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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 23, 1996
-------------------------------
Mountasia Entertainment International, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 0-22458 58-1949379
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
5895 Windward Parkway, Suite 220, Alpharetta, Georgia 30202-4182
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 442-6640
--------------------
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This Amendment No. 1 amends and supplements the Statement on Form 8-K
Current Report filed on June 19, 1996 (the "Form 8-K") by Mountasia
Entertainment International, Inc., a Georgia Corporation limited partnership,
and certain other persons. Capitalized terms used herein which are not
otherwise defined herein are so used with the respective meanings ascribed to
them in the Form 8-K.
Item 5. Other Events
Item 5 of the Form 8-K is hereby amended by
adding the following thereto:
As contemplated by the Investment Agreement, the
Purchaser informed the Company of certain matters which arose in the
Purchaser's confirmatory due diligence review of certain matters
relating to the Company. As also contemplated by the Investment
Agreement, the parties engaged in negotiations with respect to
possible amendments to the Investment Agreement and related documents
in light of those matters. As a result of those negotiations, the
Company and the Purchaser agreed to certain amendments to the
Investment Agreement and related documentation, including without
limitation the following: (i) the number of shares of Common Stock
that the Purchaser will acquire at the Closing for its investment of
$40.0 million (either directly or upon conversion of loans previously
made by an affiliate of the Purchaser to the Company (the "Purchaser
Loans")) will equal 45.45% of the shares of Common Stock outstanding
immediately after such investment (the "Post-Investment Number of
Shares"), rather than 44.4% of the Post-Investment Number of Shares
(with the result that, assuming that the total number of shares of
Common Stock outstanding immediately prior to the Closing (the
"Pre-Investment Number of Shares") were 13,714,498, the Purchaser
would receive 11,428,571 shares of Common Stock at the closing of its
$40.0 million investment); (ii) subject to the matters referred to in
(iii) below, for three years after the closing date, the Company will
have the right (the "$20 Million Call Right") to compel the Purchaser
to invest up to an additional $20.0 million (less the amount invested
under the Purchaser's $20 Million Option (described in (iv) below)) to
purchase Common Stock at $3.50 per share (subject to adjustment in the
event that the Pre-Investment Number of Shares is other than
13,714,498 (such price, the "Per Share Option Price")), the proceeds
of which investment could be used only to fund equity required for new
investments approved by the Board of Directors of the Company; (iii)
the Company will use its best efforts to obtain shareholder approval
of the issuance of Common Stock pursuant to the Company's $20 Million
Call Right or the Purchaser's $20 Million Option, as well as approval
or ratification of the other transactions contemplated by the
Investment Agreement and related documents, within 180 days after the
closing of the investment and, in the event that such approval is not
obtained, the equity purchasable by the Purchaser upon exercise of the
Company's $20 Million Call Right or the Purchaser's $20 Million Option
will be preferred stock ("Series F Preferred") having terms that make
it substantially equivalent to Common Stock (except that the Series F
Preferred will be non-voting other than in certain limited
circumstances and will be convertible in certain circumstances into
Common Stock on a one-share-for-one-share basis), in which event the
Per Share Option Price under the Company's $20 Million Call Right and
the Purchaser's $20 Million Option will be reduced by 15%; (iv) for
five years after the Closing Date, the Purchaser will have the right
to invest in the Company up to $20 million (less any amount invested
pursuant to the Company's $20 Million Call Right) to purchase Common
Stock (or, if applicable, Series F Preferred) at the Per Share Option
Price (the "Purchaser's $20 Million Option"); (v) the Warrant will be
amended so that the Purchaser would receive 0.8333 shares of Common
Stock (subject to adjustment to up to 1.25 shares in the event of
exercise of the Company's $20 Million Call Option or the Purchaser's
$20 Million Option) for each share of Common Stock issued upon
conversion or exercise of any convertible debt or preferred stock
outstanding as of immediately following the Closing, regardless of the
conversion price thereunder; (vi) the Closing Date will be extended to
August 6, 1996 or such other date on or prior to August 30, 1996 to
which the parties may agree; (vii) the Purchaser's due diligence
closing condition and certain other closing conditions are waived;
(viii) the Purchaser's obligations to consummate the transactions
contemplated by the Investment Agreement will be subject to the
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remaining closing conditions set forth in the Investment Agreement and
certain other conditions (including arranging not less than $20.0
million of third-party financing that would be used to refinance a
portion of the Purchaser Loans, certain amendments to the terms of
existing indebtedness of the Company and the closing of the Company's
previously announced acquisition of National Entertainment Funding,
L.P.); (ix) in the event that certain events occur which vary
adversely from the Purchaser's assumptions relating thereto, pursuant
to the Warrant, the Company will issue to the Purchaser (without the
payment of additional consideration) the number of shares of Common
Stock necessary to protect the Purchaser from the economically
dilutive effects thereof; and (x) the Standstill Agreement will be
amended to permit the transactions described above and to provide for
the termination thereof in the event that the Purchaser owns a
majority of the outstanding voting stock of the Company as a result of
acquistions pursuant to the Investment Agreement or the Warrant or as
otherwise permited by the Standstill Agreement.
