disputes, the last step of which is final and binding arbitration. The DRP will be a term and condition of your employment and your exclusive remedy for any employment claims you may have. By accepting employment with SEA you agree to submit all claims to the DRP.
Thank you again for your consideration of employment with SeaWorld Parks & Entertainment. We look forward to having you join our team!
Best Regards,

/s/ David L. Hammer	
David L. Hammer	
Chief Administrative Officer	
Accepted:

/s/ Jim Heaney	 	 	 	1/17/12	
Jim Heaney	 		 	Date	

3

Exhibit 10.34
February 16, 2011
Mr. Scott D. Helmstedter
355 N. Maple Unit 233
Burbank, CA 91505
Dear Scott,
This letter will confirm our offer for the position of Chief Creative Officer for SeaWorld Parks & Entertainment (“SEA”) reporting to the President. Included with this letter is a brief but not necessarily all-inclusive outline of your compensation package. As plan sponsor, SeaWorld reserves the right to amend or terminate any of the benefits outlined below. This document is intended as a summary of benefits and is not intended as a complete reference guide or substitute for official plan documents or summary plan descriptions, which in all cases govern.
Base Compensation

Effective date:	  	4/1/11	
		
Base annual salary:	  	$275,000	
		
Monthly salary:	  	$22,917	
Bonus
The SEA bonus plan is formula driven and incorporates key components tied to company performance and park performance. Because the bonus plan is formula driven, there is potential to increase the pool and conversely, if the company does not achieve the budgeted target, your payout potential lessens accordingly.
If SEA achieves the budgeted profit contribution, your bonus pool will be calculated on a pro-rata basis and funded at 75% of your base salary. For the 2011 plan year (January 1 - December 31), the bonus specific plan details regarding targets and formulation calculations will be formally announced in the very near future.
Equity Participation
The details of the SEA Equity plan will be announced shortly. Your equity distribution is 3% of the total pool with an initial estimated dollar value of $2,250,000.
Relocation
SEA offers a comprehensive relocation program for the movement of household goods to your new location in Orlando. The relocation funds include a payback provision of 100% in the first year and 50% in the second year should you resign from SEA employment during this timeframe. A summary of the relocation program is attached (Attachment A). A more comprehensive document will be provided upon acceptance of the offer.
Vacation
The SEA vacation schedule entitles you up to one week (5 days) of vacation upon employment. However, based on previous discussions you will be given two weeks upon your date of hire. Our vacation plan is based upon years of service, as per below:
1 year     = Two weeks
5 years   = Three weeks
10 years = Four weeks
15 years = Five weeks
20 years = Six weeks
401K
SEA offers a 401k plan with a variety of investment options. Currently our match rate is 100% on the first 1% of your salary deferral and 50% on each percent thereafter, up to a total maximum of 6%. You will be eligible for participation in the plan after 30 days of employment. After two years of employment you will be 100% vested in the employer match.

Holidays
The 2011 corporate holiday schedule is listed below.

HOLIDAYS-2011	  	DAY	  	DATE	
New Year’s Day	  	Monday	  	Jan. 3	
Memorial Day	  	Monday	  	May 30	
Independence Day	  	Monday	  	July 4	
Labor Day	  	Monday	  	Sept. 5	
Thanksgiving	  	Thursday	  	Nov. 24	
Day after Thanksgiving	  	Friday	  	Nov. 25	
Christmas Holidays	  	Monday	  	Dec. 26	
	  	Tuesday	  	Dec. 27	
New Year’s Eve	  	Friday	  	Dec. 30	
4 Floating Days which can be used at the employees’ personal discretion. Floating days must be requested and approved in advance. In total, you will have 13 annual paid holidays.
SEA Employee Complimentary Park Passes
Annually, you will receive 12 complimentary park passes. Each pass is good for a single visit; passes can be used at any of our SEA parks with the exception of Discovery Cove.
In addition, as a corporate employee you will receive a Corporate Executive Card which will allow you and an unlimited number of guests to complimentary enter any of SEA’s parks, excluding Discovery Cove. Please note you must be present and accompany your guests to use this card. You will also receive complimentary parking and a 30% discount on park food and merchandise.
Health Insurance
You and your eligible dependents will be eligible to participate in the company’s Health & Welfare plans effective the first of the month following your date of hire. We offer the choice of two types of medical plans which include an HMO plan and a Preferred Provider Option (PPO) plan, all administered by AETNA. All medical plans include a prescription drug benefit. The HMO and PPO plans require an employee contribution through a payroll deduction. We also offer a Dental plan with options ($1000/$3000 Annual maximum) and a vision plan.
The current (2011) monthly contribution schedule is as follows:

 	  	HMO	 	  	PPO	 	  	Dental	 	  	Vision	 	
Employee	  	$	60	  	  	$	162	  	  	$	12	  	  	$	2.62	  	
Emp + Sp	  	$	125	  	  	$	340	  	  	$	25	  	  	$	5.24	  	
Emp + Child	  	$	110	  	  	$	292	  	  	$	22	  	  	$	5.61	  	
Family	  	$	175	  	  	$	470	  	  	$	35	  	  	$	8.96	  	
 
2

Life Insurance
You will receive two times your annual salary in company paid term life insurance as well as $10,000 Company paid life insurance for your spouse and $5,000 for each eligible child, if applicable. Our benefit plan also includes the option to purchase supplemental life insurance for yourself (up to 3x your annual salary) as well as supplemental life insurance for your eligible dependents.
Sick Pay
Upon your first day of employment you will be eligible for sick pay, payable at 100% of your base salary, according to the Company’s sick pay policy.
Disability Benefits
The company provides up to 26 weeks of short term disability (STD) coverage annually, should you become disabled. You will receive 60% of your base pay.
In addition, you may elect to participate in the Long Term Disability (LTD) plan. The plan pays up to 60% of your monthly salary should you become disabled. If you elect to participate, the company will pay 20% of the cost of the premium and you will pay 80% of the cost through a payroll deduction. Premium costs are based your annual salary amount.
In Motion Entertainment Ownership
As discussed, SEA has a policy addressing conflicts of interests. Your ownership/equity interest in In Motion Entertainment (“In Motion”), one of our vendors, raises such a conflict of interest. Your conflict of interest is especially sensitive because you will be in a position to let work to In Motion and will be directly responsible for the employees within SEA who hire In Motion on behalf of SEA. You must act only with the best interest of SEA in mind and without any regard for the interests of In Motion. You will not share confidential or non-public information with In Motion. Failure to act solely in the interest of SEA can result in discipline up to, and including, termination. In that regard, SEA will require the following:
During your employment, neither you nor those reporting through you will be allowed to direct work to In Motion unless such work is competitively bid and reviewed by (Insert Norbert Dean title) and the General Counsel. In addition, such proposed work shall be approved by the Chief Operating Officer for the brand for which the work is being performed. You must also ensure that any discussions about In Motion, between you and those who work through you, are not and cannot be construed as exerting pressure over employees to favor or direct work to In Motion.
Prior to employment you must completely relinquish any control or voting rights (direct or indirect) you have as a result of your ownership interest in In Motion. For purposes hereof, “completely relinquish” shall include, but not be limited to, any of your family members, any other entity over which you have any control and any person or entity over which you have a power of direction. Neither you nor anyone on your behalf should have any direct or indirect ability to affect the operations of In Motion.
You acknowledge that your ownership/equity interest in In Motion may be characterized as an Affiliate Party Transaction or Related Party Transaction and may be subject to periodic diligence or inquiry by our internal and external auditors. In such event, you agree to cooperate with and provide requested documentation to such auditors upon their request and to certify as to the accuracy of any information given to such auditors. Further, you acknowledge that your interest in In Motion may require further disclosure in audits and public filings.
Nothing in this letter shall be construed as a continuing obligation on behalf of SEA to engage In Motion on a going-forward basis.
This offer of employment is contingent upon successfully completing and passing a reference check of your current/last employer and a background check (educational and criminal). You must also successfully pass a drug screen for controlled substances. On average, results for both the drug test screen and background check can take approximately 5-7 business days. Please do not resign from your present employer until we have notified you that the review process has been completed. Once we receive word of satisfactory results, your start date will be determined.

SEA uses a Dispute Resolution Program (“DRP”) for all employment-related disputes, the last step of which is final and binding arbitration. The DRP will be a term and condition of your employment and your exclusive remedy for any employment claims you may have. By accepting employment with SEA you agree to submit all claims to the DRP.
Thank you again for your consideration of employment with SeaWorld Parks & Entertainment. We look forward to having you join our team!
Best Regards,

/s/ David L. Hammer	
David L. Hammer	
Chief Administrative Officer	
Attachment
Accepted:

/s/ Scott D. Helmstedter	 	 	 	1-31-11	
Name	 		 	Date	

Exhibit 10.35
SeaWorld Parks & Entertainment, Inc.
9205 S. Park Center, Loop #400
Orlando, FL 32819
September 1, 2010
David D’Alessandro
DFD Enterprises LLC
283 Dartmouth Street
Boston, Massachusetts 02116
Dear David:
It is a pleasure to offer you the position of chairman of the board of directors of SeaWorld Parks & Entertainment, Inc. (the “ Company ”). I am confident that you will find the information contained below to be consistent with your prior conversations with Peter Wallace and Joseph Baratta.
I am pleased to offer you the following:

Title:	  	Chairman of the board of directors of the Company (the “ Board ”).	
		
