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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
August 28, 1996
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
5895 Windward Parkway, Suite 220
Alpharetta, GA 30202-4182
0-22458
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Commission File Number
GEORGIA 58-194 379
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(I.R.S. Employment I.D. No.)
Registrant's Telephone number, including area code: (770) 442-6640
Form 8-K
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Item 7 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
1. "Purchase and Sale Agreement" by and among
Family Fun Entertainment, Inc., Family
Entertainment Funding, L.P., and Mountasia
Entertainment International, Inc. dated April
3, 1996.
2. "Letter Agreement Concerning Closing" by and
among Family Fun Entertainment, Inc., Family
Entertainment Funding, L.P., and Mountasia
Entertainment International, Inc. dated
April 3, 1996.
3. Letter agreement by and among Family Fun
Entertainment, Inc., Family Entertainment
Funding, L.P., and Mountasia Entertainment
International, Inc. dated April 19, 1996.
4. "Purchase and Sale Agreement" by and among
the sole shareholders of Amusement Co., Inc.,
Amusement Co. Partners, Inc., Capital Trust
Investments Limited and Mountasia
Entertainment International, Inc. dated April
3, 1996.
5. "Letter Agreement Concerning Closing" by and
among the sole shareholders of Amusement Co.,
Inc., Amusement Co. Partners, Inc., Capital
Trust Investments Limited and Mountasia
Entertainment International, Inc. dated April
3, 1996.
6. Letter agreement by and among the sole
shareholders of Amusement Co., Inc.,
Amusement Co. Partners, Inc., Capital
Form 8-K
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Trust Investments Limited and Mountasia
Entertainment International, Inc. dated April
19, 1996.
7. "Purchase and Sale Agreement" by and between
Leisure Funn, Inc. and Mountasia
Entertainment International, Inc. dated May
10, 1996.
8. "Consulting Agreement" between Mountasia
Entertainment International, Inc. and Capital
Trust Developments Limited dated April 3,
1996.
9. "Closing Agreement" by and among Family Fun
Entertainment, Inc., Family Entertainment
Funding, L.P., and Mountasia Entertainment
International, Inc. dated August 28, 1996.
10. "Closing Agreement" by and among the sole
shareholders of Amusement Co., Inc.,
Amusement Co. Partners, Inc., Capital Trust
Investments Limited and Mountasia
Entertainment International, Inc. dated
August 28, 1996.
11. "Closing Agreement" by and between Leisure
Funn, Inc. and Mountasia Entertainment
International, Inc. dated August 28, 1996.
12. Form of 9.1% Subordinated Convertible
Debenture due January 1, 2002.
Form 8-K
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SIGNATURES
Pursuant to the requirements of the Securities Exchanges Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
(Registrant)
Date: September 13, 1996 By: /s/ L. Scott Demerau
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President, Chief Executive Officer
Form 8-K
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
10.1 "Purchase and Sale Agreement" by and among Family Fun Entertainment, Inc., Family Entertainment
Funding, L.P., and Mountasia Entertainment International, Inc. dated April 3, 1996.
10.2 "Letter Agreement Concerning Closing" by and among Family Fun Entertainment, Inc., Family
Entertainment Funding, L.P., and Mountasia Entertainment International, Inc. dated April 3,
1996.
10.3 Letter agreement by and among Family Fun Entertainment, Inc., Family Entertainment Funding,
L.P., and Mountasia Entertainment International, Inc. dated April 19, 1996.
10.4 "Purchase and Sale Agreement" by and among the sole shareholders of Amusement Co., Inc.,
Amusement Co. Partners, Inc., Capital Trust Investments Limited and Mountasia Entertainment
International, Inc. dated April 3, 1996.
10.5 "Letter Agreement Concerning Closing" by and among the sole shareholders of Amusement Co.,
Inc., Amusement Co. Partners, Inc., Capital Trust Investments Limited and Mountasia
Entertainment International, Inc. dated April 3, 1996.
10.6 Letter agreement by and among the sole shareholders of Amusement Co., Inc., Amusement Co.
Partners, Inc., Capital Trust Investments Limited and Mountasia Entertainment International,
Inc. dated April 19, 1996.
10.7 "Purchase and Sale Agreement" by and between Leisure Funn, Inc. and Mountasia Entertainment
International, Inc. dated May 10, 1996.
10.8 "Consulting Agreement" between Mountasia Entertainment International, Inc. and Capital Trust
Developments Limited dated April 3, 1996.
10.9 "Closing Agreement" by and among Family Fun Entertainment, Inc., Family Entertainment Funding,
L.P., and Mountasia Entertainment International, Inc. dated August 28, 1996.
</TABLE>
Form 8-K
Page 8
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<TABLE>
<S> <C>
10.10 "Closing Agreement" by and among the sole shareholders of Amusement Co., Inc., Amusement Co.
Partners, Inc., Capital Trust Investments Limited and Mountasia Entertainment International,
Inc. dated August 28, 1996.
10.11 "Closing Agreement" by and between Leisure Funn, Inc. and Mountasia Entertainment
International, Inc. dated August 28, 1996.
10.12 Form of 9.1% Subordinated Convertible Debenture due January 1, 2002.
</TABLE>
Form 8-K
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EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into this 3rd day of April, 1996, by and among Family Funn Entertainment, Inc.,
a Florida corporation ("Family Funn GP"), Family Entertainment Funding, L.P., a
Georgia limited partnership ("Family Entertainment LP") and Mountasia
Entertainment International, Inc., a Georgia corporation ("MEI" or
"Purchaser").
W I T N E S S E T H:
WHEREAS, Family Funn GP is a general partner of National Entertainment
Funding, L.P., a Delaware limited partnership (the "Partnership"); and
WHEREAS, Family Entertainment LP is a limited partner of the
Partnership; and
WHEREAS, Family Entertainment LP is the holder of $2,718,000 original
principal amount of indebtedness from the Partnership (the "Indebtedness"); and
WHEREAS, Family Funn GP desires to sell and convey its general
partnership interest in the Partnership (the "Family Funn GP Interest") to
Purchaser, and Purchaser desires to purchase and acquire the Family Funn GP
Interest from Family Funn GP; and
WHEREAS, Family Entertainment LP desires to sell and convey its
limited partnership interest in the Partnership (the "L.P. Interest") and its
interest in the Indebtedness to Purchaser, and Purchaser desires to acquire the
L.P. Interest and the Indebtedness from Family Entertainment LP.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, each intending to be legally bound, do hereby covenant and
agree as follows:
1. PURCHASE AND SALE OF THE FAMILY FUNN GP INTEREST, THE L.P.
INTEREST AND THE INDEBTEDNESS. On the terms and conditions set forth herein,
(i) Family Funn GP hereby sells, transfers, assigns, conveys and delivers to
Purchaser the Family Funn GP Interest, and Purchaser hereby purchases and
acquires from Family Funn GP all of its right, title and interest in and to the
Family Funn GP Interest; and (ii) Family Entertainment LP hereby sells,
transfers, assigns, conveys and delivers to Purchaser all of its right, title
and interest in and to the L.P. Interest and the Indebtedness and Purchaser
hereby purchases and acquires from Family Entertainment LP all of its right,
title and interest in and to the L.P. Interest and the Indebtedness.
2. PURCHASE PRICE. In full consideration for the purchase of the
Family Funn GP Interest, Purchaser is simultaneously herewith paying to Family
Funn GP a total purchase price (the "Family Funn GP Purchase Price") of ONE
HUNDRED DOLLARS ($100.00). In
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consideration for the purchase of the L.P. Interest, Purchaser is
simultaneously herewith paying to Family Entertainment LP a total purchase
price (the "L.P. Purchase Price") of TWO MILLION FOUR HUNDRED NINETY SIX
THOUSAND FIVE HUNDRED THIRTY THREE DOLLARS ($2,496,533.00). In consideration
for the purchase of the Indebtedness, Purchaser is simultaneously herewith
paying to Family Entertainment LP a total purchase price (the "Indebtedness
Purchase Price") of TWO MILLION FIVE HUNDRED THIRTY SIX THOUSAND EIGHT HUNDRED
DOLLARS ($2,536,800.00).
3. PAYMENT OF PURCHASE PRICE. Purchaser is paying the Family
Funn GP Purchase Price the L.P. Purchase Price and the Indebtedness Purchase
Price (collectively, the "Purchase Price") by delivering to Family Funn GP and
Family Entertainment LP, in exchange for the Family Funn GP Interest, the L.P.
Interest and the Indebtedness, Purchaser's 9.1% Subordinated Convertible
Debentures Due January 1, 1998 (individually, a "Debenture" and collectively,
the "Debentures"), the form of which is attached hereto as Exhibit A and by
this reference incorporated herein. The Debentures, duly issued in the names
of Family Funn GP and Family Entertainment LP (collectively, "Sellers") in the
respective denominations set forth on Exhibit B, are simultaneously herewith
being delivered to Sellers, and the Sellers are simultaneously herewith
delivering to Purchaser Assignments of the Family Funn GP Interest, the L.P.
Interest and the Indebtedness in the form of Exhibit C attached hereto.
Purchaser shall have no rights of set-off with respect to the Purchase Price
for any reason.
4. REPRESENTATIONS AND WARRANTIES OF FAMILY FUNN GP. Family Funn
GP hereby represents and warrants to Purchaser that all of the following are
true as of the date hereof, and such representations and warranties shall
survive for a period of one year from the date hereof:
4.1 DUE ORGANIZATION. Family Funn GP is duly organized,
validly existing and in good standing under the laws of the State of Florida,
and is duly authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted except for where the
failure to be so authorized, qualified or licensed would not have a material
adverse effect on its business.
4.2 OWNERSHIP OF FAMILY FUNN GP INTEREST. Family Funn GP is
the sole owner of the Family Funn GP Interest, free and clear of any liens,
charges, or other encumbrances whatsoever. Subject to Section 8.3 hereof, the
making and performance of this Agreement does not and will not constitute a
default under or result in the creation of any adverse claim, lien, charge or
encumbrance upon or against the Family Funn GP Interest pursuant to any
agreement or instrument to which Family Funn GP or its assets is or may be
bound.
4.3 AUTHORIZATION. Family Funn GP has full legal right,
power and authority to enter into this Agreement. This Agreement has been duly
authorized by Family Funn GP. The exchange of the Family Funn GP Interest for
the Debentures, pursuant to the provisions of this Agreement, will transfer
full and complete ownership of and valid title in the Family Funn GP Interest
to Purchaser, free and clear of all liens, encumbrances, pledges, security
interests and claims of every kind.
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4.4 NO CONFLICTS. The execution, delivery and performance of
this Agreement, the consummation of the transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not conflict with, or result in a default under any document, agreement or
other instrument to which Family Funn GP is a party, or result in the
imposition of any lien, charge or encumbrance on Family Funn GP's properties
pursuant to (i) any law or regulation to which Family Funn GP, or its
properties is subject or (ii) any judgment, order or decree to which Family
Funn GP is bound or any of its properties is subject, except that the consent
of the general partners and a majority of the limited partners of the
Partnership is required for the transfer of the Family Funn GP Interest to
Purchaser.
5. REPRESENTATIONS AND WARRANTIES OF FAMILY ENTERTAINMENT LP.
Family Entertainment LP represents and warrants to Purchaser that the following
are true as of the date hereof and that such representations and warranties
shall survive for a period of one year from the date hereof.
5.1 DUE ORGANIZATION. Family Entertainment LP is duly
organized, validly existing and in good standing under the laws of the State of
Georgia, and is duly authorized, qualified and licensed under all applicable
laws, regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted except for where the
failure to be so authorized, qualified or licensed would not have a material
adverse effect on its business.
5.2 OWNERSHIP OF L.P. INTEREST. Family Entertainment LP is
the owner of the L.P. Interest, free and clear of any liens, charges, or other
encumbrances of any nature whatsoever. Subject to Section 7.3 hereof, the
making and performance of this Agreement does not and will not constitute a
default under or result in the creation of any adverse claim, lien, charge or
encumbrance upon or against the L.P. Interest pursuant to any agreement or
instrument to which Family Entertainment LP is a party or by which Family
Entertainment LP or its assets is or may be bound.
5.3 AUTHORIZATION. Subject to the receipt of the consent of
a majority of the limited partners of Family Entertainment LP, Family
Entertainment LP has full legal right, power and authority to enter into this
Agreement, and this Agreement has been duly authorized by Family Entertainment
LP. The exchange of the L.P. Interest and the Indebtedness for the Debentures,
pursuant to the provisions of this Agreement, will transfer full and complete
ownership of and valid title in the L.P. Interest and the Indebtedness to
Purchaser, free and clear of all liens, encumbrances, pledges, security
interests and claims of every kind.
5.4 NO CONFLICTS. Subject to the receipt of the consent of a
majority of the limited partners of Family Entertainment LP, the execution,
delivery and performance of this Agreement, the consummation of the
transactions herein referred to or contemplated hereby and the fulfillment of
the terms hereof and thereof will not conflict with, or result in a default
under any document, agreement or other instrument to which Family Entertainment
LP is a party, or result in the imposition of any lien, charge or encumbrance
on Family Entertainment LP's properties pursuant to (i) any law or regulation
to which Family Entertainment LP , or its properties, is subject or (ii) any
judgement, order or decree to which Family Entertainment LP
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is bound or any of its properties is subject, except that the consent of the
general and limited partners of the Partnership is required for the transfer of
the L.P. Interest to Purchaser and the consent of the Partnership may be
required for the transfer of the Indebtedness to Purchaser.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to Sellers that all of the following representations
and warranties are true as of the date hereof and as of each date the
Debentures are converted into MEI common stock pursuant to the terms of the
Debentures, and shall survive for a period of twelve months following the date
the Debentures are converted into MEI common stock.
6.1 DUE ORGANIZATION. Purchaser is duly organized, validly
existing and in good standing under the laws of the State of Georgia and is
duly authorized, qualified and licensed under all applicable laws, regulations,
and ordinances of public authorities to carry on its respective businesses in
the places and in the manner as now conducted except for where the failure to
be so authorized, qualified or licensed would not have a material adverse
effect on its respective businesses. Copies of the Articles of Incorporation
(certified by the Secretary of State of the State of Georgia) and the Bylaws,
as amended, of Purchaser (certified by the Secretary of Purchaser) are attached
hereto as Schedule 6.1.
6.2 DEBENTURES. The Debentures delivered to Sellers
simultaneously herewith have been duly authorized and are valid and legally
issued instruments of Purchaser and are free from all liens, encumbrances,
pledges and claims of every kind. The Debentures have been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligation
of Purchaser, enforceable against it in accordance with their terms, except as
the same may be limited by applicable bankruptcy or other laws of general
application which affect the enforceability of creditors' rights. A copy of
the form of the Debentures are attached hereto as Exhibit A and by this
reference incorporated herein. The shares of Purchaser's common stock issuable
upon conversion of the Debentures will, when issued in accordance with the
terms of the Debentures, be duly authorized, validly and legally issued, fully
paid and nonassessable, not subject to any preemptive or similar rights, and
free from all liens, encumbrances, pledges and claims of every kind.
6.3 AUTHORIZATION. Purchaser has full legal right, power and
authority to enter into this Agreement. The execution and delivery of this
Agreement by the Purchaser and the performance by Purchaser of its obligations
hereunder has been duly authorized by Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms, except as the same may be limited by applicable bankruptcy or other laws
of general application which affect the enforceability of creditors' rights.
6.4 NO CONFLICTS. The execution, delivery and performance of
this Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not:
(i) conflict with, or result in a breach or violation of the
Articles of Incorporation or Bylaws of Purchaser;
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(ii) materially conflict with, or result in a material
default (or constitute a default but for any requirement of notice or
lapse of time or both) under, accelerate or permit the acceleration of
the performance required by the terms of, or result in the creation or
imposition of any lien, charge or encumbrance on any of Purchaser's
properties pursuant to (A) any document, agreement or other
instrument to which Purchaser is a party, (B) any law or regulation to
which Purchaser, or any of its property, is subject, or (C) any
judgment, order or decree to which Purchaser is bound or any of its
property is subject;
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization
of Purchaser; or
(iv) require the consent, waiver or approval of, or any
declaration or filing with, any person (whether or not a governmental
authority).
6.5 DISCLOSURE. Purchaser has provided each Seller with a
true and complete copy of its annual report on Form 10-K/A for its fiscal year
ended September 30, 1995 (the "1995 10-K") and its quarterly report on Form
10-Q for the quarter ended December 31, 1995 (the "10-Q"). The 1995 10-K and
10-Q do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances under which they were made. Since
December 31, 1995, there has been no material adverse change in, and there are
no facts which have a material adverse effect or in the future may reasonably
be expected to have a material adverse effect on, the Purchaser's business,
prospects, condition (financial or otherwise), affairs or operations which are
not disclosed in the 1995 10-K or the 10-Q.
6.6 ISSUANCE OF SHARES UPON CONVERSION. To the best of
Purchaser's knowledge, there is no reason Purchaser will be unable to issue
shares of its common stock upon conversion of the Debentures pursuant to the
terms thereof as set forth in Exhibit A.
6.7 INVESTMENT INTENT. Purchaser is acquiring the Family
Funn GP Interest, the L.P. Interest and the Indebtedness for its own account,
for investment, and without the intention of participating in a distribution
thereof; provided, however, it is the intention of Purchaser to consolidate the
business operations of the Partnership with it and to this extent Purchaser may
cause to occur a merger or other business combination between Purchaser and the
Partnership to accomplish this purpose.
6.8 PAYMENT OF INTEREST. Purchaser currently has assets
legally available for, and is not subject to any restrictions with respect to,
the payment of interest on the Debentures in accordance with the terms of the
Debentures (without regard to Section 17 thereof). Purchaser has no reason to
expect that it will not have assets legally available for, or that it will be
subject to restrictions with respect to, the payment of interest on the
Debentures during the time the Debentures will be outstanding.
6.9 NO DEFAULTS UNDER SENIOR INDEBTEDNESS. Purchaser is
not in default under any Senior Indebtedness (as defined in the Debentures),
and no conditions exist that would constitute a default thereunder but for any
requirement of notice or lapse of time or both.
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7. ADDITIONAL COVENANTS AND ACKNOWLEDGEMENTS OF PURCHASER.
7.1 TRANSACTIONS WITH AFFILIATES. Purchaser agrees that so
long as any of the Debentures remain outstanding, all transactions between
Purchaser and any entity into which any or all of Purchaser's operations and/or
assets may be transferred or any transactions between Purchaser and any
affiliate of Purchaser (other than wholly-owned subsidiaries of Purchaser)
shall be approved by a majority of the independent directors of the Purchaser's
Board of Directors and will be on an arms-length basis and fair to Purchaser
and to such other entity or affiliate. For purposes of this provision, an
"affiliate" of Purchaser shall mean any officer, director or beneficial owner,
directly or indirectly, of more than five percent of the common stock of
Purchaser (and if such beneficial owner is a corporation, any person
controlling, controlled by, or under common control with such beneficial owner,
or any officer or director of such beneficial owner or of any corporation
occupying any such control relationship) or any other person which, directly or
indirectly, controls or is controlled by or is under common control with
Purchaser. For purposes of this provision, "control" with respect to any
person shall mean possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise. For
purposes of this Section 7.1, "independent director" shall mean each director
who is not an officer or employee of the Corporation or the "affiliate".
7.2 OPERATION OF THE PARTNERSHIP. Purchaser acknowledges to
Sellers that (i) Purchaser has managed the Partnership since its formation and,
therefore, has full knowledge of its assets, liabilities, business, prospects,
condition (financial or otherwise), affairs and operations, (ii) Purchaser
accepts all risks with respect thereto, (iii) Sellers are making no
representations with respect thereto or otherwise regarding the Partnership and
(iv) Purchaser shall not seek to assert or enforce against the Sellers any
liabilities of the Partnership to the Purchaser or any other person. Since
Purchaser has full knowledge of the Partnership's assets, liabilities,
business, prospects, condition (financial or otherwise), affairs and
operations, it agrees that in the event the Partnership does not pay the
Indebtedness pursuant to the terms thereof, Purchaser will have no claim
against Family Entertainment LP for such nonpayment.
7.3 PARTNERSHIP AND BANK CONSENTS. Purchaser is aware of
the existence and contents of the National Entertainment Funding, L.P.
Formation Agreement (the "Formation Agreement") and the Amended and Restated
Agreement of Limited Partnership of National Entertainment Funding, L.P. (the
"Partnership Agreement"), each dated as of June 30, 1994. Pursuant to the
Formation Agreement and the Partnership Agreement, the consent of the other
partners of the Partnership is required for the transactions contemplated
hereby. Purchaser has advised Sellers that it is entering into a transaction
with the other partners of the Partnership, and that in connection with such
other transaction, Purchaser will obtain the necessary consents from the other
partners and the Partnership to the transactions contemplated by this
Agreement. Purchaser has also advised Sellers that it is engaged in
negotiations with NationsBank, N.A. (South) ("NationsBank"), a lender to the
Partnership, and that Purchaser will obtain any necessary consents of
NationsBank to the transactions contemplated by this Agreement.
8. INDEMNIFICATION. Sellers and Purchaser each make the
following representations to the other:
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8.1 GENERAL INDEMNIFICATION BY SELLERS. Each Seller
covenants and agrees that it will severally and not jointly indemnify, defend,
protect and hold harmless Purchaser at all times from and after the date of
this Agreement for a period of twelve (12) months from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by Purchaser in excess
of Five Thousand Dollars ($5,000) in the aggregate as a result of or incident
to any breach of the representations and warranties of such Seller set forth
herein, on the schedules or certificates attached hereto or in any other
document delivered pursuant to this Agreement and any misrepresentations or
nonfulfillment of any agreement on the part of such Seller under this
Agreement.
8.2 INDEMNIFICATION BY PURCHASER. Purchaser covenants and
agrees that it will indemnify, defend, protect and hold harmless Sellers at all
times from and after the date of this Agreement until the expiration of twelve
months following the date the Debentures are converted into common stock from
and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by Sellers in excess of Five Thousand Dollars ($5,000) in the
aggregate as a result of or incident to any breach of the representations and
warranties set forth herein, on the schedules or certificates attached hereto
or in any other document delivered pursuant to this Agreement and any
misrepresentations or nonfulfillment of any agreement on the part of Purchaser
under this Agreement. Purchaser also covenants and agrees that it will
indemnify, defend, protect and hold harmless Sellers at all times from and
after the date of this Agreement from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expense of investigation) incurred by Sellers as a result of or incident to any
claim made by NationsBank under the Construction and Working Capital Loan
Agreement dated May 9, 1995, by and between the Partnership and NationsBank,
the Promissory Note issued by the Partnership to NationsBank pursuant to such
Loan Agreement or any other document, certificate or instrument delivered in
connection therewith.
8.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge
of any claim by a person not a party to this Agreement ("Third Person") or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being
made against any party obligated to provide indemnification pursuant to Section
8.1 or 8.2 hereof (hereinafter the "Indemnifying Party"), give the Indemnifying
Party written notice of such claim or the commencement of such action or
proceeding; provided, however, that the failure to give such notice shall not
affect the rights of any Indemnified Party or the obligations of any
Indemnifying Party hereunder except to the extent the Indemnifying Party has
been prejudiced as a result thereof. Such notice shall state the nature and
the basis of such claim and a reasonable estimate of the amount thereof. The
Indemnifying Party shall have right to defend and settle, at its own expense
and by its own counsel (which shall be reasonably acceptable to the Indemnified
Party) any such matter so long as the Indemnifying Party pursues the same in
good faith and diligently, provided that the Indemnifying Party shall consult
with and keep the Indemnified Party fully informed with respect to the defense
and any proposed settlement. If the Indemnifying Party undertakes to defend or
settle, it shall promptly notify the
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Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof
and in any settlement thereof; provided, however, that under no circumstances
shall the Indemnifying Party settle any Third Person claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld. Such cooperation shall include, but shall not be limited to,
furnishing the Indemnifying Party with any books, records or information
reasonably requested by the Indemnifying Party that are in the Indemnified
Party's possession or control. Notwithstanding the foregoing, the Indemnified
Party shall have the right to participate in any matter through counsel of its
own choosing at its own expense (unless there is a conflict of interest that
prevents counsel for the Indemnifying Party from representing Indemnified
Party, in which case the Indemnifying Party will reimburse the Indemnified
Party for the expenses of its counsel); provided that the Indemnifying Party's
counsel shall always be lead counsel and shall determine all litigation and
settlement steps, strategy and the like (unless there is a conflict of interest
that prevents counsel for the Indemnifying Party from representing the
Indemnified Party, in which case counsel for the Indemnified Party shall
determine all litigation and settlement steps, strategy and the like with
respect to the Indemnified Party). After the Indemnifying Party has notified
the Indemnified Party of its intention to undertake to defend or settle any
such asserted liability, and for so long as the Indemnifying Party diligently
pursues such defense, the Indemnifying Party shall not be liable for any
additional legal expenses incurred by the Indemnified Party in connection with
any defense or settlement of such asserted liability, except to the extent such
participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses, out-of-pocket expenses and allocable share of
employee compensation incurred in connection with such participation for any
employee whose participation is so requested. If the Indemnifying Party
desires to accept a final and complete settlement of any such Third Person
claim which requires the payment of money only and includes as a condition
thereof a complete release of the Indemnified Party, and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person and the Indemnified
Party shall reimburse the Indemnifying Party for any additional costs of
defense which it subsequently incurs with respect to such claim. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense
through counsel of its choice, at the cost and expense of the Indemnifying
Party, and the Indemnified Party may settle such matter, and the Indemnifying
Party shall reimburse the Indemnified Party for the amount paid in such
settlement and any other liabilities or expenses incurred by the Indemnified
Party in connection therewith, provided, however, that under no circumstances
shall the Indemnified Party settle any Third Person claim without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
8
<PAGE> 9
9. FEDERAL SECURITIES ACT COMPLIANCE AND RESTRICTIONS ON
TRANSFER.
9.1 REPRESENTATIONS. Each Seller acknowledges that none of
the Debentures to be delivered to it pursuant to this Agreement will, at the
time of delivery, be registered under the Securities Act of 1933, as amended
(the "Act"). Each Seller hereby represents and warrants that it is acquiring
the Debentures for investment, and not with a view toward, or for resale in
connection with, a distribution of such Debentures. Each Seller hereby
acknowledges that the Debentures may be sold, pledged, hypothecated, disposed
of, or otherwise transferred or distributed only (i) pursuant to registration
of such Debentures under the Act, or (ii) pursuant to an exemption from the
registration requirements of the Act, and in the case of exemption, only if
such Seller delivers to Purchaser a legal opinion, in form and substance
reasonably satisfactory to Purchaser and Purchaser's legal counsel, stating
that an exemption from the registration requirements of the Act is available.
The Debentures shall bear a legend setting forth the restrictions on transfer
set forth in this Section 9.1.
9.2 SOPHISTICATION OF SELLERS. Each Seller hereby makes the
following representations and warranties to and for the benefit of Purchaser:
(i) such Seller has been provided with or has obtained a copy
of the 1995 10-K;
(ii) such Seller has had adequate opportunity to ask
questions of and receive answers from the officers of Purchaser
concerning any and all matters pertaining to the transactions referred
to in the 1995 10-K which it deemed necessary or appropriate;
(iii) such Seller has in fact asked of Purchaser's officers
any and all questions of the nature described in Section 9.2(ii) above
which it desired to ask, and all such questions have been answered to
the satisfaction of such Seller;
(iv) such Seller is the true party in interest and is not
acquiring any of the Debentures for the benefit of any other person or
entity;
(v) such Seller is acquiring the Debentures for such Seller's
own account for investment, and not with a view to the resale,
redistribution, subdivision or fractionalization of such Debentures,
except such distribution as may occur upon the dissolution and
liquidation of such Seller;
(vi) such Seller has such knowledge and experience in
financial and business matters and investments in general that it is
capable of evaluating the merits and risks of the ownership of the
Debentures;
(vii) such Seller acknowledges and understands that ownership
of the Debentures involves a high degree of risk, including the
possibility of a total loss of the investment in the Debentures; and
9
<PAGE> 10
(viii) Purchaser has provided to such Seller, or has offered
to provide to such Seller, copies of all reports, proxy statements,
and other information which Purchaser files with the Securities and
Exchange Commission.
10. GENERAL.
10.1 COOPERATION. Sellers and Purchaser shall each deliver
or cause to be delivered to the other on the date hereof and at such other
times and places as shall be reasonably agreed to, such additional instruments
as the other may reasonably request for the purpose of carrying out this
Agreement. Sellers will cooperate and use their best efforts to cooperate with
Purchaser on and after the date hereof in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to
all periods prior to the date hereof.
10.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights
of the parties hereunder may not be assigned (except by operation of law) and
shall be binding upon and shall inure to the benefit of the parties hereto, and
their successors and permitted assigns.
10.3 ENTIRE AGREEMENT. This Agreement (including the
schedules and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding between Sellers and
Purchaser and supersede any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement, upon execution, constitutes a
valid and binding agreement of the parties hereto enforceable in accordance
with its terms and may be modified or amended only by a written instrument
executed by Sellers and Purchaser acting through their respective officers,
duly authorized by their respective Boards of Directors or other governing body
(if applicable).
10.4 COUNTERPARTS. This Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed
an original and all of which together shall constitute but one and the same
instrument.
10.5 BROKERS AND AGENTS. Each party represents and warrants
to the other that it will be solely responsible for any fee or compensation to
any broker or agent used by it in connection with this transaction and agrees
to indemnify the other against all loss, cost, damages or expense arising out
of claims for fees or commission of brokers employed or alleged to have been
employed by such indemnifying party.
10.6 EXPENSES. Whether or not the transactions herein
contemplated shall be consummated, Purchaser will pay the fees, expenses and
disbursements of Purchaser and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments thereto. Whether or not the transactions herein contemplated
shall be consummated, Purchaser will also pay the fees, expenses and
disbursements of Sellers and their agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments hereto and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed by Sellers under
this Agreement.
10
<PAGE> 11
10.7 NOTICES. All notices of communication required or
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, or by delivering the
same in person to an officer or agent of such party, or by recognized overnight
courier service, fees prepaid.
(a) If to Purchaser, addressed to it at:
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202
Attention: L. Scott Demerau
With a copy to:
Nelson Mullins Riley & Scarborough, L.L.C.
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
Attention: Steven A. Cunningham, Esq.
(b) If to Family Entertainment LP or Family Funn GP,
addressed to them in care of:
Family Funn Entertainment, Inc.
P.O. Box 10321, Pacific Centre
Suite 1688
609 Granville Street
Vancouver, B.C. V7Y 1G5
Attention: James Curtis or Tracy Moore
With a copy to:
Morgan, Lewis & Bockius, L.L.P.
101 Park Avenue
New York, New York 10178
Attention: Charles E. Engros, Esq.
10.8 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws.
10.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties made
herein or in writing delivered pursuant to the provisions of this Agreement
shall survive the consummation of the transactions contemplated hereby and any
examination on behalf of the parties.
11
<PAGE> 12
10.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach
or default occurring before or after that waiver.
10.11 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
10.12 PARTNER AND PARTNERSHIP CONSENTS. Notwithstanding any
provision in the Formation Agreement or the Partnership Agreement to the
contrary, each of Family Funn GP, Family Entertainment LP and Purchaser, as a
general or limited partner of the Partnership, hereby consents to (i) the sale
to Purchaser of the Family Funn GP Interest, the L.P. Interest and the
Indebtedness, (ii) the sale to Purchaser of all of the issued and outstanding
shares of capital stock of Amusement Co., Inc., a general partner of the
Partnership, and Amusement Co. Partners, Inc., a limited partner of the
Partnership, and (iii) the sale to Purchaser of the promissory note from the
Partnership to Capital Trust Investments Limited in the principal amount of $3
million.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PURCHASER"
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
ATTEST:
/s/ Barbara Jean Vandersaar By: /s/ L. Scott Demerau
- ------------------------------- ---------------------------------
Its: President
--------------------------------
[CORPORATE SEAL]
12
<PAGE> 13
"FAMILY FUNN GP"
FAMILY FUNN ENTERTAINMENT, INC.
By: /s/ James Curtis
-------------------------------------
Its: President
------------------------------------
"FAMILY ENTERTAINMENT LP"
FAMILY ENTERTAINMENT FUNDING, L.P.
By: FAMILY FUNN ENTERTAINMENT, INC.
Its: Sole General Partner
By: /s/ James Curtis
-------------------------------------
Its: President of FFE
------------------------------------
13
<PAGE> 14
EXHIBIT A
<PAGE> 15
NEITHER THIS DEBENTURE NOR THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THIS DEBENTURE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE, AND NEITHER MAY BE SOLD WITHOUT
REGISTRATION THEREOF OR AN EXEMPTION THEREFROM.
9.1% SUBORDINATED CONVERTIBLE DEBENTURE DUE JANUARY 1, 1998
______________, 1996 $____________
1. FOR VALUE RECEIVED, the undersigned, MOUNTASIA
ENTERTAINMENT INTERNATIONAL, INC., a corporation duly organized under the laws
of the State of Georgia (herein called the "Maker") promises to pay to
________________ or assigns (herein called the "Payee") the sum of
_____________________________ AND NO/100 DOLLARS ($___________________),
together with interest on the principal hereof from time to time outstanding
from the date of advancement until maturity, at the per annum rate hereinafter
stated (computed on the basis of a year of 360 days and paid for the actual
number of days elapsed), said principal and interest being payable in lawful
money of the United States of America by wire transfer pursuant to the
instructions provided to the Maker by the Payee.
2. Purchase and Sale Agreement. This Debenture is one
of the debentures being issued pursuant, and is subject, to the terms of that
certain Purchase and Sale Agreement dated as of April 3, 1996 by and among
Maker and Payee, among others (the "Purchase Agreement"). Reference is made to
the Purchase Agreement for a description of the respective rights and
limitations of rights, duties and obligations of the Payee and the Maker and
the provisions of the Purchase Agreement are hereby incorporated into this
Debenture by reference with the full effect of such provisions being stated
herein. The Maker will provide a copy of the Purchase Agreement to the Payee
upon request to the Maker at 5895 Windward Parkway, Suite 220, Alpharetta,
Georgia 30202-4128, telephone number (770) 442-6640. Capitalized terms used in
this Debenture and not defined herein shall have the meanings set forth in the
Purchase Agreement.
3. Interest Rate and Interest Payment. (a) From and
after the date hereof through maturity, the unpaid principal balance hereof
shall bear interest from January 1, 1996 at a rate of nine and one-tenth
percent (9.1%) per annum. Interest on said principal is due and payable
quarterly in advance on the 8th of each of January, April, July and October,
commencing January 8, 1996; provided that the interest payment for the first
quarter this Debenture is outstanding shall be paid simultaneously with its
issuance.