The transactions contemplated by the Investment
Agreement, as amended, and the above-described amendment are subject
to various conditions. There can be no assurance that these conditions
will be satisfied or the transactions contemplated by the Investment
Agreement will be consummated.
The foregoing description of the amendment to the
Investment Agreement and related documentation is qualified in its
entirety by reference to the actual terms of such amendment, a copy of
which is filed as Exhibit 2A hereto and is incorporated herein by this
reference.
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby amended by adding the following after "Exhibit 2 -
Investment Agreement":
Exhibit 2A - Letter amending Investment Agreement, dated July 23, 1996".
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ Gregory N. Waters
---------------------------
Name: Gregory N. Waters
Title: Chief Financial Officer
Dated: August 2, 1996.
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EXHIBIT INDEX
EXHIBIT 2A Letter amending Investment Agreement, dated July 23, 1996
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EXHIBIT 2A
MEI HOLDINGS, L.P.
4200 TEXAS COMMERCE TOWER
DALLAS, TEXAS 75201
July 23, 1996
Mountasia Entertainment International, Inc.
5895 Windward Parkway
Suite 220
Alpharetta, Georgia 30202-4128
Attention: Chief Executive Officer
Ladies and Gentlemen:
In accordance with Section 8.8 of the Investment Agreement,
dated June 5, 1996 (the "Investment Agreement"), between Mountasia Entertainment
International, Inc. (the "Company") and MEI Holdings, L.P. ("Purchaser"), the
Company and Purchaser hereby agree that the Investment Agreement and certain
Exhibits referred to therein will be amended as provided below:
1. INCREASE IN SHARES TO BE PURCHASED AND SOLD AT THE CLOSING:
The number of Shares to be purchased and sold at the Closing will equal 45.45%
of the Closing Outstanding Shares with the result that the total number of
Shares purchasable at the Closing would be 11,428,571 if the total number of
shares of Common Stock outstanding immediately prior to the Closing (the
"Pre-Investment Number of Shares") is 13,714,498.
2. COMPANY CALL OPTION; PURCHASER OPTION: If the Closing
occurs, for up to three years following the Closing Date, Purchaser will be
obligated to invest upon the call of the Company (the "$20 Million Call Right")
up to an additional $20.0 million, less the amount invested under Purchaser's
$20 Million Option (defined below), to fund equity required for new acquisitions
or other income-producing capital investments approved by the Board of Directors
of the Company. The purchase price for any such investment (the "Per Share
Option Price") will be $3.50 per share, subject to adjustment in the event that
the Pre-Investment Number of Shares is other than 13,714,498. Shares purchasable
upon exercise of the Company's $20 Million Call Right will be Common Stock if
shareholder approval therefor is obtained as hereafter provided or otherwise. If
such shareholder approval is not obtained, the equity purchasable by the
Purchaser upon exercise of the Company's $20 Million Call Right or the
Purchaser's $20 Million Option will be preferred stock ("Series F Preferred")
having terms that make it substantially equivalent to Common Stock, except that
such Series F Preferred (i) will be non-voting other than in certain limited
circumstances provided by law and (ii) will be convertible on a
one-share-for-one-share basis into Common Stock if either (a) shareholder
approval is obtained as aforesaid or (b) the Series F Preferred is beneficially
owned by a person, entity or "group" within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, other than Purchaser or any of its
Affiliates (so
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long as the transfer by the Purchaser or any of its Affiliates to any such
person, entity or group, either alone or with any other substantially
contemporaneous transactions, does not constitute a change in control not
approved by the Company's Board of Directors). Notwithstanding the foregoing,
the Per Share Option Price will be reduced by 15% in connection with the
issuance of any Series F Preferred. For five years after the Closing Date, the
Purchaser will have the right to invest in the Company up to $20 million (less
any amount invested pursuant to the Company's $20 Million Call Right) to
purchase Common Stock (or, if applicable, Series F Preferred) at the Per Share
Option Price or, if shares of Series F Preferred are issuable upon exercise as
provided above, 85% of the Per Share Option Price (the "Purchaser's $20 Million
Option"), provided, however, that if Purchaser exercises Purchaser's $20 Million
Option within 180 calendar days of the Closing and shareholder approval as
contemplated herein is obtained within 180 calendar days after the Closing, the
Purchaser will pay to the Company such additional amount as it would have paid
had such shareholder approval been obtained before such exercise. The Company
will use its best efforts to secure shareholder approval of the issuance of
Common Stock pursuant to the Company's $20 Million Call Right or the Purchaser's
$20 Million Option, as well as approval or ratification of the other
transactions contemplated by the Investment Agreement and related documents, as
promptly as practicable and in any event within 180 calendar days after the
Closing Date. The Board of Directors of the Company has resolved to recommend
that shareholders of the Company give such approval.