Annual Retainer:	  	The equivalent of $200,000 per year, payable to DFD Enterprises LLC on a basis no less frequently than in quarterly installments in arrears	
		
Start Date:	  	September 7, 2010	
		
Bonus:	  	You will not be eligible for a bonus.	
		
Benefits:	  	You will not be entitled to participate in the Company’s (or any of its affiliates’) employee benefit plans. You will participate in the Company’s standard directors’ and officers’ insurance and indemnity policies.	
		
Term:	  	At-Will
You understand that when you are hired and engaged by the Company, your services will be terminable “at will,” which means you may resign from your services with the Company for any reason upon delivery of at least 30 days advance written notice to the Company, and that the Company may terminate your services at any time with or without cause at any time by written notice to you. Should such a separation occur, all income and grants not vested but identified in this offer letter or any of the other documents that may be provided, will immediately cease as of the day of separation, except as otherwise provided by applicable law or plan document. As set forth herein, the at-will status of your services cannot be changed except in a written document signed by you and the Chief Executive Officer of the Company.	

			
Management Equity:	  	The terms of your equity award will be separately documented pursuant to our equity plan, but will be consistent with the following terms:
 
Overview . Indirect equity interests of the Company will be granted to Company management (the “ Management Pool ”) through profits interest units (the “ Incentive Units ”) under a management equity program. You will be entitled to 7% of the Management Pool. The Management Pool is structured so that the Incentive Units have an “intrinsic value” or “liquidation value” of zero, but offer the opportunity to share in any increased value in the Company.
 
Incentive Units. Incentive Units are entitled to participate solely in a portion of the profits and growth in value of the Company. They are not entitled to share in any portion of the current value or capital of the Company.
 
Vesting . The Incentive Units consist of three tranches:
 
•      One-third of the Incentive Units (the “ Time-Vesting Incentive Units ”) will vest based solely on time conditions, with 25% of the Time-Vesting Incentive Units vesting as of your Start Date and the remaining 75% vesting in equal annual installments on each of the first four anniversaries of your Start Date. Notwithstanding the foregoing, immediately prior to and following the occurrence of a change of control that occurs prior to your termination as Chairman of the Board, 100% of the unvested Time-Vesting Incentive Units shall become vested.
 
•      One-third of the Incentive Units (the “ 2.25x Exit-Vesting Incentive Units ”) will vest based on a combination of time conditions and exit conditions.
 
•      First, 25% of the 2.25x Exit-Vesting Incentive Units will have satisfied the time conditions as of your Start Date. The remaining 75% will satisfy the time conditions in equal annual installments on each of the first four anniversaries of your Start Date.
 
•      Second, the 2.25x Exit-Vesting Incentive Units that have satisfied the time conditions will vest on the date, if any, when Blackstone Management Associates (Cayman) V L.P. and Blackstone LR Associates (Cayman) V Ltd. (together, the	

			
	  	“ Sponsor ”) have received, in respect of their indirect investment in the Company (the “ Common Units ”), cash resulting in both (x) a 20% annual internal rate of return and (y) a 2.25x multiple on invested capital. Upon your departure as Chairman of the Board, all 2.25x Exit-Vesting Incentive Units which have satisfied the time conditions, shall remain outstanding, subject to achievement of the aforementioned performance conditions.
 
•     One-third of the Incentive Units (the “ 2.75x Exit-Vesting Incentive Units ”) will vest based on a combination of time conditions and exit conditions.
 
•     First, 25% of the 2.75x Exit-Vesting incentive units will have satisfied the time conditions as of your Start Date. The remaining 75% will satisfy the time conditions in equal annual installments on each of the first four anniversaries of your Start Date.
 
•     Second, the 2.75x Exit-Vesting Incentive Units that have satisfied the time conditions will vest on the date, if any, when the Sponsor have received, in respect of their Common Units, cash resulting in both (x) a 15% annual internal rate of return and (y) a 2.75x multiple on invested capital. Upon your departure as Chairman of the Board, all 2.75x Exit-Vesting Incentive Units which have satisfied the time conditions, shall remain outstanding, subject to achievement of the aforementioned performance conditions.
 
•     Upon your departure as Chairman of the Board, you will retain all Incentive Units that have satisfied the time-vesting conditions and will forfeit those which have not satisfied the time-vesting conditions.
 
•     Your equity award will otherwise be subject to the same terms and conditions applicable to senior management.	
This offer is contingent upon your acceptance of the terms of the offer set forth herein by signing the attached Acknowledgment.
If you accept engagement with the Company, federal law requires you to produce documents establishing your identity and work authorization. The Company cannot legally hire you if you do not produce such verification.
If you agree with the terms and conditions set forth in this offer letter, please indicate your acceptance by signing the Acknowledgment and Acceptance Letter and returning the original to me at:
9205 South Park Center
Loop #400
Orlando, FL 32819.

We look forward to having you become an integral part of our Company’s strategy in your new position and believe you will find this new opportunity rewarding and a great way to make a difference for the Company.
Should you have any questions, please do not hesitate to contact me at 407-226-5001.

Sincerely,	
	
/s/ James D. Atchison	
James D. Atchison
CEO, SeaWorld Parks & Entertainment, Inc.	

Exhibit 10.36
April 22, 2010
Mr. Donald Wilson Mills Jr.
Dear Donnie:
I would like to confirm your acceptance of the position of Chief Operating Officer – Busch Gardens for SeaWorld Parks & Entertainment, reporting to the President & CEO. Included with this letter is a brief outline of your new total compensation package. As plan sponsor, SeaWorld reserves the right to amend or terminate any of the benefits outlined below. This document is intended as a summary of benefits and is not intended as a complete reference guide or substitute to official plan documents or summary plan descriptions.
Base Compensation

Effective date:	  	February 15, 2010	
Base annual salary:	  	$280,008	
New monthly salary:	  	$23,334	
Bonus
The new SEA bonus plan is formula driven and incorporates key components tied to company performance and key personal indicators (KPI’s). Because the bonus plan is formula driven, there is potential to increase the pool and conversely, if the company does not achieve the budgeted target, your payout potential lessens accordingly.
If SEA achieves budget and you achieve all your personal KPI’s, your bonus at target will be 75% of your base salary. For the 2010 plan year from January 1 - December 31, your targeted bonus will be $210,006.
Equity Participation
Your equity distribution is 5.0% of the total pool with an estimated dollar value of $3.75MM.
Management Equity
 
 	•	 	In addition to the SEA Equity program, The Blackstone group will be providing key executives the opportunity to invest in the Company at the same price paid by Blackstone affiliates. Additional information pertaining to this program will be shared with you in a few weeks	
401K
The new SEA 401k plan commenced on March 1, 2010. Currently our match rate will be 100% on the first 1% and then 50% on each percent up to 6%.

Severance
This document will serve as notice that the SEA Board has adopted a key employee Severance plan and that you are a participant in the plan.
The plan is effective immediately and with your participation you are entitled to severance in two instances:
 
 	1.	Your employment is involuntarily terminated other than for cause, death or disability; or	
 
 	2.	You terminate your employment for Good Reason. “Good Reason” can arise due to a material reduction in your current duties and responsibilities.	
As a participant in the plan, you will be entitled to a lump sum payment equal to no less than 12 months of you base pay. The lump sum payment will be made within 30-days of your termination event. Key employees will also be entitled to health care benefits (medical, dental, vision, and prescription drug) and life insurance continuation for 12 months.
A copy of the plan will be provided to you in the next few weeks.
Thank you.

/s/ Jim Atchison	
Jim Atchison	
 
2

Exhibit 10.37
August 1, 2010
Effective Date
SEAWORLD PARKS & ENTERTAINMENT, INC
KEY EMPLOYEE SEVERANCE PLAN
POLICY
SeaWorld Parks & Entertainment, Inc. (The “Company”) has adopted a severance plan (the “Plan”) for the benefit of certain employees designated as members of the Company’s Strategy Committee. When an eligible employee’s employment terminates under the Plan they may be entitled to a lump sum cash payment (less applicable tax withholdings) and continuation of certain benefits, depending upon the circumstances under which employment terminates. The amount of the payment is determined by tier (as defined by the Company).
SECTION I. ELIGIBILITY
 
 	1.1	Employees who are classified as members of the Company’s Strategy Committee by the CEO, SeaWorld Parks & Entertainment, Inc and the Compensation Committee of the Board of Directors.	
 
 	1.2	In order to be eligible for the Plan benefits, the employee must sign and return a Release and Waiver of Claims that will include but is not limited to:	
 
 	1.2.1	One-year non-compete agreement	
 
 	1.2.2	Two-year non-solicitation agreement	
 
 	1.2.3	Non disparagement agreement	
 
 	1.2.4	Agreement to cooperate in any current or future legal matters relating to activities or matters occurring the employees term of employment and,	
 
 	1.2.5	Release of any and all claims that the employee may have in connection with employment at the Company or with the termination of employment.	
 