<PAGE> 16
(b) No dividend shall be declared or paid or any other
distribution declared or made with respect to any class of stock of the Maker,
nor shall any sums be set aside for or applied to the purchase or redemption of
any shares of any class of stock of the Maker, unless and until all interest
payable upon this Debenture and all other debentures issued pursuant to the
Purchase Agreement (collectively, the "Debentures") have been fully paid.
(c) Any partial interest payment with respect to the
Debentures shall be made pro rata to all holders of the Debentures in
proportion to the full amount of interest to which they would otherwise be
entitled.
(d) If the Maker is required to make any withholding or
deduction from any interest payment required hereunder to the Payee for or in
respect of any present or future taxes, levies, imposts, duties, charges or
fees of any nature imposed by the United States (or any political subdivision
thereof or therein), (i) the Maker shall make such withholding or deduction,
pay such taxes or other fees and provide the Payee with proof of such payment
and (ii) the amount due to the Payee from the Maker with respect to such
interest payment shall be increased to the extent necessary to ensure that
after making such withholding or deduction, and any withholdings or deductions
required to be made in respect of any such increase, the Payee shall receive an
amount equal to the amount which the Payee would have received had no such
withholding or deduction been required to be made.
4. Past Due or Default Rate. All past due principal and
interest of this Debenture, whether due as the result of acceleration of
maturity or otherwise, shall bear interest from the due date at a rate equal to
twelve percent (12%). In addition, upon the occurrence and during the
continuance of any Default (as defined in Section 12), the unpaid principal
balance and all due but unpaid interest thereon shall bear interest at a rate
of twelve percent (12%) per annum.
5. Term and Principal Payments. The principal of this
Debenture is due and payable in full together with all due but unpaid interest
thereon through the payment date on January 1, 1998 as such date may be
extended as hereinafter set forth (the "Maturity Date").
6. Prepayment. This Debenture is not subject to
prepayment without the consent of the Payee.
7. Conversion.
(a) Conversion Generally. This Debenture shall be
convertible into shares of Maker's Common Stock at the option of Payee, at the
option of Maker or automatically, as provided in this Section 7. This
Debenture shall be convertible into the number of fully paid and nonassessable
shares of Maker's Common Stock obtained by dividing the aggregate principal
balance of Debentures
2
<PAGE> 17
to be converted plus any due and unpaid interest thereon by the Conversion
Price specified in the provision of this Section 7 pursuant to which the
Debenture is being converted. All shares of Maker's Common Stock and any other
securities issuable upon conversion of the Debentures pursuant to this Section
7 shall be registered upon issuance under the Securities Act of 1933, as
amended (the "Securities Act").
(b) Reorganization Prior to September 30, 1996.
(1) Conversion at the Option of Payee. If, prior
to September 30, 1996, Maker has completed a corporate restructuring whereby it
reorganizes itself by spinning off any or all of its operations and/or assets
to its shareholders as a separate public company or by creating a new class of
"tracking" stock of Maker, the value of which is tied specifically to the
performance of a portion of Maker's operations and/or assets (a
"Reorganization"), Payee shall have the right to convert all or a portion of
this Debenture into fully paid, nonassessable, registered shares of Common
Stock of Maker (which, for this purpose, shall mean the continuing entity and
not an entity which is spun off in the Reorganization) any time after September
30, 1996, at a Conversion Price equal to the closing bid price of a share of
Maker's Common Stock on the day prior to the day upon which the holder provides
notice that it wishes to convert its Debenture into shares of Maker's Common
Stock.
(2) Conversion at the Option of Maker. If Maker
has completed a Reorganization prior to September 30, 1996, Maker shall have
the option to require the conversion of this Debenture into fully paid,
nonassessable, registered shares of Common Stock of Maker (which, for this
purpose, shall mean the continuing entity and not an entity which is spun off
in the Reorganization) for a period of time beginning on the thirtieth trading
day after the date the Reorganization is completed and ending 90 days later,
upon no less than five days written notice from Maker to Payee; provided,
however, that upon the occurrence and during the continuance of a Default,
Maker shall not be entitled to require the conversion of this Debenture. The
Conversion Price for any conversion pursuant to this Section 7(b)(2) shall be
an amount equal to the average of the closing bid prices of a share of Maker's
Common Stock for the thirty (30) trading days prior to the date of notice of
such conversion.
(3) Automatic Conversion. Notwithstanding the
foregoing, if Maker has completed a Reorganization prior to September 30, 1996,
any principal amount of this Debenture that has not been converted prior to
January 1, 1998 will be automatically converted into fully paid, nonassessable,
registered shares of Maker's Common Stock on January 1, 1998, at a Conversion
Price equal to the amount which is the lower of (i) the average of the closing
bid prices of a share of Maker's Common Stock for the thirty (30) trading days
prior to January 1, 1998, and (ii) $5.23.
3
<PAGE> 18
(c) No Reorganization.
(1) Conversion at the Option of Payee. If Maker
has not completed a Reorganization, Payee shall have the right to convert all
or a portion of this Debenture into fully paid, nonassessable, registered
shares of Maker's Common Stock at any time after September 30, 1996, at a
Conversion Price equal to the amount which is the lower of (i) the average of
the closing bid prices for a share of Maker's Common Stock for the thirty (30)
trading days prior to the date of notice of such conversion and (ii) $5.23.
(2) Automatic Conversion. If Maker has not
completed a Reorganization, any principal amount of this Debenture that has not
been converted prior to January 1, 1998 will be automatically converted into
fully paid, nonassessable, registered shares of Maker's Common Stock on January
1, 1998, at a Conversion Price equal to the amount which is the lower of (i)
the average of the closing bid prices for a share of Maker's Common Stock for
the thirty (30) trading days prior to January 1, 1998, and (ii) $5.23.
(d) Reorganization After September 30, 1996. If Maker
has not completed a Reorganization prior to September 30, 1996, but has
completed a Reorganization prior to such time as all of the principal amount of
this Debenture has been converted, then, any principal amount of this Debenture
converted at any time after the date such Reorganization is completed shall be
converted into Units (as hereinafter defined). Payee shall have the right to
convert all or a portion of this Debenture into Units at any time on or after
the date the Reorganization is completed. Any principal amount of this
Debenture that has not been converted prior to January 1, 1998 will be
automatically converted into Units on January 1, 1998. The Units to be issued
as a result of conversion pursuant to this Section 7(d) shall consist of (i)
one fully paid, nonassessable, registered share of Maker's Common Stock
(adjusted for any stock split or stock dividend or similar event after the date
of the Reorganization) and (ii) the number (adjusted for any stock split or
stock dividend or similar event after the date of the Reorganization) of newly
issued, fully paid, nonassessable, registered shares of common stock or other
securities of the entity or entities which is/are spun off or of the new class
of "tracking" stock of Maker described in Section 7(b)(1) to which each share
of common stock of Maker was entitled as a result of the Reorganization. The
Conversion Price for any conversion into Units pursuant to this Section 7(d)
shall be an amount equal to the lower of (i) the average of the aggregate of
the closing bid prices for a share (or other unit) of each of the individual
securities comprising a Unit (measured by reference to the number of shares (or
other units) of each such security within the Unit) for the thirty (30) trading
days prior to the required payment date and (ii) $5.23.
(e) Merger, Sale of Assets or "Going Private"
Transaction.
4
<PAGE> 19
(1)(A) Immediately prior to the occurrence of (i) a
consolidation or merger of Maker with or into any other corporation or
corporations, or (ii) a sale, conveyance or other disposition of all or
substantially all of the assets of Maker, or (iii) a transaction or series of
related transactions in which any person or any persons acting together which
would constitute a "group" for purposes of Section 13(d) of the Exchange Act
acquires more than 25% of the voting power of Maker, or (iv) the termination of
registration of Maker's securities under Section 12(g) of the Exchange Act or
any other event which has the effect of Maker ceasing to file reports as
required by Section 13(a) of the Exchange Act, or the delisting of Maker's
securities from the Nasdaq Stock Exchange, in either case as a result of any
event other than a transaction described in any of clauses (i), (ii), (iii), or
(v) the resignation or removal of L. Scott Demerau from the offices of Chief
Executive Officer and President of Maker for any reason (including death) (any
of such events described in clauses (i), (ii), (iii), (iv) or (v), a "Change of
Control Transaction"), any principal amount of this Debenture that has not
otherwise been converted pursuant to Section 7 shall be immediately and
automatically converted into fully paid, nonassessable, registered shares of
Maker's Common Stock (except as provided in Section 7(e)(2)) at a Conversion
Price equal to the amount which is the lower of (x) $5.23 and (y) (1) the per
share merger consideration, purchase, exchange or conversion price for Maker's
Common Stock in a Change of Control Transaction described in clauses (i) or
(iii), (2) the aggregate purchase price (which shall include, without
limitation, the amount of any liabilities assumed by the purchaser, the present
value of any deferred consideration and the present value of any contingent
consideration as agreed between Maker and Payee or as determined by an
independent "Big Six" accounting firm chosen jointly by Maker and Payee) for a
Change of Control Transaction described in clause (ii) divided by the number of
shares of Maker's Common Stock outstanding at the time of such Change of
Control Transaction or (3) the average of the closing bid prices of a share of
Maker's Common Stock for the thirty (30) trading days prior to the effective
date of a Change of Control Transaction described in clauses (iv) or (v).
(B) Maker or the person acquiring control of Maker
pursuant to the Change of Control Transaction shall be required to purchase the
shares of Maker's Common Stock issued upon conversion of this Debenture from
Payee at the closing of the Change of Control Transaction, or on the effective
date thereof if there is no closing, for a cash amount per share equal to (x)
the per share merger consideration, purchase, exchange or conversion price for
Maker's Common Stock in a Change of Control Transaction described in clauses
(i) or (iii) of the preceding paragraph (A), (y) the aggregate purchase price
(which shall include, without limitation, the amount of any liabilities assumed
by the purchaser, the present value of any deferred consideration and the
present value of any contingent consideration as agreed between Maker and Payee
or as determined by an independent "Big Six" accounting firm chosen jointly by
Maker and Payee) for a Change of Control Transaction
5
<PAGE> 20
described in clause (ii) of the preceding paragraph (A) divided by the number
of shares of Maker's Common Stock outstanding at the time of such Change of
Control Transaction or (z) the average of the closing bid prices of a share of
Maker's Common Stock for the thirty (30) trading days prior to the effective
date of a Change of Control Transaction described in clauses (iv) or (v) of the
preceding paragraph (A). If such cash purchase price is not paid in full when
due, the unpaid portion thereof shall bear interest at an annual rate of 14%
from the due date until such amount is paid in full. Any partial payment shall
be made pro rata to holders of the Debentures in proportion to the full amount
to which they would otherwise be entitled. Until such purchase price has been
paid in full, Maker and any other entity responsible for the payment thereof
shall not declare or pay any dividend or any other distribution or pay or set
aside any sums for or apply any sums to the purchase or redemption of any
shares of its capital stock.
(C) This paragraph (e) shall not apply to a
Reorganization.
(2) If Maker has not completed a Reorganization
prior to September 30, 1996, but has completed a Reorganization prior to the
occurrence of a Change of Control Transaction with respect to either entity
whose securities comprise the Units, any principal amount of this Debenture
that has not otherwise been converted pursuant to Section 7 shall be
immediately and automatically converted into Units immediately prior to the
occurrence of a Change of Control Transaction involving either of the entities
whose securities comprise the Units. In such event, the Conversion Price shall
be an amount equal to the lower of
(i) $5.23, and
(ii) the sum of
(a) the average of the aggregate of the
closing bid prices for a share (or other
unit) of each of the individual securities
included in a Unit of the entity that is not
involved in the Change of Control Transaction
(measured by reference to the number of
shares (or other units) of such security
within the Unit) for the thirty trading days
prior to the effective date of the Change of
Control Transaction with respect to the other
entity and
(b) the applicable amount specified in
clause (y) of Section 7(e)(1)(A), mutatis
mutandis, for each of the individual
securities included in the Unit of the entity
that is involved in the Change of Control
Transaction (measured by reference to the
number of shares (or other units) of such
security within the Unit).
6
<PAGE> 21
At the completion of the Change of Control Transaction, if this Debenture has
been converted in the Change of Control Transaction pursuant to this Section
7(e)(2), Payee shall sell and receive cash for the securities issuable upon
conversion which were subject to the Change of Control Transaction in
accordance with the provisions of Section 7(e)(1)(B), mutatis mutandis, and it
shall thereafter continue to hold the securities issuable upon conversion of
the entity not involved in the Change of Control Transaction.
(f) Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of this Debenture. In lieu of any
fractional share to which the holder would otherwise be entitled, Maker shall
pay cash to such holder in an amount equal to such fraction multiplied by the
applicable Conversion Price. In order to convert this Debenture into full
shares of Common Stock, the holder shall surrender this Debenture, duly
endorsed, to the office of Maker or of any transfer agent for this Debenture,
and shall give written notice to Maker at such office that he elects to convert
the same, the principal amount of this Debenture to be so converted and a
calculation of the Conversion Price; provided, however, that Maker shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such conversion until either this Debenture is delivered to Maker or its
transfer agent as provided above, or the holder notifies Maker or its transfer
agent that such Debenture has been lost, stolen or destroyed and executes an
agreement reasonably satisfactory to Maker to indemnify Maker from any loss
incurred by it in connection with such Debenture or conversion occurs
automatically or at the option of Maker pursuant to the provisions of Section
7.
Maker shall issue and deliver within three (3) business days
after delivery to Maker of this Debenture, or after such agreement and
indemnification, to Payee at the address of Payee specified in the notice of
conversion, a certificate or certificates for the number of shares of Common
Stock to which Payee shall be entitled as aforesaid. The date on which notice
of conversion is given shall be deemed to be the date set forth in such notice
of conversion provided that the original Debenture to be converted is received
by the transfer agent or Maker within five (5) business days thereafter and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date. If the original Debenture
to be converted is not received by the transfer agent or Maker within five
business days after the date on which notice of conversion is given, the notice
of conversion shall become null and void.
If Payee exercises its right to convert part but not all of
this Debenture, in addition to the shares of Common Stock (or other securities,
if applicable) issuable upon conversion and cash for any fractional shares,
Maker will also deliver to such holder a new Debenture, of like tenor, for the
principal amount of this Debenture not being converted.
7
<PAGE> 22
(g) Reservation of Stock Issuable Upon Conversion. Maker
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of this Debenture, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all then
outstanding Debentures being issued pursuant to the Purchase Agreement; and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding Debentures
issued pursuant to the Purchase Agreement, Maker will promptly take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
The provisions of this Section 7(g) shall also apply, mutatis
mutandis, to any securities issuable by the Company or any other entity as part
of any Unit issued pursuant to Section 7(d).
8. Repayment. If upon conversion of this Debenture,
Maker (or any other entity which is required to issue securities upon
conversion of this Debenture under Section 7(d)) fails to issue shares of its
Common Stock or other securities (if required under Section 7(d)) that have
been registered under the Securities Act as required under Section 7, Payee
shall have the right, upon written notice to Maker, to rescind the conversion
of this Debenture and require repayment hereunder in cash as provided in this
Section 8. The aggregate cash repayment amount for this Debenture under this
Section 8 shall be an amount equal to the higher of (i) the current market
value on the date of the notice of redemption of the securities that would have
been issued upon conversion of this Debenture pursuant to Section 7 had Maker
and any other applicable entity issued securities registered under the
Securities Act as required by Section 7, or (ii) the outstanding principal
amount of this Debenture plus all due but unpaid interest hereon, or (iii) the
relevant aggregate purchase price specified in Section 7(e)(1)(B) if this
Debenture was converted in connection with a Change of Control Transaction
pursuant to Section 7(e).
The cash repayment amount shall be payable by Maker to the
holders of the Debentures requesting repayment in cash by wire transfer to such
account as specified by such holder on the fifth day after Maker's receipt of
notice from such holder of its request for repayment in cash. In the event
Maker is unable or shall fail to pay the repayment amount in cash on the date
due, Maker shall repay on such date the principal amount of this Debenture
which it is able to repay, pro rata among all holders of the Debentures issued
pursuant to the Purchase Agreement that have then given notice of repayment in
cash in proportion to the full amounts to which they would otherwise be
entitled if all Debentures required to be repaid were repaid, and shall pay the
remainder of the repayment amount as soon as Maker is able to do so. Any
unpaid portion of the repayment amount shall bear interest at an annual rate of
14% from the due date until such amount is paid in full. For so long as any
repayment amount with respect to this Debenture
8
<PAGE> 23
for which repayment in cash has been requested has not been fully paid, Maker
shall not declare or pay any dividend or any other distribution or pay or set
aside any sums for or apply any sums to the purchase or redemption of any
shares of capital stock of Maker.
9. Registration.
9.1 Maker hereby agrees at its sole cost and expense
(excluding any discounts and commissions, if applicable) to file, and use its
best efforts to cause to become effective within 180 days following the date
hereof (the "Registration Date") and to keep effective and current under the
Securities Act a registration statement or registration statements (each a
"Registration Statement") covering the maximum number of shares of Common Stock
of the Maker issuable upon conversion of this Debenture (the "Registrable
Shares"). Maker shall also use its best efforts to keep any such Registration
Statements, and the accompanying prospectuses, effective and current under the
Act at its expense for a period until the Payee is able to sell all of its
Registrable Shares (the "Registration Period").
9.2 Any Registration Statement referred to in Section 9
hereof shall be prepared and processed in accordance with the following terms
and conditions:
(a) Payee will cooperate in furnishing promptly
to Maker in writing any information requested by Maker in connection with the
preparation, filing and processing of such Registration Statement and agrees to
comply with all requirements of the Securities Act or other laws applicable to
it in connection with the offer, sale, underwriting and distribution of its
respective Registrable Shares.
(b) Maker will furnish to the Payee such number
of prospectuses or other documents incident to such registration as may from
time to time be reasonably requested, and cause its Registrable Shares to be
qualified under the blue sky laws of those states reasonably requested by the
Payee.
(c) Maker will indemnify the Payee (and any
officer, director or controlling person of the Payee) and any underwriters
acting on behalf of the Payee against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) to which they may become subject
under the Securities Act or otherwise, arising out of or based upon any untrue
or alleged untrue statement of any material facts contained in any Registration
Statement filed pursuant hereto, or any document relating thereto, including
all amendments and supplements, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein contained not misleading, and will
reimburse the Payee (or such other aforementioned parties) or such underwriters
for any legal and all other expenses reasonably incurred in connection with
investigating or defending
9
<PAGE> 24
any such claim, loss, damage, liability or action; provided, however, that
Maker will not be liable where the untrue or alleged untrue statement or
omission or alleged omission is based upon information furnished in writing to
Maker by the Payee expressly for use therein, or solely as a result of the
Payee's failure to furnish to Maker information duly requested in writing by
counsel for Maker specifically for use therein. This indemnity agreement shall
be in addition to any other liability Maker may have. The indemnity agreement
of Maker contained in this paragraph (c) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery and payment for the
Registrable Shares.
(d) The Payee will indemnify Maker (and any officer,
director or controlling person of Maker) and any underwriters acting on behalf
of Maker against all claims, losses, expenses, damages and liabilities (or
actions in respect thereof) to which they may become subject under the
Securities Act or otherwise, arising out of or based upon any untrue or alleged
untrue statement of any material facts contained in any Registration Statement
filed pursuant hereto, or any document relating thereto, including all
amendments and supplements, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein contained not misleading, and, will
reimburse Maker (or such other aforementioned parties) or such underwriters for
any legal and other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or action;
provided, however, that the Payee will be liable as aforesaid only to the
extent that such untrue or alleged untrue statement or omission or alleged
omission is based solely upon information furnished in writing to Maker by the
Payee expressly for use therein, or solely as a result of its failure to
furnish Maker with information duly requested in writing by counsel for Maker
specifically for use therein. This indemnity agreement contained in this
paragraph (d) shall remain operative and in full force and effect regardless of
any investigation made by or an behalf of any indemnified party and shall
survive the delivery of and payment for Registrable Shares.
(e) Promptly after receipt by an indemnified party under
this Section 9.2 of notice of the commencement of any action, such indemnified
party will follow the procedures prescribed by Section 10.3 of the Purchase
Agreement, which terms are incorporated herein by this reference and made a
part hereof, mutatis mutandis.
(f) Except as expressly set forth in Section 9.2(g),
Maker shall bear all costs and expenses incident to any registration pursuant
to this Section 9 and the legal fees and expenses of one firm representing the
Payee and holders of all registrable shares under the Debentures.
10
<PAGE> 25
(g) The Payee shall pay any and all underwriters
discounts, brokerage fees and transfer taxes incident to the sale of any
securities sold by the Payee pursuant to this Section 9.
10. Subordination.
(a) Maker, for itself, its successors and assigns, covenants and
agrees, and Payee by Payee's acceptance of this Debenture, likewise covenants
and agrees, that the Debentures represent and at all times shall remain
unsecured indebtedness of Maker and the payment of the principal, interest and
premium (if any) on this Debenture and on each and all of the Debentures is
hereby expressly subordinated to the extent and in the manner set forth below
to the prior payment in full in cash of all Senior Indebtedness (as defined
below), whether such Senior Indebtedness is repaid in accordance with its
terms, or upon dissolution, winding up, liquidation or reorganization of Maker
(whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or otherwise). The provisions of this
Section 10 shall constitute a continuing offer to all persons who become
holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness and such holders are
hereby made beneficiaries hereunder, the same as if their names were written
herein as such, and they and/or each of them may proceed to enforce such
provisions. Such provisions will not be amended without the prior written
consent of all holders of Senior Indebtedness. For purposes of this Debenture,
"Senior Indebtedness" shall mean all loans, advances, liabilities, covenants,
duties or other indebtedness of Maker existing on the date hereof and listed on
Schedule A hereto or any Bank Debt (as defined below) arising from time to time
hereafter and any and all renewals, extensions and refundings of any such
indebtedness, whether for principal, premium or interest (including
post-petition interest) or otherwise, of Maker or any subsidiary of Maker,
whether direct or indirect, absolute or contingent, secured or unsecured, due
or to become due, unless in any instrument or instruments creating, evidencing
or securing any such indebtedness it is expressly provided that such
indebtedness is not superior in right of payment to the Debentures. Without
limiting the generality of the foregoing, Maker and Payee acknowledge and agree
that the term "Senior Indebtedness" includes, without limitation, all loans,
advances, liabilities, covenants, duties and other indebtedness of Maker
existing on the date hereof or arising from time to time hereafter, and any and
all renewals, extensions and refundings of any such indebtedness, whether for
principal, premium, interest, fees or otherwise of Maker or any subsidiary of
Maker, whether direct or indirect, absolute or contingent, secured or
unsecured, due or to become due, to any or all of (i) Bank South, (ii)
NationsBank, N.A. (South), or any other Lender under the Credit Agreement,
dated as of November 14, 1994, among Maker, Bank South, as Agent, and the
Lenders listed therein, as amended or supplemented from time to time; and any
indebtedness of Maker to a commercial bank or financial institution that, by its
11
<PAGE> 26
terms, is expressly incurred in replacement or substitution of all or any
portion thereof (the "Bank Debt").
(b) Upon any payment or distribution of the assets of Maker or any
subsidiary of Maker or any of them of any kind or character, whether in cash,
property or securities to creditors upon any dissolution, winding up, total or
partial liquidation, reorganization, recapitalization or readjustment of Maker
or any subsidiary of Maker or any of them or their respective securities
(whether voluntary or involuntary, or in bankruptcy, insolvency,
reorganization, liquidation or receivership proceedings, or upon an assignment
for the benefit of the creditors, or any other marshaling of the assets and
liabilities of Maker or any subsidiary of Maker, or otherwise), then in such
event:
(i) the holders of Senior Indebtedness shall be entitled
to receive payment in full in cash (or to have such payments duly provided for
in a manner satisfactory to the holders of Senior Indebtedness) of all amounts
due or to become due on or in respect of all Senior Indebtedness, before any
payment is made on account of or applied on the Debentures (other than payment
in shares of stock of the Maker as reorganized or readjusted, or securities of
the Maker or any other corporation or other entity provided for by a plan of
reorganization or readjustment, which stock and securities are subordinated to
the payment of all Senior Indebtedness and securities received in lieu thereof
which may at the time be outstanding);
(ii) any payment or distribution of assets of Maker or any
subsidiary of Maker or any of them of any kind or character from any source
whatsoever, whether in cash, property or securities (other than shares of stock
of the Maker as reorganized or readjusted, or securities of the Maker or any
other corporation or other entity provided for by a plan of reorganization or
readjustment, which stock and securities are subordinated to the payment of all
Senior Indebtedness and securities received in lieu thereof which may at the
time be outstanding), to which the holders of the Debentures would be entitled
except for the provisions of this Section 11, shall be paid or delivered by any
debtor, custodian or other person making such payment or distribution, directly
to the holders of the Senior Indebtedness, for application to payment of all
such Senior Indebtedness remaining unpaid, to the extent necessary to pay all
such Senior Indebtedness in full after giving effect to any concurrent payment
or distribution, or provision therefor, to the holders of such Senior
Indebtedness; and
(iii) in the event that, notwithstanding the foregoing
provisions of this Section 11(b), any payment or distribution of assets of
Maker or any subsidiary of Maker or any of them of any kind or character from
any source whatsoever, whether in cash, property or securities (other than
shares of stock of the Maker as reorganized or readjusted, or securities of the
Maker or any other corporation or other entity provided for by a plan of
reorganization or readjustment, which stock and securities are
12
<PAGE> 27
subordinated to the payment of all Senior Indebtedness and securities received
in lieu thereof which may at the time be outstanding) shall be received by any
holder of the Debentures before all such Senior Indebtedness is indefeasibly
paid in full in cash, such payment or distribution shall be held in trust for
the benefit of, and shall be immediately paid or delivered by such holder to,
as the case may be, the holders of such Senior Indebtedness remaining unpaid,
for application to the payment of all such Senior Indebtedness remaining
unpaid, to the extent necessary to pay all such Senior Indebtedness in full
after giving effect to any concurrent payment or distribution, or provision
therefor, to the holders of such Senior Indebtedness.
(c) No payment of principal on the Debentures other than pursuant
to Sections 7 or 8 hereof shall be made by or on behalf of Maker or any
subsidiary for Maker or any of them unless and until the Senior Indebtedness
shall have been indefeasibly paid in full in cash.
(d) No payment of any kind on account of the Debentures (whether
principal, interest, premiums, fees or otherwise) other than pursuant to
Section 7 hereof shall be made by or on behalf of Maker or any subsidiary of
Maker or any of them upon and during the continuance of any default in the
payment of principal, interest or premium, if any, with respect to any Senior
Indebtedness.
(e) Upon and during the continuance of any default or event of
default under or with respect to any Senior Indebtedness, except pursuant to
Sections 7 or 8 hereof, no holder of any Debenture may (i) accelerate or take
any action to accelerate the maturity of all or any portion of any Debenture,
or (ii) commence or continue any judicial proceedings against Maker or any of
its subsidiaries with respect to this Debenture, or (iii) exercise any rights
or remedies under any Debenture or at law or in equity in respect of the
collection of the indebtedness evidenced thereby.
(f) In the event that, notwithstanding the foregoing provisions of
this Section 10, any payment or distribution of assets of Maker or any
subsidiary of Maker or any or them of any kind or character from any source
whatsoever, whether in cash, property or securities, shall be received by any
holder of any Debenture contrary to the foregoing provisions of this Section
10, such payment or distribution shall be held in trust for the benefit of, and
shall be immediately paid or delivered by such holder to, as the case may be,
the holders of such Senior Indebtedness remaining unpaid, for application to
the payment or prepayment of all such Senior Indebtedness remaining unpaid, to
the extent necessary to pay all such Senior Indebtedness in full in cash.
(g) Each holder of Senior Indebtedness is hereby irrevocably
authorized and empowered (in its own name or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution referred to in respect of this Debenture and to file claims and
proofs of claim with respect to the
13
<PAGE> 28
Debenture if the holder of the Debenture fails to do so within sixty (60) days
after receipt of written notice from the holders of the Senior Indebtedness
requesting it to take such action.
(h) The provisions of this Section 10 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by
any holder of Senior Indebtedness, as though such payment had not been made.
(i) Holders of the Debentures hereby undertake and agree for the
benefit of the holders of Senior Indebtedness that, upon the occurrence and
during the continuance of a default under any Senior Indebtedness, they shall
take any actions reasonably requested by any holder of such Senior Indebtedness
to effectuate the full benefit of the subordination contained herein.
(j) Subject to the payment in full of all Senior Indebtedness, the
holders of the Debentures shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the Maker
applicable to the Senior Indebtedness until all amounts owing on the Debentures
shall be paid in full, and for the purpose of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Maker or by or on behalf of the holders of the Debentures by virtue of this
Section 10 which otherwise would have been made to the holders of the
Debentures, shall be deemed to be payment by the Company to or on account of
the Senior Indebtedness, it being understood that the provisions of this
Section 10 are and are intended solely for the purpose of defining the relative
rights of the holders of the Debentures, on the one hand, and the holders of
the Senior Indebtedness, on the other hand.
(k) Nothing contained in this Section 10 or elsewhere in this
Debenture shall impair, as between the Maker and the holder of this Debenture,
the obligation of the Maker, which is absolute and unconditional, to pay to the
holder of this Debenture the principal of and interest on this Debenture as and
when the same shall become due and payable in accordance with the terms hereof,
or prevent the holder of this Debenture upon any default hereunder from
exercising all rights, powers and remedies with respect hereto, all subject to
the rights of the holders of the Senior Indebtedness under this Section 10.
11. Default. Each of the following shall constitute a "Default"
under this Debenture:
(i) the Maker shall fail to pay interest as required pursuant to
Section 3 hereof;
(ii) the Maker shall fail to convert all or any portion of this
Debenture as required pursuant to Section 7 hereof;
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<PAGE> 29
(iii) Maker shall fail to pay in cash when due the amounts payable
pursuant to Section 8 hereof;
(iv) maker shall default in the performance or observance of any
covenant contained in this Debenture or in the Purchase Agreement; or
(v) any event or circumstance shall have occurred which shall
result in the acceleration of the maturity of any Senior Indebtedness or which
shall permit any holder of any Senior Indebtedness to accelerate the maturity
thereof or to require an early prepayment or repayment of such Senior
Indebtedness.
12. Voting and Other Rights. Upon the occurrence and during the
continuance of a Default, the holders of the Debentures shall be entitled to
vote together with the holders of the Common Stock of the Maker, voting
together as one class, on all actions to be voted on by the shareholders of the
Maker. The holder of this Debenture shall be entitled to a number of votes
equal to the number of shares of Common Stock into which this Debenture would
be convertible, assuming a Conversion Price of $5.23.
Holders of the Debentures shall be entitled to notice of all
shareholder meetings or written consents whether or not they would be entitled
to vote at such meetings or with respect to such consents, which notice would
be provided pursuant to the Maker's By-Laws and applicable statutes. Holders
of the Debentures shall also be entitled to receive all reports and other
information or materials distributed to the holders of the Maker's Common Stock
at the time and in the manner such items are distributed to the holders of the
Maker's Common Stock.
Except as provided in this Section 12, this Debenture shall not
entitle the holder hereof to any of the rights of a shareholder of Maker.
13. Certain Covenants (a) So long as any principal amount of the
Debentures remain outstanding, all transactions between the Maker and any
separate public company into which the Maker may transfer any of its operations
or assets in a Reorganization and all transactions between the Maker and any
affiliate of the Maker (other than wholly-owned subsidiaries of the Maker)
shall be approved by a majority of the independent directors of the Maker's
Board of Directors and will be on an arms-length basis and fair to the Maker
and to such other entity or affiliate. For purposes of this Section 13(a), an
"affiliate" of the Maker shall mean any officer, director or beneficial owner,
directly or indirectly, of more than five percent of the Maker's Common Stock
(and if such beneficial owner is a corporation, any person controlling,
controlled by or under common control with such beneficial owner, or any
officer or director of such beneficial owner or of any corporation occupying
any such control relationship) or any other person which, directly or
indirectly, controls or is controlled by or is under common control with the
Maker. For purposes of this
15
<PAGE> 30
Section 13(a), "control" with respect to any person shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise. For purposes of this Section 14(a),
"independent director" shall mean each director who is not an officer or
employee of the Maker or an "affiliate."
(b) The Maker shall, as a condition of any spin-off of its
operations or assets to a separate public company in a Reorganization, cause
such separate public company to agree to be bound by the provisions of this
Debenture applicable to it. In addition, the Maker shall, as a condition of
any Change of Control Transaction to which it is a party, cause the person
acquiring control of the Maker pursuant to the Change of Control Transaction to
agree to be bound by the provisions of this Debenture applicable to it.
14. Amendments. This Debenture shall not be amended without the
prior written approval of the holders of at least two-thirds of the outstanding
principal amount of the Debentures.
15. Waiver. Maker and any and all sureties, guarantors and
endorsers of this Debenture and all other parties now or hereafter liable
hereon, severally waive grace, demand, presentment for payment, protest, notice
of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(a) to all extensions and partial payments, with or without notice, before or
after maturity, (b) to any substitution, exchange or release of any security
now or hereafter given for this Debenture, (c) to the release of any party
primarily or secondarily liable hereon, and (d) that it will not be necessary
for the Payee, in order to enforce payment of this Debenture, to first
institute or exhaust the Payee's remedies against Maker or any other party
liable therefor or against any security for this Debenture.
16. Costs of Collection. If a Default occurs hereunder or under
any of the instruments securing payment hereof (whether or not suit is filed),
or if this Debenture is collected by suit or legal proceedings or through the
probate court or bankruptcy proceedings, Maker agrees to pay all reasonable
attorneys' fees and all expenses of collection and costs of court.