3. THE WARRANT: The Warrant is hereby amended to provide that,
if the Closing occurs, the Purchaser or its designee will be entitled to an
additional 0.8333 shares of Common Stock for each share of Common Stock issued
upon conversion ("Conversion Shares") of any outstanding 9.0%, 9.1% or 10%
debentures or Series D Preferred Stock (the "Outstanding Converts") outstanding
as of immediately prior to the Closing (subject to adjustment to up to 1.25
shares of Common Stock for each Conversion Share so issued in the event of
exercise of the Company's $20 Million Call Option or the Purchaser's $20 Million
Option, which adjustment will be reduced proportionately upon any partial
exercise of the Company's $20 Million Call Right or Purchaser's $20 Million
Option), without regard to the conversion price thereunder. The existing
dilution-protection provisions of the Warrant will apply to all other issuances
of Common Stock pursuant to the exercise or conversion of any other Subject
Securities (as defined in the Warrant).
4. CERTAIN CLOSING MATTERS: The Closing will occur on August
6, 1996 or such other date on or prior to the Outside Date (which is hereby
amended to be August 30, 1996) to which the parties may mutually agree. Annex
5.2(k), which sets forth certain Closing conditions, is hereby amended to read
in its entirety as set forth in Annex 5.2(k) attached hereto. Sections 5.2(m),
5.2(o) and 5.2(q) of the Investment Agreement are hereby deleted.
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5. CERTAIN ADJUSTMENTS: The parties acknowledge that the
Purchaser made the assumptions as to the matters set forth in Annex 5 hereto in
connection with its evaluation of its proposed investment in the Company. If any
of the events set forth in Annex 5 occurs or fails to occur and such occurrence
or failure results in an adverse variance from such assumptions, the Company
acknowledges that the Purchaser will be entitled to the issuance of additional
shares of Common Stock under the Warrant (or, if such issuance would cause the
Purchaser to own a majority of the Common Stock and shareholder approval of such
issuance is not obtained as herein contemplated or otherwise, Series F
Preferred) in an amount necessary to avoid the economically dilutive effects
thereof on the total enterprise value of the Company and the Purchaser's equity
interest therein (giving effect, if applicable, to any antidilution adjustments
under any securities of the Company other than the Series F Preferred and the
Warrant). Accordingly, in any such event, the parties will negotiate in good
faith and agree upon the number of additional shares of Common Stock (or Series
F Preferred in the circumstances provided above) to be issued to the Purchaser
(without any additional consideration therefor) or, absent such agreement, the
matter will be referred to an independent third party for final determination.
6. STANDSTILL AGREEMENT: The Standstill Agreement is
amended to permit the transactions described above and to provide for the
termination thereof in the event that the Purchaser owns a majority of the
Total Voting Power (as defined in the Standstill Agreement) as a result of
transactions contemplated by the Investment Agreement or the Warrants or as
otherwise permitted by the Standstill Agreement.
7. CERTAIN ADDITIONAL REPRESENTATIONS AND WARRANTIES:
The Company hereby represents and warrants to the Purchaser
(which representations and warranties are incorporated into
Article II of the Investment Agreement) as follows:
(a) The financial advisory agreement between the
Company and Allen & Co. and warrants and other rights previously
held by Allen & Co. have been terminated without any cost to, or
liability or obligation of, the Company.
(b) The Company has entered into a binding
contract to purchase the land used in connection with the Company's Puente
Hills, California FEC on terms previously disclosed to the Purchaser.