 	1.3	All severance pay and benefits must be approved by the Chief Administrative Officer and the Chairman of the Compensation Committee of the Board. Benefits are payable if the employees employment terminates as a result of:	
 
 	1.3.1	Job elimination resulting from a business reorganization, reduction in force, facility closure, business consolidation; or	
 
 	1.3.2	Job elimination resulting from a sale or merger, or	

 	1.3.3	Lack of an available position following a return from a certified medical leave of absence or work related injury or illness; or	
 
 	1.3.4	Unsatisfactory job performance.	
 
 	1.4	Benefits are not payable under the Plan if:	
 
 	1.4.1	The employee fails or refuses to return the Release and Waiver of Claims; or	
 
 	1.4.2	The employee voluntarily leaves the Company for “any” reason; or	
 
 	1.4.3	Willful misconduct as determined by the discretion of the Plan administrator.	
SECTION II. SCHEDULE OF BENEFITS
 
 	2.1	Plan benefits are based upon the normal base monthly salary and the targeted bonus for the plan year in place at the time of termination.	
 
 	2.2	Tier is determined by position and/or by length of employment.	
 
 	2.3	Health, dental, vision, prescription drug and mental health coverage as enrolled at the time of termination.	
 
 	2.4	Generally, all other benefits are subject to plan administration. These include but are not limited to:	
 
 	2.4.1	Company Holidays	
 
 	2.4.2	Vacations	
 
 	2.4.3	Short and Long-term disability	
 
 	2.4.4	SeaWorld Parks & Entertainment 401k Plan	
 
 	2.4.5	SeaWorld Relocation benefits	
 
 	2.5	Executive outplacement services (as determined by the Company) will be available to eligible employees. Services must be engaged within 30 days of the termination of employment.	
SECTION III. SEVERANCE PAYMENT
Payment of accrued obligations shall be made to each eligible employee who incurs Severance in accordance with Section 1.3 of the Plan. The lump sum payment will include severance, the targeted bonus for the plan year and any remaining accrued vacation pay. Payment will occur within 15 days of the date of termination.
 
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 	3.1	Tier 1 is designated for the CEO, SeaWorld Parks & Entertainment, Inc.	
 
 	3.1.1	As a tier 1 employee, the CEO will be entitled to a lump sum payment equal to two times the employee’s annual base pay at the time of termination, any remaining accrued but unused vacation, and the targeted bonus for the plan year.	
 
 	3.1.2	Benefit continuation (as defined in section 2.3) for a period of 24 months. The employee (and eligible dependants) will be subject to the same benefit limits, co-payments, premium payments and deductibles as if the employee had remained employed with the Company. The Company reserves the right to change benefit carriers at any time. As a condition of the Plan, if the employee becomes eligible for coverage through a new employer, they must notify the SEA corporate HR department in writing within 30-days after becoming eligible for coverage. In the event of the employee’s death, the spouse and dependents will be eligible to retain coverage through the balance of the established benefit period.	
 
 	3.2	Tier 2 Employee is designated for external hires to the Company who have been employed by the Company for less than 2 years.	
 
 	3.2.1	As a tier 2 employee, the strategy committee member will be entitled to a lump sum payment equal to 18-months the employee’s annual base pay at the time of termination, any remaining accrued but unused vacation, and the targeted bonus for the plan year.	
 
 	3.2.2	Benefit continuation (as defined in section 2.3) for a period of 12 months. The employee (and eligible dependants) will be subject to the same benefit limits, co-payments, premium payments and deductibles as if the employee had remained employed with the Company. The Company reserves the right to change benefit carriers at any time. As a condition of the Plan, if the employee becomes eligible for coverage through a new employer, they must notify the SEA corporate HR department in writing within 30-days after becoming eligible for coverage. In the event of the employee’s death, the spouse and dependents will be eligible to retain coverage through the balance of the established benefit period.	
 
 	3.3	Tier 3 Employee is designated for existing employees of the Company who have been employed greater than 2 years.	
 
 	3.3.1	As a tier 3 employee, the strategy committee member will be entitled to a lump sum payment equal to 12-months the employee’s annual base pay at the time of termination, any remaining accrued but unused vacation, and the targeted bonus for the plan year.	
 
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 	3.3.2	Benefit continuation (as defined in section 2.3) for a period of 12 months. The employee (and eligible dependants) will be subject to the same benefit limits, co-payments, premium payments and deductibles as if the employee had remained employed with the Company. The Company reserves the right to change benefit carriers at any time. As a condition of the Plan, if the employee becomes eligible for coverage through a new employer, they must notify the SEA corporate HR department in writing within 30-days after becoming eligible for coverage. In the event of the employee’s death, the spouse and dependents will be eligible to retain coverage through the balance of the established benefit period.	
ADMINISTRATION
All questions regarding the interpretation and administration of this policy should be directed to the Sr. Director, Compensation and Benefits or the Chief Administrative Officer.
 
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Exhibit 10.38
EXECUTION VERSION

 
SECOND AMENDED AND RESTATED
EQUITYHOLDERS AGREEMENT
Dated as of April 11, 2011

 

TABLE OF CONTENTS

 	 	 	  	Page	 	
			
SECTION 1.	 	DEFINITIONS	  	 	2	  	
			
SECTION 2.	 	RESTRICTIONS ON TRANSFERS OF INTERESTS GENERALLY	  	 	6	  	
			
SECTION 3.	 	TAG-ALONG RIGHTS	  	 	7	  	
			
SECTION 4.	 	DRAG-ALONG RIGHTS	  	 	10	  	
			
SECTION 5.	 	PREEMPTIVE RIGHTS	  	 	12	  	
			
SECTION 6.	 	SALES OF EQUITY OF SW HOLDCO.	  	 	13	  	
			
SECTION 7.	 	REDEMPTION OF EQUITY OF SW HOLDCO OR INTERESTS OF THE PARTNERSHIPS	  	 	14	  	
			
SECTION 8.	 	MISCELLANEOUS	  	 	15	  	
 
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SECOND AMENDED AND RESTATED
EQUITYHOLDERS AGREEMENT
This SECOND AMENDED AND RESTATED EQUITYHOLDERS AGREEMENT is dated as of April 11, 2011 (this “ Agreement ”) and is being entered into by and among SW Cayman L.P., (the “ Main Partnership ”), SW Cayman A L.P., SW Cayman B L.P., SW Cayman C L.P., SW Cayman D L.P., SW Cayman E L.P., SW Cayman F L.P., SW Cayman Co-Invest L.P., SW Cayman (GS) L.P. (the “ GS Partnership ”) and SW Cayman (GSO) L.P. (the “ GSO Partnership ” and together with the GS Partnership, the “ Mezz Partnerships ”), each a limited partnership organized under the laws of the Cayman Islands (each of the foregoing other than the Main Partnership, an “ Other Partnership ”, and collectively, with the Main Partnership the “ Partnerships ”), SW Cayman Limited (formerly known as Orca Cayman Limited), a Cayman Islands limited company and the general partner of each of the Partnership (the “ General Partner ”), the Limited Partners of the Partnerships listed on the signature pages hereto and each Additional Limited Partner (as defined below), Terrific Investment Corporation (“ TIC ”), a company incorporated under the laws of the People’s Republic of China, the holders of Warrants listed on the signature pages hereto, SW Holdco, Inc. a Delaware corporation (“ SW Holdco ”), and each of the Employees (as defined below).
BACKGROUND
WHEREAS, the General Partner, GSMP V Onshore US, LTD., an exempted company organized under the laws of the Cayman Islands (“ GSMP V Onshore ”), GSMP V Offshore US — AB Holdings, an exempted company organized under the laws of the Cayman Islands (“ GSMP V Offshore ”), GSMP V Institutional US — AB Holdings, an exempted company organized under the laws of the Cayman Islands (“ GSMP V Institutional ”), GSLP I Offshore Holdings Fund A — AB Holdings, an exempted company organized under the laws of the Cayman Islands (“ GSLP A ”), GSLP I Offshore Holdings Fund B — AB Holdings, an exempted company organized under the laws of the Cayman Islands (“ GSLP B ”), GSLP I Offshore Holdings Fund C — AB Holdings, an exempted company organized under the laws of the Cayman Islands (“ GSLP C ”), GSLP I Onshore Holdings Fund, L.L.C., a Delaware limited liability company (“ GSLP Onshore ” and, together with GSMP V Onshore, GSMP V Offshore, GSMP V Institutional, GSLP A, GSLP B and GSLP C, the “ GS Purchasers ”); Blackstone Holdings Finance Co. LLC, a Delaware limited liability company (“ GSO Finance ”) and GSO Capital Opportunities Fund LP, a Delaware limited partnership (“ GSO Capital Opportunities ” and, together with GSO Finance and each of their affiliates, the “ GSO Purchasers ”, and together with the GS Purchasers, the “ Mezz Limited Partners ”) and certain other limited partners of the Partnerships are parties to those certain Amended and Restated Limited Partnership Agreements of the applicable Mezz Partnerships, dated December 1, 2009, as the same may hereafter be amended from time to time (the “ Mezz LP Partnership Agreements ” and collectively with the partnership agreements for the Main Partnership and all of the Other Partnerships, the “ Partnership Agreements ”);
WHEREAS, the Partnerships collectively own 100% of the equity interests of SW Holdco;