17. Interest Adjustments. It is the intention of the parties
hereto to comply with applicable usury laws (now or hereafter enacted):
accordingly, notwithstanding any provision to the contrary in this Debenture,
or in any of the documents securing payment hereof or otherwise relating
hereto, in no event shall this Debenture or such documents require the payment
or permit the collection of interest in excess of the maximum amount permitted
by such laws. If any such excess of interest is contracted for, charged,
taken, reserved or received under this Debenture or under
16
<PAGE> 31
the terms of any of the documents securing payment hereof or otherwise
relating hereto, or in the event the maturity of the indebtedness evidenced by
this Debenture is accelerated in whole or in part, so that under any of such
circumstances the amount of interest contracted for, charged, taken, reserved
or received under this Debenture or under any of the instruments securing
payment hereof or otherwise relating hereto, on the amount of principal
actually outstanding from time to time under this Debenture shall exceed the
maximum amount of interest permitted by applicable usury laws, now or hereafter
enacted, then in any such event (i) the provisions of this paragraph shall
govern and control, (ii) any such excess which may have been collected at final
maturity of said indebtedness either shall be applied as a credit against the
then unpaid principal amount hereof or refunded to Maker, at the Payee's
option, (iii) if, as a result of the application of the provisions of this
paragraph, the Payee shall receive interest payments under this Debenture in an
amount less than the amount otherwise provided hereunder, such deficit will, to
the fullest extent permitted by applicable laws, cumulate and be carried
forward (without interest) until the payment in full of this Debenture, and
interest otherwise payable to Payee hereunder for any subsequent period shall
be increased by the maximum amount of such deficit that may be so added without
causing the Payee to receive interest in excess of the maximum amount then
permitted by applicable laws, and (iv) upon such final maturity, the effective
rate of interest shall be automatically reduced to the maximum lawful rate
allowed under applicable usury laws as now or hereafter construed by the courts
having jurisdiction thereof. Without limiting the foregoing, all calculations
of the rate of interest contracted for, charged, taken, reserved or received
under this Debenture or under such other documents which are made for the
purpose of determining whether such rate exceeds the maximum lawful rate, shall
be made, to extent permitted by applicable laws, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the loan evidence hereby, all interest at any time contracted for,
charged, taken, reserved or received from Maker or otherwise by the Payee
connection with such indebtedness.
18. Applicable Law. This Debenture shall be govern and construed
under the applicable laws of the State of Georgia without regard to the
conflicts of law provisions thereof.
19. No Waiver by the Payee. Any check, draft, money order or
other instrument given in payment of all or any portion hereof may be accepted
by the Payee and handled in collection in the Payee's customary manner, but the
same shall not constitute payment hereunder or diminish any rights of the Payee
except to the extent that actual cash proceeds of such instrument are
unconditionally received by the Payee.
IN WITNESS WHEREOF, MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC. has
caused this Debenture to be executed in its name by a duly authorized officer.
17
<PAGE> 32
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By:
-------------------------------------
Title:
----------------------------------
18
<PAGE> 33
SCHEDULE A
1. Loan Agreement, dated January 8, 1991, by and between Maker and 1st
National Bank Northwest Florida. Outstanding as of March 31, 1996 -
$950,144.23
2. Sales Contract and Licensing Agreement, dated March 13, 1996, by and
between Maker and Petro Associates (d/b/a Amusement Solutions).
Outstanding as of March 31, 1996 - $744,450.00
3. Credit Agreement, dated as of November 14, 1994, among, Maker, Bank
South, N.A. (k/n/a NationsBank, N.A. (South)), as Agent and the
Lenders listed therein. Outstanding as of March 31, 1996 -
$2,991,017.00
4. Loan Agreement, dated August 1, 1994 by and between Maker and Bank
South, N.A. (k/n/a NationsBank, N.A. (South)). Outstanding as of
March 31, 1996 - $6,506,000.00
5. Promissory Note, dated August 18, 1994, by and between Maker and
Barnett Bank. Outstanding as, of March 31, 1996 - $45,000.00
6. Promissory Note, dated February 4, 1993, by and between Maker and
Barnett Bank. Outstanding as of March 31, 1996 - $11,055.00
7. Master Lease, dated June 1994, by and between Maker and CIT Equipment
Finance. Outstanding as of March 31, 1996 - $1,819,206.58
8. Promissory Note, dated June 17, 1995, by and between Maker and General
Motors Acceptance Corporation. Outstanding as of March 31, 1996 -
$25,277.52
9. Promissory Note, dated August 1993, by and between National Bank of
Texas and Kingwood FFC, L.P. Outstanding as of March 31, 1996 -
$53,554.66
10. Loan Agreement, dated January 1993, by and between Maker and Norwest
Equipment Finance. Outstanding as of March 31, 1996 - $353,798.78
11. Loan Agreement, dated August 1993, by and between ITT and Kingwood
FFC, L.P. Outstanding as of March 31, 1996 - $927,777.81
19
<PAGE> 34
EXHIBIT B
DENOMINATIONS OF DEBENTURES
<TABLE>
<CAPTION>
Denomination
Name of Debentures
- ---- -------------
<S> <C>
Family Funn Entertainment, Inc. $ 100
Family Entertainment Funding, L.P. $5,033,333
</TABLE>
<PAGE> 35
EXHIBIT C
FORM OF
ASSIGNMENT OF [PARTNERSHIP INTEREST] [INDEBTEDNESS]
This ASSIGNMENT is made and entered into as of the ____ day of
March, 1996, by and between _________________________, a ______________________
[CORPORATION] [LIMITED PARTNERSHIP] (the "Assignor") and Mountasia
Entertainment International, Inc., a Georgia corporation (the "Assignee").
W I T N E S S E T H:
WHEREAS, the Assignor and the Assignee, together with certain
other parties, have entered into a Purchase and Sale Agreement dated as of
March __, 1996 (the "Purchase and Sale Agreement"), providing, among other
things, for the sale, transfer, assignment, conveyance and delivery by the
Assignor to the Assignee of its [GENERAL PARTNERSHIP INTEREST IN] [LIMITED
PARTNERSHIP INTEREST IN] [INTEREST IN THE INDEBTEDNESS OWED TO IT BY] National
Entertainment Funding, L.P., a Delaware limited partnership;
NOW, THEREFORE, pursuant to the Purchase and Sale Agreement
and in consideration of the provisions thereof and the mutual covenants and
agreements set forth therein, the parties hereto agree as follows:
1. In consideration of the [FAMILY FUNN GP PURCHASE
PRICE] [LFI PURCHASE PRICE] [L.P. PURCHASE PRICE] [INDEBTEDNESS PURCHASE PRICE]
(as such term and all other capitalized terms used but not defined herein are
defined in the Purchase and Sale Agreement), the Assignor hereby sells,
transfers, assigns, conveys and delivers to the Assignee, and the Assignee
hereby assumes from the Assignor, all of the Assignor's right, title and
interest in and to the [FAMILY FUNN GP INTEREST] [LFI INTEREST] [L.P. INTEREST]
[INDEBTEDNESS], to have and to hold the same for the Assignee, its successors
and assigns forever.
2. The Assignor hereby constitutes and appoints the
Assignee as its true and lawful attorney-in-fact with full power of
substitution and in its name and stead or in the name of the Assignee or
otherwise, by and on behalf and for the benefit of the Assignee to demand and
receive from time to time any and all of the rights and interests hereby sold,
transferred, assigned, conveyed and delivered, and to give receipts and
releases for and in respect of the same and any part thereof, and from time to
<PAGE> 36
time to institute and prosecute in the name of the Assignor or otherwise, for
the benefit of the Assignee, all proceedings at law, in equity or otherwise
which the Assignor may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to or arising from the rights and
interests hereby sold, transferred, assigned, conveyed and delivered, and for
the benefit of the Assignee to defend or compromise any and all actions, suits
or proceedings in respect of the [FAMILY FUNN GP INTEREST] [LFI INTEREST] [L.P.
INTEREST] [INDEBTEDNESS] assigned hereby and to do all such acts and things in
relation thereto as the Assignee shall deem desirable; the Assignor hereby
declaring that the appointment made and the powers hereby granted are coupled
with an interest and are and shall be irrevocable by the Assignor in any manner
or for any reason.
3. This Assignment may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
4. This Assignment shall be binding upon and enforceable
against and shall inure to the benefit of the Assignee and the Assignor and
their respective successors and assigns.
5. This Assignment shall be construed in accordance with
the laws of the State of Georgia without regard to the principles of conflict
of laws.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment as of the day and year first written above.
"ASSIGNOR"
----------------------------------------
By:
-------------------------------------
Name:
Title:
"ASSIGNEE"
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.2
LETTER AGREEMENT CONCERNING CLOSING
April 3, 1996
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202
Attention: L. Scott Demerau
Dear Scott:
Reference is made to the Purchase and Sale Agreement dated the
date hereof (the "Purchase Agreement") among Family Funn Entertainment, Inc.
("Family Funn GP"), Family Entertainment Funding, L.P. ("Family Entertainment
LP") and Mountasia Entertainment International, Inc. (the "Purchaser").
Family Funn GP, Family Entertainment LP and the Purchaser have
today entered into the Purchase Agreement pursuant to which Family Funn GP has
agreed to sell to the Purchaser its general partnership interest in National
Entertainment Funding, L.P. ("NEF"), and Family Entertainment LP has agreed to
sell to the Purchaser its limited partnership interest in NEF and indebtedness
owed to it by NEF in the original principal amount of $2,718,000. In
consideration therefor, the Purchaser will issue its 9.1% Subordinated
Convertible Debentures Due January 1, 1998 (the "Purchaser's 9.1% Debentures")
to Family Funn GP and Family Entertainment LP as provided in the Purchase
Agreement.
Notwithstanding the provisions of the Purchase Agreement which
contemplate that the closing of the purchase and sale of the general
partnership interest in NEF, the limited partnership interest in NEF and the
indebtedness from NEF shall occur simultaneously with the signing of the
Purchase Agreement, Family Funn GP, Family Entertainment LP and the Purchaser
wish to defer the closing under the Purchase Agreement until (i) the Purchaser
shall have obtained the consent of NationsBank, N.A. (South) to the
transactions contemplated thereby and (ii) Family Entertainment LP shall have
obtained the consent of a majority of its limited partners to the sale of its
limited partnership interest in NEF and the indebtedness owed to it by NEF.
Therefore, the actual sale of the general partnership interests in NEF, the
limited partnership interest in NEF and the indebtedness from NEF and the
issuance of the Purchaser's 9.1% Debentures in consideration therefor pursuant
to the terms of the Purchase Agreement (the "Closing") shall occur as soon as
possible and in any event no later than three (3) business days after (i)
NationsBank, N.A. (South) gives its consent to the
<PAGE> 2
transactions contemplated by the Purchase Agreement and (ii) a majority of the
limited partners of Family Entertainment LP give their consent to the sale by
Family Entertainment LP of its limited partnership interest in NEF and the
indebtedness from NEF.
Furthermore, notwithstanding the provisions of the Purchase
Agreement, the principal amount of the Purchaser's 9.1% Debentures to be issued
to Family Entertainment LP at the Closing shall be $4,858,333, and the
Purchaser shall pay the remaining $175,000 of the purchase price for the Family
Entertainment LP limited partnership interest in NEF in cash by wire transfer
to an account designated by Family Entertainment LP prior to the Closing.
Family Entertainment LP shall use such cash portion of the purchase price to
reimburse the Purchaser for certain expenses incurred by the Purchaser on
behalf of Family Entertainment LP.
Each of Family Funn GP, Family Entertainment LP and the
Purchaser shall be deemed to repeat its representations and warranties
contained in the Purchase Agreement as of the date of the Closing.
The Purchaser shall pay the fees, expenses and disbursements
of Morgan, Lewis & Bockius LLP, counsel to Family Funn GP and Family
Entertainment LP, as required by Section 10.6 of the Purchase Agreement, on the
date hereof and on the date of the Closing.
The Purchaser agrees that it will use its best efforts to
obtain the consent of NationsBank, N.A. (South) to the transactions
contemplated by the Purchase Agreement as soon as possible.
If you are in agreement with the foregoing, please so indicate
by signing in the space indicated below and returning a
2
<PAGE> 3
signed copy of this letter to Morgan, Lewis & Bockius LLP, counsel for Family
Funn GP and Family Entertainment LP.
Very truly yours,
FAMILY FUNN ENTERTAINMENT, INC.
By: /s/ James Curtis
-----------------------------------
Name: James Curtis
Title: President
FAMILY ENTERTAINMENT FUNDING L.P.
By: Family Funn Entertainment,
Inc., General Partner
By: /s/ James Curtis
-----------------------------------
Name: James Curtis
Title: President of Family Funn
Entertainment, Inc.
AGREED as of the date written above:
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
-------------------------------
Name: L. Scott Demerau
Title: President
3
<PAGE> 1
EXHIBIT 10.3
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
5895 WINDWARD PARKWAY, SUITE 220
ALPHARETTA, GEORGIA 30202
April 19, 1996
Family Funn Entertainment, Inc.
Family Entertainment Funding, L.P.
P.O. Box 10321, Pacific Centre
Suite 1688
609 Granville Street
Vancouver, B.C. V7Y 1G5
Dear James:
Reference is made to (i) the Purchase and Sale Agreement dated
April 3, 1996 (the "Purchase Agreement"), among Family Funn Entertainment, Inc.
("Family Funn GP"), Family Entertainment Funding, L.P. ("Family Entertainment
LP") and Mountasia Entertainment International, Inc. ("Mountasia"), and (ii)
the Letter Agreement Concerning Closing dated April 3, 1996 (the "Letter
Agreement"), among Family Funn GP, Family Entertainment LP and Mountasia.
Pursuant to the terms of the Letter Agreement, the closing of
the transactions contemplated by the Purchase Agreement has been delayed until
(i) Mountasia shall have obtained the consent of NationsBank, N.A. (South)
("NationsBank") to the transactions contemplated thereby and (ii) Family
Entertainment LP shall have obtained the consent of a majority of its limited
partners to the sale of its limited partnership interest in National
Entertainment Funding, L.P. ("NEF") and the indebtedness owed to it by NEF. A
majority of the limited partners of Family Entertainment LP have now given such
consent.
In the event NationsBank sells to a third party its loans to
Mountasia and/or NEF, such loans are repaid or NationsBank's consent to the
transactions contemplated by the Purchase Agreement is otherwise not required,
such consent shall no longer be a condition to the closing of the transactions
contemplated by the Purchase Agreement. In such event, the closing of the
transactions contemplated by the Purchase Agreement shall occur as soon as
possible and in any
<PAGE> 2
April 19, 1996
Page 2
event no later than three business days after any such sale, repayment or other
determination that NationsBank's consent is not required.
Very truly yours,
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
-----------------------------------
L. Scott Demerau
President
AGREED AND ACCEPTED as
of the date written above:
FAMILY FUNN ENTERTAINMENT, INC.
By: /s/ James Curtis
---------------------------------
James Curtis
President
FAMILY ENTERTAINMENT FUNDING, L.P.
By: Family Funn Entertainment, Inc.,
General Partner
By: /s/ James Curtis
---------------------------------
James Curtis
President
<PAGE> 1
EXHIBIT 10.4
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into this 3rd day of April, 1996, by and among those entities listed on Exhibit
A attached hereto by this reference incorporated herein (the "Shareholders"),
constituting the sole shareholders of Amusement Co., Inc., a Delaware
corporation ("ACI") and Amusement Co. Partners, Inc., a Delaware corporation
("ACPI"), Capital Trust Investments Limited, a British Virgin Islands
corporation (the "Noteholder"), the holder of a certain promissory note (the
"Note") from National Entertainment Funding, L.P., a Delaware limited
partnership (the "Partnership"), in the principal amount of Three Million
Dollars ($3,000,000), and Mountasia Entertainment International, Inc., a
Georgia corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, ACI is a general partner of the Partnership, and ACPI is a
limited partner of the Partnership;
WHEREAS, the sole asset of ACI is its general partner interest in the
Partnership (the "G.P. Interest") and the sole asset of ACPI is its limited
partner interest in the Partnership (the "L.P. Interest");
WHEREAS, Shareholders now own and desire to sell to Purchaser all of
the issued and outstanding shares of capital stock (the "Shares") of ACI and
ACPI and Purchaser desires to acquire same from Shareholders, subject to the
terms and conditions set forth below; and
WHEREAS, Noteholder now owns and desires to sell the Note to Purchaser
and Purchaser desires to acquire same from Noteholder, subject to the terms and
conditions set forth below,
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, each intending to be legally bound, do hereby covenant and
agree as follows:
1. PURCHASE AND SALE OF THE SHARES AND THE NOTE. On the terms
and conditions set forth herein, (i) Shareholders hereby sell, transfer,
assign, convey and deliver to Purchaser all of their right, title and interest
in and to the Shares and Purchaser hereby purchases and acquires from
Shareholders all of their right, title and interest in and to the Shares; and
(ii) Noteholder hereby sells, transfers, assigns, conveys and delivers to
Purchaser all of its right, title and interest in and to the Note and Purchaser
hereby purchases and acquires from Noteholder all of its right, title and
interest in and to the Note.
2. PURCHASE PRICE. In full consideration for the purchase of the
Shares, Purchaser is simultaneously herewith paying to Shareholders a total
purchase price (the "Stock Purchase Price") of TWO MILLION SEVEN HUNDRED FIFTY
FIVE THOUSAND FIVE HUNDRED
1
<PAGE> 2
FIFTY SIX DOLLARAS ($2,755,556) to be apportioned among the Shareholders as set
forth on Exhibit A attached hereto and by this reference incorporated herein.
In consideration for the purchase of the Note, Purchaser is simultaneously
herewith paying to Noteholder a total purchase price (the "Note Purchase
Price") of TWO MILLION EIGHT HUNDRED THOUSAND DOLLARS ($2,800,000).
3. PAYMENT OF PURCHASE PRICE. Purchaser is paying the Stock
Purchase Price and the Note Purchase Price (collectively, the "Purchase Price")
by delivering to Shareholders and Noteholder, in exchange for the Shares and
the Note, Purchaser's 9.1% Subordinated Convertible Debentures Due January 1,
1998 (individually, a "Debenture" and collectively, the "Debentures"), the form
of which is attached hereto as Exhibit B and by this reference incorporated
herein. The Debentures, duly issued in the names of Shareholders and the
Noteholder in the respective denominations set forth on Exhibit A, are
simultaneously herewith being delivered to Shareholders and Noteholder
(collectively, "Sellers"), in exchange for which certificates representing the
Shares, duly endorsed by Shareholders for transfer to Purchaser or Purchaser's
designee, are simultaneously herewith being delivered to Purchaser and the
original Note is simultaneously herewith being delivered to Purchaser,
accompanied by such instruments of transfer and assignment as Purchaser deems
reasonably necessary to vest good title to the Note in Purchaser. Purchaser
shall have no rights of set-off with respect to the Purchase Price for any
reason.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS OF ACPI.
Shareholders other than Capital Trust Management Limited (the "ACPI
Shareholders") jointly and severally hereby represent and warrant to Purchaser
that all of the following are true as of the date hereof, and that such
representations and warranties shall survive for a period of one year from the
date hereof:
4.1 DUE ORGANIZATION. ACPI is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted. Copies of the Articles of
Incorporation of ACPI (certified by the Secretary of State of the State of
Delaware) and Bylaws of ACPI (certified by the Secretary of ACPI), each as
amended, are attached hereto as Schedule 4.1. ACPI is not qualified to do
business in any other jurisdiction. The stock records and minute books of ACPI,
as heretofore made available to Purchaser, are correct and complete.
4.2 CAPITAL STOCK OF ACPI. The total authorized capital
stock of ACPI consists solely of 1,000 shares of voting common stock $0.10 par
value, of which 900 shares are issued and outstanding. All of the issued and
outstanding shares of the capital stock of ACPI are owned by the ACPI
Shareholders and have been duly authorized and validly issued, are fully paid
and nonassessable, and such shares were offered, issued, sold and delivered by
ACPI in compliance with all applicable state and federal laws concerning the
issuance of securities. Further, none of such shares were issued in violation
of the preemptive rights of any past or present stockholder. ACPI does not
have outstanding and has not agreed to issue any securities, including, but not
limited to, any stock, options, warrants, convertible securities, puts, calls
or other derivative securities.
2
<PAGE> 3
4.3 TRANSACTIONS IN CAPITAL STOCK. ACPI has not acquired any
treasury stock. No option, warrant, call, conversion right or commitment of
any kind exists which obligates ACPI to issue any of its authorized but
unissued capital stock. In addition, ACPI has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof.
4.4 SUBSIDIARIES. ACPI does not presently own, of record or
beneficially, or control, directly or indirectly, any capital stock or
securities convertible into capital stock or any other equity interest in any
corporation, association or business entity, other than the Partnership. ACPI
is not, directly or indirectly, a participant in any joint venture, partnership
or other noncorporate entity, other than the Partnership.
4.5 CONFORMITY WITH LAW. ACPI is not in material default
under any law or regulation or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality having jurisdiction over it, and there are no claims,
actions, suits or proceedings, pending or, to the knowledge of the ACPI
Shareholders, threatened, against or affecting ACPI, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
it and it has not received any notice of any claim, action, suit or proceeding,
whether pending or threatened.
4.6 TAXES. ACPI has timely filed all requisite federal and
other tax returns required to be filed for all fiscal periods ended on or
before the date hereof, and there are no examinations or audits in progress (or
notices of impending examinations or audits) or claims against it for federal
and other taxes (including penalties and interest) for any period(s) and it has
not received any notice of any claim, whether pending or threatened, for taxes.
There are no tax examinations of ACPI pending, and ACPI has not granted any
extensions of any statutory limitations. Purchaser acknowledges the only tax
returns filed by ACPI are for the 1994 fiscal year, that such returns were
prepared on the basis of information regarding the Partnership prepared by
Purchaser and provided by it to ACPI and that the ACPI Shareholders make no
representation or warranty regarding the accuracy or completeness of such
information. Purchaser further acknowledges that ACPI's tax returns for the
1995 fiscal year have not yet been prepared since information regarding the
Partnership needed to prepare such returns is not yet available, and Purchaser
agrees that it shall be responsible for preparing and filing ACPI's 1995 tax
returns and for paying any taxes due for such year that have not yet been paid,
or for causing ACPI to do so.
4.7 COMPLETENESS. The certified copies of the Articles of
Incorporation and Bylaws, both as amended to date, of ACPI, and the copies of
all instruments, agreements, licenses, permits, certificates or other documents
which are included on schedules attached hereto or delivered to Purchaser in
connection with the transactions contemplated hereby are complete and correct;
neither ACPI nor any other party thereto is in material default thereunder;
except as set forth in the schedules and documents attached to this Agreement,
the rights and benefits of ACPI thereunder will not be materially and adversely
affected by the transactions contemplated hereby; and the execution of this
Agreement and the performance of the obligations
3
<PAGE> 4
hereunder will not materially violate or result in a material breach or
constitute a default under any of the terms or provisions thereof. Subject to
Section 9.3, none of such instruments, agreements, contracts, licenses,
permits, certificates or other documents requires notice to, or the consent or
approval of, any governmental agency or other third party to any of the
transactions contemplated hereby to remain in full force and effect or give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit.
4.8 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. ACPI currently has
no bank accounts, and its has not granted any powers of attorney.
4.9 OWNERSHIP OF L.P. INTEREST. ACPI is the owner of the
L.P. Interest, free and clear of any liens, charges, or other encumbrances of
any nature whatsoever. The sole purpose and business of ACI is to hold the
L.P. Interest. Subject to Section 9.3, the making and performance of this
Agreement does not and will not constitute a default under or result in the
creation of any adverse claim, lien, charge or encumbrance upon or against the
L.P. Interest pursuant to any agreement or instrument to which ACPI or its
assets is or may be bound. ACPI has not engaged in any business other than to
serve as a limited partner of the Partnership. ACPI does not have any assets
other than the L.P. Interest, and it has not incurred any liabilities other
than those, if any, arising from its ownership of the L.P. Interest.
5. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER OF ACI. Capital
Trust Management Limited (the "ACI Shareholder") represents and warrants to
Purchaser that all of the following are true as of the date hereof and that
such representations and warranties shall survive for a period of one year from
the date hereof:
5.1 DUE ORGANIZATION. ACI is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted. Copies of the Articles of
Incorporation of ACI (certified by the Secretary of State of the State of
Delaware) and Bylaws of ACI (certified by the Secretary of ACI), each as
amended, are attached hereto as Schedule 5.1, and ACI is qualified to do
business in Florida. The stock records and minute books of ACI, as heretofore
made available to Purchaser, are correct and complete.
5.2 CAPITAL STOCK OF ACI. The total authorized capital
stock of ACI consists solely of 1,000 shares of voting common stock $0.10 par
value, of which 100 shares are issued and outstanding. All of the issued and
outstanding shares of the capital stock of ACI are owned by the ACI Shareholder
and have been duly authorized and validly issued, are fully paid and
nonassessable, and such shares were offered, issued, sold and delivered by ACI
in compliance with all applicable state and federal laws concerning the
issuance of securities. Further, none of such shares were issued in violation
of the preemptive rights of any past or present stockholder. ACI does not have
outstanding and has not agreed to issue any securities, including, but not
limited to, any stock, options, warrants, convertible securities, puts, calls
or other derivative securities.
4
<PAGE> 5
5.3 TRANSACTIONS IN CAPITAL STOCK. ACI has not acquired
any treasury stock. No option, warrant, call, conversion right or commitment
of any kind exists which obligates ACI to issue any of its authorized but
unissued capital stock. In addition, ACI has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof.
5.4 SUBSIDIARIES. ACI does not presently own, of record
or beneficially, or control, directly or indirectly, any capital stock or
securities convertible into capital stock or any other equity interest in any
corporation, association or business entity, other than the Partnership. ACI
is not, directly or indirectly, a participant in any joint venture, partnership
or other noncorporate entity, other than the Partnership.
5.5 CONFORMITY WITH LAW. ACI is not in material default
under any law or regulation or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality having jurisdiction over it, and there are no claims,
actions, suits or proceedings, pending or, to the knowledge of the ACI
Shareholder, threatened, against or affecting ACI, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
it and it has not received any notice of any claim, action, suit or proceeding,
whether pending or threatened.
5.6 TAXES. ACI has timely filed all requisite federal and
other tax returns required to be filed for all fiscal periods ended on or
before the date hereof, and there are no examinations or audits in progress (or
notices of impending examinations or audits) or claims against it for federal
and other taxes (including penalties and interest) for any period(s) and it has
not received any notice of any claim, whether pending or threatened, for taxes.
There are no tax examinations of ACI pending, and ACI has not granted any
extensions of any statutory limitations. Purchaser acknowledges that the only
tax returns filed by ACI are for the 1994 fiscal year, that such returns were
prepared on the basis of information regarding the Partnership prepared by
Purchaser and provided by it to ACI and that the ACI Shareholder makes no
representation or warranty regarding the accuracy or completeness of such
information. Purchaser further acknowledges that ACI's tax returns for the
1995 fiscal year have not yet been prepared since information regarding the
Partnership needed to prepare such returns is not yet available, and Purchaser
agrees that it shall be responsible for preparing and filing ACI's 1995 tax
returns and for paying any taxes due for such year that have not yet been paid,
or for causing ACI to do so.
5.7 COMPLETENESS. The certified copies of the Articles of
Incorporation and Bylaws, both as amended to date, of ACI, and the copies of
all instruments, agreements, licenses, permits, certificates or other documents
which are included on schedules attached hereto or delivered to Purchaser in
connection with the transactions contemplated hereby are complete and correct;
neither ACPI nor any other party thereto is in material default thereunder;
except as set forth in the schedules and documents attached to this Agreement,
the rights and benefits of ACI thereunder will not be materially and adversely
affected by the transactions contemplated hereby; and the execution of this
Agreement and the performance of the obligations hereunder will not materially
violate or result in a material breach or constitute a default under
5
<PAGE> 6
any of the terms or provisions thereof. Subject to Section 9.3, none of such
instruments, agreements, contracts, licenses, permits, certificates or other
documents requires notice to, or the consent or approval of, any governmental
agency or other third party to any of the transactions contemplated hereby to
remain in full force and effect or give rise to any right to termination,
cancellation or acceleration or loss of any right or benefit.
5.8 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. ACI currently has
no bank accounts, and it has not granted any powers of attorney.
5.9 OWNERSHIP OF G.P. INTEREST. ACI is the owner of the G.P.
Interest, free and clear of any liens, charges, or other encumbrances of any
nature whatsoever. The sole purpose and business of ACI is to hold the G.P.
Interest and serve as a general partner of the Partnership. Subject to Section
9.3, the making and performance of this Agreement does not and will not
constitute a default under or result in the creation of any adverse claim,
lien, charge or encumbrance upon or against the G.P. Interest pursuant to any
agreement or instrument to which ACI is a party or by which ACI or its assets
is or may be bound. ACI has not engaged in any business other than to serve as
a general partner of the Partnership. ACI does not have any assets other than
the G.P. Interest, and it has not incurred any liabilities other than those
arising from the G.P. Interest.
6. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS INDIVIDUALLY.
Each Shareholder, severally and not jointly, represents and warrants to
Purchaser as to itself only that the following is true as of the date hereof
and that such representations and warranties shall survive for a period of one
year from the date hereof.
6.1 AUTHORIZATION. Such Shareholder has full legal right,
power and authority to enter into this Agreement. This Agreement has been duly
authorized by such Shareholder. The exchange of such Shareholder's Shares for
Debentures, pursuant to the provisions of this Agreement, will transfer full
and complete ownership of and valid title in such Shares to Purchaser, free and
clear of all liens, encumbrances, pledges and claims of every kind. The Shares
indicated beside such Shareholder's name on Exhibit A are owned of record and
beneficially by it.
7. REPRESENTATIONS AND WARRANTIES OF NOTEHOLDER. Noteholder
hereby represents and warrants to Purchaser that all of the following are true
as of the date hereof, and that such representations and warranties shall
survive for a period of one year from the date hereof:
7.1 AUTHORIZATION. Noteholder has full legal right,
power and authority to enter into this Agreement; this Agreement has been duly
authorized by Noteholder; and the exchange of the Note for Debentures, pursuant
to the provisions of this Agreement, will transfer full and complete ownership
of and valid title in the Note to Purchaser, free and clear of all liens,
encumbrances, pledges and claims of every kind. A true and correct copy of the
Note is attached hereto as Schedule 7.1.
7.2 NO CONFLICTS. The execution, delivery and
performance of this Agreement, the consummation of the transactions herein
referred to or contemplated hereby and
6
<PAGE> 7
the fulfillment of the terms hereof and thereof will not conflict with, or
result in a default (or constitute a default but for any requirement of notice
or lapse of time or both) under any document, agreement or other instrument to
which Noteholder is a party, or result in the imposition of any lien, charge or
encumbrance on Noteholder's properties pursuant to (i) any law or regulation to
which Noteholder, or Noteholder's properties, is subject, or (ii) any judgment,
order or decree to which Noteholder is bound or any of Noteholder's properties
is subject, except that the consent of the Partnership is required for the
transfer of the Note to Purchaser.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to Sellers that all of the following representations
and warranties are true as of the date hereof and as of each date the
Debentures are converted into common stock pursuant to the terms of the
Debentures, and shall survive for a period of twelve months following the date
the Debentures are converted into common stock.
8.1 DUE ORGANIZATION. Purchaser is duly organized, validly
existing and in good standing under the laws of the State of Georgia and is
duly authorized, qualified and licensed under all applicable laws, regulations,
and ordinances of public authorities to carry on its respective businesses in
the places and in the manner as now conducted except for where the failure to
be so authorized, qualified or licensed would not have a material adverse
effect on its respective businesses. Copies of the Articles of Incorporation
(certified by the Secretary of State of the State of Georgia) and the Bylaws,
as amended, of Purchaser (certified by the Secretary of Purchaser) are attached
hereto as Schedule 8.1.
8.2 DEBENTURES. The Debentures delivered to Sellers
simultaneously herewith have been duly authorized and are valid and legally
issued instruments of Purchaser and are free from all liens, encumbrances,
pledges and claims of every kind. The Debentures have been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligation
of Purchaser, enforceable against it in accordance with their terms, except as
the same may be limited by applicable bankruptcy or other laws of general
application which affect the enforceability of creditors' rights. A copy of
the form of the Debenture is attached hereto as Exhibit B and by this reference
incorporated herein. The shares of Purchaser's common stock issuable upon
conversion of the Debentures will, when issued in accordance with the terms of
the Debentures, be duly authorized, validly and legally issued, fully paid and
nonassessable, not subject to any preemptive or similar rights, and free from
all liens, encumbrances, pledges and claims of every kind.
8.3 AUTHORIZATION. Purchaser has full legal right, power and
authority to enter into this Agreement. The execution and delivery of this
Agreement by the Purchaser and the performance by Purchaser of its obligations
hereunder has been duly authorized by Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms, except as the same may be limited by applicable bankruptcy or other laws
of general application which affect the enforceability of creditors' rights.
7
<PAGE> 8
8.4 NO CONFLICTS. The execution, delivery and performance of
this Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not:
(i) conflict with, or result in a breach or violation of the
Articles of Incorporation or Bylaws of Purchaser;
(ii) materially conflict with, or result in a material
default (or constitute a default but for any requirement of notice or
lapse of time or both) under, accelerate or permit the acceleration of
the performance required by the terms of, or result in the creation or
imposition of any lien, charge or encumbrance on any of Purchaser's
properties pursuant to (A) any document, agreement or other
instrument to which Purchaser is a party, (B) any law or regulation to
which Purchaser, or any of its property, is subject, or (C) any
judgment, order or decree to which Purchaser is bound or any of its
property is subject;
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization
of Purchaser; or
(iv) require the consent, waiver or approval of, or any
declaration or filing with, any person (whether or not a governmental
authority).
8.5 DISCLOSURE. Purchaser has provided each Seller with a
true and complete copy of its annual report on Form 10-K/A for its fiscal year
ended September 30, 1995 (the "1995 10-K") and its quarterly report on Form
10-Q for the quarter ended December 31, 1995 (the "10-Q"). The 1995 10-K and
10-Q do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances under which they were made. Since
December 31, 1995, there has been no material adverse change in, and there are
no facts which have a material adverse effect or in the future may reasonably
be expected to have a material adverse effect on, the Purchaser's business,
prospects, condition (financial or otherwise), affairs or operations which are
not disclosed in the 1995 10-K or the 10-Q.
8.6 ISSUANCE OF SHARES UPON CONVERSION. To the best of
Purchaser's knowledge, there is no reason Purchaser will be unable to issue
shares of its common stock upon conversion of the Debentures pursuant to the
terms thereof as set forth in Exhibit B.
8.7 INVESTMENT INTENT. Purchaser is acquiring the Shares and
the Note for its own account, for investment, and without the intention of
participating in a distribution thereof; provided, however, it is the intention
of Purchaser to consolidate the business operations of the Partnership with it
and to this extent Purchaser may cause to occur a merger or other business
combination between Purchaser and the Partnership to accomplish this purpose.