(c) The Company has, or prior to the Closing
will have, completed the NEF acquisition. Except for the warrants issued to the
partners of NEF or their Affiliates, which the Company will use its best efforts
to have cancelled prior to the Closing, the total consideration to be paid by
the Company in the NEF acquisition is the issuance of the 9.1% debentures in an
amount not to exceed $11,422,422. The Brass Ring II acquisition has been, or
prior to the Closing will be, completed; the total consideration paid or payable
by the Company therein is
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$1.5 million (which has already been paid) plus 325,000 shares of Common Stock,
all of which shares will be issued prior to the Closing.
(d) Scott and Julie Demerau have irrevocably
undertaken to vote or cause to be voted all shares of Common Stock beneficially
owned by them or either of them in favor of shareholder approval of the matters
referred to in Paragraph 2 hereof.
(e) This amendment has been authorized by the
Board of Directors of the Company and constitutes the valid and binding
obligation of the Company.
8. CERTAIN ADDITIONAL COVENANTS: The Company will make such
filings with the Securities and Exchange Commission, or make amendments to
existing filings, as the Purchaser may reasonably request as promptly as
practicable and in any event by not later than 45 calendar days after the
Closing Date. Without limiting the generality or effect of any other provision
of the Investment Agreement, the parties hereby agree that all claims brought by
Durham Capital Corporation or any affiliate, associate or other party in respect
of any matter referred to in the Durham Capital Corporation lawsuit filed on or
about June 26, 1996 are covered by the indemnification provisions of Section
4.12 of the Investment Agreement. In the event that the Company receives notice
that any of the Outstanding Converts is to be converted, the Purchaser will have
the right to acquire the Outstanding Converts to be converted for the redemption
price therefor if the Company has a cash redemption option, or if the Purchaser
or any of its Affiliates otherwise purchases any Outstanding Converts, without
further action the Company will be deemed to have waived the redemption rights
relating to the Outstanding Converts so purchased. If shareholder approval as
contemplated herein is not obtained, the Outstanding Converts will be deemed to
be convertible into Series F Preferred unless and until such approval is
obtained.
9. MISCELLANEOUS: This amendment is effective as of the date
first written above, provided, however, that (i) without limiting the generality
or effect of any other provision hereof, the parties' obligations hereunder are
subject to the Company's receipt of a confirmatory fairness opinion (which the
Company hereby agrees to use its best efforts to obtain from Furman Selz,
Incorporated or another investment banking firm as promptly as practicable) and
(ii) if such opinion is not obtained on or prior to July 26, 1996, at the
election of the Purchaser, upon notice from the Purchaser to the Company at any
time after July 26, 1996 and prior to the Closing Date, this letter agreement
will be void and the Investment Agreement will continue unaffected hereby except
that (a) the July 22, 1996 date specified in Section 5.2(o) will be deemed
without further action to have been extended to August 13, 1996, (b) the Outside
Date will be deemed without further action to have been extended to September
15, 1996, and (c) if the Company elects to satisfy its obligations to make
reimbursement payments provided for in Section 8.1 of the
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Investment Agreement by issuing shares of Common Stock, in lieu of cash, the
value of such shares for this purpose will be $2.00 per share, provided,
however, that nothing herein will affect Purchaser's rights under the proviso to
the last sentence of Section 8.1. Except as amended hereby, the Investment
Agreement will remain in full force and effect in accordance with its terms as
of the date hereof. Terms used herein which are defined in the Investment
Agreement are used as so defined when used herein with initial capital letters,
except that the term "Agreement" therein means the Investment Agreement. The
parties agree to negotiate and execute such formal modifications to the
Investment Agreement and Exhibits referred to herein as may be necessary to give
effect to the matters referred to herein as promptly as practicable and in any
event by July 29, 1996.
Very truly yours,
MEI HOLDINGS, L.P.
By: MEI GenPar, L.P., its
general partner
By: HH GenPar Partners, its
general partner and co-
manager
By: Hampstead Associates, Inc.,
its general partner and
co-manager
By:
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Daniel A. Decker,
Executive Vice President
Accepted and Agreed to:
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By:---------------------------
Name:---------------------
Title:--------------------
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ANNEX 5.2(K) --
ADDITIONAL ACTIONS TO BE TAKEN BY THE
COMPANY AS A CONDITION TO PURCHASER CLOSING OBLIGATIONS
1. Close the NEF acquisition pursuant to the existing
contracts therefor but renegotiate such contracts to provide for (a)
the terms of the convertible securities issuable in connection
therewith to be modified as contemplated by Paragraph 7 of this Annex
5.2(k). Use its best efforts to acquire and cancel all warrants issued
to the partners of NEF or their Affiliates.