WHEREAS, SW Holdco, the GSO Partnership, the General Partner, GSO Finance and GSO Capital Opportunities are parties to that certain Warrant Agreement, dated December 1, 2009, as the same may hereafter be amended from time to time (the “ GSO Warrant Agreement ”), pursuant to which GSO Finance and GSO Capital Opportunities hold certain warrants to receive Class B limited partnership units of the GSO Partnership (“ GSO Warrants ”);
WHEREAS, SW Holdco, the GS Partnership, the General Partner and the GS Purchasers are parties to that certain Warrant Agreement, dated December 1, 2009, as the same may hereafter be amended from time to time (the “ GS Warrant Agreement ”), pursuant to which the GS Purchasers hold certain warrants to receive Class B limited partnership units of the GS Partnership (“ GS Warrants ” and together with the GSO Warrants, the “ Warrants ”);
WHEREAS, in connection with entering into the Partnership Agreements, the GS Warrant Agreement, the GSO Warrant Agreement and the closing of the transactions contemplated by the Equity Purchase Agreement, dated as of October 7, 2009, as amended on November 30, 2009, by and among SW Acquisitions Co., Inc. (formerly known as Orca Acquisition Co., Inc.), a Delaware corporation, Anheuser-Busch Companies, Inc., a Delaware corporation, BPOF Corp., a Delaware corporation, HSHO Corp., a Delaware corporation, the Partnerships, solely with respect to certain sections as set forth therein, and Anheuser-Busch InBev SA/NV, solely with respect to certain sections as set forth therein, the Partnerships, the General Partner, certain of the Limited Partners of the Partnerships (as listed on the signature pages therein), SW Holdco and the other parties listed thereto entered into an Equityholders Agreement dated December 1, 2009 (the “ Original Equityholders Agreement ”) to provide certain of the Limited Partners with certain rights and obligations with respect to their interests in the Partnership;
WHEREAS, in accordance with Section 8(g) of the Original Equityholders Agreement, the parties thereto entered into the Amended and Restated Equityholders Agreement, dated December 1, 2009 (the “Amended and Restated Equityholders Agreement”); and
WHEREAS, in accordance with Section 8(g) of the Amended and Restated Equityholders Agreement, the General Partner may amend the Amended and Restated Equityholders Agreement by written instrument, duly executed by the General Partner, provided that no such amendment shall be effective or binding against a Limited Partner without being executed by such Limited Partner if such amendment adversely and disproportionately affects such Limited Partner;
NOW, THEREFORE, the General Partner, acting pursuant to, and in accordance with, Section 8(g) of the Amended and Restated Equityholders Agreement, hereby amends and restates the Amended and Restated Equityholders Agreement as follows:
Section 1. Definitions . Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:
“ Affiliate ” with respect to any Person means any other Person who controls, is controlled by or is under common control with such Person. For the avoidance of doubt,
 
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with respect to Blackstone, “Affiliate” includes (i) Blackstone Management Associates (Cayman) V L.P. and its Affiliates, (ii) any investment fund in respect of which Blackstone Management Associates (Cayman) V L.P. and/or one of its Affiliates is the investment manager or general partner, and (iii) any Affiliate of the investment funds described in paragraph (ii) above.
“ Additional Limited Partner ” shall mean any entity that acquires Interests pursuant to a Permitted Syndication and executes a joinder hereto pursuant to Section 8(i) hereof.
“ Allocable Interests ” shall have the meaning set forth in Section 3(a)(ii).
“ Applicable Limited Partner ” shall mean any Mezz Limited Partner, any Additional Limited Partner and any Employee.
“ Blackstone ” means Blackstone Capital Partners Cayman (III) V, L.P.
“ Blackstone Limited Partner ” means Blackstone and any Affiliate of Blackstone who is a Limited Partner in any of the Partnerships.
“ Business Day ” shall mean any day other than a Saturday, Sunday or other day on which banks are authorized or required by law to be closed in New York, New York.
“ Change of Control ” means (i) the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets of the Partnerships to any “person” or “group” (as such terms are defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than Blackstone and its Affiliates or (ii) if any Person or group, other than Blackstone or one of its Affiliates, is or becomes the General Partner or the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Interests.
“ Class D Unit s” has the meaning set forth in the Partnership Agreements.
“ Drag Along Sale ” shall have the meaning set forth in Section 4(a).
“ Employee ” shall have the meaning set forth in the Partnership Agreements.
“ Employee Units ” shall have the meaning set forth in the Partnership Agreements.
“ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended from time to time.
“ Fair Market Value ” has the meaning set forth in the applicable Management Subscription Agreement.
“ General Partner ” shall have the meaning set forth in the recitals of this Agreement.
 
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“ GS Partnership ” shall have the meaning set forth in the recitals of this Agreement.
“ GSO Partnership ” shall have the meaning set forth in the recitals of this Agreement.
“ GS Purchasers ” shall have the meaning set forth in the recitals of this Agreement.
“ GS Warrant Agreement ” shall have the meaning set forth in the recitals of this Agreement.
“ GS Warrants ” shall have the meaning set forth in the recitals of this Agreement.
“ GSO Purchasers ” shall have the meaning set forth in the recitals of this Agreement.
“ GSO Warrant Agreement ” shall have the meaning set forth in the recitals of this Agreement.
“ GSO Warrants ” shall have the meaning set forth in the recitals of this Agreement.
“ Interest ” means a Class D Unit, a Class B Unit or an Employee Unit (each as defined in the Partnership Agreements) held by a Limited Partner in any Partnership at any particular time, including the right of such Limited Partner to any and all benefits to which a Limited Partner may be entitled as provided in this Agreement together with the obligations of such Limited Partner to comply with all of the terms and provisions of this Agreement. Interests shall be expressed as a number of Interests.
“ Interest Buyer ” shall have the meaning set forth in Section 5(a).
“ IPO ” means the initial firm commitment underwritten offering (or series of related offerings) of common stock of SW Holdco to the public pursuant to an effective registration statement (or statements) under the Securities Act after which there is an active trading market in such shares of common stock.
“ Issuing Partnership ” shall have the meaning set forth in Section 5(a).
“ Limited Partner ” shall mean any limited partner in a Partnership.
“ Main Partnership ” shall have the meaning set forth in the Preamble to this Agreement.
“ Management Subscription Agreement ” means, with respect to each Employee, any Management Subscription Agreement between the Partnerships, the General Partner, SeaWorld Parks and Entertainment, Inc. and Employee.
 
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“ Mezz Limited Partners ” shall have the meaning set forth in the recitals of this Agreement.
“ Mezz LP Partnership Agreements ” shall have the meaning set forth in the recitals of this Agreement.
“ Mezz Partnerships ” shall have the meaning set forth in the recitals of this Agreement.
“ Offered Securities ” shall have the meaning set forth in Section 3(a)(i).
“ Original Equityholders Agreement ” has the meaning set forth in the Recitals.
“ Other Holder ” shall have the meaning set forth in Section 3(a)(i).
“ Other Partnership ” shall have the meaning set forth in the Preamble to this Agreement.
“ Partnerships ” shall have the meaning set forth in the Preamble to this Agreement.
“ Partnership Agreement ” shall have the meaning set forth in the recitals of this Agreement.
“ Permitted Syndication ” shall have the meaning set forth in the Partnership Agreements.
“ Permitted Transferee ” shall have the meaning set forth in the Partnership Agreements.
“ Person ” means and includes any individual, corporation, partnership, limited liability company, association, joint venture, association, joint stock company, trust, unincorporated organization, governmental or political subdivision or agency, or any other entity of whatever nature.
“ Preemptive Rights Notice ” shall have the meaning set forth in Section 5(a).
“ Registration Rights Agreement ” shall have the meaning set forth in the Partnership Agreement.
“ Sale Notice ” shall have the meaning set forth in Section 3(a)(i).
“ Section 5 Limited Partner ” shall mean any Mezz Limited Partner and any Additional Limited Partner.
“ Securities Act ” means the U.S. Securities Act of 1933, as amended from time to time.
“ Selling Blackstone Holder ” shall have the meaning set forth in Section 3(a)(i).
 