8.8 PAYMENT OF INTEREST. Purchaser currently has assets
legally available for, and is not subject to any restrictions with respect to,
the payment of interest on the Debentures in accordance with the terms of the
Debentures (without regard to Section 17 thereof). Purchaser has no reason to
expect that it will not have assets legally available for, or that it will
8
<PAGE> 9
be subject to restrictions with respect to, the payment of interest on the
Debentures during the time the Debentures will be outstanding.
8.9 NO DEFAULTS UNDER SENIOR INDEBTEDNESS. Purchaser is
not in default under any Senior Indebtedness (as defined in the Debentures),
and no conditions exist that would constitute a default thereunder but for any
requirement of notice or lapse of time or both.
9. ADDITIONAL COVENANTS AND ACKNOWLEDGEMENTS OF PURCHASER.
9.1 TRANSACTIONS WITH AFFILIATES. Purchaser agrees that so
long as any of the Debentures remain outstanding, all transactions between
Purchaser and any entity into which any or all of Purchaser's operations and/or
assets may be transferred or any transactions between Purchaser and any
affiliate of Purchaser (other than wholly-owned subsidiaries of Purchaser)
shall be approved by a majority of the independent directors of the Purchaser's
Board of Directors and will be on an arms-length basis and fair to Purchaser
and to such other entity or affiliate. For purposes of this provision, an
"affiliate" of Purchaser shall mean any officer, director or beneficial owner,
directly or indirectly, of more than five percent of the common stock of
Purchaser (and if such beneficial owner is a corporation, any person
controlling, controlled by, or under common control with such beneficial owner,
or any officer or director of such beneficial owner or of any corporation
occupying any such control relationship) or any other person which, directly or
indirectly, controls or is controlled by or is under common control with
Purchaser. For purposes of this provision, "control" with respect to any
person shall mean possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise. For
purposes of this Section 9.1, "independent director" shall mean each director
who is not an officer or employee of the Corporation or the "affiliate".
9.2 OPERATION OF THE PARTNERSHIP. Purchaser acknowledges to
Sellers that (i) Purchaser has managed the Partnership since its formation and,
therefore, has full knowledge of its assets, liabilities, business, prospects,
condition (financial or otherwise), affairs and operations, (ii) Purchaser
accepts all risks with respect thereto, and (iii) Sellers are making no
representations with respect thereto or otherwise regarding the Partnership.
Since Purchaser has full knowledge of the Partnership's assets, liabilities,
business, prospects, condition (financial or otherwise), affairs and
operations, it agrees that in the event the Partnership does not pay the Note
pursuant to the terms thereof, Purchaser will have no claim against the
Noteholder for such nonpayment.
9.3 PARTNERSHIP AND BANK CONSENTS. Purchaser is aware of
the existence and contents of the National Entertainment Funding, L.P.
Formation Agreement (the "Formation Agreement") and the Amended and Restated
Agreement of Limited Partnership of National Entertainment Funding, L.P. (the
"Partnership Agreement"), each dated as of June 30, 1994. Pursuant to the
Formation Agreement and the Partnership Agreement, the consent of the other
partners of the Partnership is required for the transactions contemplated
hereby. Purchaser has advised Sellers that it is entering into a transaction
with the other partners of the Partnership, and that in connection with such
other transaction, Purchaser will obtain the necessary consents from the other
partners and the Partnership to the transactions contemplated by this
Agreement.
9
<PAGE> 10
Purchaser has also advised Sellers that it is engaged in negotiations with
NationsBank, N.A. (South) ("NationsBank"), a lender to the Partnership, and
that Purchaser will obtain any necessary consents of NationsBank to the
transactions contemplated by this Agreement.
10. INDEMNIFICATION. Sellers and Purchaser each make the
following representations to the other:
10.1 GENERAL INDEMNIFICATION BY SHAREHOLDERS. Each Seller
covenants and agrees that it will severally and not jointly indemnify, defend,
protect and hold harmless Purchaser at all times from and after the date of
this Agreement for a period of twelve (12) months from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by Purchaser in excess
of Five Thousand Dollars ($5,000) in the aggregate as a result of or incident
to any breach of the representations and warranties of such Seller set forth
herein, on the schedules or certificates attached hereto or in any other
document delivered pursuant to this Agreement and any misrepresentations or
nonfulfillment of any agreement on the part of such Seller under this
Agreement.
10.2 INDEMNIFICATION BY PURCHASER. Purchaser covenants and
agrees that it will indemnify, defend, protect and hold harmless Sellers at all
times from and after the date of this Agreement until the expiration of twelve
months following the date the Debentures are converted into common stock from
and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by Sellers in excess of Five Thousand Dollars ($5,000) in the
aggregate as a result of or incident to any breach of the representations and
warranties set forth herein, on the schedules or certificates attached hereto
or in any other document delivered pursuant to this Agreement and any
misrepresentations or nonfulfillment of any agreement on the part of Purchaser
under this Agreement. Purchaser also covenants and agrees that it will
indemnify, defend, protect and hold harmless Sellers at all times from and
after the date of this Agreement from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expense of investigation) incurred by Sellers as a result of or incident to any
claim made by NationsBank under the Construction and Working Capital Loan
Agreement dated May 9, 1995, by and between the Partnership and NationsBank,
the Promissory Note issued by the Partnership to NationsBank pursuant to such
Loan Agreement or any other document, certificate or instrument delivered in
connection therewith.
10.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge
of any claim by a person not a party to this Agreement ("Third Person") or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being
made against any party obligated to provide indemnification pursuant to Section
10.1 or 10.2 hereof (hereinafter the "Indemnifying Party"), give the
Indemnifying Party written notice of such claim or the commencement of such
action or proceeding; provided, however, that the failure to give such notice
shall not affect the rights of any Indemnified Party or the obligations of any
Indemnifying Party hereunder except to the extent the Indemnifying Party has
10
<PAGE> 11
been prejudiced as a result thereof. Such notice shall state the nature and
the basis of such claim and a reasonable estimate of the amount thereof. The
Indemnifying Party shall have the right to defend and settle, at its own
expense and by its own counsel (which shall be reasonably acceptable to the
Indemnified Party) any such matter so long as the Indemnifying Party pursues
the same in good faith and diligently, provided that the Indemnifying Party
shall consult with and keep the Indemnified Party fully informed with respect
to the defense and any proposed settlement. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof; provided, however, that under no circumstances shall the Indemnifying
Party settle any Third Person claim without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records or information reasonably requested
by the Indemnifying Party that are in the Indemnified Party's possession or
control. Notwithstanding the foregoing, the Indemnified Party shall have the
right to participate in any matter through counsel of its own choosing at its
own expense (unless there is a conflict of interest that prevents counsel for
the Indemnifying Party from representing Indemnified Party, in which case the
Indemnifying Party will reimburse the Indemnified Party for the expenses of its
counsel); provided that the Indemnifying Party's counsel shall always be lead
counsel and shall determine all litigation and settlement steps, strategy and
the like (unless there is a conflict of interest that prevents counsel for the
Indemnifying Party from representing the Indemnified Party, in which case
counsel for the Indemnified Party shall determine all litigation and settlement
steps, strategy and the like with respect to the Indemnified Party). After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except to the extent such participation is requested by the
Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses, out-of-pocket
expenses and allocable share of employee compensation incurred in connection
with such participation for any employee whose participation is so requested.
If the Indemnifying Party desires to accept a final and complete settlement of
any such Third Person claim which requires the payment of money only and
includes as a condition thereof a complete release of the Indemnified Party,
and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying Party
for any additional costs of defense which it subsequently incurs with respect
to such claim. If the Indemnifying Party does not undertake to defend such
matter to which the Indemnified Party is entitled to indemnification hereunder,
or fails diligently to pursue such defense, the Indemnified Party may undertake
such defense through counsel of its choice, at the cost and expense of the
Indemnifying Party, and the Indemnified Party may settle such matter, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount paid in
such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith, provided, however, that under no
circumstances shall the Indemnified Party settle any Third Person claim without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.
11
<PAGE> 12
11. FEDERAL SECURITIES ACT COMPLIANCE AND RESTRICTIONS ON
TRANSFER.
11.1 REPRESENTATIONS.Each Seller acknowledges that none of
the Debentures to be delivered to it pursuant to this Agreement will, at the
time of delivery, be registered under the Securities Act of 1933, as amended
(the "Act"). Each Seller hereby represents and warrants that it is acquiring
the Debentures for investment, and not with a view toward, or for resale in
connection with, a distribution of such Debentures. Each Seller acknowledges
that the Debentures may be sold, pledged, hypothecated, disposed of, or
otherwise transferred or distributed only (i) pursuant to registration of such
Debentures under the Act, or (ii) pursuant to an exemption from the
registration requirements of the Act, and in the case of exemption, only if
such Seller delivers to Purchaser a legal opinion, in form and substance
reasonably satisfactory to Purchaser and Purchaser's legal counsel, stating
that an exemption from the registration requirements of the Act is available.
The Debentures shall bear a legend setting forth the restrictions on transfer
set forth in this Section 11.1.
11.2 SOPHISTICATION OF SHAREHOLDERS. Each Seller hereby
makes the following representations and warranties to and for the benefit of
Purchaser:
(i) such Seller has been provided with or has obtained a copy
of the 1995 10-K;
(ii) such Seller has had adequate opportunity to ask
questions of and receive answers from the officers of Purchaser
concerning any and all matters pertaining to the transactions referred
to in the 1995 10-K which it deemed necessary or appropriate;
(iii) such Seller has in fact asked of Purchaser's officers
any and all questions of the nature described in Section 11.2(ii)
above which it desired to ask, and all such questions have been
answered to the satisfaction of such Seller;
(iv) such Seller is the true party in interest and is not
acquiring any of the Debentures for the benefit of any other person or
entity;
(v) such Seller is acquiring the Debentures for such Seller's
own account for investment, and not with a view to the resale,
redistribution, subdivision or fractionalization of such Debentures;
(vi) such Seller has such knowledge and experience in
financial and business matters and investments in general that it is
capable of evaluating the merits and risks of the ownership of the
Debentures;
(vii) such Seller acknowledges and understands that ownership
of the Debentures involves a high degree of risk, including the
possibility of a total loss of the investment in the Debentures; and
(viii) Purchaser has provided to such Seller, or has offered
to provide to such Seller, copies of all reports, proxy statements,
and other information which Purchaser files with the Securities and
Exchange Commission.
12
<PAGE> 13
12. GENERAL.
12.1 COOPERATION. Sellers and Purchaser shall each deliver
or cause to be delivered to the other on the date hereof and at such other
times and places as shall be reasonably agreed to, such additional instruments
as the other may reasonably request for the purpose of carrying out this
Agreement. Shareholders will cooperate and use their best efforts to have the
present officers, directors and employees of ACI and ACPI cooperate with
Purchaser on and after the date hereof in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to
all periods prior to the date hereof.
12.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights
of the parties hereunder may not be assigned (except by operation of law) and
shall be binding upon and shall inure to the benefit of the parties hereto, and
their successors and permitted assigns.
12.3 ENTIRE AGREEMENT. This Agreement (including the
schedules and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding between Sellers and
Purchaser and supersede any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement, upon execution, constitutes a
valid and binding agreement of the parties hereto enforceable in accordance
with its terms and may be modified or amended only by a written instrument
executed by Sellers and Purchaser acting through their respective officers,
duly authorized by their respective Boards of Directors or other governing body
(if applicable).
12.4 COUNTERPARTS. This Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed
an original and all of which together shall constitute but one and the same
instrument.
12.5 BROKERS AND AGENTS. Each party represents and warrants
to the other that it will be solely responsible for any fee or compensation to
any broker or agent used by it in connection with this transaction and agrees
to indemnify the other against all loss, cost, damages or expense arising out
of claims for fees or commission of brokers employed or alleged to have been
employed by such indemnifying party.
12.6 EXPENSES. Whether or not the transactions herein
contemplated shall be consummated, Purchaser will pay the fees, expenses and
disbursements of Purchaser and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments thereto. Whether or not the transactions herein contemplated
shall be consummated, Purchaser will also pay the fees, expenses and
disbursements of Sellers and their agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments hereto and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed by Sellers under
this Agreement.
12.7 NOTICES. All notices of communication required or
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed
13
<PAGE> 14
to the party to be notified, postage prepaid and registered or certified with
return receipt requested, or by delivering the same in person to an officer or
agent of such party, or by recognized overnight courier service, fees prepaid.
(a) If to Purchaser, addressed to it at:
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202
Attention: L. Scott Demerau
With a copy to:
Nelson Mullins Riley & Scarborough, L.L.C.
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
Attention: Steven A. Cunningham, Esq.
(b) If to Shareholders or Noteholder, addressed to them
in care of:
Capital Trust Developments Limited
c/o Kleinwort Benson (Guernsey) Limited
P.O. Box 44 Westbourne
The Grange
St. Peter Port
Guernsey
Channel Islands
With a copy to:
CT Capital International, Inc.
575 Fifth Avenue
New York, New York 10017
Attention: John P. Oswald
and
Morgan, Lewis & Bockius, L.L.P.
101 Park Avenue
New York, New York 10178
Attention: Charles E. Engros, Esq.
12.8 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws.
14
<PAGE> 15
12.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties made
herein or in writing delivered pursuant to the provisions of this Agreement
shall survive the consummation of the transactions contemplated hereby and any
examination on behalf of the parties.
12.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach
or default occurring before or after that waiver.
12.11 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PURCHASER"
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
ATTEST:
/s/ Barbara Jean Vandersaar
- ------------------------------- By: /s/ L. Scott Demerau
------------------------------
Its: President
------------------------------
[CORPORATE SEAL]
15
<PAGE> 16
"SHAREHOLDERS"
CAPITAL TRUST MANAGEMENT LIMITED
OMAR S. BAHATEQ
CLOVER HOLDINGS LTD.
AL HUDA HOLDINGS LTD.
DR. ANIS F. KASSIM
SALEH M. AL-HAJAJ
ABDULLAH AL ALI AL-MUSIM
ALRAJA ESTABLISHMENT
TAREQ BIN SALEH
SARAH INVESTMENTS
SHAKTI INVESTMENT HOLDINGS LTD.
TAMANCA ESTABLISHMENT
CAPITAL TRUST S.A.
By: /s/ John P. Oswald
---------------------------
John P. Oswald
Attorney-in-Fact
"NOTEHOLDER"
CAPITAL TRUST INVESTMENTS LIMITED
By: /s/ John P. Oswald
---------------------------
John P. Oswald
Attorney-in-Fact
16
<PAGE> 17
EXHIBIT A
SHAREHOLDER OF AMUSEMENT CO., INC.
<TABLE>
<CAPTION>
Principal
No. of Shares Purchase Amount of
Name Being Sold Price Debentures
- ---- ------------- -------- ----------
<S> <C> <C> <C>
Capital Trust 100 $100 $100
Management Limited
</TABLE>
SHAREHOLDERS OF AMUSEMENT CO. PARTNERS, INC.
<TABLE>
<CAPTION>
Principal
No. of Shares Purchase Amount of
Name Being Sold Price Debentures
- ---- ------------- -------- ----------
<S> <C> <C> <C>
Omar S. Bahateq 45 $137,778 $137,778
Clover Holdings Ltd. 45 $137,778 $137,778
Al Huda Holdings 286.2 $876,267 $876,267
Ltd.
Dr. Anis F. Kassim 27 $ 82,667 $ 82,667
Saleh M. Al-Hajaj 90 $275,555 $275,555
Abdullah Al Ali 45 $137,778 $137,778
Al-Musim
Alraja Establishment 45 $137,778 $137,778
Tareq Bin Saleh 45 $137,778 $137,778
Sarah Investments 90 $275,555 $275,555
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
Principal
No. of Shares Purchase Amount of
Name Being Sold Price Debentures
- ---- ------------- -------- ----------
<S> <C> <C> <C>
Shakti Investment 18 $ 55,111 $ 55,111
Holdings Ltd.
Tamanca 45 $ 137,778 $ 137,778
Capital Trust S.A. 118.8 $ 363,733 $ 363,733
----- ---------- ----------
Total 900 $2,755,556 $2,755,556
</TABLE>
NOTEHOLDER
<TABLE>
<CAPTION>
Principal Principal
Amount of Purchase Amount of
Name Note Price Debentures
- ---- --------- ---------- ----------
<S> <C> <C> <C>
Capital Trust $3,000,000 $2,800,000 $2,800,000
Investments Limited
</TABLE>
<PAGE> 19
EXHIBIT B
<PAGE> 20
NEITHER THIS DEBENTURE NOR THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THIS DEBENTURE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE, AND NEITHER MAY BE SOLD WITHOUT
REGISTRATION THEREOF OR AN EXEMPTION THEREFROM.
9.1% SUBORDINATED CONVERTIBLE DEBENTURE DUE JANUARY 1, 1998
________________, 1996 $____________________
1. FOR VALUE RECEIVED, the undersigned, MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC., a corporation duly organized under the laws of the State of
Georgia (herein called the "Maker") promises to pay to _____________________ or
assigns (herein called the "Payee") the sum of____________________________ AND
NO/100 DOLLARS ($_________________), together with interest on the principal
hereof from time to time outstanding from the date of advancement until
maturity, at the per annum rate hereinafter stated (computed on the basis of a
year of 360 days and paid for the actual number of days elapsed), said principal
and interest being payable in lawful money of the United States of America by
wire transfer pursuant to the instructions provided to the Maker by the Payee.
2. Purchase and Sale Agreement. This Debenture is one of the
debentures being issued pursuant, and is subject, to the terms of that certain
Purchase and Sale Agreement dated as of April 3, 1996 by and among Maker and
Payee, among others (the "Purchase Agreement"). Reference is made to the
Purchase Agreement for a description of the respective rights and limitations of
rights, duties and obligations of the Payee and the Maker and the provisions of
the Purchase Agreement are hereby incorporated into this Debenture by reference
with the full effect of such provisions being stated herein. The Maker will
provide a copy of the Purchase Agreement to the Payee upon request to the Maker
at 5895 Windward Parkway, Suite 220, Alpharetta, Georgia 30202-4128, telephone
number (770) 442-6640. Capitalized terms used in this Debenture and not defined
herein shall have the meanings set forth in the Purchase Agreement.
3. Interest-Rate and Interest Payment. (a) From and after the
date hereof through maturity, the unpaid principal balance hereof shall bear
interest from January 1, 1996 at a rate of nine and one-tenth percent (9.1%) per
annum. Interest on said principal is due and payable quarterly in advance on the
8th of each of January, April, July and October, commencing January 8, 1996;
provided that the interest payment for the first quarter this Debenture is
outstanding shall be paid simultaneously with its issuance.
<PAGE> 21
(b) No dividend shall be declared or paid or any other distribution
declared or made with respect to any class of stock of the Maker, nor shall any
sums be set aside for or applied to the purchase or redemption of any shares of
any class of stock of the Maker, unless and until all interest payable upon this
Debenture and all other debentures issued pursuant to the Purchase Agreement
(collectively, the "Debentures") have been fully paid.
(c) Any partial interest payment with respect to the Debentures shall
be made pro rata to all holders of the Debentures in proportion to the full
amount of interest to which they would otherwise be entitled.
(d) If the Maker is required to make any withholding or deduction from
any interest payment required hereunder to the Payee for or in respect of any
present or future taxes, levies, imposts, duties, charges or fees of any nature
imposed by the United States (or any political subdivision thereof or therein),
(i) the Maker shall make such withholding or deduction, pay such taxes or other
fees and provide the Payee with proof of such payment and (ii) the amount due to
the Payee from the Maker with respect to such interest payment shall be
increased to the extent necessary to ensure that after making such withholding
or deduction, and any withholdings or deductions required to be made in respect
of any such increase, the Payee shall receive an amount equal to the amount
which the Payee would have received had no such withholding or deduction been
required to be made.
4. Past Due or Default Rate. All past due principal and interest of
this Debenture, whether due as the result of acceleration of maturity or
otherwise, shall bear interest from the due date at a rate equal to twelve
percent (12%). In addition, upon the occurrence and during the continuance of
any Default (as defined in Section 12), the unpaid principal balance and all due
but unpaid interest thereon shall bear interest at a rate of twelve percent
(12%) per annum.
5. Term and Principal Payments. The principal of this Debenture is
due and payable in full together with all due but unpaid interest thereon
through the payment date on January 1, 1998 as such date may be extended as
hereinafter set forth (the "Maturity Date").
6. Prepayment. This Debenture is not subject to prepayment without
the consent of the Payee.
7. Conversion.
(a) Conversion Generally. This Debenture shall be convertible into
shares of Maker's Common Stock at the option of Payee, at the option of Maker or
automatically, as provided in this Section 7. This Debenture shall be
convertible into the number of fully paid and nonassessable shares of Maker's
Common Stock obtained by dividing the aggregate principal balance of Debentures
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<PAGE> 22
to be converted plus any due and unpaid interest thereon by the Conversion Price
specified in the provision of this Section 7 pursuant to which the Debenture is
being converted. All shares of Maker's Common Stock and any other securities
issuable upon conversion of the Debentures pursuant to this Section 7 shall be
registered upon issuance under the Securities Act of 1933, as amended (the
"Securities Act").
(b) Reorganization Prior to September 30, 1996.
(1) Conversion at the Option of Payee. If, prior to September
30, 1996, Maker has completed a corporate restructuring whereby it reorganizes
itself by spinning off any or all of its operations and/or assets to its
shareholders as a separate public company or by creating a new class of
"tracking" stock of Maker, the value of which is tied specifically to the
performance of a portion of Maker's operations and/or assets (a
"Reorganization"), Payee shall have the right to convert all or a portion of
this Debenture into fully paid, nonassessable, registered shares of Common Stock
of Maker (which, for this purpose, shall mean the continuing entity and not an
entity which is spun off in the Reorganization) any time after September 30,
1996, at a Conversion Price equal to the closing bid price of a share of Maker's
Common Stock on the day prior to the day upon which the holder provides notice
that it wishes to convert its Debenture into shares of Maker's Common Stock.
(2) Conversion at the Option of Maker. If Maker has completed
a Reorganization prior to September 30, 1996, Maker shall have the option to
require the conversion of this Debenture into fully paid, nonassessable,
registered shares of Common Stock of Maker (which, for this purpose, shall mean
the continuing entity and not an entity which is spun off in the Reorganization)
for a period of time beginning on the thirtieth trading day after the date the
Reorganization is completed and ending 90 days later, upon no less than five
days written notice from Maker to Payee; provided, however, that upon the
occurrence and during the continuance of a Default, Maker shall not be entitled
to require the conversion of this Debenture. The Conversion Price for any
conversion pursuant to this Section 7(b) (2) shall be an amount equal to the
average of the closing bid prices of a share of Maker's Common Stock for the
thirty (30) trading days prior to the date of notice of such conversion.
(3) Automatic Conversion. Notwithstanding the foregoing, if
Maker has completed a Reorganization prior to September 30, 1996, any principal
amount of this Debenture that has not been converted prior to January 1, 1998
will be automatically converted into fully paid, nonassessable, registered
shares of Maker's Common Stock on January 1, 1998, at a Conversion Price equal
to the amount which is the lower of (i) the average of the closing bid prices of
a share of Maker's Common Stock for the thirty (30) trading days prior to
January 1, 1998, and (ii) $5.23.
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<PAGE> 23
(c) No Reorganization.
(1) Conversion at the Option of Payee. If Maker has not
completed a Reorganization, Payee shall have the right to convert all or a
portion of this Debenture into fully paid, nonassessable, registered shares of
Maker's Common Stock at any time after September 30, 1996, at a Conversion
Price equal to the amount which is the lower of (i) the average of the closing
bid prices for a share of Maker's Common Stock for the thirty (30) trading
days prior to the date of notice of such conversion and (ii) $5.23.
(2) Automatic Conversion. If Maker has not completed a
Reorganization, any principal amount of this Debenture that has not been
converted prior to January 1, 1998 will be automatically converted into fully
paid, nonassessable, registered shares of Maker's Common Stock on January 1,
1998, at a Conversion Price equal to the amount which is the lower of (i) the
average of the closing bid prices for a share of Maker's Common Stock for the
thirty (30) trading days prior to January 1, 1998, and (ii) $5.23.
(d) Reorganization After September 30, 1996. If Maker has not
completed a Reorganization prior to September 30, 1996, but has completed a
Reorganization prior to such time as all of the principal amount of this
Debenture has been converted, then, any principal amount of this Debenture
converted at any time after the date such Reorganization is completed shall be
converted into Units (as hereinafter defined). Payee shall have the right to
convert all or a portion of this Debenture into Units at any time on or after
the date the Reorganization is completed. Any principal amount of this Debenture
that has not been converted prior to January 1, 1998 will be automatically
converted into Units on January 1, 1998. The Units to be issued as a result of
conversion pursuant to this Section 7(d) shall consist of (i) one fully paid,
nonassessable, registered share of Maker's Common Stock (adjusted for any stock
split or stock dividend or similar event after the date of the Reorganization)
and (ii) the number (adjusted for any stock split or stock dividend or similar
event after the date of the Reorganization) of newly issued, fully paid,
nonassessable, registered shares of common stock or other securities of the
entity or entities which is/are spun off or of the new class of "tracking" stock
of Maker described in Section 7(b) (1) to which each share of common stock of
Maker was entitled as a result of the Reorganization. The Conversion Price for
any conversion into Units pursuant to this Section 7(d) shall be an amount equal
to the lower of (i) the average of the aggregate of the closing bid prices for a
share (or other unit) of each of the individual securities comprising a Unit
(measured by reference to the number of shares (or other units) of each such
security within the Unit) for the thirty (30) trading days prior to the required
payment date and (ii) $5.23.
(e) Merger, Sale of Assets or "Going Private" Transaction.
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<PAGE> 24
(1) (A) Immediately prior to the occurrence of (i) a
consolidation or merger of Maker with or into any other corporation or
corporations, or (ii) a sale, conveyance or other disposition of all or
substantially all of the assets of Maker, or (iii) a transaction or series of
related transactions in which any person or any persons acting together which
would constitute a "group" for purposes of Section 13 (d) of the Exchange Act
acquires more than 25% of the voting power of Maker, or (iv) the termination of
registration of Maker's securities under Section 12(g) of the Exchange Act or
any other event which has the effect of Maker ceasing to file reports as
required by Section 13 (a) of the Exchange Act, or the delisting of Maker's
securities from the Nasdaq Stock Exchange, in either case as a result of any
event other than a transaction described in any of clauses (i), (ii), (iii), or
(v) the resignation or removal of L. Scott Demerau from the offices of Chief
Executive Officer and President of Maker for any reason (including death) (any
of such events described in clauses (i) (ii), (iii) (iv) or (v), a "Change of
Control Transaction"), any principal amount of this Debenture that has not
otherwise been converted pursuant to Section 7 shall be immediately and
automatically converted into fully paid, nonassessable, registered shares of
Maker's Common Stock (except as provided in Section 7 (e) (2)) at a Conversion
Price equal to the amount which is the lower of (x) $5.23 and (y) (1) the per
share merger consideration, purchase, exchange or conversion price for Maker's
Common Stock in a Change of Control Transaction described in clauses (i) or
(iii), (2) the aggregate purchase price (which shall include, without
limitation, the amount of any liabilities assumed by the purchaser, the present
value of any deferred consideration and the present value of any contingent
consideration as agreed between Maker and Payee or as determined by an
independent "Big Six" accounting firm chosen jointly by Maker and Payee) for a
Change of Control Transaction described in clause (ii) divided by the number of
shares of Maker's Common Stock outstanding at the time of such Change of Control
Transaction or (3) the average of the closing bid prices of a share of Maker's
Common Stock for the thirty (30) trading days prior to the effective date of a
Change of Control Transaction described in clauses (iv) or (v).
(B) Maker or the person acquiring control of Maker
pursuant to the Change of Control Transaction shall be required to purchase the
shares of Maker's Common Stock issued upon conversion of this Debenture from
Payee at the closing of the Change of Control Transaction, or on the effective
date thereof if there is no closing, for a cash amount per share equal to (x)
the per share merger consideration, purchase, exchange or conversion price for
Maker's Common Stock in a Change of Control Transaction described in clauses (i)
or (iii) of the preceding paragraph (A), (y) the aggregate purchase price (which
shall include, without limitation, the amount of any liabilities assumed by the
purchaser, the present value of any deferred consideration and the present value
of any contingent consideration as agreed between Maker and Payee or as
determined by an independent "Big Six" accounting firm chosen jointly by Maker
and Payee) for a Change of Control Transaction
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<PAGE> 25
described in clause (ii) of the preceding paragraph (A) divided by the number of
shares of Maker's Common Stock outstanding at the time of such Change of Control
Transaction or (z) the average of the closing bid prices of a share of Maker's
Common Stock for the thirty (30) trading days prior to the effective date of a
Change of Control Transaction described in clauses (iv) or (v) of the preceding
paragraph (A). If such cash purchase price is not paid in full when due, the
unpaid portion thereof shall bear interest at an annual rate of 14% from the due
date until such amount is paid in full. Any partial payment shall be made pro
rata to holders of the Debentures in proportion to the full amount to which they
would otherwise be entitled. Until such purchase price has been paid in full,
Maker and any other entity responsible for the payment thereof shall not declare
or pay any dividend or any other distribution or pay or set aside any sums for
or apply any sums to the purchase or redemption of any shares of its capital
stock.
(C) This paragraph (e) shall not apply to a Reorganization.
(2) If Maker has not completed a Reorganization prior to
September 30, 1996, but has completed a Reorganization prior to the occurrence
of a Change of Control Transaction with respect to either entity whose
securities comprise the Units, any principal amount of this Debenture that has
not otherwise been converted pursuant to Section 7 shall be immediately and
automatically converted into Units immediately prior to the occurrence of a
Change of Control Transaction involving either of the entities whose securities
comprise the Units. In such event, the Conversion Price shall be an amount equal
to the lower of
(i) $5.23, and
(ii) the sum of
(a) the average of the aggregate of the closing bid
prices for a share (or other unit) of each of the
individual securities included in a Unit of the entity
that is not involved in the Change of Control
Transaction (measured by reference to the number of
shares (or other units) of such security within the
Unit) for the thirty trading days prior to the effective
date of the Change of Control Transaction with respect
to the other entity and
(b) the applicable amount specified in clause
(y) of Section 7(e)(1)(A), mutatis mutandis, for
each of the individual securities included in the
Unit of the entity that is involved in the Change of
Control Transaction (measured by reference to the number
of shares (or other units) of such security within the
Unit).
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<PAGE> 26
At the completion of the Change of Control Transaction, if this Debenture has
been converted in the Change of Control Transaction pursuant to this Section
7(e) (2), Payee shall sell and receive cash for the securities issuable upon
conversion which were subject to the Change of Control Transaction in accordance
with the provisions of Section 7(e) (1) (B), mutatis mutandis, and it shall
thereafter continue to hold the securities issuable upon conversion of the
entity not involved in the Change of Control Transaction.
(f) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. In lieu of any fractional
share to which the holder would otherwise be entitled, Maker shall pay cash to
such holder in an amount equal to such fraction multiplied by the applicable
Conversion Price. In order to convert this Debenture into full shares of Common
Stock, the holder shall surrender this Debenture, duly endorsed, to the office
of Maker or of any transfer agent for this Debenture, and shall give written
notice to Maker at such office that he elects to convert the same, the principal
amount of this Debenture to be so converted and a calculation of the Conversion
Price; provided, however, that Maker shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such conversion
until either this Debenture is delivered to Maker or its transfer agent as
provided above, or the holder notifies Maker or its transfer agent that such
Debenture has been lost, stolen or destroyed and executes an agreement
reasonably satisfactory to Maker to indemnify Maker from any loss incurred by it
in connection with such Debenture or conversion occurs automatically or at the
option of Maker pursuant to the provisions of Section 7.
Maker shall issue and deliver within three (3) business days after
delivery to Maker of this Debenture, or after such agreement and
indemnification, to Payee at the address of Payee specified in the notice of
conversion, a certificate or certificates for the number of shares of Common
Stock to which Payee shall be entitled as aforesaid. The date on which notice of
conversion is given shall be deemed to be the date set forth in such notice of
conversion provided that the original Debenture to be converted is received by
the transfer agent or Maker within five (5) business days thereafter and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date. If the original Debenture
to be converted is not received by the transfer agent or Maker within five
business days after the date on which notice of conversion is given, the notice
of conversion shall become null and void.
If Payee exercises its right to convert part but not all of this
Debenture, in addition to the shares of Common Stock (or other securities, if
applicable) issuable upon conversion and cash for any fractional shares, Maker
will also deliver to such holder a new Debenture, of like tenor, for the
principal amount of this Debenture not being converted.
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<PAGE> 27
(g) Reservation of Stock Issuable Upon Conversion Maker shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of this
Debenture, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all then outstanding Debentures
being issued pursuant to the Purchase Agreement; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding Debentures issued pursuant to the
Purchase Agreement, Maker will promptly take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
The provisions of this Section 7(g) shall also apply, mutatis mutandis,
to any securities issuable by the Company or any other entity as part of any
Unit issued pursuant to Section 7(d).
8. Repayment. If upon conversion of this Debenture, Maker (or any
other entity which is required to issue securities upon conversion of this
Debenture under Section 7(d)) fails to issue shares of its Common Stock or
other securities (if required under Section 7(d)) that have been registered
under the Securities Act as required under Section 7, Payee shall have the
right, upon written notice to Maker, to rescind the conversion of this Debenture
and require repayment hereunder in cash as provided in this Section 8. The
aggregate cash repayment amount for this Debenture under this Section 8 shall be
an amount equal to the higher of (i) the current market value on the date of the
notice of redemption of the securities that would have been issued upon
conversion of this Debenture pursuant to Section 7 had Maker and any other
applicable entity issued securities registered under the Securities Act as
required by Section 7, or (ii) the outstanding principal amount of this
Debenture plus all due but unpaid interest hereon, or (iii) the relevant
aggregate purchase price specified in Section 7(e)(1)(B) if this Debenture was
converted in connection with a Change of Control Transaction pursuant to Section
7(e).
The cash repayment amount shall be payable by Maker to the holders of
the Debentures requesting repayment in cash by wire transfer to such account as
specified by such holder on the fifth day after Maker's receipt of notice from
such holder of its request for repayment in cash. In the event Maker is unable
or shall fail to pay the repayment amount in cash on the date due, Maker shall
repay on such date the principal amount of this Debenture which it is able to
repay, pro rata among all holders of the Debentures issued pursuant to the
Purchase Agreement that have then given notice of repayment in cash in
proportion to the full amounts to which they would otherwise be entitled if all
Debentures required to be repaid were repaid, and shall pay the remainder of the
repayment amount as soon as Maker is able to do so. Any unpaid portion of the
repayment amount shall bear interest at an annual rate of 14% from the due date
until such amount is paid in full. For so long as any repayment amount with
respect to this Debenture
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<PAGE> 28
for which repayment in cash has been requested has not been fully paid, Maker
shall not declare or pay any dividend or any other distribution or pay or set
aside any sums for or apply any sums to the purchase or redemption of any shares
of capital stock of Maker.