2. With respect to any employment agreements and stock options
that provide rights or payments to employees or optionees, as the case
may be, that are triggered by a change of control of the Company
(including the employment agreements of Scott Demerau, Julia Demerau,
Betty Henderson and Gregory Waters), obtain amendments thereof such
that any investments or transactions by the Purchaser or any Affiliate
or Associate of the Purchaser in the Company or in securities of the
Company (including pursuant to the Investment Agreement) do not, alone
or with other investments or transactions, constitute a change of
control.
3. Terminate, without any cost to the Company not disclosed on
Schedule 2.16 to the Investment Agreement or approved by the Purchaser,
the financial advisory agreements with Furman Selz, Incorporated (other
than in connection with the transactions contemplated by the Investment
Agreement) and obtain cancellation of all warrants issued to Furman
Selz.
4. Complete the acquisition of all of the Company's
obligations under, and terminate and reacquire the rights
(the "Domestic IP Rights") sold, granted or licensed by the
Company under, the Amended and Restated U.S. Strategic
Alliance Agreement with M.M.E. Entertainment Center, Inc.
and all related agreements (including the Management
Agreement, License Agreement and Construction Management
Agreement) for not more than $2.1 million, with the notes
receivable from Judy Demerau and M.M.E. being paid
simultaneously with the closing of such transaction.
5. Execute and deliver Indemnity Agreements with the
Purchaser's director designees in the forms previously
agreed to by legal counsel for the Company and the
Purchaser.
6. Execute and deliver a Service Agreement with The
Hampstead Group, L.L.C. in the form previously agreed to by
legal counsel for the Company and the Purchaser.
7. Obtain amendments or other assurances from the
holders of the Company's subordinated indebtedness
(including the subordinated indebtedness to be issued in
connection with the NEF acquisition ) (the "Subordinated
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Debt") (a) as to the matters set forth in Exhibit A hereto, and (b)
that all prior defaults are waived or cured. Satisfy all obligations
payable to the holders of Subordinated Debt between the date hereof and
the Closing Date by issuing shares of Common Stock.
8. Consummate the proposed credit facility from Foothill
Capital Corporation on terms satisfactory to Purchaser, the net
proceeds of which will be used to refinance borrowings outstanding as
of the Closing under the Interim Financing Facility Commitment so that
not more than $13 million of such borrowings will be outstanding
immediately prior to the Closing (such amount to be used to pay a
portion of the $40 million Purchase Price).
9. All liabilities and obligations under the Young
World debt will be paid or discharged prior to or at the
Closing.
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EXHIBIT A
CHANGES TO THE COMPANY CONVERTIBLE SECURITIES
SECURITY: CHANGES:
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NEW 10% 1. Use best efforts to improve subordination provisions per
DEBENTURES the form previously furnished by Purchaser to the
(7/10/96) Company, including, without limitation, confirmation of
the Company's ability to incur senior subdebt.
9.1% DEBENTURES 1. Extend maturity to at least 2002.
NOT YET ISSUED 2. Allow all payments other than interest payments to be
made in Common Stock at any time at the Company's
option, including prepayments (at par) of all or part
of the debentures and payments following a redemption or
acceleration.
3. Amend payment of interest in advance to provide for
payment of interest in arrears.
4. Modify registration requirements to give Purchaser
step-in-front rights and to reasonably reduce the
registration requirements.
5. Reduce or eliminate events of default, including
elimination of cross-default provisions.
6. Eliminate voting rights upon non-monetary default.
7. Improve subordination provisions per the form
previously furnished by Purchaser to the Company
for the new 10% debentures, including, without
limitation, confirmation of the Company's ability
to incur senior subdebt.
8. Eliminate conversion/purchase requirement upon change in
control, Nasdaq delisting and change in status of
current CEO.
9. Modify warrants previously issued to NEF partners
or their affiliates to reduce registration
requirements and to give Purchaser step-in-front
rights (if the Company is unable, despite its
best efforts, to obtain the cancellation of such
warrants).
9% DEBENTURES 1. Allow all payments other than interest payments to be
(11/15/94) made in Common Stock at any time at the Company's
option, including prepayments (at par) of all or part of
the debentures and payments following a redemption or
acceleration.
(REG S) 2. Eliminate registration rights.
3. Use best efforts to improve subordination
provisions per the form previously furnished by
Purchaser to the Company for the new 10%
debentures, including, without limitation,
confirmation of the Company's ability to incur
senior subdebt.