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“ Sharing Percentage ” means, as of any time of determination, with respect to any Limited Partner, a percentage equal to the aggregate percentage interest indirectly owned by such Limited Partner in SW Holdco (exclusive of any interests in SW Holdco owned by the Class C LP in any of the Partnerships) (it being understood that for purposes of this calculation in Section 3 only, in addition to any Class D Units held by an Employee, such Employee shall be deemed to hold a number of Class D Units equal to the number of such Class D Units into which such Employee’s Vested Employee Units (or Employee Units that will become Vested Employee Units as a result of the proposed Transfer) may be exchanged in an Employee Unit Exchange, which number shall be determined as of the date of the Sale Notice).
“ Substituted Limited Partner ” shall have the meaning set forth in the Partnership Agreements.
“ Tag-Along Notice ” shall have the meaning set forth in Section 3(a)(i).
“ Transfer ” shall have the meaning set forth in Section 2(a)(i).
“ Transfer Agreement ” shall have the meaning set forth in the Recitals.
“ Transferee ” means any Person to whom a Limited Partner’s Interests is transferred in accordance with this Agreement.
“ Unvested Employee Unit ” shall have the meaning set forth in the Partnership Agreements.
“ Vested Employee Unit ” shall have the meaning set forth in the Partnership Agreements.
“ Warrant Agreements ” means collectively the GS Warrant Agreement and the GSO Warrant Agreement.  
Section 2. Restrictions on Transfers of Interests Generally .
(a) In addition to any restrictions imposed by the Partnership Agreements, prior to an IPO, no Applicable Limited Partner may, subject to subsection (b) of this Section 2, directly or indirectly, assign, sell, exchange, transfer, pledge, hypothecate or otherwise dispose of all or any part of its Interests (each such action, a “ Transfer ”) in any of the Partnerships to any Person (other than a Permitted Transferee or pursuant to an Exempt Employee Transfer) without the prior written consent of the General Partner, which it may grant or withhold in its sole and absolute discretion.
(b) Notwithstanding subsection (a) of this Section 2, but subject in any event to any restrictions in the Partnership Agreements,
i. any Applicable Limited Partner may Transfer its Interests pursuant to Section 3, Section 4 and Section 5 hereof;
 
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ii. without the prior written consent of the General Partner, no Transfer of any Interests by any Applicable Limited Partner shall be made unless (A) registration is not required under the Securities Act in respect of such Transfer, and (B) such Transfer does not violate any other applicable federal or state securities laws (the General Partner may elect prior to any Transfer to require an opinion of counsel with respect to any of the foregoing matters in this paragraph); and
iii. a Limited Partner may pledge its Interests (other than Employee Units) pursuant to a bona fide financing transaction; provided that, any agreement entered into with a lender in connection with such pledge will provide that in the event the lender seeks to enforce such pledge, Blackstone and/or its designees would have a pro rata right of first offer, in priority to the lender’s right to foreclose, in respect of the Interests subject to the lender’s pledge. To the extent Blackstone and its designees do not acquire the entirety of any stake subject to such pro rata right of first offer, the lender, or such other purchaser of Interests pursuant hereto, upon foreclosure may acquire, subject to any requisite consent applicable to Transfers to a third party under the transfer restrictions contained in this Agreement and the Partnership Agreements, the remaining portion of the stake not acquired pursuant to such pro rata right of first offer and shall adhere to all of the obligations under this Agreement and the Partnership Agreements (including without limitation the transfer restrictions set forth herein and therein); provided further that, for avoidance of doubt, upon foreclosure, the lender, or such other purchaser of Interests pursuant hereto, will not have any right to vote any of its Interests on any matter to be voted on by the Limited Partners and will not have any right to appoint or designate any members of any governing body of the Partnerships, the General Partner or any of their Subsidiaries or Affiliates or any other governance, consent or approval rights.
(c) Any purported Transfer by an Applicable Limited Partner of any of its Interests in violation of this Agreement shall be null and void and of no force or effect.
(d) Notwithstanding anything to the contrary in this Agreement and other than in connection with an Exempt Employee Transfer, no Employee Units may be Transferred (instead, if a holder of Employee Units desires to Transfer any Employee Units that are Vested Employee Units, other than in connection with an Exempt Employee Transfer or any repurchase rights of the Partnership and the Blackstone Members or their Affiliates, the holder shall be required to, immediately prior to, and contingent upon, the consummation of the desired Transfer, exchange such Employee Units with the applicable Partnership for a number of Class D Units having a Fair Market Value equal to the Fair Market Value of the Employee Units being exchanged (such exchange, an “ Employee Unit Exchange ”)). Any Transfer of Class D Units issued in connection with an Employee Unit Exchange shall be subject to the provisions of Section 2.
Section 3. Tag-Along Rights.
(a)
 
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i. Prior to making or permitting any Transfer of Interests (other than a Transfer described in Section 3(b)) in any Partnership held by Blackstone or any of its Affiliates, the General Partner shall require that the Blackstone Limited Partner holding the Interests in the Partnership subject to the proposed Transfer (for purposes of this Section 3, a “ Selling Blackstone Holder ”) give at least fifteen (15) days’ prior written notice to each Applicable Limited Partner (for purposes of this Section 3, each an “ Other Holder ”), which notice (for purposes of this Section 3, the “ Sale Notice ”) shall identify the number of Interests in the Partnerships to be sold (for purposes of this Section 3, the “ Offered Securities ”), describe the terms and conditions of such proposed Transfer, and identify each prospective Transferee. Any of the Other Holders may, within ten (10) days of the receipt of the Sale Notice, give written notice (each, a “ Tag-Along Notice ”) to the Selling Blackstone Holder and the General Partner that such Other Holder wishes to participate in such proposed Transfer upon the terms and conditions set forth in the Sale Notice, which Tag-Along Notice shall specify the number of Interests such Other Holder desires to include in such proposed Transfer. In order to exercise its tag-along rights hereunder, each Other Holder must agree to make to the transferee the same representations, warranties, covenants, indemnities and agreements as the Selling Blackstone Holder agrees to make in connection with the Transfer of the Offered Securities; provided that, no Other Holder shall be required to (A) make only those representations and warranties pertaining specifically to (and, as applicable, covenants by) its ownership of Interests and its ability to effect the Transfer of its Interests), and (B) indemnify, severally but not jointly, the Transferee (in the amount limited to the value of Interests that are Transferred by such Other Holder) for all liabilities to the Transferee arising out of representations, warranties, covenants and indemnities made by such Other Holder in connection with the Transfer. Each Limited Partner will bear (x) its own costs of any sale of Interests pursuant to this Section 3(a)(i) and (y) its pro rata share (based upon the relative amount of proceeds received for the Interests sold) of the costs of any sale of Interests pursuant to this Section 3(a)(i) to the extent such costs are incurred for the benefit of all selling Limited Partners and are not otherwise paid by the Transferee. If consideration is to be received by Limited Partners in connection with a sale pursuant to this Section 3(a)(i), all holders of then currently exercisable rights to acquire Interests, if any, will be given an opportunity to exercise such rights prior to the consummation of such sale and to participate in such sale as holders of Interests.
ii. If none of the Other Holders gives the Selling Blackstone Holder a timely Tag-Along Notice with respect to the Transfer proposed in the Sale Notice, then (notwithstanding the first sentence of Section 3(a)(i)) the Selling Blackstone Holder may Transfer such Offered Securities on the terms and conditions set forth, and to or among any of the proposed Transferees identified (or Affiliates of proposed Transferees identified), in the Sale Notice at any time within ninety (90) days after expiration of the fifteen-day period for giving Tag-Along Notices with respect to such Transfer. Any such Offered Securities not Transferred by the Selling Blackstone Holder during such ninety-day period will again be subject to the provisions of this Section 3(a) upon subsequent Transfer. If one or more
 
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Other Holders give the Selling Blackstone Holder a timely Tag Along Notice, then the Selling Blackstone Holder shall, as a condition to the sale contemplated by the Sale Notice, obtain the agreement of the prospective Transferee(s) to allow the participation of the Other Holders in any contemplated Transfer, on the same terms and conditions as are applicable to the Offered Securities, and no Selling Blackstone Holder shall Transfer any of its Interests to any prospective transferee if such prospective Transferee(s) decline(s) to allow the participation of the Other Holders. If the prospective Transferee(s) is (or are) unwilling or unable to acquire all of the Offered Securities and all of the Interests specified in timely Tag-Along Notices upon such terms, then the Selling Blackstone Holder may elect either to cancel such proposed Transfer or to allocate the maximum number of Interests that the prospective Transferees are willing to purchase (the “ Allocable Interests ”) among the Selling Blackstone Holder and the Other Holders giving timely Tag-Along Notices as follows:
 
 	(A)	each participating Limited Partner (including the Selling Blackstone Holder and any Other Holder electing to participate in such contemplated Transfer) shall be entitled to have included in the Transfer a number of Interests (not to exceed, for any Other Holder, the number of Interests identified in such Other Holder’s Tag-Along Notice) equal to the product of (I) the aggregate number of Allocable Interests and (II) a fraction, the numerator of which is such Limited Partner’s Sharing Percentage and the denominator of which is the aggregate Sharing Percentages for all participating Limited Partners; and	
 
 	(B)	if after allocating the Allocable Interests to such Limited Partners in accordance with clause (A) above, there are any Allocable Interests that remain unallocated, then they shall be allocated (in one or more successive allocations on the basis of the allocation method specified in clause (A) above) among the Selling Blackstone Holder and each such Other Holder that has elected in its Tag-Along Notice to sell a greater number of Interests than previously has been allocated to it pursuant to clause (A) and this clause (B) (all of whom (but no others) shall, for purposes of clause (A) above, be deemed to be the participating Limited Partners) until all such Allocable Interests have been allocated in accordance with this clause (B).	
(b) The rights and restrictions contained in Section 3(a) shall not apply with respect to any of the following Transfers of Interests:
i. any Transfer of Interests by Blackstone in accordance with (x) Section 4 or Section 5 hereof, or (y) Section 7.3 of any of the Partnership Agreements;
 