9. Registration.
9.1 Maker hereby agrees at its sole cost and expense (excluding
any discounts and commissions, if applicable) to file, and use its best efforts
to cause to become effective within 180 days following the date hereof (the
"Registration Date") and to keep effective and current under the Securities Act
a registration statement or registration statements (each a "Registration
Statement") covering the maximum number of shares of Common Stock of the Maker
issuable upon conversion of this Debenture (the "Registrable Shares"). Maker
shall also use its best efforts to keep any such Registration Statements, and
the accompanying prospectuses, effective and current under the Act at its
expense for a period until the Payee is able to sell all of its Registrable
Shares (the "Registration Period").
9.2 Any Registration Statement referred to in Section 9 hereof
shall be prepared and processed in accordance with the following terms and
conditions:
(a) Payee will cooperate in furnishing promptly to
Maker in writing any information requested by Maker in connection with the
preparation, filing and processing of such Registration Statement and agrees to
comply with all requirements of the Securities Act or other laws applicable to
it in connection with the offer, sale, underwriting and distribution of its
respective Registrable Shares.
(b) Maker will furnish to the Payee such number of
prospectuses or other documents incident to such registration as may from time
to time be reasonably requested, and cause its Registrable Shares to be
qualified under the blue sky laws of those states reasonably requested by the
Payee.
(c) Maker will indemnify the Payee (and any officer,
director or controlling person of the Payee) and any underwriters acting on
behalf of the Payee against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) to which they may become subject
under the Securities Act or otherwise, arising out of or based upon any untrue
or alleged untrue statement of any material facts contained in any Registration
Statement filed pursuant hereto, or any document relating thereto, including all
amendments and supplements, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein contained not misleading, and will
reimburse the Payee (or such other aforementioned parties) or such underwriters
for any legal and all other expenses reasonably incurred in connection with
investigating or defending
9
<PAGE> 29
any such claim, loss, damage, liability or action; provided, however, that Maker
will not be liable where the untrue or alleged untrue statement or omission or
alleged omission is based upon information furnished in writing to Maker by the
Payee expressly for use therein, or solely as a result of the Payee's failure to
furnish to Maker information duly requested in writing by counsel for Maker
specifically for use therein. This indemnity agreement shall be in addition to
any other liability Maker may have. The indemnity agreement of Maker contained
in this paragraph (c) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery and payment for the Registrable Shares.
(d) The Payee will indemnify Maker (and any officer, director
or controlling person of Maker) and any underwriters acting on behalf of Maker
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereof) to which they may become subject under the Securities Act or
otherwise, arising out of or based upon any untrue or alleged untrue statement
of any material facts contained in any Registration Statement filed pursuant
hereto, or any document relating thereto, including all amendments and
supplements, or arising out of or based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein contained not misleading, and, will reimburse Maker (or
such other aforementioned parties) or such underwriters for any legal and other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action; provided, however, that the
Payee will be liable as aforesaid only to the extent that such untrue or alleged
untrue statement or omission or alleged omission is based solely upon
information furnished in writing to Maker by the Payee expressly for use
therein, or solely as a result of its failure to furnish Maker with information
duly requested in writing by counsel for Maker specifically for use therein.
This indemnity agreement contained in this paragraph (d) shall remain operative
and in full force and effect regardless of any investigation made by or an
behalf of any indemnified party and shall survive the delivery of and payment
for Registrable Shares.
(e) Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will follow the procedures prescribed by Section 10.3 of the Purchase Agreement,
which terms are incorporated herein by this reference and made a part hereof,
mutatis mutandis.
(f) Except as expressly set forth in Section 9.2(g), Maker
shall bear all costs and expenses incident to any registration pursuant to this
Section 9 and the legal fees and expenses of one firm representing the Payee and
holders of all registrable shares under the Debentures.
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<PAGE> 30
(g) The Payee shall pay any and all underwriters discounts,
brokerage fees and transfer taxes incident to the sale of any securities sold by
the Payee pursuant to this Section 9.
10. Subordination.
(a) Maker, for itself, its successors and assigns, covenants
and agrees, and Payee by Payee's acceptance of this Debenture, likewise
covenants and agrees, that the Debentures represent and at all times shall
remain unsecured indebtedness of Maker and the payment of the principal,
interest and premium (if any) on this Debenture and on each and all of the
Debentures is hereby expressly subordinated to the extent and in the manner set
forth below to the prior payment in full in cash of all Senior Indebtedness (as
defined below), whether such Senior Indebtedness is repaid in accordance with
its terms, or upon dissolution, winding up, liquidation or reorganization of
Maker (whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or otherwise). The provisions of this
Section 10 shall constitute a continuing offer to all persons who become holders
of, or continue to hold, Senior Indebtedness, and such provisions are made for
the benefit of the holders of Senior Indebtedness and such holders are hereby
made beneficiaries hereunder, the same as if their names were written herein as
such, and they and/or each of them may proceed to enforce such provisions. Such
provisions will not be amended without the prior written consent of all holders
of Senior Indebtedness. For purposes of this Debenture, "Senior Indebtedness"
shall mean all loans, advances, liabilities, covenants, duties or other
indebtedness of Maker existing on the date hereof and listed on Schedule A
hereto or any Bank Debt (as defined below) arising from time to time hereafter
and any and all renewals, extensions and refundings of any such indebtedness,
whether for principal, premium or interest (including post-petition interest) or
otherwise, of Maker or any subsidiary of Maker, whether direct or indirect,
absolute or contingent, secured or unsecured, due or to become due, unless in
any instrument or instruments creating, evidencing or securing any such
indebtedness it is expressly provided that such indebtedness is not superior in
right of payment to the Debentures. Without limiting the generality of the
foregoing, Maker and Payee acknowledge and agree that the term "Senior
Indebtedness" includes, without limitation, all loans, advances, liabilities,
covenants, duties and other indebtedness of Maker existing on the date hereof or
arising from time to time hereafter, and any and all renewals, extensions and
refundings of any such indebtedness, whether for principal, premium, interest,
fees or otherwise of Maker or any subsidiary of Maker, whether direct or
indirect, absolute or contingent, secured or unsecured, due or to become due, to
any or all of (i) Bank South, (ii) NationsBank, N.A. (South), or any other
Lender under the Credit Agreement, dated as of November 14, 1994, among Maker,
Bank South, as Agent, and the Lenders listed therein, as amended or supplemented
from time to time; and any indebtedness of Maker to a commercial bank or
financial institution that, by its
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<PAGE> 31
terms, is expressly incurred in replacement or substitution of all or any
portion thereof (the "Bank Debt").
(b) Upon any payment or distribution of the assets of Maker or any
subsidiary of Maker or any of them of any kind or character, whether in cash,
property or securities to creditors upon any dissolution, winding up, total or
partial liquidation, reorganization, recapitalization or readjustment of Maker
or any subsidiary of Maker or any of them or their respective securities
(whether voluntary or involuntary, or in bankruptcy, insolvency, reorganization,
liquidation or receivership proceedings, or upon an assignment for the benefit
of the creditors, or any other marshaling of the assets and liabilities of Maker
or any subsidiary of Maker, or otherwise), then in such event:
(i) the holders of Senior Indebtedness shall be entitled to
receive payment in full in cash (or to have, such payments duly provided for in
a manner satisfactory to the holders of Senior Indebtedness) of all amounts due
or to become due on or in respect of all Senior Indebtedness, before any payment
is made on account of or applied on the Debentures (other than payment in shares
of stock of the Maker as reorganized or readjusted, or securities of the Maker
or any other corporation or other entity provided for by a plan of
reorganization or readjustment, which stock and securities are subordinated to
the payment of all Senior Indebtedness and securities received in lieu thereof
which may at the time be outstanding);
(ii) any payment or distribution of assets of Maker or any
subsidiary of Maker or any of them of any kind or character from any source
whatsoever, whether in cash, property or securities (other than shares of stock
of the Maker as reorganized or readjusted, or securities of the Maker or any
other corporation or other entity provided for by a plan of reorganization or
readjustment, which stock and securities are subordinated to the payment of all
Senior Indebtedness and securities received in lieu thereof which may at the
time be outstanding), to which the holders of the Debentures would be entitled
except for the provisions of this Section 11, shall be paid or delivered by any
debtor, custodian or other person making such payment or distribution, directly
to the holders of the Senior Indebtedness, for application to payment of all
such Senior Indebtedness remaining unpaid, to the extent necessary to pay all
such Senior Indebtedness in full after giving effect to any concurrent payment
or distribution, or provision therefor, to the holders of such Senior
Indebtedness; and
(iii) in the event that, notwithstanding the foregoing
provisions of this Section 11(b), any payment or distribution of assets of Maker
or any subsidiary of Maker or any of them of any kind or character from any
source whatsoever, whether in cash, property or securities (other than shares of
stock of the Maker as reorganized or readjusted, or securities of the Maker or
any other corporation or other entity provided for by a plan of reorganization
or readjustment, which stock and securities are
12
<PAGE> 32
subordinated to the payment of all Senior Indebtedness and securities received
in lieu thereof which may at the time be outstanding) shall be received by any
holder of the Debentures before all such Senior Indebtedness is indefeasibly
paid in full in cash, such payment or distribution shall be held in trust for
the benefit of, and shall be immediately paid or delivered by such holder to, as
the case may be, the holders of such Senior Indebtedness remaining unpaid, for
application to the payment of all such Senior Indebtedness remaining unpaid, to
the extent necessary to pay all such Senior Indebtedness in full after giving
effect to any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness.
(c) No payment of principal on the Debentures other than pursuant
to Sections 7 or 8 hereof shall he made by or on behalf of Maker or any
subsidiary for Maker or any of them unless and until the Senior Indebtedness
shall have been indefeasibly paid in full in cash.
(d) No payment of any kind on account of the Debentures (whether
principal, interest, premiums, fees or otherwise) other than pursuant to Section
7 hereof shall be made by or on behalf of Maker or any subsidiary of Maker or
any of them upon and during the continuance of any default in the payment of
principal, interest or premium, if any, with respect to any Senior Indebtedness.
(e) Upon and during the continuance of any default or event of
default under or with respect to any Senior Indebtedness, except pursuant to
Sections 7 or 8 hereof, no holder of any Debenture may (i) accelerate or take
any action to accelerate the maturity of all or any portion of any Debenture, or
(ii) commence or continue any judicial proceedings against Maker or any of its
subsidiaries with respect to this Debenture, or (iii) exercise any rights or
remedies under any Debenture or at law or in equity in respect of the collection
of the indebtedness evidenced thereby.
(f) In the event that, notwithstanding the foregoing provisions of
this Section 10, any payment or distribution of assets of Maker or any
subsidiary of Maker or any or them of any kind or character from any source
whatsoever, whether in cash, property or securities, shall be received by any
holder of any Debenture contrary to the foregoing provisions of this Section 10,
such payment or distribution shall be held in trust for the benefit of, and
shall be immediately paid or delivered by such holder to, as the case may be,
the holders of such Senior Indebtedness remaining unpaid, for application to the
payment or prepayment of all such Senior Indebtedness remaining unpaid, to the
extent necessary to pay all such Senior Indebtedness in full in cash.
(g) Each holder of Senior Indebtedness is hereby irrevocably
authorized and empowered (in its own name or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution referred to in respect of this Debenture and to file claims and
proofs of claim with respect to the
13
<PAGE> 33
Debenture if the holder of the Debenture fails to do so within sixty (60) days
after receipt of written notice from the holders of the Senior Indebtedness
requesting it to take such action.
(h) The provisions of this Section 10 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by any
holder of Senior Indebtedness, as though such payment had not been made.
(i) Holders of the Debentures hereby undertake and agree for the
benefit of the holders of Senior Indebtedness that, upon the occurrence and
during the continuance of a default under any Senior Indebtedness, they shall
take any actions reasonably requested by any holder of such Senior Indebtedness
to effectuate the full benefit of the subordination contained herein.
(j) Subject to the payment in full of all Senior Indebtedness, the
holders of the Debentures shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the Maker
applicable to the Senior Indebtedness until all amounts owing on the Debentures
shall be paid in full, and for the purpose of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Maker or by or on behalf of the holders of the Debentures by virtue of this
Section 10 which otherwise would have been made to the holders of the
Debentures, shall be deemed to be payment by the Company to or on account of the
Senior Indebtedness, it being understood that the provisions of this Section 10
are and are intended solely for the purpose of defining the relative rights of
the holders of the Debentures, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
(k) Nothing contained in this Section 10 or elsewhere in this
Debenture shall impair, as between the Maker and the holder of this Debenture,
the obligation of the Maker, which is absolute and unconditional, to pay to the
holder of this Debenture the principal of and interest on this Debenture as and
when the same shall become due and payable in accordance with the terms hereof,
or prevent the holder of this Debenture upon any default hereunder from
exercising all rights, powers and remedies with respect hereto, all subject to
the rights of the holders of the Senior Indebtedness under this Section 10.
11. Default. Each of the following shall constitute a "Default" under
this Debenture:
(i) the maker shall fail to pay interest as required pursuant to
Section 3 hereof;
(ii) the maker shall fail to convert all or any portion of this
Debenture as required pursuant to Section 7 hereof;
14
<PAGE> 34
(iii) Maker shall fail to pay in cash when due the amounts payable
pursuant to Section 8 hereof;
(iv) Maker shall default in the performance or observance of any
covenant contained in this Debenture or in the Purchase Agreement; or
(v) any event or circumstance shall have occurred which shall
result in the acceleration of the maturity of any Senior Indebtedness or which
shall permit any holder of any Senior Indebtedness to accelerate the maturity
thereof or to require an early prepayment or repayment of such Senior
Indebtedness.
12. Voting and Other Rights. Upon the occurrence and during the
continuance of a Default, the holders of the Debentures shall be entitled to
vote together with the holders of the Common Stock of the Maker, voting together
as one class, on all actions to be voted on by the shareholders of the Maker.
The holder of this Debenture shall be entitled to a number of votes equal to the
number of shares of Common Stock into which this Debenture would be convertible,
assuming a Conversion Price of $5.23.
Holders of the Debentures shall be entitled to notice of all shareholder
meetings or written consents whether or not they would be entitled to vote at
such meetings or with respect to such consents, which notice would be provided
pursuant to the Maker's By-Laws and applicable statutes. Holders of the
Debentures shall also be entitled to receive all reports and other information
or materials distributed to the holders of the Maker's Common Stock at the time
and in the manner such items are distributed to the holders of the Maker's
Common Stock.
Except as provided in this Section 12, this Debenture shall not entitle
the holder hereof to any of the rights of a shareholder of Maker.
13. Certain Covenants (a) So long as any principal amount of the
Debentures remain outstanding, all transactions between the Maker and any
separate public company into which the Maker may transfer any of its operations
or assets in a Reorganization and all transactions between the Maker and any
affiliate of the Maker (other than wholly-owned subsidiaries of the Maker)
shall be approved by a majority of the independent directors of the Maker's
Board of Directors and will be on an arms-length basis and fair to the Maker and
to such other entity or affiliate. For purposes of this Section 13(a), an
"affiliate" of the Maker shall mean any officer, director or beneficial owner,
directly or indirectly, of more than five percent of the Maker's Common Stock
(and if such beneficial owner is a corporation, any person controlling,
controlled by or under common control with such beneficial owner, or any officer
or director of such beneficial owner or of any corporation occupying any such
control relationship) or any other person which, directly or indirectly,
controls or is controlled by or is under common control with the Maker. For
purposes of this
15
<PAGE> 35
Section 13 (a), "control" with respect to any person shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise. For purposes of this Section 14 (a),
"independent director" shall mean each director who is not an officer or
employee of the Maker or an "affiliate."
(b) The Maker shall, as a condition of any spin-off of its
operations or assets to a separate public company in a Reorganization, cause
such separate public company to agree to be bound by the provisions of this
Debenture applicable to it. In addition, the Maker shall, as a condition of any
Change of Control Transaction to which it is a party, cause the person acquiring
control of the Maker pursuant to the Change of Control Transaction to agree to
be bound by the provisions of this Debenture applicable to it.
14. Amendments. This Debenture shall not be amended without the
prior written approval of the holders of at least two-thirds of the outstanding
principal amount of the Debentures.
15. Waiver. Maker and any and all sureties, guarantors and
endorsers of this Debenture and all other parties now or hereafter liable
hereon, severally waive grace, demand, presentment for payment, protest, notice
of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(a) to all extensions and partial payments, with or without notice, before or
after maturity, (b) to any substitution, exchange or release of any security now
or hereafter given for this Debenture, (c) to the release of any party primarily
or secondarily liable hereon, and (d) that it will not be necessary for the
Payee, in order to enforce payment of this Debenture, to first institute or
exhaust the Payee's remedies against Maker or any other party liable therefor or
against any security for this Debenture.
16. Costs of Collection. If a Default occurs hereunder or under any
of the instruments securing payment hereof (whether or not suit is filed), or if
this Debenture is collected by suit or legal proceedings or through the probate
court or bankruptcy proceedings, Maker agrees to pay all reasonable attorneys'
fees and all expenses of collection and costs of court.
17. Interest Adjustments. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted): accordingly,
notwithstanding any provision to the contrary in this Debenture, or in any of
the documents securing payment hereof or otherwise relating hereto, in no event
shall this Debenture or such documents require the payment or permit the
collection of interest in excess of the maximum amount permitted by such laws.
If any such excess of interest is contracted for, charged, taken, reserved or
received under this Debenture or under
16
<PAGE> 36
the terms of any of the documents securing payment hereof or otherwise relating
hereto, or in the event the maturity of the indebtedness evidenced by this
Debenture is accelerated in whole or in part, so that under any of such
circumstances the amount of interest contracted for, charged, taken, reserved or
received under this Debenture or under any of the instruments securing payment
hereof or otherwise relating hereto, on the amount of principal actually
outstanding from time to time under this Debenture shall exceed the maximum
amount of interest permitted by applicable usury laws, now or hereafter enacted,
then in any such event (i) the provisions of this paragraph shall govern and
control, (ii) any such excess which may have been collected at final maturity of
said indebtedness either shall be applied as a credit against the then unpaid
principal amount hereof or refunded to Maker, at the Payee's option, (iii) if,
as a result of the application of the provisions of this paragraph, the Payee
shall receive interest payments under this Debenture in an amount less than the
amount otherwise provided hereunder, such deficit will, to the fullest extent
permitted by applicable laws, cumulate and be carried forward (without interest)
until the payment in full of this Debenture, and interest otherwise payable to
Payee hereunder for any subsequent period shall be increased by the maximum
amount of such deficit that may be so added without causing the Payee to receive
interest in excess of the maximum amount then permitted by applicable laws, and
(iv) upon such final maturity, the effective rate of interest shall be
automatically reduced to the maximum lawful rate allowed under applicable usury
laws as now or hereafter construed by the courts having jurisdiction thereof.
Without limiting the foregoing, all calculations of the rate of interest
contracted for, charged, taken, reserved or received under this Debenture or
under such other documents which are made for the purpose of determining whether
such rate exceeds the maximum lawful rate, shall be made, to extent permitted by
applicable laws, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the loan evidence hereby, all
interest at any time contracted for, charged, taken, reserved or received from
Maker or otherwise by the Payee connection with such indebtedness.
18. Applicable Law. This Debenture shall be govern and
construed under the applicable laws of the State of Georgia without regard to
the conflicts of law provisions thereof.
19. No Waiver by the Payee. Any check, draft, money order or other
instrument given in payment of all or any portion hereof may be accepted by the
Payee and handled in collection in the Payee's customary manner, but the same
shall not constitute payment hereunder or diminish any rights of the Payee
except to the extent that actual cash proceeds of such instrument are
unconditionally received by the Payee.
IN WITNESS WHEREOF, MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
has caused this Debenture to be executed in its name by a duly authorized
officer.
17
<PAGE> 37
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By:
--------------------------------
Title:
----------------------------
18
<PAGE> 38
SCHEDULE A
1. Loan Agreement, dated January 8, 1991, by and between Maker and 1st
National Bank Northwest Florida. Outstanding as of March 31, 1996 -
$950,144.23
2. Sales Contract and Licensing Agreement, dated March 13, 1996, by and
between Maker and Petro Associates (d/b/a Amusement Solutions).
Outstanding as of March 31, 1996 - $744,450.00
3. Credit Agreement, dated as of November 14, 1994, among, Maker, Bank
South, N.A. (k/n/a NationsBank, N.A. (South)), as Agent and the Lenders
listed therein. Outstanding as of March 31, 1996 - $2,991,017.00
4. Loan Agreement, dated August 1, 1994 by and between Maker and Bank
South, N.A. (k/n/a NationsBank, N.A. (South)). Outstanding as of March
31, 1996 - $6,506,000.00
5. Promissory Note, dated August 18, 1994, by and between Maker and
Barnett Bank. Outstanding as, of March 31, 1996 - $45,000.00
6. Promissory Note, dated February 4, 1993, by and between Maker and
Barnett Bank. Outstanding as of March 31, 1996 - $11,055.00
7. Master Lease, dated June 1994, by and between Maker and CIT
Equipment Finance. Outstanding as of March 31, 1996 - $1,819,206.58
8. Promissory Note, dated June 17, 1995, by and between Maker and General
Motors Acceptance Corporation. Outstanding as of March 31, 1996 -
$25,277.52
9. Promissory Note, dated August 1993, by and between National Bank of
Texas and Kingwood FFC, L.P. Outstanding as of March 31, 1996 -
$53,554.66
10. Loan Agreement, dated January 1993, by and between Maker and Norwest
Equipment Finance. Outstanding as of March 31, 1996 - $353,798.78
11. Loan Agreement, dated August 1993, by and between ITT and
Kingwood FFC, L.P. Outstanding as of March 31, 1996 - $927,777.81
19
<PAGE> 1
EXHIBIT 10.5
LETTER AGREEMENT CONCERNING CLOSING
April 3, 1996
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202
Attention: L. Scott Demerau
Dear Scott:
Reference is made to the Purchase and Sale Agreement dated the
date hereof (the "Purchase Agreement") among the shareholders of Amusement Co.,
Inc. and Amusement Co. Partners, Inc. (collectively, the "Shareholders"),
Capital Trust Investments Limited (the "Noteholder"), and Mountasia
Entertainment International, Inc. (the "Purchaser").
The Shareholders, the Noteholder and the Purchaser have today
entered into the Purchase Agreement pursuant to which the Shareholders have
agreed to sell all of the issued and outstanding shares of capital stock of
Amusement Co., Inc. and Amusement Co. Partners, Inc. (collectively, the
"Shares") to the Purchaser and the Noteholder has agreed to sell to the
Purchaser the $3 million principal amount promissory note from National
Entertainment Funding, L.P. (the "Note") which it holds. In consideration
therefor, the Purchaser will issue its 9.1% Subordinated Convertible Debentures
Due January 1, 1998 (the "Purchaser's 9.1% Debentures") to the Shareholders and
the Noteholder as provided in the Purchase Agreement.
Notwithstanding the provisions of the Purchase Agreement which
contemplate that the closing of the purchase and sale of the Shares and the
Note shall occur simultaneously with the signing of the Purchase Agreement, the
Shareholders, the Noteholder and the Purchaser wish to defer the closing under
the Purchase Agreement until the Purchaser shall have obtained the consent of
NationsBank, N.A. (South) to the transactions contemplated thereby. Therefore,
the actual sale of the Shares and the Note and the issuance of the Purchaser's
9.1% Debentures in consideration therefor pursuant to the terms of the Purchase
Agreement (the "Closing") shall occur as soon as possible and in any event no
later than three (3) business days after NationsBank, N.A. (South) gives its
consent to the transactions contemplated by the Purchase Agreement.
Each of the Shareholders, the Noteholder and the Purchaser
shall be deemed to repeat its representations and
<PAGE> 2
warranties contained in the Purchase Agreement as of the date of the Closing.
The Purchaser shall pay the fees, expenses and disbursements
of Morgan, Lewis & Bockius LLP, counsel to the Shareholders and the Noteholder,
as required by Section 12.6 of the Purchase Agreement, on the date hereof and
on the date of the Closing.
The Purchaser agrees that it will use its best efforts to
obtain the consent of NationsBank, N.A. (South) to the transactions
contemplated by the Purchase Agreement as soon as possible.
If you are in agreement with the foregoing, please so indicate
by signing in the space indicated below and returning a
2
<PAGE> 3
signed copy of this letter to Morgan, Lewis & Bockius LLP, counsel for the
Shareholders and the Noteholder.
Very truly yours,
SHAREHOLDERS:
CAPITAL TRUST MANAGEMENT LIMITED
OMAR S. BAHATEQ
CLOVER HOLDINGS LTD.
AL HUDA HOLDINGS LTD.
DR. ANIS F. KASSIM
SALEH M. AL-HAJAJ
ABDULLAH AL ALI AL-MUSIM
ALRAJA ESTABLISHMENT
TAREQ BIN SALEH
SARAH INVESTMENTS
SHAKTI INVESTMENT HOLDINGS LTD.
TAMANCA ESTABLISHMENT
CAPITAL TRUST S.A.
By: /s/ John P. Oswald
-------------------------------------
John P. Oswald
Attorney-in-Fact
NOTEHOLDER:
CAPITAL TRUST INVESTMENTS LIMITED
By: /s/ John P. Oswald
-------------------------------------
John P. Oswald
Attorney-in-Fact
AGREED as of the date written above:
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
---------------------------------
Name: L. Scott Demerau
Title: President
3
<PAGE> 1
EXHIBIT 10.6
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
5895 WINDWARD PARKWAY, SUITE 220
ALPHARETTA, GEORGIA 30202
April 19, 1996
The Shareholders of Amusement
Co., Inc. and Amusement Co.
Partners, Inc.
Capital Trust Investments Ltd.
c/o Capital Trust Developments Limited
c/o Kleinwort Benson (Guernsey) Ltd.
P.O. Box 44 Westbourne
The Grange
St. Peter Port
Guernsey, Channel Islands
Dear Shareholders and Noteholder:
Reference is made to (i) the Purchase and Sale Agreement dated
April 3, 1996 (the "Purchase Agreement"), among the shareholders of Amusement
Co., Inc. and Amusement Co. Partners, Inc. (collectively, the "Shareholders"),
Capital Trust Investments Ltd. (the "Noteholder"), and Mountasia Entertainment
International, Inc. ("Mountasia"), and (ii) the Letter Agreement Concerning
Closing dated April 3, 1996 (the "Letter Agreement"), among the Shareholders,
the Noteholder and Mountasia.
Pursuant to the terms of the Letter Agreement, the closing of
the transactions contemplated by the Purchase Agreement has been delayed until
Mountasia shall have obtained the consent of NationsBank, N.A. (South)
("NationsBank") to the transactions contemplated thereby. In the event
NationsBank sells to a third party its loans to Mountasia and/or National
Entertainment Funding, L.P., such loans are repaid or NationsBank's consent to
the transactions contemplated by the Purchase Agreement is otherwise not
required, such consent shall no longer be a condition to the closing of the
transactions contemplated by the Purchase Agreement. In such event, the
closing of the transactions contemplated by the Purchase Agreement shall occur
as soon as possible and in any event nolater than three business days after any
such sale, repayment or other determination that NationsBank's consent is not
required.
<PAGE> 2
April 19,1996
Page 2
Very truly yours,
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
------------------------------------
L. Scott Demerau
President
AGREED AND ACCEPTED as
of the date written above:
SHAREHOLDERS:
CAPITAL TRUST MANAGEMENT LIMITED
OMAR S. BAHATEQ
CLOVER HOLDINGS LTD.
AL HUDA HOLDINGS LTD.
DR. ANIS F. KASSIM
SALEH M. AL-HAJAJ
ABDULLAH AL ALI AL-MUSIM
ALRAJA ESTABLISHMENT
TAREQ BIN SALEH
SARAH INVESTMENTS
SHAKTI INVESTMENT HOLDINGS LTD.
TAMANCA ESTABLISHMENT
CAPITAL TRUST S.A.
By:/s/ John P. Oswald
---------------------------------
John P. Oswald
Attorney-in-Fact
NOTEHOLDER:
CAPITAL TRUST INVESTMENTS LIMITED
<PAGE> 3
April 19, 1996
Page 3
By: /s/ John P. Oswald
---------------------------------
John P. Oswald
Attorney-in-Fact
<PAGE> 1
EXHIBIT 10.7
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into this ___ day of May, 1996, by and between Leisure Funn, Inc., a Florida
corporation ("LFI") and Mountasia Entertainment International, Inc., a Georgia
corporation ("MEI" or "Purchaser").
W I T N E S S E T H:
WHEREAS, LFI is a general partner of National Entertainment Funding,
L.P., a Delaware limited partnership (the "Partnership"); and
WHEREAS, LFI desires to sell and convey its general partnership
interest in the Partnership (the "LFI Interest") to Purchaser, and Purchaser
desires to purchase and acquire the LFI Interest from LFI.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, each intending to be legally bound, do hereby covenant and
agree as follows:
1. PURCHASE AND SALE OF THE LFI INTEREST. On the terms and
conditions set forth herein, LFI hereby sells, transfers, assigns, conveys and
delivers to Purchaser the LFI Interest, and Purchaser hereby purchases and
acquires from LFI all of its right, title and interest in and to the LFI
Interest.
2. PURCHASE PRICE. In full consideration for the purchase of the
LFI Interest, Purchaser is simultaneously herewith paying to LFI a total
purchase price (the "LFI Purchase Price") of ONE HUNDRED DOLLARS ($100.00).
3. PAYMENT OF PURCHASE PRICE. Purchaser is paying the LFI
Purchase Price by delivering to LFI, in exchange for the LFI Interest, one of
Purchaser's 9.1% Subordinated Convertible Debentures Due January 1, 1998
(individually, a "Debenture" and collectively, the "Debentures"), the form of
which is attached hereto as Exhibit A and by this reference incorporated
herein. A Debenture, duly issued in the name of LFI (the "Seller") in the
amount specified in Section 2, is simultaneously herewith being delivered to
Seller, and the Seller is simultaneously herewith delivering to Purchaser an
Assignment of the LFI Interest in the form of Exhibit B attached hereto.
Purchaser shall have no rights of set-off with respect to the Purchase Price
for any reason.
4. REPRESENTATIONS AND WARRANTIES OF LFI. LFI represents and
warrants to Purchaser that all of the following are true as of the date hereof,
and that such representations and warranties shall survive for a period of one
year from the date hereof:
1
<PAGE> 2
4.1 DUE ORGANIZATION. LFI is duly organized, validly
existing and in good standing under the laws of the State of Florida, and is
duly authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted.
4.2 OWNERSHIP OF LFI INTEREST. LFI is the sole owner of
the LFI Interest, free and clear of any liens, charges, or other encumbrances of
any nature whatsoever. The sole purpose and business of LFI is to hold the LFI
Interest and serve as a general partner of the Partnership. Subject to Section
7.3 hereof, the making and performance of this Agreement does not and will not
constitute a default under or result in the creation of any adverse claim,
lien, charge or encumbrance upon or against the LFI Interest pursuant to any
agreement or instrument to which LFI is a party or by which LFI or its assets
is or may be bound. LFI has not engaged in any business other than to serve as
a general partner of the Partnership. LFI does not have any assets other than
the LFI Interest, and it has not incurred any liabilities other than those
arising from the LFI Interest.
4.3 AUTHORIZATION. LFI has full legal right, power and
authority to enter into this Agreement. This Agreement has been duly
authorized by LFI. The exchange of the LFI Interest for the Debentures,
pursuant to the provisions of this Agreement, will transfer full and complete
ownership of and valid title in the LFI Interest to Purchaser, free and clear
of all liens, encumbrances, pledges, security interests and claims of every
kind.
4.4 NO CONFLICTS. The execution, delivery and
performance of this Agreement, the consummation of the transactions herein
referred to or contemplated hereby and the fulfillment of the terms hereof and
thereof will not conflict with, or result in a default under any document,
agreement or other instrument to which LFI is a party, or result in the
imposition of any lien, charge or encumbrance on LFI's properties, except that
the consent of the general partners and a majority of the limited partners of
the Partnership is required for the transfer of the LFI Interest to Purchaser.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to Seller that all of the following representations and
warranties are true as of the date hereof and as of each date the Debentures
are converted into MEI common stock pursuant to the terms of the Debentures,
and shall survive for a period of twelve months following the date the
Debentures are converted into MEI common stock.
5.1 DUE ORGANIZATION. Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Georgia
and is duly authorized, qualified and licensed under all applicable laws,
regulations, and ordinances of public authorities to carry on its respective
businesses in the places and in the manner as now conducted except for where
the failure to be so authorized, qualified or licensed would not have a
material adverse effect on its respective businesses. Copies of the Articles
of Incorporation (certified by the Secretary of State of the State of Georgia)
and the Bylaws, as amended, of Purchaser (certified by the Secretary of
Purchaser) are attached hereto as Schedule 5.1.
2
<PAGE> 3
5.2 DEBENTURES. The Debentures delivered to Seller
simultaneously herewith have been duly authorized and are valid and legally
issued instruments of Purchaser and are free from all liens, encumbrances,
pledges and claims of every kind. The Debentures have been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligation
of Purchaser, enforceable against it in accordance with their terms, except as
the same may be limited by applicable bankruptcy or other laws of general
application which affect the enforceability of creditors' rights. A copy of
the form of the Debentures are attached hereto as Exhibit A and by this
reference incorporated herein. The shares of Purchaser's common stock issuable
upon conversion of the Debentures will, when issued in accordance with the
terms of the Debentures, be duly authorized, validly and legally issued, fully
paid and nonassessable, not subject to any preemptive or similar rights, and
free from all liens, encumbrances, pledges and claims of every kind.
5.3 AUTHORIZATION. Purchaser has full legal right, power
and authority to enter into this Agreement. The execution and delivery of this
Agreement by the Purchaser and the performance by Purchaser of its obligations
hereunder has been duly authorized by Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms, except as the same may be limited by applicable bankruptcy or other laws
of general application which affect the enforceability of creditors' rights.