4. Use best efforts to eliminate or reduce covenants and
negative covenants.
5. Use best efforts to eliminate or reduce events of
default, including elimination of
cross-default provisions.
6. Use best efforts to obtain termination of Commonwealth's
rights regarding the election of directors.
7. If so desired by the Company, modify debentures to
provide for the immediate conversion of $1 million at
market.
<PAGE> 9
ANNEX 5 --
CERTAIN POTENTIAL TRANSACTIONS
------------------------------
The Purchaser has made the following assumptions in connection
with its evaluation of its proposed investment in the Company:
1. WORLDWIDE DEVELOPMENT RIGHTS: An important part of
Purchaser's evaluation of the Company was the assumption that the Company
had worldwide development rights for its concepts except as specifically
set forth in Annex 5.2(o)#5. Accordingly, there are no restrictions on the
ability of the Company to develop any of its concepts worldwide, including
without limitation as a result of any actual or alleged agreement with
Jack Lowe, Ron Potts, Fantasy Fun and/or any of their Affiliates, except
as specifically disclosed in Schedule 5.2(o)#5 to the Investment
Agreement.
2. DALLAS LAND: The Company will acquire the land used in
connection with its Dallas, Texas Malibu Grand Prix facility for not more
than the amount assumed in Purchaser's valuation analysis previously
disclosed to the Company and will close the Puente Hills, California land
acquisition pursuant to the existing contract therefor.
3. CERTAIN CONTINGENT LIABILITIES: The $1.5 million reserve
for environmental matters, legal matters, regulatory matters (including
without limitation all such matters relating to the Charlotte land other
than the obligation to pay the purchase price), litigation and all other
contingent liabilities (including without limitation any partner-related
claims) covers all expenses or liabilities of the Company and its
subsidiaries for such matters.
4. WILLOWBROOK: The total purchase price (cash plus assumed
liabilities) for the Company's acquisition of Willowbrook will not exceed
$6.9 million, and the cash amount thereof will not exceed $5,001,433,
provided, however, that no adjustment will be made in respect of any such
expenditure approved by the Board of Directors of the Company at such time
as a majority of the members thereof are designees of the Purchaser unless
such expenditure was pursuant to an obligation of the Company or any
subsidiary of the Company prior to the time at which such designees
constituted a majority of the members of the Company's Board of Directors.
5. OTHER ACQUISITIONS: The Company's total expenditures for
any acquisitions of partnership interests in, or the assets of, Mountasia
of Santa Clarita, L.P. and F.F.C. of Columbus Limited Partnership will not
exceed an amount determined consistent with valuation parameters used by
the Purchaser in making its investment in the Company, and in all events
the Company will receive fair value for any payments made with respect to
debt relating to the Columbus FEC (or any guarantees thereof), provided,
however, that no adjustment will be made in respect of any such
expenditure approved by the Board of Directors of the Company at such time
as a majority of the members thereof are designees of the Purchaser unless
such expenditure was pursuant to an obligation of the Company or any
subsidiary of the Company prior to the time at which such designees
constituted a majority of the members of the Company's Board of Directors.
6. SUB DEBT: The modifications contemplated by Exhibit A to
Annex 5.2(k) shall have been obtained by the Closing. Any economic
adjustments shall be calculated as if the Company had converted all of
the outstanding 10%, 9% and 9.1% debentures on or before January 1, 1997.
7. OTHER: The conditions set forth in Section 5.2 shall have
been satisfied, the Company's representations and warranties in the
Investment Agreement shall be true and correct as of the Closing as if
made anew as of the Closing and the Company shall have complied with all
covenants required to be complied with by the Company prior to the Closing
(with the result that if the Purchaser waives any failure to satisfy any
closing condition or breach for purposes of the Closing, that will not
constitute a waiver for purposes of Paragraph 5 of the accompanying letter
agreement unless expressly agreed to by the Purchaser).
8. DEFERRED MAINTENANCE: Deferred maintenance expenses
(excluding deferred maintenance in respect of facilities which are
currently planned to be sold or as to which the Company does not plan to
renew its leases, unless the Company or any subsidiary of the Company is
legally obligated to complete such deferred maintenance) to complete
required renovations (as determined by Purchaser's structural engineering
firm) do not exceed $7.5 million. (The parties will discuss in good faith
any adjustment which may be appropriate in respect of deferred maintenance
and agree upon an adjustment, if any, contemplated hereby prior to the
Closing.)