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ii. any Transfer of Interests by Blackstone incidental to any reclassification or combination of Interests or any recapitalization, reorganization or reclassification of, or any merger or consolidation involving, any Partnership; provided that all Interests held by Other Holders are treated in the same way as the Interests held by Blackstone in connection with such exercise, conversion or exchange;
iii. any Transfer (x) to a Permitted Transferee of Blackstone or (y) in connection with a Permitted Syndication to the extent that the cumulative Sharing Percentage transferred under this clause (y) since the date hereof is less than 30%;
iv. any Transfer pursuant to the Registration Rights Agreement.
(c) All restrictions on Transfer set forth in this Agreement shall apply to any Interests that have been transferred by the Selling Blackstone Holder or an Other Holder in a Transfer pursuant to the provisions of Section 3(a).
(d) The provisions of this Section 3 shall terminate upon an IPO.
Section 4. Drag-Along Rights.
(a) Subject to the next paragraph, if the General Partner elects to consummate, or to cause all the Partnerships to consummate, a transaction constituting a Change of Control, the General Partner shall notify the Applicable Limited Partners in writing of that election, the Applicable Limited Partners will take all other actions reasonably necessary or desirable to cause the consummation of such transaction (pursuant to which the Applicable Limited Partners shall be obligated to sell the same proportion of their Interests as those sold by the Blackstone Limited Partners) on the terms proposed by the General Partner (a “ Drag Along Sale ”) so long as such terms are identical, in all material respects (it being agreed and understood that price and consideration shall be material terms), to the terms on which all other Limited Partners in the Partnerships participate in such transaction in all material respects. Without limiting the foregoing, if the proposed Drag Along Sale is structured as or involves a sale or redemption of Interests, the Applicable Limited Partners will agree to sell their pro rata share of the Interests (based on the relative proportion of Interests held by all Limited Partners (it being understood that for purposes of this calculation, in addition to any Class D Interests held by an Employee, such Employee shall be deemed to hold a number of Class D Units equal to the number of such Class D Units into which such Employee’s Vested Employee Units (or Employee Units that will become Vested Employee Units as a result of the proposed Transfer) may be exchanged in an Employee Unit Exchange, which number shall be determined as of the date the Blackstone Members enter into an agreement with the proposed transferee to consummate a Drag Along Sale)) being sold in such Drag Along Sale on the terms and conditions approved by the General Partner, and subject to this Section 4, the Applicable Limited Partners will execute any merger, asset purchase, security purchase, recapitalization or other sale agreement approved by the General Partner in connection with such Change of Control, and, without limiting the generality of the foregoing, shall make to the Transferee the same representations, warranties, covenants, indemnities and agreements as all other Limited Partners (including all Blackstone Limited Partners) agree to make in connection with the Drag Along Sale (except that the Applicable
 
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Limited Partners shall make only representations and warranties pertaining specifically to (and, as applicable, covenants by) their ownership of Interests and their ability to effect the Transfer of their Interests), and shall agree to indemnify, severally but not jointly, the Transferees (in the amount limited to the value of Interests that are Transferred by each Limited Partner) for all liabilities to the Transferees arising out of representations, warranties, covenants and indemnities made by such Applicable Limited Partner.
(b) The foregoing obligations of the Applicable Limited Partners with respect to the Drag Along Sale are subject to the satisfaction of the following conditions: (i) all Limited Partners shall participate in the Drag Along Sale on a pro rata basis (based on the relative proportion of Interests held by all Limited Partners (it being understood that for purposes of this calculation, in addition to any Class D Interests held by an Employee, such Employee shall be deemed to hold a number of Class D Units equal to the number of such Class D Units into which such Employee’s Vested Employee Units (or Employee Units that will become Vested Employee Units as a result of the proposed Transfer) may be exchanged in an Employee Unit Exchange, which number shall be determined as of the date the Blackstone Members enter into an agreement with the proposed transferee to consummate a Drag Along Sale)); (ii) upon the consummation of the Drag Along Sale, all of the Limited Partners in all Partnerships shall receive the same form and amount of consideration per Interest, or if any Limited Partners in any of the Partnerships are given an option as to the form and amount of consideration to be received, all Applicable Limited Partners will be given the same option; and (iii) if consideration is to be received by Limited Partners in any of the Partnerships, all holders of then currently exercisable rights to acquire Interests, if any, will be given an opportunity to either (A) exercise such rights prior to the consummation of the Drag Along Sale and participate in such sale as holders of Interests or (B) upon the consummation of the Drag Along Sale, receive in exchange for such rights consideration equal to the amount determined by multiplying (1) the same amount of consideration per Interest received by the Limited Partners in connection with the Drag Along Sale less the exercise price per Interest by (2) the number of Interests represented by such rights.
(c) Each Applicable Limited Partner will bear its pro rata share (based upon the relative amount of proceeds received for the Interests sold (it being understood that for purposes of this calculation, in addition to any Class D Interests held by an Employee, such Employee shall be deemed to hold a number of Class D Units equal to the number of such Class D Units into which such Employee’s Vested Employee Units (or Employee Units that will become Vested Employee Units as a result of the proposed Transfer) may be exchanged in an Employee Unit Exchange, which number shall be determined as of the date the Blackstone Members enter into an agreement with the proposed transferee to consummate a Drag Along Sale) of the reasonable costs of any sale of Interests pursuant to a Drag Along Sale to the extent such costs are incurred for the benefit of all Limited Partners and are not otherwise paid by the Partnership or the acquiring party. Costs incurred by or on behalf of an Applicable Limited Partner for its sole benefit will not be considered costs of the transaction hereunder. In the event that any transaction that the General Partner elects to consummate or cause to be consummated pursuant to this Section 4 is not consummated for any reason, the Partnerships will reimburse all Applicable Limited Partners for all actual and reasonable expenses paid or incurred by them in connection therewith.
 
11

(d) Notwithstanding any provision in this Agreement to the contrary, Blackstone shall be entitled to be paid customary and reasonable fees by the Partnerships or any subsidiary for any investment banking services or services provided by it in connection with a Change of Control. Nothing in this agreement shall limit any rights a Limited Partner has with respect to any agreement validly entered into with the Partnership or one of its subsidiaries with respect to any advisory or similar fees.
(e) The provisions of this Section 4 shall terminate upon an IPO.
Section 5. Preemptive Rights.
(a) Prior to an IPO, if any Partnership (referred to herein as the “ Issuing Partnership ”) proposes to issue new Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) to any Limited Partner or any other Person (an “ Interest Buyer ”) and the proceeds thereof are being used to acquire additional shares or other equity interests in SW Holdco, each Section 5 Limited Partner shall, subject to Sections 5(b) and 5(c) below, have a preemptive right to acquire up to its pro rata share (in accordance with its Sharing Percentage and calculated on an as-converted basis for Interests that would be issuable upon the conversion of outstanding Warrants) of Interests in the Partnership in which such Section 5 Limited Partner is a Limited Partner on the same terms and conditions as offered to the Interest Buyer (with the proceeds of any such Interests being used to acquire a pro rata share of the equity interests of SW Holdco). At least thirty (30) days prior to any issuance of new Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) by any of the Partnerships to which the preemptive right in this Section 5 applies, the Issuing Partnership shall notify each such Section 5 Limited Partner of such proposed issuance and the aggregate number of Interests or other securities which it proposes to issue to the Interest Buyer (the “ Preemptive Rights Notice ”). In order to exercise its preemptive right, such Section 5 Limited Partner must notify the Partnership in writing (within ten (10) days following its receipt of the Preemptive Rights Notice) of its exercise of such preemptive right. Such notice shall state the number of Interests which it elects to purchase (which number cannot exceed the number of Interests it is entitled to purchase under this Section 5). Each Section 5 Limited Partner who does not so notify the Issuing Partnership in the time period above shall be deemed to have waived all of such Limited Partner’s rights with respect to such issuance. In the event that any Section 5 Limited Partner does not elect to purchase its full pro rata share of the Interests or other additional equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities), the Issuing Partnership shall deliver to each Section 5 Limited Partner (other than declining Section 5 Limited Partners) a written notice thereof not later than the twentieth day after delivery of the Preemptive Rights Notice, including the number of Interests or other securities which were subject to the purchase right of such declining Section 5 Limited Partner (s), and each other Section 5 Limited Partner may subscribe for not more than its pro rata share (in accordance with the percentage ownership of the Interests held by such Section 5 Limited Partner and calculated on an as-converted basis for Interests that would be issuable upon the conversion of outstanding Warrants) of such declined Interests or other securities by delivering a second notice to the Issuing Partnership at least five (5) days prior to the issuance. The purchase price for any Interests or other securities subscribed for by an Section 5 Limited Partner pursuant to this
 