5.4 NO CONFLICTS. The execution, delivery and
performance of this Agreement, the consummation of any transactions herein
referred to or contemplated hereby and the fulfillment of the terms hereof and
thereof will not:
(i) conflict with, or result in a breach or violation of
the Articles of Incorporation or Bylaws of Purchaser;
(ii) materially conflict with, or result in a material
default (or constitute a default but for any requirement of notice or
lapse of time or both) under, accelerate or permit the acceleration of
the performance required by the terms of, or result in the creation or
imposition of any lien, charge or encumbrance on any of Purchaser's
properties pursuant to (A) any document, agreement or other
instrument to which Purchaser is a party, (B) any law or regulation to
which Purchaser, or any of its property, is subject, or (C) any
judgment, order or decree to which Purchaser is bound or any of its
property is subject;
(iii) result in termination or any impairment of any
material permit, license, franchise, contractual right or other
authorization of Purchaser; or
(iv) require the consent, waiver or approval of, or any
declaration or filing with, any person (whether or not a governmental
authority).
5.5 DISCLOSURE. Purchaser has provided Seller with a true
and complete copy of its annual report on Form 10-K/A for its fiscal year ended
September 30, 1995 (the "1995 10-K") and its quarterly report on Form 10-Q for
the quarter ended December 31, 1995 (the "10-Q"). The 1995 10-K and 10-Q do
not contain any untrue statement of a material fact or
3
<PAGE> 4
omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which they
were made. Since December 31, 1995, there has been no material adverse change
in, and there are no facts which have a material adverse effect or in the
future may reasonably be expected to have a material adverse effect on, the
Purchaser's business, prospects, condition (financial or otherwise), affairs or
operations which are not disclosed in the 1995 10-K or the 10-Q.
5.6 ISSUANCE OF SHARES UPON CONVERSION. To the best of
Purchaser's knowledge, there is no reason Purchaser will be unable to issue
shares of its common stock upon conversion of the Debentures pursuant to the
terms thereof as set forth in Exhibit A.
5.7 INVESTMENT INTENT. Purchaser is acquiring the LFI
Interest for its own account, for investment, and without the intention of
participating in a distribution thereof; provided, however, it is the intention
of Purchaser to consolidate the business operations of the Partnership with it
and to this extent Purchaser may cause to occur a merger or other business
combination between Purchaser and the Partnership to accomplish this purpose.
5.8 PAYMENT OF INTEREST. Purchaser currently has assets
legally available for, and is not subject to any restrictions with respect to,
the payment of interest on the Debentures in accordance with the terms of the
Debentures (without regard to Section 17 thereof). Purchaser has no reason to
expect that it will not have assets legally available for, or that it will be
subject to restrictions with respect to, the payment of interest on the
Debentures during the time the Debentures will be outstanding.
5.9 NO DEFAULTS UNDER SENIOR INDEBTEDNESS. Purchaser is
not in default under any Senior Indebtedness (as defined in the Debentures),
and no conditions exist that would constitute a default thereunder but for any
requirement of notice or lapse of time or both.
6. ADDITIONAL COVENANTS AND ACKNOWLEDGEMENTS OF PURCHASER.
6.1 TRANSACTIONS WITH AFFILIATES. Purchaser agrees that
so long as any of the Debentures remain outstanding, all transactions between
Purchaser and any entity into which any or all of Purchaser's operations and/or
assets may be transferred or any transactions between Purchaser and any
affiliate of Purchaser (other than wholly-owned subsidiaries of Purchaser)
shall be approved by a majority of the independent directors of the Purchaser's
Board of Directors and will be on an arms-length basis and fair to Purchaser
and to such other entity or affiliate. For purposes of this provision, an
"affiliate" of Purchaser shall mean any officer, director or beneficial owner,
directly or indirectly, of more than five percent of the common stock of
Purchaser (and if such beneficial owner is a corporation, any person
controlling, controlled by, or under common control with such beneficial owner,
or any officer or director of such beneficial owner or of any corporation
occupying any such control relationship) or any other person which, directly or
indirectly, controls or is controlled by or is under common control with
Purchaser. For purposes of this provision, "control" with respect to any
person shall mean possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or
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by contract or otherwise. For purposes of this Section 7.1, "independent
director" shall mean each director who is not an officer or employee of the
Corporation or the "affiliate".
6.2 OPERATION OF THE PARTNERSHIP. Purchaser acknowledges
to Seller that (i) Purchaser has managed the Partnership since its formation
and, therefore, has full knowledge of its assets, liabilities, business,
prospects, condition (financial or otherwise), affairs and operations, (ii)
Purchaser accepts all risks with respect thereto, (iii) Seller is making no
representations with respect thereto or otherwise regarding the Partnership and
(iv) Purchaser shall not seek to assert or enforce against the Seller any
liabilities of the Partnership to the Purchaser or any other person. Since
Purchaser has full knowledge of the Partnership's assets, liabilities,
business, prospects, condition (financial or otherwise), affairs and
operations, it agrees that in the event the Partnership does not pay the
Indebtedness pursuant to the terms thereof, Purchaser will have no claim
against LFI for such nonpayment.
6.3 PARTNERSHIP AND BANK CONSENTS. Purchaser is aware of
the existence and contents of the National Entertainment Funding, L.P.
Formation Agreement (the "Formation Agreement") and the Amended and Restated
Agreement of Limited Partnership of National Entertainment Funding, L.P. (the
"Partnership Agreement"), each dated as of June 30, 1994. Pursuant to the
Formation Agreement and the Partnership Agreement, the consent of the other
partners of the Partnership is required for the transactions contemplated
hereby. Purchaser has advised Seller that it is entering into a transaction
with the other partners of the Partnership, and that in connection with such
other transaction, Purchaser will obtain the necessary consents from the other
partners and the Partnership to the transactions contemplated by this
Agreement. Purchaser has also advised Seller that it is engaged in
negotiations with NationsBank, N.A. (South) ("NationsBank"), a lender to the
Partnership, and that Purchaser will obtain any necessary consents of
NationsBank to the transactions contemplated by this Agreement.
7. INDEMNIFICATION. Seller and Purchaser each make the following
representations to the other:
7.1 GENERAL INDEMNIFICATION BY SELLER. Seller covenants
and agrees that it will severally and not jointly indemnify, defend, protect and
hold harmless Purchaser at all times from and after the date of this Agreement
for a period of twelve (12) months from and against all claims, damages,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) incurred by Purchaser in excess of Five
Thousand Dollars ($5,000) in the aggregate as a result of or incident to any
breach of the representations and warranties of Seller set forth herein, on the
schedules or certificates attached hereto or in any other document delivered
pursuant to this Agreement and any misrepresentations or nonfulfillment of any
agreement on the part of Seller under this Agreement.
7.2 INDEMNIFICATION BY PURCHASER. Purchaser covenants and
agrees that it will indemnify, defend, protect and hold harmless Seller at all
times from and after the date of this Agreement until the expiration of twelve
months following the date the Debentures are converted into common stock from
and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation,
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reasonable attorneys' fees and expenses of investigation) incurred by Seller in
excess of Five Thousand Dollars ($5,000) in the aggregate as a result of or
incident to any breach of the representations and warranties set forth herein,
on the schedules or certificates attached hereto or in any other document
delivered pursuant to this Agreement and any misrepresentations or
nonfulfillment of any agreement on the part of Purchaser under this Agreement.
Purchaser also covenants and agrees that it will indemnify, defend, protect and
hold harmless Seller at all times from and after the date of this Agreement
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expense of investigation)
incurred by Seller as a result of or incident to any claim made by NationsBank
under the Construction and Working Capital Loan Agreement dated May 9, 1995, by
and between the Partnership and NationsBank, the Promissory Note issued by the
Partnership to NationsBank pursuant to such Loan Agreement or any other
document, certificate or instrument delivered in connection therewith.
7.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge
of any claim by a person not a party to this Agreement ("Third Person") or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being
made against any party obligated to provide indemnification pursuant to Section
7.1 or 7.2 hereof (hereinafter the "Indemnifying Party"), give the Indemnifying
Party written notice of such claim or the commencement of such action or
proceeding; provided, however, that the failure to give such notice shall not
affect the rights of any Indemnified Party or the obligations of any
Indemnifying Party hereunder except to the extent the Indemnifying Party has
been prejudiced as a result thereof. Such notice shall state the nature and
the basis of such claim and a reasonable estimate of the amount thereof. The
Indemnifying Party shall have right to defend and settle, at its own expense
and by its own counsel (which shall be reasonably acceptable to the Indemnified
Party) any such matter so long as the Indemnifying Party pursues the same in
good faith and diligently, provided that the Indemnifying Party shall consult
with and keep the Indemnified Party fully informed with respect to the defense
and any proposed settlement. If the Indemnifying Party undertakes to defend or
settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate with the Indemnifying Party and
its counsel in the defense thereof and in any settlement thereof; provided,
however, that under no circumstances shall the Indemnifying Party settle any
Third Person claim without the written consent of the Indemnified Party, which
consent shall not be unreasonably withheld. Such cooperation shall include,
but shall not be limited to, furnishing the Indemnifying Party with any books,
records or information reasonably requested by the Indemnifying Party that are
in the Indemnified Party's possession or control. Notwithstanding the
foregoing, the Indemnified Party shall have the right to participate in any
matter through counsel of its own choosing at its own expense (unless there is
a conflict of interest that prevents counsel for the Indemnifying Party from
representing Indemnified Party, in which case the Indemnifying Party will
reimburse the Indemnified Party for the expenses of its counsel); provided that
the Indemnifying Party's counsel shall always be lead counsel and shall
determine all litigation and settlement steps, strategy and the like (unless
there is a conflict of interest that prevents counsel for the Indemnifying
Party from representing the Indemnified Party, in which case counsel for the
Indemnified Party shall determine all litigation and settlement steps, strategy
and the like with respect to the Indemnified Party). After the Indemnifying
Party has notified
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the Indemnified Party of its intention to undertake to defend or settle any
such asserted liability, and for so long as the Indemnifying Party diligently
pursues such defense, the Indemnifying Party shall not be liable for any
additional legal expenses incurred by the Indemnified Party in connection with
any defense or settlement of such asserted liability, except to the extent such
participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses, out-of-pocket expenses and allocable share of
employee compensation incurred in connection with such participation for any
employee whose participation is so requested. If the Indemnifying Party
desires to accept a final and complete settlement of any such Third Person
claim which requires the payment of money only and includes as a condition
thereof a complete release of the Indemnified Party, and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person and the Indemnified
Party shall reimburse the Indemnifying Party for any additional costs of
defense which it subsequently incurs with respect to such claim. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense
through counsel of its choice, at the cost and expense of the Indemnifying
Party, and the Indemnified Party may settle such matter, and the Indemnifying
Party shall reimburse the Indemnified Party for the amount paid in such
settlement and any other liabilities or expenses incurred by the Indemnified
Party in connection therewith, provided, however, that under no circumstances
shall the Indemnified Party settle any Third Person claim without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
8. FEDERAL SECURITIES ACT COMPLIANCE AND RESTRICTIONS ON TRANSFER.
8.1 REPRESENTATIONS. Seller acknowledges that none of the
Debentures to be delivered to it pursuant to this Agreement will, at the time
of delivery, be registered under the Securities Act of 1933, as amended (the
"Act"). Seller hereby represents and warrants that it is acquiring the
Debentures for investment, and not with a view toward, or for resale in
connection with, a distribution of such Debentures. Seller hereby acknowledges
that the Debentures may be sold, pledged, hypothecated, disposed of, or
otherwise transferred or distributed only (i) pursuant to registration of such
Debentures under the Act, or (ii) pursuant to an exemption from the
registration requirements of the Act, and in the case of exemption, only if
Seller delivers to Purchaser a legal opinion, in form and substance reasonably
satisfactory to Purchaser and Purchaser's legal counsel, stating that an
exemption from the registration requirements of the Act is available. The
Debentures shall bear a legend setting forth the restrictions on transfer set
forth in this Section 8.1.
8.2 SOPHISTICATION OF SELLER. Seller hereby makes the
following representations and warranties to and for the benefit of Purchaser:
(i) Seller has been provided with or has obtained a copy
of the 1995 10-K;
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(ii) Seller has had adequate opportunity to ask questions
of and receive answers from the officers of Purchaser concerning any
and all matters pertaining to the transactions referred to in the 1995
10-K which it deemed necessary or appropriate;
(iii) Seller has in fact asked of Purchaser's officers any
and all questions of the nature described in Section 8.2(ii) above
which it desired to ask, and all such questions have been answered to
the satisfaction of Seller;
(iv) Seller is the true party in interest and is not
acquiring any of the Debentures for the benefit of any other person or
entity;
(v) Seller is acquiring the Debentures for Seller's own
account for investment, and not with a view to the resale,
redistribution, subdivision or fractionalization of such Debentures,
except such distribution as may occur upon the dissolution and
liquidation of Seller;
(vi) Seller has such knowledge and experience in financial
and business matters and investments in general that it is capable of
evaluating the merits and risks of the ownership of the Debentures;
(vii) Seller acknowledges and understands that ownership of
the Debentures involves a high degree of risk, including the
possibility of a total loss of the investment in the Debentures; and
(viii) Purchaser has provided to Seller, or has offered to
provide to Seller, copies of all reports, proxy statements, and other
information which Purchaser files with the Securities and Exchange
Commission.
9. GENERAL.
9.1 COOPERATION. Seller and Purchaser shall each deliver
or cause to be delivered to the other on the date hereof and at such other times
and places as shall be reasonably agreed to, such additional instruments as the
other may reasonably request for the purpose of carrying out this Agreement.
Seller will cooperate and use its best efforts to cooperate with Purchaser on
and after the date hereof in furnishing information, evidence, testimony and
other assistance in connection with any actions, proceedings, arrangements or
disputes of any nature with respect to matters pertaining to all periods prior
to the date hereof.
9.2 SUCCESSORS AND ASSIGNS. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of
law) and shall be binding upon and shall inure to the benefit of the parties
hereto, and their successors and permitted assigns.
9.3 ENTIRE AGREEMENT. This Agreement (including the
schedules and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding between Seller and
Purchaser and supersede any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement, upon execution,
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constitutes a valid and binding agreement of the parties hereto enforceable in
accordance with its terms and may be modified or amended only by a written
instrument executed by Seller and Purchaser acting through their respective
officers, duly authorized by their respective Boards of Directors or other
governing body (if applicable).
9.4 COUNTERPARTS. This Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed
an original and all of which together shall constitute but one and the same
instrument.
9.5 BROKERS AND AGENTS. Each party represents and
warrants to the other that it will be solely responsible for any fee or
compensation to any broker or agent used by it in connection with this
transaction and agrees to indemnify the other against all loss, cost, damages
or expense arising out of claims for fees or commission of brokers employed or
alleged to have been employed by such indemnifying party.
9.6 EXPENSES. Whether or not the transactions herein
contemplated shall be consummated, Purchaser will pay the fees, expenses and
disbursements of Purchaser and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments thereto. Whether or not the transactions herein contemplated
shall be consummated, Purchaser will also pay the fees, expenses and
disbursements of Seller and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments hereto and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed by Seller under
this Agreement.
9.7 NOTICES. All notices of communication required or
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, or by delivering the
same in person to an officer or agent of such party, or by recognized overnight
courier service, fees prepaid.
(a) If to Purchaser, addressed to it at:
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202
Attention: L. Scott Demerau
With a copy to:
Nelson Mullins Riley & Scarborough, L.L.C.
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
Attention: Steven A. Cunningham, Esq.
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(b) If to LFI, addressed to it at:
78 Glenview Crescent
London, Ontario
CANADA N5X 2P9
Attention: Robert Worthy
9.8 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws.
9.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties made
herein or in writing delivered pursuant to the provisions of this Agreement
shall survive the consummation of the transactions contemplated hereby and any
examination on behalf of the parties.
9.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach
or default occurring before or after that waiver.
9.11 REFORMATION AND SEVERABILITY. In case any provision
of this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
9.12 PARTNER AND PARTNERSHIP CONSENTS. Notwithstanding any
provision in the Formation Agreement or the Partnership Agreement to the
contrary, each of LFI and Purchaser, as a general or limited partner of the
Partnership, hereby consents to (i) the sale to Purchaser of the LFI, the
general partnership interest in the Partnership of Family Entertainment, Inc.,
and the limited partnership interest of the Partnership and indebtedness held
from the Partnership by Family Entertainment Funding, L.P. (ii) the sale to
Purchaser of all of the issued and outstanding shares of capital stock of
Amusement Co., Inc., a general partner of the Partnership, and Amusement Co.
Partners, Inc., a limited partner of the Partnership, and (iii) the sale to
Purchaser of the promissory note from the Partnership to Capital Trust
Investments Limited in the principal amount of $3 million.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PURCHASER"
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
ATTEST:
/s/ Julia E. Demerau By: /s/ L. Scott Demerau
- ------------------------------------ -------------------------------------
Its: President
------------------------------------
[CORPORATE SEAL]
"LFI"
LEISURE FUNN, INC.
By: /s/ R. H. Worthy
-------------------------------------
Its: President
------------------------------------
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EXHIBIT 10.8
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Consulting Agreement"), is made and
entered into this 3rd day of April, 1996, by and between MOUNTASIA
ENTERTAINMENT INTERNATIONAL, INC., a Georgia corporation, ("Mountasia"), and
CAPITAL TRUST DEVELOPMENTS LIMITED, a British Virgin Islands corporation
("Consultant").
W I T N E S S E T H:
WHEREAS, Consultant has been advising one of the general partners of
National Entertainment Funding, L.P., a Delaware limited partnership ("NEF"),
and the holder of a promissory note issued by NEF (the "Note") and is very
familiar with the operations of NEF;
WHEREAS, Mountasia is acquiring certain of the limited and general
partnership interests of NEF (the "NEF Interests") and the Note;
WHEREAS, Mountasia desires to engage the services of Consultant to
provide consulting services with respect to the transfer of ownership of the
NEF Interests to Mountasia and the ongoing management and operation of the
family entertainment centers owned by NEF (the "NEF Centers"); and
WHEREAS, Consultant desires to provide Mountasia with such consulting
services.
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the
above premises, the mutual agreements hereinafter set forth, and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. ENGAGEMENT. Mountasia hereby agrees to engage Consultant and
Consultant agrees to serve Mountasia as an independent contractor to provide
consulting services (the "Consulting Services") with respect to the transfer of
ownership of the NEF Interests to Mountasia and the ongoing management and
operation of the NEF Centers.
2. SERVICES OF CONSULTANT. Consultant shall provide the
Consulting Services to Mountasia and shall lend its full talent and expertise
to the provision of such Consulting Services, not to exceed ten (10) hours per
year during the term of this Agreement. Consultant shall provide Consulting
Services upon Mountasia's reasonable request with reasonable notice to
Consultant at a time and place convenient to Consultant.
3. COMPENSATION. For services rendered hereunder, Mountasia is
simultaneously herewith paying to Consultant a one-time, non-refundable
consulting fee
<PAGE> 2
(the "Fee") in the amount of Eight Hundred Thirty Three Thousand Three Hundred
Thirty Three Dollars ($833,333). The Fee shall be payable through the issuance
of $833,333 of Mountasia's 9.1% Subordinated Convertible Debentures due January
1, 1998 (the "Debentures"), and Mountasia will have no rights of set-off with
respect to the Fee. A copy of the form of the Debentures is attached hereto as
Exhibit A and incorporated herein by this reference. Mountasia agrees that the
Consultant may subsequently transfer the Debentures to any of its affiliates,
and that no stop transfer instructions will apply with respect to any such
transfer and no legal opinion will be required in connection therewith.
4. EXPENSES. Mountasia shall reimburse Consultant for any
out-of-pocket expenses incurred by Consultant in the performance of the
consulting services.
5. TERM. The term of this Consulting Agreement shall commence on
the date hereof, and shall continue for a period of five (5) years.
6. CONFIDENTIAL INFORMATION.
(a) Consultant agrees that, from the date hereof and throughout
the term of this Consulting Agreement, Consultant will not disclose, at any
time, except in pursuit of Mountasia's business, any Confidential Information
(as hereinafter defined) of Mountasia and its subsidiaries, whether written or
oral. For purposes of this Consulting Agreement, the term "Confidential
Information" means all information that is known only to employees (including
former employees or employees of affiliated companies) or others in a
confidential relationship with Mountasia and its parent, subsidiaries or
affiliates and that is not generally available from public sources, and that
relates to (i) specific technical matters, such as plans, reports, promotional,
sales or operational procedures, manuals and materials of Mountasia, (ii)
business practices of Mountasia that are unique to Mountasia and are not
publicly known, or (iii) information about services, products, processes,
analyses, financing strategies, investors, facilities or projects under
consideration, research, data, or development by Mountasia. Mountasia
acknowledges that certain affiliates of Consultant are stockholders of
Mountasia and that certain of the officers, directors and shareholders of
Consultant may be officers, directors or shareholders of such affiliates.
Mountasia agrees that disclosure of any Confidential Information to any such
affiliates of Consultant by virtue of the overlap of officers, directors or
shareholders among Consultant and its affiliates will not be a violation of
this provision.
(b) Consultant agrees not to remove from the premises of any
office of Mountasia or its subsidiaries, except in pursuit of Mountasia's
business, any document or object containing or reflecting any Confidential
Information of Mountasia or its subsidiaries.
7. INTENTION OF THE PARTIES. It is the express intention of all
of the parties hereto that Mountasia shall remain the sole owner of all
Confidential Information which,
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as a matter of necessity, may be disclosed, in whole or in part, to Consultant
in the course of its engagement by Mountasia.
8. TITLE. Title to all Confidential Information furnished to
Consultant by Mountasia, whether in the form of documents, data, software
programs or otherwise, shall remain in Mountasia. Such Confidential
Information shall not be divulged to others by Consultant without the prior
written consent of Mountasia in each such instance and all documents containing
any such Confidential Information shall be returned to Mountasia promptly upon
request by Mountasia or upon termination of this Consulting Agreement.
Mountasia acknowledges that certain affiliates of Consultant are stockholders
of Mountasia and that certain of the officers, directors and shareholders of
Consultant may be officers, directors or shareholders of such affiliates.
Mountasia agrees that disclosure of any Confidential Information to any such
affiliates of Consultant by virtue of the overlap of officers, directors or
shareholders among Consultant and its affiliates will not be a violation of
this provision.
9. NAMES AND MARKS. Following the termination or expiration of
this Agreement, Consultant shall not, for the benefit of its own or any other
person or entity's business, use or display the names, marks, logos or slogans
of Mountasia or any name, mark, logo or slogan confusingly similar thereto,
without the prior written consent of Mountasia.
10. TERMINATION. This Consulting Agreement may be terminated by
Mountasia for any reason upon written notice to Consultant stating that it
elects to terminate Consultant's services under this Consulting Agreement.
Upon termination of this Consulting Agreement by Mountasia, all of the
Consultant's and Mountasia's obligations hereunder shall, except as provided in
Sections 11 and 12, immediately cease, and Consultant shall have no obligation
whatsoever to refund the Fee or any portion thereof.
11. LIMITATION OF LIABILITY. Mountasia acknowledges that it has
substantial knowledge, experience and expertise generally with respect to the
matters as to which the Consultant will provide consulting services and that it
is able to and will independently evaluate any advice rendered by Consultant to
Mountasia in the performance of its duties hereunder. As a result, Mountasia
agrees that neither Consultant nor any of its officers, directors, shareholders
or affiliates shall have any liability whatsoever for any advice or services
rendered or for the performance or nonperformance of Consultant's duties under
this Consulting Agreement.
12. INDEMNIFICATION. Mountasia shall indemnify and hold
Consultant harmless from any claim, suit, loss, liability, damage or expense
(including reasonable attorneys' fees) ("Losses") arising in any way whatsoever
from Consultant's services hereunder, including any Losses arising from the use
by Mountasia of any advice given by Consultant.
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13. WAIVERS. All of the rights of Mountasia and Consultant
hereunder shall be cumulative and not alternative, but any delay or indulgence
on the part of either Mountasia or Consultant in enforcing any of the rights
accruing hereunder shall not be deemed a waiver of any such right. No notice
shall be required as a prior condition to the right of either party hereto to
enforce any right or obligation arising hereunder. The waiver of any breach of
any term or condition of this Consulting Agreement shall not be deemed to
constitute a waiver of any other term or condition of this Consulting
Agreement.
14. NO CONFLICT. Consultant represents that the execution of and
performance under this Consulting Agreement will not be a breach of, violation
of, or conflict with any other contract or agreement to which it is a party or
subject.
15. SUCCESSORS AND ASSIGNMENT. The provisions of this Consulting
Agreement shall extend to the successors and permitted assigns of Mountasia and
Consultant. The assignment by either party of this Consulting Agreement or any
interest herein, without the prior written consent of the other party, shall be
void.
16. ENTIRE AGREEMENT. This Consulting Agreement includes the
entire agreement between the parties with respect to the subject matter hereof
and sets forth the entirety of the consideration to which Consultant is
entitled hereunder. No modifications, changes, waivers or alterations shall be
valid or effective unless in writing and signed by the party against whom the
claimed modification, change, waiver or alteration is sought to be enforced.
17. NOTICES. All notices, including notice of termination of this
Consulting Agreement, shall be deemed given on the first day after such notice
is transmitted by overnight mail or courier service, by telex, telecopy, or
comparable wire service or on the fourth day after deposit in the United States
mail, in any case to the address set forth below or to the address given by
either party to the other from time to time by notice pursuant to this Section
17.
Mountasia: Mountasia Entertainment International, Inc.
5895 Windward Pkwy., Suite 220
Alpharetta, Georgia 30202
Attention: L. Scott Demerau
Fax No.: 770-442-6644
with a copy to: Nelson, Mullins, Riley & Scarborough
400 Colony Square, Suite 2200
1201 Peachtree Street
Atlanta, Georgia 30361
Attention: Steven A. Cunningham, Esq.
Fax No.: 404-817-6050
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Consultant: Capital Trust Developments Limited
c/o Kleinwort Benson (Guernsey) Limited
P. O. Box 44 Westbourne
The Grange
St. Peter Port
Guernsey
Channel Islands
Fax No.: 011-44-481-728-317
with a copy to: CT Capital International
575 Fifth Avenue
New York, New York 10017
Attention: John P. Oswald
Fax No.: 212-490-6950
and to: Morgan, Lewis & Bockius, L.L.P.
101 Park Avenue
New York, New York 10178-0060
Attention: Charles E. Engros, Esq.
Fax No.: 212-309-6273
18. PARAGRAPH HEADINGS. Headings are for convenience only and
shall in no manner be construed as a part of this Consulting Agreement.
19. SEVERABILITY; PARTIAL INVALIDITY. The parties to this
Consulting Agreement desire and intend that the terms and conditions of this
Consulting Agreement be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. The parties agree specifically that, if any particular term or
condition of this Consulting Agreement is adjudicated, or becomes by operation
of law, invalid or unenforceable, this Consulting Agreement will be deemed
amended to delete the portion that is adjudicated or that becomes by operation
of law, invalid or unenforceable; the deletion or reduction to apply only with
respect to the operation of the term or condition, and the remainder of the
Consulting Agreement to remain in full force and effect. A deletion or
reduction resulting from any adjudication will apply only with respect to the
operation of that term in the particular jurisdiction in which the adjudication
is made.
20. GOVERNING LAW. This Consulting Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York.
21. COUNTERPARTS. This Consulting Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Consulting
Agreement, as of the date and year first above written.
"MOUNTASIA"
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
------------------------------------
L. Scott Demerau, President
"CONSULTANT"
CAPITAL TRUST DEVELOPMENTS LIMITED
By: /s/
-----------------------------------
Title: /s/ Attorney-in-Fact
--------------------------------
<PAGE> 1
EXHIBIT 10.9
CLOSING AGREEMENT
This CLOSING AGREEMENT (the "Agreement") is made and entered into as
of the 28th day of August, 1996, by and among Family Funn Entertainment,
Inc., a Florida corporation ("FFE"), Family Entertainment Funding, L.P., a
Georgia Limited partnership ("FEF") (collectively, "Sellers") and Mountasia
Entertainment International, Inc., a Georgia corporation ("MEI" or "Purchaser").
W I T N E S S E T H:
WHEREAS, Sellers and Purchaser entered into a Purchase and Sale
Agreement dated as of April 3, 1996 (the "Purchase and Sale Agreement"),
providing among other things, for (i) the conveyance by FFE to MEI of its
general partnership interest (the "GP Interest") in National Entertainment
Funding, L.P., a Delaware limited partnership ("NEF"); and (ii) the conveyance
by FEF to MEI of its limited partnership interest (the "LP Interest") in NEF,
as well as certain indebtedness owed to FEF by NEF in the original principal
amount of $2,718,000 (the "Indebtedness"); and
WHEREAS, Sellers and Purchaser entered into a Letter Agreement
Concerning Closing contemporaneously with the Purchase and Sale Agreement (the
"First Letter Agreement") by which the parties agreed to defer the closing
under the Purchase and Sale Agreement until (i) the Purchaser shall have
obtained the consent of NationsBank, N.A. (South), the senior secured lender to
NEF, ("NationsBank") to the transactions contemplated by the Purchase and Sale
Agreement, and (ii) FEF shall have obtained the consent of a majority of its
limited partners to the sale of the LP Interest and the Indebtedness to
Purchaser; and
WHEREAS, Sellers and Purchaser entered into a subsequent letter
agreement dated April 19, 1996 (the "Second Letter Agreement") pursuant to
which the parties agreed that the aforesaid consent of NationsBank would no
longer be required if NationsBank sold its loans to Purchaser to a third party,
such loans were repaid or such consent was otherwise not required, in which
event the closing under the Purchase and Sale Agreement was agreed to occur as
soon thereafter as possible and in any event no later than three business days
after such event.
NOW, THEREFORE, pursuant to the Purchase and Sale Agreement and in
consideration of the provisions thereof and the mutual covenants and agreements
set forth therein, the parties hereto agree as follows:
1. ASSIGNMENT OF PARTNERSHIP INTERESTS AND INDEBTEDNESS.
(a) In consideration of the Purchase Price (as such term
and all other capitalized terms used but not defined herein are defined in the
Purchase and Sale Agreement), FFE hereby sells, transfers, assigns, conveys and
delivers to Purchaser, all of FFE's right, title and interest in and to the GP
Interest, to have and to hold the same for Purchaser, its successors and
assigns forever.
<PAGE> 2
(b) In consideration of the Purchase Price, FEF hereby
sells, transfers, assigns, conveys and delivers to Purchaser, and Purchaser
hereby assumes from FEF, all of FEF's right, title and interest in and to the
LP Interest and the Indebtedness, to have to hold the same for Purchaser, its
successors and assigns forever.
(c) Each Seller hereby constitutes and appoints Purchaser
as its true and lawful attorney-in-fact with full power of substitution and in
its name and stead or in the name of Purchaser or otherwise, by and on behalf
and for the benefit of Purchaser, to demand and receive from time to time any
and all of the rights and interests hereby sold, transferred, assigned,
conveyed and delivered, and to give receipts and releases for and in respect of
the same and any part thereof, and from time to time to institute and prosecute
in the name of each Seller or otherwise, for the benefit of Purchaser, all
proceedings at law, in equity or otherwise, in order to collect, assert or
enforce any claim, right or title of any kind in or to or arising from the
rights and interests hereby sold, transferred, assigned, conveyed and
delivered, and for the benefit of Purchaser to defend or compromise any and all
actions, suits or proceedings in respect of the GP Interest, the LP Interest,
and the Indebtedness assigned hereby and to do all such acts and things in
relation thereto as Purchaser shall deem desirable; Sellers hereby declaring
that the appointment made and the powers hereby granted are coupled with an
interest and are and shall be irrevocable by Sellers in any manner or for any
reason.
(d) In recognition of the delay in the closing under the
Purchase and Sale Agreement from the dates contemplated by the Purchase and
Sale Agreement, the First Letter Agreement and the Second Letter Agreement,
Purchaser agrees that, notwithstanding the provisions of the First Letter
Agreement, Sellers shall not be deemed to have repeated as of the date hereof
the representations and warranties set forth in the first sentence of Section
4.1 and of Section 5.1 of the Purchase and Sale Agreement.
2. PAYMENT OF PURCHASE PRICE. In full satisfaction of the
Purchase Price, Sellers hereby acknowledge receipt of Purchaser's 9.1%
Subordinated Convertible Debentures Due January 1, 2002, issued in the names of
Sellers in the respective dominations set forth on Exhibit B of the Purchase
and Sale Agreement. Accordingly, Sellers acknowledge and agree that the
Purchase Price has been paid in full as of the date of this Closing Agreement.
3. TERMINATION OF NEF FORMATION AGREEMENT. Sellers and Purchaser
hereby agree to enter into a Termination Agreement substantially in the form
attached as Exhibit "A" hereto, by which the "National Entertainment Funding,
L.P. Formation Agreement" dated June 30, 1994, shall be terminated.
4. PURCHASER REPRESENTATION. Purchaser represents that,
simultaneously with the execution of this Agreement, Purchaser is closing the
sale of $40,000,000.00 of Purchaser's common stock pursuant to an Amended and
2
<PAGE> 3
Restated Investment Agreement with MEI Holdings, L.P., and is executing and
delivering a Consolidated, Amended and Restated Loan and Security Agreement by
and among Purchaser and certain of its wholly owned subsidiaries as Borrowers
and Foothill Capital Corporation as Lender by which the Lender will provide up
to $20,000,000.00 in secured financing to the Borrowers, which under certain
conditions could increase to $25,000,000 (such simultaneous transactions being
referred to together as the "Refinance Closings").
5. CONSENTS. Each of the Sellers and Purchaser hereby represent
that all required consents to the Purchase and Sale Agreement and to this
Agreement with respect to performance of its obligations hereunder have been
obtained or waived.
6. CERTAIN PAYMENTS. Each of the parties hereby acknowledges and
agrees that none of the transactions effected pursuant hereto shall be deemed
to have been concluded until, and each of such transactions is expressly
conditioned upon, (i) receipt by the Sellers of the prepayment of interest
required by Section 3(A) of the Debentures being issued and delivered to the
Sellers in accordance with Section 2 of this Agreement; and (ii) the completion
of the Refinancing Closings and receipt by MEI of the amounts described in
Section 4 above in respect thereof.
7. ENFORCEABILITY. This Agreement shall be binding upon and
enforceable against and shall inure to the benefit of Sellers and Purchaser and
their respective successors and assigns.