12

Section 5 shall be payable on the same terms and conditions as offered to the Interest Buyer, with such other consideration (if other than cash, to be valued at fair market value mutually agreed to between the parties) as the parties shall mutually agree.
(b) Notwithstanding the provisions of Section 5(a), in the event that General Partner determines that time is of the essence in completing any issuance of additional Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) subject to this Section 5, the Issuing Partnership may proceed to complete such issuance prior to the expiration of the 30 day period set forth in Section 5(a), so long as provision is made in such issuance such that subsequent to such period either (i) the purchaser(s) will be obligated to transfer that portion of such Interests or other securities to any Limited Partners properly electing to participate in such issuance pursuant to Section 5(a) sufficient to satisfy the terms of this Section 5(a) or (ii) the Partnership shall issue such additional Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) to those Section 5 Limited Partners properly electing to participate in such issuance pursuant to Section 5(a) sufficient to satisfy the terms of this Section 5.
(c) Sections 5(a) and 5(b) shall not apply to (i) the issuance or grant of Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) to officers, employees or consultants of the Partnerships or any of their subsidiaries or other Person having a relationship with the Partnerships or their subsidiaries pursuant to any management equity plan or other equity-based employee benefits plan or arrangement, in each case that has been approved by the General Partner or any duly authorized committee thereof; (ii) the issuance or sale of Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) to a seller or its designee in connection with and as consideration for the direct or indirect acquisition of a Person by the Partnerships from such seller or designee, which acquisition has been approved by the General Partner or any duly authorized committee thereof; (iii) the issuance or sale of Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) to financial institutions or commercial lenders or their designees, in connection with commercial loans to the Partnerships by such financial institutions or commercial lenders, which are approved by the General Partner or any duly authorized committee thereof; (iv) the issuance or sale of Interests or other equity securities (including Warrants or options to acquire such securities or securities exchangeable for or convertible into such securities) pursuant to any joint venture, partnership or other strategic transaction approved by the General Partner or any duly authorized committee thereof, and primarily for purposes other than raising capital; (v) the issuance of Interests pursuant to the terms of the Warrant Agreements or any other warrants or options to acquire such Interests or securities exchangeable for or convertible into such Interests which have been issued, sold or granted in compliance with this Section and the other terms and conditions of this Agreement; and (vi) the issuance of Interests pursuant to the IPO or any other public offering.
Section 6. Sales of Equity of SW Holdco. The General Partner and each Partnership collectively agree that no Partnership may sell any of the equity interests of SW Holdco held by them unless such sale is consummated pro rata (based on their relative ownership
 
13

percentages in SW Holdco) among all Partnerships. SW Holdco agrees that it will not, and the General Partner shall procure that SW Holdco shall not, record a transfer of its equity that is made in violation of this provision. Notwithstanding the foregoing, this Section 6 shall not apply to transfers of equity interests of SW Holdco to one or more Limited Partners in connection with a Monetization or In-Kind Distribution in accordance with Section 7.3 of the applicable Partnership Agreements.
Section 7. Redemption of Equity of SW Holdco or Interests of the Partnerships.
(a) Redemptions of Equity of SW Holdco . The General Partner, each Partnership and SW Holdco collectively agree that in the event that SW Holdco proposes to redeem or repurchase any of the equity interests of SW Holdco held by the Partnerships, SW Holdco shall offer to each Partnership the right to participate in such redemption or repurchase to the extent of its pro rata ownership percentage in SW Holdco by delivering a written notice of such offer (specifying in reasonable detail the terms of such offer) (the “ Section 7(a) Redemption Notice ”) to the General Partner. The General Partner shall promptly distribute the Section 7(a) Redemption Notice to all Limited Partners and, to the extent a majority in interest of the Limited Partners of any Partnership does not affirmatively reject the offer by providing written notice to the General Partner within 10 days after the receipt of the Section 7(a) Redemption Notice, such Partnership (the “ Accepting Partnership ”) shall be deemed to have accepted the offer of redemption or repurchase and SW Holdco shall redeem or repurchase such pro rata ownership percentage of the equity interests of SW Holdco owned by the Accepting Partnership. To the extent a majority in interest of the Limited Partners of any Partnership rejects such offer of redemption or repurchase (such Partnership, the “ Rejecting Partnership ”) by written notice to the General Partner within 10 days after the receipt of the Section 7(a) Redemption Notice, the pro rata ownership percentage of the equity of SW Holdco owned by the Rejecting Partnership shall be offered to the other Partnerships in accordance with the procedure described above. SW Holdco agrees that it will not, and the General Partner shall cause SW Holdco not to, record any redemption or repurchase of its equity that is made in violation of this provision; provided that, this provision shall not apply to any redemptions pursuant to the Warrant Agreements and/or Section 7.3 of any of the Partnership Agreements.
(b) Redemptions of Interests of the Partnerships . The General Partner, each Partnership and the Limited Partners collectively agree that in the event that any Partnership proposes to redeem or repurchase any of the Interests of such Partnership held by the Limited Partners, each other Partnership shall offer to its respective Limited Partners to redeem or repurchase (subject to Section 7.2 of the Partnership Agreements) its pro rata amount from its respective Limited Partners in accordance with each Limited Partner’s Sharing Percentage among all Partnerships. The General Partner shall deliver a written notice of such offer (specifying in reasonable detail the terms of such offer) (the “ Section 7(b) Redemption Notice ”) to all Limited Partners and, to the extent a Limited Partner of any Partnership does not affirmatively reject the offer by providing written notice to the General Partner within 10 days after the receipt of the Section 7(b) Redemption Notice, such Limited Partner (the “ Accepting Limited Partner ”) shall be deemed to have accepted the offer of redemption or repurchase and the applicable Partnership shall redeem or repurchase such pro rata amount in accordance with the Accepting Limited Partner’s Sharing Percentage among all Partnerships. To the extent a Limited Partner rejects such offer of redemption or repurchase (such Limited Partner, the
 
14

“ Rejecting Limited Partner ”) by written notice to the General Partner within 10 days after the receipt of the Section 7(b) Redemption Notice, the Rejecting Limited Partner’s pro rata amount of such offer, determined in accordance with such Rejecting Limited Partner’s Sharing Percentage among all Partnerships, shall be offered to the other Partnerships in accordance with the procedure described above. The General Partner agrees that it will not record any redemption or repurchase of Interests that is made in violation of this provision; provided that this provision shall not apply to any redemptions or repurchases pursuant to the Warrant Agreements and/or Section 7.3 of any of the Partnership Agreements.
Section 8. Issuance of Equity in SW Holdco upon Vesting of Employee Units. SW Holdco and the Partnerships agree that, upon the vesting of any Employee Unit pursuant to the applicable Management Subscription Agreement and without further action of SW Holdco, its board of directors or the Partnerships, except as required pursuant to applicable law, a corresponding number of common equity interests in SW Holdco shall be deemed to be validly issued, for such consideration as set forth in the applicable Management Subscription Agreement, to the Partnerships in respect of such Vested Employee Units and SW Holdco shall update its books and records to reflect such issuance.
Section 9. Miscellaneous.
(a) Equitable Relief; Waiver of Accounting/Partition . The Limited Partners hereby confirm that damages at law may be an inadequate remedy for a breach or threatened breach of this Agreement and agree that, in the event of a breach or threatened breach of any provision hereof, the respective rights and obligations hereunder shall be enforceable by specific performance, injunction or other equitable remedy, but, nothing herein contained is intended to, nor shall it, limit or affect any right or rights at law or by statute or otherwise of a Limited Partner aggrieved as against the other for a breach or threatened breach of any provision hereof, it being the intention by this Section 9(a) to make clear the agreement of the Limited Partners that the respective rights and obligations of the Limited Partners hereunder shall be enforceable in equity as well as at law or otherwise and that the mention herein of any particular remedy shall not preclude a Limited Partner from any other remedy it or he might have, either in law or in equity. Each Limited Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.
(b) Severability . Each provision of this Agreement shall be considered severable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, such invalidity shall not impair the operation of or affect those provisions of this Agreement which are valid. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable law, and in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions.
(c) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
 
15

(d) Successors and Assigns . Subject to the limitations set forth herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective successors and assigns.
(e) Notices .
i. Any notice to any Limited Partner shall be at the address of such Limited Partner set forth in Schedule A hereto or such other mailing address of which such Limited Partner shall advise the General Partner in writing. Any notice to the Partnership or the General Partner shall be at the principal office of the Partnership as set forth in Section 2.5 of the applicable Partnership Agreement. The General Partner may at any time change the location of such office. Notice of any such change shall be given to the Limited Partners on or before the date of any such change.
ii. Any notice shall be deemed to have been duly given if personally delivered or delivered by facsimile, when received Express Mail or recognized overnight courier on the second following Business Day (or third following Business Day if mailed outside the Interested States) or (iii) delivered by e-mail, when received.
(f) Counterparts . This Agreement may be executed in any number of counterparts, each of which may be an original or facsimile and all of which together shall constitute a single instrument.
(g) Amendments . The provisions of this Agreement may be amended or modified, in whole or in part, by a written instrument duly executed by the General Partner and delivered to each Limited Partner; provided no such amendment shall be effective or binding against a Limited Partner without being executed by such Limited Partner if such amendment adversely and disproportionately affects such Limited Partner in a specific manner separate and distinct from the amendment’s treatment of other Limited Partners. The General Partner will distribute to each Limited Partner any amendments to this agreement adopted unilaterally by the General Partner (or otherwise where such amendment has not previously been reviewed by such Limited Partner) promptly following its effectiveness.
(h) Entire Agreement . This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any prior agreement or understanding among or between them with respect to such subject matter.
(i) Admission of Applicable Limited Partners . Pursuant to a Permitted Syndication, the General Partner may permit (i) additional investors that have become Limited Partners to execute a joinder to the Agreement as an Additional Limited Partner or (ii) employees, consultants or advisors of SW Holdco and its Affiliates to execute a joinder to the Agreement as an Employee, respectively, whereupon such Additional Limited Partner or Employee, as applicable, shall assume all of the rights, obligations and restrictions contained herein as an Applicable Limited Partner or Employee, respectively, as if such Additional Limited Partner or Employee, as applicable, were an original party hereto.
 