8. CHOICE OF LAW. This Agreement shall be construed in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws.
9. COUNTERPARTS. This instrument may be executed in one or more
counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
SELLERS: PURCHASER:
FAMILY FUNN ENTERTAINMENT, INC. MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: /s/ James Curtis By: /s/ L. Scott Demerau
--------------------------------- -------------------------------------
Name: James Curtis Name: L. Scott Demerau
------------------------------- -----------------------------------
Title: President Title: President & CEO
------------------------------ ----------------------------------
(SIGNATURES CONTINUED ON NEXT PAGE)
4
<PAGE> 5
(SIGNATURES CONTINUED FROM PREVIOUS PAGE)
FAMILY ENTERTAINMENT FUNDING, L.P.
By: FAMILY FUNN ENTERTAINMENT, INC.
Its General Partner
By: /s/ James Curtis
------------------------------
Name: James Curtis
----------------------------
Title: President
---------------------------
5
<PAGE> 6
EXHIBIT A
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (the "Agreement") is entered into this ____
day of August, 1996, by and among National Entertainment Funding, L.P., a
Delaware limited partnership ("NEF"); Amusement Co., Inc., a Delaware
corporation ("ACI"); Amusement Co. Partners, Inc., a Delaware corporation
("ACPI"); Family Funn Entertainment Inc., a Florida corporation ("FFE"); Family
Entertainment Funding, L.P., a Georgia limited partnership ("FEF"); Leisure
Funn, Inc., a Florida corporation ("LFI"); Mountasia Entertainment
International, a Georgia corporation ("MEI"); and Londott Investments, Ltd., a
Canadian corporation ("Londott") (collectively, the "Parties").
W I T N E S S E T H:
WHEREAS, the Parties are also all of the parties to that certain
"National Entertainment Funding, L.P. Formation Agreement" dated June 30, 1994
(the "Formation Agreement"); and
WHEREAS, FFE, FEF and LFI have sold their respective general and
limited partnership interests in NEF to MEI pursuant to Purchase and Sale
Agreements dated April 3, 1996 and ACI and ACPI have sold all of their
respective capital stock to MEI pursuant to a Purchase and Sale Agreement dated
April 3, 1996; and
WHEREAS, ACI, ACPI and MEI, being the sole remaining holders of
general and limited partnership interests in NEF, desire to dissolve NEF in
accordance with Delaware law and pursuant to a Dissolution Agreement to be
executed contemporaneously herewith; and
WHEREAS, the Parties therefore desire to terminate any and all of
their remaining rights and obligations under the Formation Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, do hereby agree that
the Formation Agreement shall be terminated, and that none of the Parties shall
have any further rights or obligations arising solely therefrom.
1
<PAGE> 7
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the day and year first above written.
AMUSEMENT CO., INC. AMUSEMENT CO. PARTNERS, INC.
By: By:
--------------------------------- -------------------------------------
Name: Name:
------------------------------- -----------------------------------
Title: Title:
------------------------------ ----------------------------------
FAMILY ENTERTAINMENT FAMILY FUNN ENTERTAINMENT, INC.
FUNDING, L.P.
By: Family Funn Entertainment, Inc.
Its General Partner
By: By:
----------------------------- -------------------------------------
Name: Name:
--------------------------- -----------------------------------
Title: Title:
-------------------------- ----------------------------------
LEISURE FUNN, INC. MOUNTASIA ENTERTAINMENT INTERNATIONAL,
INC.
By: By:
--------------------------------- -------------------------------------
Name: Name:
------------------------------- -----------------------------------
Title: Title:
------------------------------ ----------------------------------
2
<PAGE> 8
NATIONAL ENTERTAINMENT LONDOTT INVESTMENTS, LTD.
FUNDING, L.P.
By: Amusement Co., Inc.
Its General Partner
By: By:
----------------------------- -------------------------------------
Name: Name:
--------------------------- -----------------------------------
Title: Title:
-------------------------- ----------------------------------
By: Amusement Co. Partners, Inc.
Its Limited Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
By: Mountasia Entertainment
International, Inc.
Its General and Limited Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
3
<PAGE> 1
EXHIBIT 10.10
CLOSING AGREEMENT
This CLOSING AGREEMENT (the "Agreement") is made and entered into as
of the 28 day of August, 1996, by and among the undersigned sole
shareholders (the "Shareholders") of Amusement Co., Inc., a Delaware
corporation ("ACI"), and Amusement Co. Partners, Inc., a Delaware corporation
("ACPI"); ACI; ACPI; Capital Trust Investments Limited, a British Virgin Island
corporation (the "Noteholder"), the holder of a certain promissory note (the
"Note") from National Entertainment Funding, L.P. and Delaware Limited
Partnership ("NEF") in the principal amount of Three Million Dollars
($3,000,000); Capital Trust Developments Limited, a British Virgin Islands
Corporation ("CTDL"), which is party to the Consulting Agreement with Mountasia
Entertainment International, Inc., a Georgia corporation ("Purchaser") dated
April 3, 1991 (the "Consulting Agreement"), and the Purchaser.
W I T N E S S E T H:
WHEREAS, the Shareholders, the Noteholder and Purchaser entered into a
Purchase and Sale Agreement dated as of April 3, 1996 (the "Purchase and Sale
Agreement"), providing among other things, for (i) the conveyance by the
Shareholders to Purchaser all of the issued and outstanding shares of capital
stock of ACI and ACPI (collectively, the "Shares"); and (ii) the conveyance by
the Noteholder to Purchaser of the Note; and
WHEREAS, the Shareholders, the Noteholder and Purchaser entered into a
Letter Agreement Concerning Closing contemporaneously with the Purchase and
Sale Agreement (the "First Letter Agreement") by which the parties agreed to
defer the closing under the Purchase and Sale Agreement until the Purchaser
shall have obtained the consent of NationsBank, N.A. (South), the senior
secured lender to NEF ("NationsBank") to the transactions contemplated by the
Purchase and Sale Agreement;
WHEREAS, the Shareholders, the Noteholder and Purchaser entered into a
subsequent letter agreement dated April 19, 1996 (the "Second Letter
Agreement") pursuant to which the parties agreed that the aforesaid consent of
NationsBank would no longer be required if NationsBank sold its loans to
Purchaser to a third party, such loans were repaid or such consent was
otherwise not required, in which event the closing under the Purchase and Sale
Agreement was agreed to occur as soon thereafter as possible and in any event
no later than there business days after such event; and
WHEREAS, pursuant to the Consulting Agreement, Purchaser engaged CTDL
to provide certain consulting services to Purchaser and to compensate CTDL
therefor by paying to CTDL a consulting fee in the amount of $833,333;
NOW, THEREFORE, pursuant to the Purchase and Sale Agreement and the
Consulting Agreement in consideration of the provisions thereof and the mutual
covenants and agreements set forth therein, the parties hereto agree as follows:
<PAGE> 2
1. ASSIGNMENT OF STOCK AND INDEBTEDNESS.
(a) In consideration of the Purchase Price (as such term
and all other capitalized terms used but not defined herein are defined in the
Purchase and Sale Agreement), the Shareholders hereby sell, transfer, assign,
convey and deliver to Purchaser, all of the Shareholders' right, title and
interest in and to the Shares, to have and to hold the same for Purchaser, its
successors and assigns forever.
(b) In consideration of the Purchase Price, the
Noteholder hereby sells, transfers, assigns, conveys and delivers to Purchaser,
and Purchaser hereby assumes from the Noteholder, all of the Noteholder's
right, title and interest in and to the Note, to have to hold the same for
Purchaser, its successors and assigns forever.
(c) Each of the Shareholders and the Noteholder hereby
constitutes and appoints Purchaser as its true and lawful attorney-in-fact with
full power of substitution and in its name and stead or in the name of
Purchaser or otherwise, by and on behalf and for the benefit of Purchaser, to
demand and receive from time to time any and all of the rights and interests
hereby sold, transferred, assigned, conveyed and delivered, and to give
receipts and releases for and in respect of the same and any part thereof, and
from time to time to institute and prosecute in the name of the Shareholders
and the Noteholder or otherwise, for the benefit of Purchaser, all proceedings
at law, in equity or otherwise, in order to collect, assert or enforce any
claim, right or title of any kind in or to or arising from the rights and
interests hereby sold, transferred, assigned, conveyed and delivered, and for
the benefit of Purchaser to defend or compromise any and all actions, suits or
proceedings in respect of the Shares and the Note assigned hereby and to do all
such acts and things in relation thereto as Purchaser shall deem desirable; the
Shareholders and the Noteholder hereby declaring that the appointment made and
the powers hereby granted are coupled with an interest and are and shall be
irrevocable by the Shareholders and the Noteholder in any manner or for any
reason.
(d) In recognition of the delay in the closing under the
Purchase and Sale Agreement from the dates contemplated by the Purchase and
Sale Agreement, the First Letter Agreement and the Second Letter Agreement,
Purchaser agrees that, notwithstanding the provisions of the First Letter
Agreement, the Shareholders and the Noteholder shall not be deemed to have
repeated as of the date hereof the representations and warranties set forth in
the first sentence of Section 4.1, Section 4.5, Section 4.6, the first sentence
of Section 5.1, Section 5.5 and Section 5.6 of the Purchase and Sale Agreement;
provided, however, the Shareholders and the Noteholder do represent that they
have no knowledge of any facts which would cause the representations in
Sections 4.5 and 5.5 to be untrue if repeated.
2. PAYMENT OF PURCHASE PRICE. In full satisfaction of the
Purchase Price, the Shareholders and the Noteholder hereby acknowledge receipt
of Purchaser's 9.1% Subordinated Convertible Debentures Due January 1, 2002
(each, a "Debenture") issued in the names of the Shareholders and the
Noteholder in the
2
<PAGE> 3
respective denominations set forth on Exhibit B of the Purchase and Sale
Agreement. Accordingly, the Shareholders and the Noteholder acknowledge and
agree that the Purchase Price has been paid in full as of the date of this
Agreement.
3. PAYMENT OF COMPENSATION UNDER AND TERMINATION OF CONSULTING
AGREEMENT. In full satisfaction of the compensation payable to it pursuant to
the Consulting Agreement, CTDL hereby acknowledges receipt of a Debenture
issued in the name of CTDL in the principal amount of eight hundred
thirty-three thousand three hundred thirty-three dollars ($833,333).
Immediately subsequent to the issuance and delivery of the aforesaid Debenture,
Purchaser hereby terminates the Consulting Agreement pursuant to the provisions
of Section 10 thereof, and CTDL accepts and agrees to such termination.
4. PURCHASER REPRESENTATION. Purchaser represents that,
simultaneously with the execution of this Agreement, Purchaser is closing the
sale of $40,000,000.00 of Purchaser's common stock pursuant to an Amended and
Restated Investment Agreement with MEI Holdings, L.P., and is executing and
delivering a Consolidated, Amended and Restated Loan and Security Agreement by
and among Purchaser and certain of its wholly owned subsidiaries as Borrowers
and Foothill Capital Corporation as Lender by which the Lender will provide up
to $20,000,000.00 in secured financing to the Borrowers, which under certain
conditions could increase to $25,000,000 (such simultaneous transactions being
referred to together as the "Refinancing Closings").
5. BOOKS AND RECORDS. The Shareholders covenant and agree that
they shall cause to be surrendered and delivered to Purchaser the minute books,
stock books, ledgers and all other books and records of ACI and ACPI as soon as
practical on or after the date of this Agreement.
6. CONSENTS. Each of Purchaser, the Shareholders and the
Noteholder hereby represent that all required consents to the Purchase and Sale
Agreement and to this Agreement with respect to the performance of its
obligations hereunder have been obtained or waived.
7. REMOVAL AND REPLACEMENT OF OFFICERS AND DIRECTORS.
Simultaneously with the consummation of the transactions contemplated hereby,
Purchaser, ACI and ACPI hereby remove all of the officers and directors of ACI
and ACPI in place immediately prior hereto. Purchaser, ACI and ACPI, as
applicable, irrevocably release each of such persons from all damages, claims
and liabilities, known or unknown, with respect to their service as officers
and directors of ACI and ACPI.
8. CERTAIN PAYMENTS. Each of the parties hereby acknowledges and
agrees that none of the transactions effected pursuant hereto shall be deemed
to have been concluded until and each of such transactions is expressly
conditioned upon, (i) receipt by each of the Shareholders, the Noteholder and
CTDL of the prepayment of
3
<PAGE> 4
interest required by Section 3(A) of the Debentures being issued and delivered
to such person in accordance with Sections 2 or 3, as applicable, of this
Agreement; (ii) receipt by Morgan, Lewis & Bockius, L.P., counsel to the
Shareholders, the Noteholder, and CTDL of an amount equal to $24,000 in payment
of their legal fees and expenses in connection with this transaction and the
transactions contemplated by the Closing Agreement, dated the date hereof by
and among Purchaser and Family Funn Entertainment, Inc. and Family
Entertainment Funding, L.P.; and (iii) the completion of the Refinancing
Closings and receipt by Purchaser of the amounts described in Section 4 above
in respect thereof.
9. ENFORCEABILITY. This Agreement shall be binding upon and
enforceable against and shall inure to the benefit of the Shareholders, the
Noteholder, CTDL and Purchaser and their respective successors and assigns.
10. CHOICE OF LAW. This Agreement shall be construed in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws.
11. COUNTERPARTS. This instrument may be executed in one or more
counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
SHAREHOLDERS: PURCHASER:
CAPITAL TRUST MANAGEMENT LTD. MOUNTASIA ENTERTAINMENT
OMAR S. BAHATEQ INTERNATIONAL, INC.
CLOVER HOLDINGS, LTD.
AL HUDA HOLDING LTD. By: /s/ L. Scott Demerau
DR. ANIS F. KASSIM -------------------------------------
SALEH M. AL-HAJAJ Name: L. Scott Demerau
ABDULLAH AL ALI AL-MUSIM -----------------------------------
ALRAJA ESTABLISHMENT Title: Pres & CEO
TAREQ BIN SALEH ----------------------------------
SARAH INVESTMENTS
SHAKTI INVESTMENT HOLDINGS LTD.
TAMANCA ESTABLISHMENT
CAPITAL TRUST S. A.
By: /s/ John P. Oswald
---------------------------------
Attorney-In-Fact
[signatures continued on following page]
4
<PAGE> 5
[signatures continued from previous page]
NOTEHOLDER:
CAPITAL TRUST INVESTMENTS LIMITED
By: /s/ John P. Oswald
---------------------------------
John P. Oswald
Attorney-In-Fact
CAPITAL TRUST DEVELOPMENTS LIMITED,
a British Virgin Islands Corporation
By: /s/ John P. Oswald
---------------------------------
Name: John P. Oswald
-------------------------------
Title: Attorney - In - Fact
------------------------------
AMUSEMENT CO. PARTNERS, INC.
By: /s/ John P. Oswald
---------------------------------
John P. Oswald, President
AMUSEMENT CO., INC.
By: /s/ John P. Oswald
---------------------------------
John P. Oswald, President
5
<PAGE> 6
EXHIBIT A
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (the "Agreement") is entered into this ____
day of August, 1996, by and among National Entertainment Funding, L.P., a
Delaware limited partnership ("NEF"); Amusement Co., Inc., a Delaware
corporation ("ACI"); Amusement Co. Partners, Inc., a Delaware corporation
("ACPI"); Family Funn Entertainment Inc., a Florida corporation ("FFE"); Family
Entertainment Funding, L.P., a Georgia limited partnership ("FEF"); Leisure
Funn, Inc., a Florida corporation ("LFI"); Mountasia Entertainment
International, a Georgia corporation ("MEI"); and Londott Investments, Ltd., a
Canadian corporation ("Londott") (collectively, the "Parties").
W I T N E S S E T H:
WHEREAS, the Parties are also all of the parties to that certain
"National Entertainment Funding, L.P. Formation Agreement" dated June 30, 1994
(the "Formation Agreement"); and
WHEREAS, FFE, FEF and LFI have sold their respective general and
limited partnership interests in NEF to MEI pursuant to Purchase and Sale
Agreements dated April 3, 1996 and ACI and ACPI have sold all of their
respective capital stock to MEI pursuant to a Purchase and Sale Agreement dated
April 3, 1996; and
WHEREAS, ACI, ACPI and MEI, being the sole remaining holders of
general and limited partnership interests in NEF, desire to dissolve NEF in
accordance with Delaware law and pursuant to a Dissolution Agreement to be
executed contemporaneously herewith; and
WHEREAS, the Parties therefore desire to terminate any and all of
their remaining rights and obligations under the Formation Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, do hereby agree that
the Formation Agreement shall be terminated, and that none of the Parties shall
have any further rights or obligations arising solely therefrom.
1
<PAGE> 7
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the day and year first above written.
AMUSEMENT CO., INC. AMUSEMENT CO. PARTNERS, INC.
By: By:
--------------------------------- -------------------------------------
Name: Name:
------------------------------- -----------------------------------
Title: Title:
------------------------------ ----------------------------------
FAMILY ENTERTAINMENT FAMILY FUNN ENTERTAINMENT, INC.
FUNDING, L.P.
By: Family Funn Entertainment, Inc.
Its General Partner
By: By:
----------------------------- -------------------------------------
Name: Name:
--------------------------- -----------------------------------
Title: Title:
-------------------------- ----------------------------------
LEISURE FUNN, INC. MOUNTASIA ENTERTAINMENT INTERNATIONAL,
INC.
By: By:
--------------------------------- -------------------------------------
Name: Name:
------------------------------- -----------------------------------
Title: Title:
------------------------------ ----------------------------------
2
<PAGE> 8
NATIONAL ENTERTAINMENT LONDOTT INVESTMENTS, LTD.
FUNDING, L.P.
By: Amusement Co., Inc.
Its General Partner
By: By:
----------------------------- -------------------------------------
Name: Name:
--------------------------- -----------------------------------
Title: Title:
-------------------------- ----------------------------------
By: Amusement Co. Partners, Inc.
Its Limited Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
By: Mountasia Entertainment
International, Inc.
Its General and Limited Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
3
<PAGE> 1
EXHIBIT 10.11
CLOSING AGREEMENT
This CLOSING AGREEMENT (the "Agreement") is made and entered into as
of the 28 day of August, 1996, by and among Leisure Funn, Inc., a Florida
corporation ("LFI") and Mountasia Entertainment International, Inc., a Georgia
corporation ("MEI").
W I T N E S S E T H:
WHEREAS, LFI and MEI entered into a Purchase and Sale Agreement dated
as of May 10, 1996 (the "Purchase and Sale Agreement"), providing among other
things for the conveyance by LFI to MEI of its general partnership interest
(the "GP Interest") in National Entertainment Funding, L.P., a Delaware limited
partnership ("NEF");
NOW, THEREFORE, pursuant to the Purchase and Sale Agreement and in
consideration of the provisions thereof and the mutual covenants and agreements
set forth therein, the parties hereto agree as follows:
1. ASSIGNMENT OF PARTNERSHIP INTERESTS AND INDEBTEDNESS.
(a) In consideration of the Purchase Price (as such term
and all other capitalized terms used but not defined herein are defined in the
Purchase and Sale Agreement), LFI hereby sells, transfers, assigns, conveys and
delivers to MEI, all of LFI's right, title and interest in and to the GP
Interest, to have and to hold the same for MEI, its successors and assigns
forever.
(b) LFI hereby constitutes and appoints MEI as its true
and lawful attorney-in-fact with full power of substitution and in its name and
stead or in the name of MEI or otherwise, by and on behalf and for the benefit
of MEI, to demand and receive from time to time any and all of the rights and
interests hereby sold, transferred, assigned, conveyed and delivered, and to
give receipts and releases for and in respect of the same and any part thereof,
and from time to time to institute and prosecute in the name of LFI or
otherwise, for the benefit of MEI, all proceedings at law, in equity or
otherwise, in order to collect, assert or enforce any claim, right or title of
any kind in or to or arising from the rights and interests hereby sold,
transferred, assigned, conveyed and delivered, and for the benefit of MEI to
defend or compromise any and all actions, suits or proceedings in respect of
the GP Interest assigned hereby and to do all such acts and things in relation
thereto as MEI shall deem desirable; LFI hereby declaring that the appointment
made and the powers hereby granted are coupled with an interest and are and
shall be irrevocable by LFI in any manner or for any reason.
2. PAYMENT OF PURCHASE PRICE. In full satisfaction of the
Purchase Price, LFI hereby acknowledges receipt of one of MEI's 9.1%
Subordinated Convertible Debentures Due January 1, 2002, issued in the name of
LFI for the amount of One Hundred Dollars ($100). Accordingly, LFI
acknowledges and agrees that the Purchase Price has been paid in full as of the
date of this Closing Agreement.
<PAGE> 2
3. TERMINATION OF NEF FORMATION AGREEMENT. LFI and MEI hereby
agree to enter into a Termination Agreement substantially in the form attached
as Exhibit "A" hereto, by which the "National Entertainment Funding, L.P.
Formation Agreement" dated June 30, 1994, shall be terminated.
4. MEI REPRESENTATION. MEI represents that, simultaneously with
the execution of this Agreement, MEI is closing the sale of $40,000,000.00 of
MEI's common stock pursuant to an Amended and Restated Investment Agreement
with MEI Holdings, L.P., and is executing and delivering a Consolidated,
Amended and Restated Loan and Security Agreement by and among MEI and certain
of its wholly owned subsidiaries as Borrowers and Foothill Capital Corporation
as Lender by which the Lender will provide up to $20,000,000.00 in secured
financing to the Borrowers, which under certain conditions could increase to
$25,000,000.00 (such simultaneous transactions being referred to together as
the "Refinancing Closings").
5. CONSENTS. LFI and MEI hereby represent that all required
consents to the Purchase and Sale Agreement and to this Agreement with respect
to the performance of its obligations hereunder have been obtained or waived.
6. CERTAIN PAYMENTS. Each of the parties hereby acknowledges and
agrees that none of the transactions effected pursuant hereto shall be deemed
to have been concluded until, and each of such transactions is expressly
conditioned upon, (i) receipt by LFI of the prepayment of interest required by
Section 3(A) of the Debentures being issued and delivered to LFI in accordance
with Section 2 of this Agreement; and (ii) the completion of the Refinancing
Closings and receipt by MEI of the amounts described in Section 4 above in
respect thereof.
7. ENFORCEABILITY. This Agreement shall be binding upon and
enforceable against and shall inure to the benefit of LFI and MEI and their
respective successors and assigns.
8. CHOICE OF LAW. This Agreement shall be construed in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws.
9. COUNTERPARTS. This instrument may be executed in one or more
counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
LEISURE FUNN, INC. MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: /s/ Ronald Potts By: /s/ L. Scott Demerau
--------------------------------- -------------------------------------
Name: Ronald Potts Name: L. Scott Demerau
------------------------------- -----------------------------------
Title: Vice President Title: Pres & CEO
------------------------------ ----------------------------------
3
<PAGE> 4
EXHIBIT A
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (the "Agreement") is entered into this ____
day of August, 1996, by and among National Entertainment Funding, L.P., a
Delaware limited partnership ("NEF"); Amusement Co., Inc., a Delaware
corporation ("ACI"); Amusement Co. Partners, Inc., a Delaware corporation
("ACPI"); Family Funn Entertainment Inc., a Florida corporation ("FFE"); Family
Entertainment Funding, L.P., a Georgia limited partnership ("FEF"); Leisure
Funn, Inc., a Florida corporation ("LFI"); Mountasia Entertainment
International, a Georgia corporation ("MEI"); and Londott Investments, Ltd., a
Canadian corporation ("Londott") (collectively, the "Parties").
W I T N E S S E T H:
WHEREAS, the Parties are also all of the parties to that certain
"National Entertainment Funding, L.P. Formation Agreement" dated June 30, 1994
(the "Formation Agreement"); and
WHEREAS, FFE, FEF and LFI have sold their respective general and
limited partnership interests in NEF to MEI pursuant to Purchase and Sale
Agreements dated April 3, 1996 and ACI and ACPI have sold all of their
respective capital stock to MEI pursuant to a Purchase and Sale Agreement dated
April 3, 1996; and
WHEREAS, ACI, ACPI and MEI, being the sole remaining holders of
general and limited partnership interests in NEF, desire to dissolve NEF in
accordance with Delaware law and pursuant to a Dissolution Agreement to be
executed contemporaneously herewith; and
WHEREAS, the Parties therefore desire to terminate any and all of
their remaining rights and obligations under the Formation Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, do hereby agree that
the Formation Agreement shall be terminated, and that none of the Parties shall
have any further rights or obligations arising solely therefrom.
1
<PAGE> 5
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the day and year first above written.
AMUSEMENT CO., INC. AMUSEMENT CO. PARTNERS, INC.
By: By:
--------------------------------- -------------------------------------
Name: Name:
------------------------------- -----------------------------------
Title: Title:
------------------------------ ----------------------------------
FAMILY ENTERTAINMENT FAMILY FUNN ENTERTAINMENT, INC.
FUNDING, L.P.
By: Family Funn Entertainment, Inc.
Its General Partner
By: By:
----------------------------- -------------------------------------
Name: Name:
--------------------------- -----------------------------------
Title: Title:
-------------------------- ----------------------------------
LEISURE FUNN, INC. MOUNTASIA ENTERTAINMENT INTERNATIONAL,
INC.
By: By:
--------------------------------- -------------------------------------
Name: Name:
------------------------------- -----------------------------------
Title: Title:
------------------------------ ----------------------------------
2
<PAGE> 6
NATIONAL ENTERTAINMENT LONDOTT INVESTMENTS, LTD.
FUNDING, L.P.
By: Amusement Co., Inc.
Its General Partner
By: By:
----------------------------- -------------------------------------
Name: Name:
--------------------------- -----------------------------------
Title: Title:
-------------------------- ----------------------------------
By: Amusement Co. Partners, Inc.
Its Limited Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
By: Mountasia Entertainment
International, Inc.
Its General and Limited Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
3
<PAGE> 1
EXHIBIT 10.12
NEITHER THIS DEBENTURE NOR THE SHARES
OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS DEBENTURE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE, AND NEITHER MAY BE SOLD WITHOUT REGISTRATION THEREOF OR AN
EXEMPTION THEREFROM.
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
9.1% SUBORDINATED CONVERTIBLE DEBENTURE DUE JANUARY 1, 2002
April 3, 1996 $1~
THIS DEBENTURE is one of a duly authorized issue of Debentures of
Mountasia Entertainment International, Inc., a corporation duly organized and
existing under the laws of the State of Georgia (the "Company"), designated as
its 9.1% Subordinated Convertible Debentures Due January 1, 2002, in an
aggregate principal amount not exceeding U.S. $11,422,422 (the "Debentures").
This Debenture is one of the debentures being issued pursuant, and is subject
to the terms of that certain Purchase and Sale Agreement dated as of April 3,
1996 by and among Maker and Payee, among others (the "Purchase Agreement").
FOR VALUE RECEIVED, the undersigned, MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC., a corporation duly organized under the laws of the State
of Georgia (herein called the "Maker") promises to pay to 2~ or assigns (herein
called the "Payee") the sum of 3~ and No/100 Dollars ($1~), together with
interest on the principal
(continued on reverse)
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
Dated: April 3, 1996 By:
-------------------------------------
L. Scott Demerau
President
<PAGE> 2
(page 2 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
hereof from time to time outstanding from the date of advancement until
maturity, at the per annum rate hereinafter stated (computed on the basis of a
year of 360 days and paid for the actual number of days elapsed), said
principal and all other obligations (other than interest on the principal
hereof or on other interest-bearing obligations of the Maker hereunder and
other than other obligations of the Maker hereunder which are specifically
stated herein to be cash obligations) of Maker under this Debenture, including
without limitation, obligations in respect of costs, expenses and indemnities,
being payable, at Maker's option, in lawful money of the United States of
America by wire transfer pursuant to the instructions provided to the Maker by
the Payee or in shares of the Common Stock of Maker (valued per share at the
lower of (i) the average of the closing bid prices for a share of Maker's
Common Stock (unless traded on the American Stock Exchange or the New York
Stock Exchange, in which case the average of the last reported sales prices)
for the thirty (30) days prior to the date of reference set forth herein (or if
no date of reference is so specified, the date of payment) (hereinafter the
"Market Price") which shares are registered in accordance with Section 9 hereof
or (ii) $5.00, and said interest being payable in lawful money of the United
States of America by wire transfer pursuant to the instructions provided to
Maker by Payee and, provided that, except as otherwise provided herein, no
limitation on the Maker's or Payee's option to require the conversion of this
Debenture, whether upon the occurrence and during the continuance of a Default
or otherwise, shall limit in any way the Maker's option to make payments
hereunder in shares of Maker's Common Stock.
This Debenture is subject to the following additional provisions:
1. [Intentionally omitted]
2. Purchase and Sale Agreement. Reference is made to the
Purchase Agreement for a description of the respective rights and limitations
of rights, duties and obligations of the Payee and the Maker and the provisions
of the Purchase Agreement are hereby incorporated into this Debenture by
reference with the full effect of such provisions being stated herein;
provided, however, if any provision of the Purchase Agreement conflicts with
the terms of this Debenture, then the terms of this Debenture shall govern.
The Maker will provide a copy of the Purchase Agreement to the Payee upon
request to the Maker at 5895 Windward Parkway, Suite 220, Alpharetta, Georgia
30202-4128, telephone number (770) 442-6640. Capitalized terms used in this
Debenture and not defined herein shall have the meanings set forth in the
Purchase Agreement.
3. Interest Rate and Interest Payment.
(a) From and after the date hereof through maturity, the
unpaid principal balance hereof shall bear interest from January 1, 1996 at a
rate of nine and one-tenth percent (9.1%) per annum. Interest on said
principal is due and payable quarterly in arrears on the 8th of each of
January, April, July and October, commencing October 8, 1996; provided that the
interest payment for the period from January 1, 1996 through June 30, 1996, to
the extent not previously paid, shall be paid simultaneously with the issuance
of this Debenture. In addition, at time of issuance, an amount equal to the
interest that would otherwise be paid for one calendar quarter, shall be paid
as a prepayment of the interest for the last quarter (or portion thereof) this
Debenture is outstanding, it being acknowledged that no portion of such
prepayment shall be refundable regardless of whether or not this Debenture is
outstanding for the entire duration of such last quarter.
2
<PAGE> 3
(page 3 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
(b) No dividend shall be declared or paid or any other
distribution declared or made with respect to any class of stock of the Maker,
nor shall any sums be set aside for or applied to the purchase or redemption of
any shares of any class of stock of the Maker, unless and until all interest
payable upon this Debenture and all other debentures issued pursuant to the
Purchase Agreement (collectively, the "Debentures") has been fully paid or
while there shall be continuing any Default hereunder or thereunder.
(c) Any partial interest payment with respect to the
Debentures shall be made pro rata to all holders of the Debentures in
proportion to the full amount of interest to which they would otherwise be
entitled.
(d) If the Maker is required to make any withholding or
deduction from any interest payment required hereunder to the Payee for or in
respect of any present or future taxes, levies, imposts, duties, charges or
fees of any nature imposed by the United States (or any political subdivision
thereof or therein) (collectively, "Taxes"), (i) (x) the Maker shall make such
withholding or deduction, pay such Taxes and provide the Payee with proof of
such payment and (y) the amount due to the Payee from the Maker with respect to
such interest payment shall be increased to the extent necessary to ensure that
after making such withholding or deduction, and any withholdings or deductions
required to be made in respect of any such increase, the Payee shall receive an
amount equal to the amount which the Payee would have received had no such
withholding or deduction been required to be made, and (ii) at the request and
expense of the Maker, the Payee shall execute such documents and instruments,
make such filings, and take such other actions, as Maker may reasonably request
to permit Maker to request and receive for its benefit any refunds or credits
with respect to the Maker's payment of any Taxes; provided, however, no failure
or delay by Payee to execute such documents, make such filings or take such
other actions shall excuse Maker from performance of its obligations under this
Debenture.
4. Past Due or Default Rate. Except as otherwise provided
herein, all past due principal and, to the fullest extent permitted by
applicable law, interest of this Debenture, whether due as the result of
acceleration of maturity or otherwise, shall bear interest from the due date at
a rate equal to eighteen percent (18%). In addition, upon the occurrence and
during the continuance of any Default (as defined in Section 12), the unpaid
principal balance and, to the fullest extent permitted by applicable law, all
due but unpaid interest thereon shall bear interest at a rate of eighteen
percent (18%) per annum.
5. Term and Principal Payments. The principal of this Debenture
is due and payable in full together with all accrued but unpaid interest
thereon through the payment date on January 1, 2002 as such date may be
extended as hereinafter set forth (the "Maturity Date"). Without limiting the
generality of the preamble to this Debenture, but subject to the other terms of
this Debenture, the principal shall be paid, at Maker's option, and regardless
of whether any such payment is made at maturity, following acceleration or
otherwise, in the form of (i) cash, (ii) shares of Common Stock of Maker having
a Fair Market Value equal to the amount of principal due and payable or (iii) a
combination of cash and shares of Common Stock of Maker such that the cash plus
the Fair Market Value of the shares of Common Stock shall be equal to the
amount of principal due and payable. For purposes of this Section, Fair Market
Value shall mean the lower of (i) the Market Price determined by reference to
the Maturity Date or, if different, the date of payment, or (ii) $5.00. Any
shares of Common Stock of Maker issued pursuant to this Section 5 must be
registered in accordance with Section 9 hereof.
3
<PAGE> 4
(page 4 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
6. Prepayment. This Debenture is not subject to prepayment
without the consent of the Payee, provided, however, that this Section 6 shall
not limit in any way the Maker's or the Payee's option to require the
conversion of this Debenture, or the automatic conversion of this Debenture,
pursuant to Section 7.
7. Conversion.
(a) Conversion Generally. This Debenture shall be
convertible into shares of Maker's Common Stock at the option of Payee, at the
option of Maker or automatically, as provided in this Section 7. This Debenture
shall be convertible into the number of fully paid and nonassessable shares of
Maker's Common Stock obtained by dividing the aggregate principal balance of
Debentures to be converted plus any accrued and unpaid interest thereon by the
Conversion Price specified in the provision of this Section 7 pursuant to which
the Debenture is being converted.
(b) Conversion at the Option of Payee. Payee shall have
the right to convert all or a portion of this Debenture into fully paid,
nonassessable, shares of Maker's Common Stock at any time after April 4, 1997
at a Conversion Price equal to the amount which is the lower of (i) the Market
Price determined by reference to the date of delivery of Notice of Conversion
and (ii) $5.00.