16

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17

IN WITNESS WHEREOF, the parties hereto have caused this Equityholders Agreement to be duly executed as of the date first above written.

SW CAYMAN LIMITED	
		
By:	 	/s/ Bruce McEvoy	
Name:	 	Bruce McEvoy	
Title:	 		
 
18

			
SW HOLDCO, INC.	
		
By:	 	/s/ Bruce McEvoy	
Name:	 	Bruce McEvoy	
Title:	 		
 
19

THE PARTNERSHIPS

SW CAYMAN L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By:	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
	
SW CAYMAN A L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By: 	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
	
SW CAYMAN B L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By: 	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
	
SW CAYMAN C L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By: 	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
 
20

			
SW CAYMAN D L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By: 	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
	
SW CAYMAN E L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By: 	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
	
SW CAYMAN F L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By:	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
	
SW CAYMAN (GS) L.P.	
		
By:	 	SW Cayman Limited, its general partner	
		
By: 	 	/s/ Bruce McEvoy	
Name:	 		
Title:	 		
 
21

			
GSMP V ONSHORE US, LTD.	
		
By:	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
	
/s/ Dawn L. Cooper	
Witness	 		
	
GSMP V OFFSHORE US—AB HOLDINGS	
		
By: 	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
	
/s/ Dawn L. Cooper	
Witness	 		
	
GSMP V INSTITUTIONAL US—AB HOLDINGS	
		
By:	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
	
/s/ Dawn L. Cooper	
Witness	 		
	
GSLP I OFFSHORE HOLDINGS FUND A—AB HOLDINGS	
		
By:	 	Goldman Sachs & Co., Duly Authorized	
		
By: 	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Managing Director	

22

			
GSLP I OFFSHORE HOLDINGS FUND B—AB HOLDINGS	
	
By: Goldman Sachs & Co., Duly Authorized	
		
By:	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
	
GSLP I OFFSHORE HOLDINGS FUND C—AB HOLDINGS	
	
By: Goldman Sachs & Co., Duly Authorized	
		
By:	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Managing Director	
	
GSLP I ONSHORE HOLDINGS FUND, L.L.C.	
	
By: Goldman Sachs & Co., as Attorney-in-Fact	
		
By:	 	/s/ John E. Bowman	
Name:	 	John E. Bowman	
Title:	 	Attorney-in-Fact	
	
GSO CAPITAL OPPORTUNITIES FUND LP	
	
By: GSO Capital Partners LP, its investment manager	
		
By:	 	/s/ George Fan	
Name:	 	George Fan	
Title:	 	Chief Legal Officer	
 
23

SW CAYMAN LIMITED PARTNERS

BLACKSTONE FAMILY INVESTMENT PARTNERSHIP (CAYMAN) V L.P.	
	
By: Blackstone LR Associates (Cayman) V Ltd., its general partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 		
	
BLACKSTONE PARTICIPATION PARTNERSHIP (CAYMAN) V L.P.	
	
By: Blackstone LR Associates (Cayman) V Ltd., its general partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 		
	
BLACKSTONE CAPITAL PARTNERS (CAYMAN III) V L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 		
	
BLACKSTONE CAPITAL PARTNERS (CAYMAN III) V—AC L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 		
 
24

			
BCP CO-INVESTORS (CAYMAN SW A) L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 		
	
BCP SW CO-INVESTORS L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 		
	
BLACKSTONE REAL ESTATE PARTNERS VI L.P.	
	
By: Blackstone Real Estate Associates VI L.P.,
its General Partner	
		
By:	 	BREA VI L.L.C., its General Partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 	Senior Managing Director	
 
25

			
BLACKSTONE REAL ESTATE PARTNERS VI.TE.1 L.P.	
	
By: Blackstone Real Estate Associates VI L.P.,
its General Partner	
	
By: BREA VI L.L.C., its General Partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 	Senior Managing Director	
	
BLACKSTONE REAL ESTATE PARTNERS VI.TE.2 L.P.	
	
By: Blackstone Real Estate Associates VI L.P.,
its General Partner	
	
By: BREA VI L.L.C., its General Partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 	Senior Managing Director	
	
BLACKSTONE REAL ESTATE PARTNERS VI (AV) L.P.	
	
By: Blackstone Real Estate Associates VI L.P.,
its General Partner	
	
By: BREA VI L.L.C., its General Partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 	Senior Managing Director	
 
26

			
BLACKSTONE REAL ESTATE PARTNERS (AIV) VI L.P.	
	
By: Blackstone Real Estate Associates VI L.P.,
its General Partner	
	
By: BREA VI L.L.C., its General Partner	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 	Senior Managing Director	
	
BLACKSTONE REAL ESTATE HOLDINGS VI L.P.	
	
By: BREP VI SIDE-BY-SIDE GP L.L.C.,
its General Partner	
	
By: BLACKSTONE HOLDINGS III L.P.,
its Sole Member	
		
By:	 	/s/ Kenneth C. Whitney	
Name:	 	Kenneth C. Whitney	
Title:	 	Authorized Officer	
 
27

SW CAYMAN A LIMITED PARTNERS

BLACKSTONE CAPITAL PARTNERS (CAYMAN III-A) V L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
	
By: BCP V GP L.L.C., its general partner	
		
By:	 	/s/ Michael Chae	
Name:	 	Michael Chae	
Title:	 	Senior Managing Director	
SW CAYMAN B LIMITED PARTNERS

BLACKSTONE CAPITAL PARTNERS (CAYMAN III-B) V L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
	
By: BCP V GP L.L.C., its general partner	
		
By:	 	/s/ Michael Chae	
Name:	 	Michael Chae	
Title:	 	Senior Managing Director	
 
28

SW CAYMAN C LIMITED PARTNERS

BLACKSTONE CAPITAL PARTNERS (CAYMAN III-C) V L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
	
By: BCP V GP L.L.C., its general partner	
		
By:	 	/s/ Michael Chae	
Name:	 	Michael Chae	
Title:	 	Senior Managing Director	
SW CAYMAN D LIMITED PARTNERS

BLACKSTONE CAPITAL PARTNERS (CAYMAN III-D) V L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
	
By: BCP V GP L.L.C., its general partner	
		
By:	 	/s/ Michael Chae	
Name:	 	Michael Chae	
Title:	 	Senior Managing Director	
 
29

SW CAYMAN E LIMITED PARTNERS

BLACKSTONE CAPITAL PARTNERS (CAYMAN III-A) V-AC L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
	
By: BCP V GP L.L.C., its general partner	
		
By:	 	/s/ Michael Chae	
Name:	 	Michael Chae	
Title:	 	Senior Managing Director	
SW CAYMAN F LIMITED PARTNERS

BLACKSTONE CAPITAL PARTNERS (CAYMAN III-B) V-AC L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
	
By: BCP V GP L.L.C., its general partner	
		
By:	 	/s/ Michael Chae	
Name:	 	Michael Chae	
Title:	 	Senior Managing Director	
 
30

SW CAYMAN CO-INVEST LIMITED PARTNERS

BCP V CO-INVESTORS (CAYMAN SW B) L.P.	
	
By: Blackstone Management Associates (Cayman)
V L.P., its general partner	
	
By: BCP V GP L.L.C., its general partner	
		
By:	 	/s/ Michael Chae	
Name:	 	Michael Chae	
Title:	 	Senior Managing Director	
 
31

ADDITIONAL LIMITED PARTNER

TERRIFIC INVESTMENT CORPORATION	
		
By:	 	/s/ Gao, Xiqing	
Name:	 	Gao, Xiqing	
Title:	 	Executive Director and President	
 
32

Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Amendment No. 1 to Registration Statement No. 333-185697 on Form S-1 of our report dated December 26, 2012 relating to the financial statements and financial statement schedule of SeaWorld Entertainment, Inc. appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading “Experts” in such Prospectus.
/s/ Deloitte & Touche LLP
Tampa, Florida
February 8, 2013