(c) Conversion at the Option of Maker. Maker shall have
the option to require the conversion of this Debenture into fully paid,
non-assessable, shares of Common Stock of Maker at any time after April 4,
1997, upon notice from Maker to Payee given no less than ninety (90) days prior
to such date or any later date on which Maker elects to exercise its conversion
option hereunder; provided, however, that during the period after Maker gives
notice of its intention to require conversion hereunder, Payee shall have the
right to convert all or a portion of this Debenture pursuant to the terms of
Section 7(b) hereof, and, further provided that Maker may not give such notice
unless it believes in good faith that it will have filed and declared effective
a Registration Statement (as defined in Section 9) or Resale Registration
Statement (as defined in Section 9) on or before the date of conversion and may
not require conversion unless the shares of Maker's Common Stock to be
delivered to Payee upon such conversion will be tradeable in the hands of Payee
by reason of such an effective Registration Statement or Resale Registration
Statement. The Conversion Price for any conversion pursuant to this Section
7(b) shall be equal to an amount which is the lower of (i) the Market Price
determined by reference to the date of conversion specified in the notice given
by Maker pursuant to this Section and (ii) $5.00.
(d) Automatic Conversion. Any principal amount of this
Debenture that has not been converted prior to December 31, 2001 will be
automatically converted into fully paid, nonassessable, shares of Maker's
Common Stock on December 31, 2001, at a Conversion Price equal to the amount
which is the lower of (i) the Market Price determined by reference to December
31, 2001 and (ii) $5.00.
(e) Merger, Sale of Assets or "Going Private"
Transaction.
(1) Immediately prior to the occurrence of (i) a
consolidation or merger of Maker with or into any other corporation or
corporations, or (ii) a sale, conveyance or other disposition of all or
substantially all of the assets of Maker (other than to one or more wholly
owned subsidiaries thereof; provided, that following any such sale, conveyance
or other disposition this clause shall be
4
<PAGE> 5
(page 5 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
applicable to any further sale, conveyance or other disposition by the
transferee subsidiary or subsidiaries), or (iii) a transaction or series of
related transactions in which any person or any persons acting together which
would constitute a "group" for purposes of Section 13 (d) of the Securities and
Exchange Act of 1934, as amended, (the "Exchange Act") (other than MEI
Holdings, L.P. or its affiliates) acquires more than 25% of the voting power of
Maker, or (iv) the termination of registration of Maker's securities under
Section 12 of the Exchange Act or any other event which has the effect of Maker
ceasing to file reports as required by Sections 13(a) or 15(d) of the Exchange
Act or the failure of Maker's Common Stock to be listed on the New York Stock
Exchange or the American Stock Exchange or to be quoted on the NASDAQ National
Market administered by the National Association of Securities Dealers, Inc., in
either case as a result of any event other than a transaction described in any
of clauses (i), (ii) or (iii) (any of such events described in clauses (i),
(ii), (iii), or (iv) a "Change of Control Transaction"), any principal amount
of this Debenture that has not otherwise been converted pursuant to Section 7
shall be immediately and automatically converted into fully paid,
nonassessable, shares of Maker's Common Stock at a Conversion Price equal to
the amount which is the lower of (x) $5.00 and (y) (1) the per share merger
consideration, purchase, exchange or conversion price for Maker's Common Stock
in a Change of Control Transaction described in clauses (i) or (iii), (2) the
aggregate purchase price (which shall include, without limitation, the amount
of any liabilities assumed by the purchaser, the present value of any deferred
consideration and the present value of any contingent consideration as agreed
between Maker and Payee or as determined by an independent "Big Six" accounting
firm chosen jointly by Maker and Payee) for a Change of Control Transaction
described in clause (ii) divided by the number of shares of Maker's Common
Stock outstanding at the time of such Change of Control Transaction or (3) the
average of the closing bid prices (unless traded on the American Stock Exchange
or the New York Stock Exchange, in which case the average of the last sales
prices) of a share of Maker's Common Stock for the thirty (30) trading days
prior to the effective date of a Change of Control Transaction described in
clause (iv).
(2) Maker or the person acquiring control of
Maker pursuant to the Change of Control Transaction shall be required to
purchase the shares of Maker's Common Stock issued upon conversion of this
Debenture from Payee at the closing of the Change of Control Transaction, or on
the effective date thereof if there is no closing, for a cash amount per share
equal to (x) the per share merger consideration, purchase, exchange or
conversion price for Maker's Common Stock in a Change of Control Transaction
described in clauses (i) or (iii) of the preceding paragraph (e)(1), (y) the
aggregate purchase price (which shall include, without limitation, the amount
of any liabilities assumed by the purchaser, the present value of any deferred
consideration and the present value of any contingent consideration as agreed
between Maker and Payee or as determined by an independent "Big Six" accounting
firm chosen jointly by Maker and Payee) for a Change of Control Transaction
described in clause (ii) of the preceding paragraph (1) divided by the number
of shares of Maker's Common Stock outstanding at the time of such Change of
Control Transaction or (z) the average of the closing bid prices (unless traded
on the American Stock Exchange or the New York Stock Exchange, in which case
the average of the last reported sales prices) of a share of Maker's Common
Stock for the thirty (30) trading days prior to the effective date of a Change
of Control Transaction described in clause (iv) of the preceding paragraph (1).
If such cash purchase price is not paid in full when due, the unpaid portion
thereof shall bear interest at an annual rate of 18% from the due date until
such amount is paid in full. Any partial payment shall be made pro rata to
holders of the Debentures in proportion to the full amount to which they would
otherwise be entitled. Until such purchase price has been paid in full, Maker
and any other entity responsible for the payment thereof shall not declare or
pay any dividend
5
<PAGE> 6
(page 6 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
or any other distribution or pay or set aside any sums for or apply any sums to
the purchase or redemption of any shares of its capital stock.
(f) Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of this Debenture. In lieu of any
fractional share to which the holder would otherwise be entitled, Maker shall
pay cash to such holder in an amount equal to such fraction multiplied by the
applicable Conversion Price. In order to convert this Debenture into full
shares of Common Stock, the holder shall give written notice to Maker at such
office that he elects to convert the same, the principal amount of this
Debenture to be so converted and a calculation of the Conversion Price;
provided, however, that Maker shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion until
either this Debenture is delivered to Maker or its transfer agent duly
endorsed, or the holder notifies Maker or its transfer agent that such
Debenture has been lost, stolen or destroyed and executes an agreement
reasonably satisfactory to Maker to indemnify Maker from any loss incurred by
it in connection with such Debenture or conversion occurs automatically or at
the option of Maker pursuant to the provisions of this Section 7.
Maker shall issue and deliver within three (3) business days
after delivery to Maker of this Debenture, or such agreement of
indemnification, to Payee at the address of Payee specified in the notice of
conversion, a certificate or certificates for the number of shares of Common
Stock to which Payee shall be entitled as aforesaid. The date on which notice
of conversion is given shall be deemed to be the date set forth in such notice
of conversion provided that the original Debenture to be converted or such
agreement of indemnification is received by the transfer agent or Maker within
five (5) business days thereafter and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
such date. If the original Debenture to be converted or such agreement of
indemnification is not received by the transfer agent or Maker within five
business days after the date on which notice of conversion is given, the notice
of conversion shall become null and void.
If Payee exercises its right to convert part but not all of
this Debenture, in addition to the shares of Common Stock (or other securities,
if applicable) issuable upon conversion and cash for any fractional shares,
Maker will also deliver to such holder a new Debenture, of like tenor, for the
principal amount of this Debenture not being converted.
(g) Reservation of Stock Issuable Upon Conversion. Maker
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of this Debenture, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all then
outstanding Debentures being issued pursuant to the Purchase Agreement; and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding Debentures
issued pursuant to the Purchase Agreement, Maker will promptly take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
8. Failure to Deliver Common Stock Upon Conversion. If upon
conversion of this Debenture, Maker fails to issue shares of its Common Stock
that have been registered under the Securities Act of 1933, as amended,
("Securities Act") as required under Section 9:
6
<PAGE> 7
(page 7 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
(a) Payee shall have the right (subject to Section 10 hereof
but notwithstanding any option of Maker set forth in this Debenture to satisfy
its obligations hereunder by issuance of shares of its Common Stock) upon
written notice to Maker, to rescind the conversion of this Debenture and
require repayment hereunder in cash as provided in this Section 8(a). The
aggregate cash repayment amount for this Debenture under this Section 8(a)
shall be an amount equal to (A) the higher of (i) sum of the Fixed Value and
the Additional Amount, if any, each as determined pursuant to Section 8(b)
below (with the date of payment serving as the date of issuance), or (ii) the
outstanding principal amount of this Debenture to have been converted plus all
accrued but unpaid interest thereon to the Original Date (as defined below), or
(iii) the relevant aggregate purchase price specified in Section 7(e)(2) if
this Debenture was converted in connection with a Change of Control Transaction
pursuant to Section 7(e) plus (B) all accrued but unpaid interest hereon from
the Original Date through the date of prepayment.
The cash repayment amount shall be payable by Maker to the
holders of the Debentures requesting repayment in cash by wire transfer to such
account as specified by such holder on the fifth day after Maker's receipt of
notice from such holder of its request for repayment in cash. In the event
Maker is unable or shall fail to pay the repayment amount in cash on the date
due, Maker shall repay on such date the principal amount of this Debenture
which it is able to repay, pro rata among all holders of the Debentures issued
pursuant to the Purchase Agreement that have then given notice of repayment in
cash in proportion to the full amounts to which they would otherwise be
entitled if all Debentures required to be repaid were repaid, and shall pay the
remainder of the repayment amount as soon as Maker is able to do so. Any
unpaid portion of the repayment amount shall bear interest at an annual rate of
18% from the due date until such amount is paid in full. For so long as any
repayment amount with respect to this Debenture for which repayment in cash has
been requested has not been fully paid, Maker shall not declare or pay any
dividend or any other distribution or pay or set aside any sums for or apply
any sums to the purchase or redemption of any shares of capital stock of Maker.
(b) If Payee does not elect to rescind the conversion of this
Debenture and require repayment hereunder in cash as provided in Section 8(a)
above, then this Debenture shall remain outstanding accruing interest at
eighteen percent (18%) and shall be converted into shares of Maker's Common
Stock upon such date as Maker shall cause a Registration Statement or, in
accordance with Section 9 hereof, Resale Registration Statement (as defined in
Section 9 below) to become effective with respect to the shares of Common Stock
issuable upon such conversion. Notwithstanding the provisions of Section 7,
the number of shares of Maker's Common Stock to be so issued shall be
calculated as follows. First a calculation shall be made of the number of
shares Payee would have received in respect of the conversion in accordance
with the provisions of Section 7 (the date with reference to which Market Price
would have been determined in connection with such conversion being referred to
as the "Original Date") (i) based on a Conversion Price of the lower of Market
Price determined with reference to the Original Date or $4.75 ("Clause (i)
Number of Shares") and (ii) based on a Conversion Price of the lower of Market
Price determined with reference to the Original Date or $4.50 ("Clause (ii)
Number of Shares). Payee shall be entitled to receive a fixed value (the
"Fixed Value") determined by multiplying the Market Price determined with
reference to the Original Date by (x) the Clause (i) Number of Shares, if such
issuance occurs within a period of sixty (60) days from the Original Date, and
(y) the Clause (ii) Number of Shares, if such issuance occurs after such sixty
(60) day period; provided, however, to the extent the Market Price determined
with reference to the Original Date is less than $5.00 per share, Payee shall
be entitled to receive an additional amount ("Additional
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Debenture due January 1, 2002)
Amount") equal to the product of (A) the difference (but not to exceed $0.25 if
such issuance occurs within a period of sixty (60) days from the Original Date
or $0.50 if such issuance occurs after such sixty (60) day period) between
$5.00 and such Market Price multiplied times (B) the Clause (i) Number of
Shares or the Clause (ii) Number of Shares, whichever is applicable. At the
issuance of the registered shares, the Payee shall receive that number of
shares, valued at the Market Price determined with reference to the date of
issuance, having an aggregate value equal to the sum of the Fixed Value, the
Additional Amount, if any, and the amount of accrued and unpaid interest on the
amount of the Debenture being converted (provided that Maker may, at its
option, pay such interest in cash in lieu of shares of its Common Stock). For
so long as Maker shall have failed to issue upon conversion shares of its
Common Stock registered under the Securities Act as required by Section 9,
Maker shall not declare or pay any dividend or any other distribution or pay or
set aside any sums for or apply any sums to the purchase or redemption of any
shares of capital stock of Maker.
(c) If Payee exercises its option pursuant to Section 8(a)
hereof to rescind the conversion of this Debenture and Maker fails to make the
aggregate cash repayment pursuant to Section 8(a) within five days after
Payee's delivery of notice of such election (including, without limitation, due
to the provisions of Section 10 hereof), then the unpaid portion of the
Debenture shall remain outstanding as provided in Section 8(a), accruing
interest at eighteen percent (18%), with respect to such unpaid portion of the
Debenture, and Maker shall pay or deliver to Payee either (i) registered shares
pursuant to Section 8(b) hereof or (ii) an aggregate cash repayment pursuant to
Section 8(a) hereof, whichever Maker is first able to accomplish.
(d) Nothing set forth in this Section 8 is intended to
relieve Maker of the obligation to continue to make payments of interest on the
dates provided in Section 3 hereof. Such interest shall accrue at the rate of
eighteen percent (18%) per annum from and after the Original Date upon any
failure by Maker to issue registered shares of its Common Stock as required by
Section 9.
9. Registration.
(a)(1) Maker hereby agrees that any shares of Maker's Common
Stock delivered to Payee in satisfaction of its obligations hereunder shall be
freely tradable in the hands of Payee by reason of an effective registration
statement under the Securities Act (a "Registration Statement"). Maker hereby
agrees, at its sole cost and expense to file, and use its best efforts to cause
to become effective prior to or simultaneously with the delivery of shares of
Maker's Common Stock pursuant hereto (the "Registration Date") a Registration
Statement governing the offer and sale of the Common Stock pursuant to this
Debenture. If, notwithstanding the foregoing, Maker is unable to cause such a
Registration Statement to become effective on or prior to the Registration
Date, Maker hereby agrees that it will, at its sole cost and expense (excluding
any discounts and commissions, if applicable) file, and use its best efforts to
cause to become effective on or prior to the Registration Date, and to keep
effective and current a Registration Statement (a "Resale Registration
Statement") covering the maximum number of shares of Common Stock of the Maker
issuable upon conversion of this Debenture (the "Registrable Shares"). Maker
shall also use its best efforts to keep any such Resale Registration
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Debenture due January 1, 2002)
Statement, and the accompanying prospectus, effective and current under the Act
at its expense for a period of one year (the "Resale Registration Period").
Notwithstanding the foregoing, if Maker's Board of Directors determines in good
faith that the best interests of the Company so require, it can direct that
Payee's right to effect any sale pursuant to a Resale Registration Statement
shall be suspended for a period ("Time Out Period") up to sixty (60) days
during which time Payee shall not effect any sale pursuant to such Resale
Registration Statement. The Maker may declare two separate Time Out Periods
during the Resale Registration Period but such Time Out Periods must be
separated by one hundred eighty (180) days. The period of any such Time Out
Periods shall be added to such one year period.
(2) For purposes of this Section 9(a), the
original holders of the Debentures consist of two groups, Group A and Group B.
Group A consists of Capital Trust Management Limited, Omar S. Bahateq, Clover
Holdings Ltd., Al Huda Holdings Ltd., Dr. Anis F. Kassim, Saleh M. Al-Hajaj,
Abdullah Al Ali Al-Musim, Alraja Establishment, Tareq Bin Saleh, Sarah
Investments, Shakti Investment Holdings Ltd., Tamanca Establishment, Capital
Trust S.A., and Capital Trust Investments Limited, Capital Trust Developments
Limited. Group B consists of Leisure Funn, Inc., Family Funn Entertainment,
Inc., and Family Entertainment Funding, L.P. For each group separately,
whenever seventy-five percent (75%) in the aggregate of the shares of Maker's
Common Stock acquired upon conversion of all of the Debentures issued to the
original holders in a Group (including Debentures issued, directly or
indirectly, in exchange for Debentures issued to the original holders) shall
have been sold by the persons acquiring such shares upon conversion (excluding
sales or other transfers within the relevant group or to affiliates of members
thereof), then the Resale Registration Period, for such group, shall terminate
on the earlier of (i) the expiration of the original term of the Resale
Registration Period (including any extensions due to any Time Out Periods) as
described in Section 9(a)(1) above or (ii) one hundred and twenty (120) days
thereafter (plus any Time Out Period that might occur during such one hundred
and twenty (120) day period).
(b) Any Resale Registration Statement referred to in
Section 9 hereof shall be prepared and processed in accordance with the
following terms and conditions:
(1) Payee will cooperate in furnishing promptly
to Maker in writing any information requested by Maker in connection with the
preparation, filing and processing of such Resale Registration Statement and
agrees to comply with all requirements of the Securities Act or other laws
applicable to it in connection with the offer, sale, underwriting and
distribution of its respective Registrable Shares.
(2) Maker will furnish to the Payee such number
of prospectuses or other documents incident to such registration as may from
time to time be reasonably requested, and cause its Registrable Shares to be
qualified under the blue sky laws of those states reasonably requested by the
Payee.
(3) Maker will indemnify the Payee (and any
officer, director or controlling person of the Payee) and any underwriters
acting on behalf of the Payee against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) to which they may become subject
under the Securities Act or otherwise, arising out of or based upon any untrue
or alleged untrue statement of any material facts contained in any Registration
Statement filed pursuant hereto, or any document relating thereto, including
all amendments and supplements, or arising out of or based upon
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Debenture due January 1, 2002)
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein contained not
misleading, and will reimburse the Payee (or such other aforementioned parties)
or such underwriters for any legal and all other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that Maker will not be liable where the
untrue or alleged untrue statement or omission or alleged omission is based
upon information furnished in writing to Maker by the Payee expressly for use
therein, or solely as a result of the Payee's failure to furnish to Maker
information duly requested in writing by counsel for Maker specifically for use
therein. This indemnity agreement shall be in addition to any other liability
Maker may have. The indemnity agreement of Maker contained in this paragraph
(c) shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery and payment for the Registrable Shares.
(4) The Payee will indemnify Maker (and any
officer, director or controlling person of Maker) and any underwriters acting
on behalf of Maker against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) to which they may become subject
under the Securities Act or otherwise, arising out of or based upon any untrue
or alleged untrue statement of any material facts contained in any Registration
Statement filed pursuant hereto, or any document relating thereto, including
all amendments and supplements, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein contained not misleading, and, will
reimburse Maker (or such other aforementioned parties) or such underwriters for
any legal and other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or action;
provided, however, that the Payee will be liable as aforesaid only to the
extent that such untrue or alleged untrue statement or omission or alleged
omission is based solely upon information furnished in writing to Maker by the
Payee expressly for use therein, or solely as a result of its failure to
furnish Maker with information duly requested in writing by counsel for Maker
specifically for use therein. This indemnity agreement contained in this
paragraph (d) shall remain operative and in full force and effect regardless of
any investigation made by or an behalf of any indemnified party and shall
survive the delivery of and payment for Registrable Shares.
(5) Promptly after receipt by an indemnified
party under this Section 9(b) of notice of the commencement of any action, such
indemnified party will follow the procedures prescribed by Section 10.3 of the
Purchase Agreement, which terms are incorporated herein by this reference and
made a part hereof, mutatis mutandis.
(6) Except as expressly set forth in Section
9(b)(vii), Maker shall bear all costs and expenses incident to any registration
pursuant to this Section 9 and the legal fees and expenses of one firm
representing the Payee and holders of all registrable shares under the
Debentures.
(7) The Payee shall pay any and all underwriters
discounts, brokerage fees and transfer taxes incident to the sale of any
securities sold by the Payee pursuant to this Section 9.
10. Subordination
(a)(1) Maker, for itself, its successors and assigns,
covenants and agrees, and Payee, for itself, its successors and assigns, by
Payee's acceptance of this Debenture likewise covenants and
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Debenture due January 1, 2002)
agrees, that the Debentures represent and at all times shall remain unsecured
indebtedness of Maker and the payment of the principal, interest (including,
without limitation, post-petition interest accruing at the rate then applicable
under the Debentures, whether or not a claim for such post-petition interest is
allowed in the related bankruptcy proceeding) and premium (if any) on, and any
and all other obligations and liabilities now or at any time or times hereafter
owing by Maker to any holder of the Debentures (including, without limitation,
Payee) or any other person under or in respect of this Debenture and each and
all of the Debentures and any amendments, modifications, extensions, renewals,
refinancings and replacements thereof (including, without limitation,
obligations and liabilities in respect of expenses, costs, indemnities,
conversions, redemptions and special or other contingent payments) (all of the
foregoing indebtedness, obligations and liabilities, collectively, the
"Subordinated Indebtedness"), together with any and all guaranties, collateral
and other security, if any, for the payment of the Subordinated Indebtedness,
is hereby expressly subordinated in all aspects to the prior payment in full in
cash of all Senior Indebtedness (as defined below), whether such Senior
Indebtedness is repaid in accordance with its terms, or upon dissolution,
winding up, liquidation or reorganization of Maker (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise), or otherwise. The provisions of this Section 10 shall
constitute a continuing offer to all persons who become holders of, or continue
to hold, Senior Indebtedness, and such provisions are made for the benefit of
the holders of Senior Indebtedness and such holders are hereby made
beneficiaries hereunder, the same as of their names were written herein as
such, and they and/or each of them may proceed to enforce such provisions.
Such provisions will not be amended without the prior written consent of all
holders of Senior Indebtedness.
(2) For purposes of this Debenture, "Senior
Indebtedness" shall mean all present and future loans, advances, liabilities,
covenants, duties and other indebtedness or obligations of Maker or any wholly
owned subsidiary of Maker for money borrowed, for indebtedness constituting the
deferred purchase price of property, assets or securities (other than trade
payables incurred in the ordinary course of business) and under interest rate
swap, cap or collar agreements ("Hedge Agreements") constituting, or required
to be entered into in respect of, Senior Secured Debt (regardless of whether
any such indebtedness and other obligations are themselves subordinated to any
other indebtedness or other obligation constituting Senior Indebtedness
including, without limitation, to the Senior Secured Debt referred to below)
and including, without limitation, any of the foregoing indebtedness or other
obligations (hereinafter "Acquisition Debt") (x) incurred or assumed by Maker
or any wholly owned Subsidiary of Maker in connection with any acquisition of
the property, assets or securities of another person constituting a business or
(y) incurred by any such Subsidiary prior to the Maker's acquisition of such
Subsidiary or (z) incurred by Maker or any wholly owned Subsidiary of Maker for
purposes of refinancing of the cost of any acquisition described in clause (x)
or (y) above and any and all renewals, extensions and refundings of any of the
foregoing indebtedness or other obligations and as any of the foregoing may be
amended, supplemented or otherwise modified from time to time (including,
without limitation, amendments, supplements or modifications giving effect to
increases or additions to, or restructurings or replacements of, any Senior
Indebtedness), whether for principal, premium or interest (including
post-petition interest accruing at the rate then applicable in respect of such
indebtedness or other obligations, whether or not a claim for such post-
petition interest is allowed in the related bankruptcy proceeding), or
otherwise (including, without limitation, indebtedness and other obligations
for fees, indemnities, costs and expenses), whether direct or indirect,
absolute or contingent, secured or unsecured, due or to become due, unless in
any instrument or instruments creating, evidencing or securing any such
indebtedness or other obligations it is
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Debenture due January 1, 2002)
expressly provided that such indebtedness or other obligations is not superior
in right of payment to the Debentures.
(3) Without limiting the generality of the
foregoing, Maker and Payee acknowledge and agree that the term "Senior
Indebtedness" includes, without limitation, all loans, advances, liabilities,
covenants, duties and other indebtedness and obligations of Maker or any wholly
owned subsidiary of Maker existing on the date hereof, or arising from time to
time hereafter, and any and all renewals, extensions and refundings of any such
indebtedness and other obligations, whether for principal, premium, interest
(including post-petition interest accruing at the rate then applicable in
respect of such indebtedness or other obligations, whether or not a claim for
such post-petition interest is allowed in the related bankruptcy proceeding),
fees, indemnities, costs, expenses or otherwise, whether direct or indirect,
absolute or contingent, secured or unsecured, due or to become due, and as any
of the foregoing indebtedness or other obligations may be amended, supplemented
or otherwise modified from time to time (including, without limitation,
amendments, supplements or modifications giving effect to increases or
additions to, or restructurings or replacements of, any such indebtedness and
obligations, in each case above owing to (x) MEI Financings, L.P. ("MEIF"), its
affiliates or assigns (including the anticipated replacement financing to be
provided by Foothill Capital Corporation, as assignee of MEIF ("Foothill")) and
(y) any bank or other institutional lender including, without limitation,
Foothill, under any credit or loan facility (including any letter of credit
facility with respect thereto), including, without limitation, any such
facility in addition to, or replacing, refunding, refinancing or repaying, in
whole or in part, any replacement financing provided by Foothill (collectively,
the "Senior Secured Debt").
(4) Notwithstanding the foregoing, the aggregate
principal amount of Senior Indebtedness (other than Acquisition Debt and
determining the amount of Senior Indebtedness under Hedge Agreements based on
the net amounts payable thereunder) shall not exceed $50,000,000 provided in no
more than three facilities (which may be layered in priority of repayment among
themselves and which may include note purchase and similar facilities providing
for the separate purchase by individual institutional lenders of instruments
constituting one or more series of a single issue of securities) from banks and
other institutional lenders (none of which can be affiliated with MEI Holdings,
L.P. after the anticipated replacement financing to be provided by Foothill).
(b) Upon any payment or distribution of the assets of
Maker or any wholly owned subsidiary of Maker or any of them of any kind or
character, whether in cash, property or securities to creditors upon any
dissolution, winding up, total or partial liquidation, reorganization,
recapitalization or readjustment of Maker or any wholly owned subsidiary of
Maker or any of them or their respective securities (whether voluntary or
involuntary, or in bankruptcy, insolvency, reorganization, liquidation or
receivership proceedings, or upon an assignment for the benefit of creditors,
or any other marshaling of the assets and liabilities of Maker or any wholly
owned subsidiary of Maker, or otherwise) then in such event:
(i) the holders of Senior Indebtedness
shall be entitled to receive payment in full in cash (or to have such
cash payments duly provided for in a manner satisfactory to the
holders of Senior Indebtedness) of all amounts due or to become due or
in respect of all Senior Indebtedness, before any payment is made on
account of or applied on the Subordinated Indebtedness;
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Debenture due January 1, 2002)
(ii) any payment or distribution of
assets of Maker or any wholly owned subsidiary of Maker or any of them
of any kind or character from any source whatsoever, whether in cash,
property or securities, to which the holders of the Subordinated
Indebtedness would be entitled except for the provisions of this
Section 10, shall be paid or delivered by any debtor, custodian or
other person making such payment or distribution, directly to the
holders of the Senior Indebtedness, for application to the payment or
prepayment of all such Senior Indebtedness remaining unpaid (in the
case of cash) or as collateral for the payment in full of the Senior
Indebtedness (in the case of non-cash property or securities), to the
extent necessary to pay all such Senior Indebtedness in full in cash
after giving effect to any concurrent payment or distribution, or
provision therefor as aforesaid, to the holders of such Senior
Indebtedness; and
(iii) in the event that, notwithstanding
the foregoing provisions of this Section 10(b), any payment or
distribution of assets by or of Maker or any wholly owned subsidiary
of Maker or any of them of any kind or character from any source
whatsoever, whether in cash, property or securities, shall be received
by any holder of the Subordinated Indebtedness before all such Senior
Indebtedness is indefeasibly paid in full in cash and all commitments,
if any, to extend credit under any Senior Indebtedness have been
terminated, such payment or distribution shall be held in trust for
the benefit of, and shall be immediately paid or delivered (in the
same form as so received and with any necessary indorsement) by such
holder to, as the case may be, the holders of such Senior Indebtedness
remaining unpaid (in the case of cash) or as collateral for the
payment in full in cash of the Senior Indebtedness (in the case of
non-cash property or securities) to the extent necessary to pay all
such Senior Indebtedness in full in cash after giving effect to any
concurrent payment or distribution, or provision therefor as
aforesaid, to the holders of such Senior Indebtedness.
(c) Each holder of Debentures agrees that unless and
until all Senior Indebtedness is paid in full in cash and all commitments, if
any, to extend credit under any Senior Indebtedness have been terminated, no
holder of Debentures will take, demand or receive from Maker or any subsidiary
of Maker or any other person, and Maker will not (and will not permit any of
its subsidiaries to) make, give or permit, directly or indirectly, by set-off,
redemption, purchase or in any other manner, any payment or security for the
whole or any part of the Subordinated Obligations, including, without
limitation, any letter of credit or similar credit support facility to support
payment of the Subordinated Obligations, provided that, unless, after giving
effect to any such payment, a Senior Default (as defined in Section 10(d)
below) shall have occurred and be continuing, the Maker may make, and the
holders of Subordinated Indebtedness may receive, (i) regularly scheduled
payments on account of interest on the Debentures or other Subordinated
Indebtedness in accordance with the terms thereof and (ii) payments of
principal paid in Common Stock of the Maker or, to the extent expressly
required by Section 7 or 8 of the Debentures, cash; provided, however, nothing
in this Section 10 shall prevent any conversion of this Debenture pursuant to
Section 7 hereof except that no cash shall be paid if a Senior Default exists
or would occur.
(d) Upon the occurrence and during the continuance of any
default or event of default under or with respect to any Senior Indebtedness
(including, without limitation, any "Default" or "Event of Default" under and
as defined in any agreement or instrument creating, governing or evidencing any
Senior Secured Debt) ("Senior Default"), no holder of any Debenture or other
Subordinated Indebtedness may (i) accelerate or take any action to accelerate
the maturity of all or any
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Debenture due January 1, 2002)
portion of any Debenture or other Subordinated Indebtedness, or (ii) commence
or continue any judicial proceedings against Maker or any of its subsidiaries
with respect to such Debenture or other Subordinated Indebtedness, or (iii)
exercise any rights or remedies under any Debenture or other Subordinated
Indebtedness or at law or in equity or otherwise in respect of the collection
of any Subordinated Indebtedness whether or not evidence by the Debentures, or
(iv) with respect to such Debenture or other Subordinated Indebtedness
commence, or join with any creditor other than holders of Senior Secured Debt,
in commencing, any bankruptcy, insolvency, arrangement, reorganization or
receivership proceedings in respect of Maker or any subsidiary of Maker or any
of their respective properties or assets; provided, however, nothing in
Sections 10(c) or 10(d) shall prevent Payee from taking any legal action
required to preserve its rights if Payee would otherwise be foreclosed from
exercising such rights ninety (90) days thereafter (e.g., to prevent the
expiration of a limitations period), and Payee shall not be required to refrain
from taking the actions specified in clauses (i), (ii), (iii) and (iv) above
beyond ninety (90) days if no holder of Senior Indebtedness during such period
commences and pursues one or more of the actions so specified in clauses (i),
(ii), (iii) and (iv) with respect to a Senior Default, provided, further,
nothing in this Section 10 shall prevent Payee from rescinding any conversion
pursuant to Section 8 hereof, but any obligation of Maker to pay cash pursuant
to Section 8 shall remain subject to this Section 10.
(e) In the event that, notwithstanding the foregoing
provisions of this Section 10, any payment or distribution of assets of Maker
or any wholly owned subsidiary of Maker or any of them of any kind or character
from any source whatsoever, whether in cash, property or securities, shall be
received by any holder of any Debenture or other Subordinated Indebtedness
contrary to the foregoing provisions of this Section 10 (without regard to the
first proviso to Section 10(d)), such payment or distribution shall be held in
trust for the benefit of, and shall be immediately paid or delivered (in the
same form as so received and with any necessary indorsement) by such holder to,
as the case may be, the holders of the Senior Indebtedness, for application to
the payment or prepayment of all such Senior Indebtedness remaining unpaid (in
the case of cash) or as collateral for the payment in full in cash of the
Senior Indebtedness remaining unpaid (in the case of non-cash property or
securities), to the extent necessary to pay all such Senior Indebtedness in
full in cash.
(f) In connection with any bankruptcy, insolvency,
arrangement, reorganization or receivership proceedings of Maker or any wholly
owned subsidiary of Maker, each holder of Senior Indebtedness is hereby
irrevocably authorized and empowered at its own expense (in its own name or
otherwise), but shall have no obligation, to demand, sue for, collect and
receive every payment or distribution referred to in respect of this Debenture
and all other Subordinated Indebtedness and to file claims and proofs of claims
with respect to the Debenture and any other Subordinated Indebtedness. Without
limiting the generality of the foregoing, if any bankruptcy, insolvency,
arrangement, reorganization or receivership proceedings is commenced by or
against Maker or any wholly owned subsidiary of Maker:
(i) to the extent that any holder of Debentures
or other Subordinated Indebtedness fails to comply with any request of
a holder of Senior Indebtedness under clause (ii) below, such holder
of Senior Indebtedness is irrevocably authorized and empowered at its
own expense (in its own name or in the name of the holder of
Debentures or other Subordinated Indebtedness or otherwise), but has
no obligation, to demand, sue for, collect and receive every payment
or distribution referred to in Section 10(b) and give acquittance
therefor and to file claims and proofs of claim and take such other
action (including, without limitation,
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(page 15 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
enforcing any security interest or other lien securing payment of the
Subordinated Indebtedness) as it may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the
holder of Senior Indebtedness hereunder; and
(ii) the holders of Debentures or other
Subordinated Indebtedness will duly and promptly take such reasonable
actions as any holder of Senior Indebtedness may request (a) to
collect the Subordinated Indebtedness for the account of the holders
of Senior Indebtedness and to file and prove appropriate claims or
proofs of claim in respect of the Subordinated Indebtedness, (b) to
execute and deliver to any holder of Senior Indebtedness such powers
of attorney, assignments or other instruments as it may request in
order to enable it to enforce any and all claims with respect to, and
any security interests and other liens securing payment of, the
Subordinated Indebtedness and (c) to collect and receive any and all
payments or distributions which may be payable or deliverable upon or
with respect to the Subordinated Indebtedness provided all such
actions shall be at the expense of the holder of Senior Indebtedness
making such request.
(g) The provisions of this Section 10 shall continue to
be effective or be reinstated, as the case may be, if at any time any payment
of any of the Senior Indebtedness is rescinded or must otherwise be returned by
any holder of Senior Indebtedness, as though such payment had not been made.
(h) Each holder of a Debenture or other Subordinated
Indebtedness hereby undertakes and agrees for the benefit of Senior
Indebtedness that they shall (at the expense of such holder of Senior
Indebtedness) take any actions reasonably requested by any holder of such
Senior Indebtedness to effectuate the full benefit of the subordination
contained herein.
(i) Subject to the payment in full in cash of all Senior
Indebtedness and the termination of all commitments, if any, to extend credit
under any Senior Indebtedness, the holders of Debentures or other Subordinated
Indebtedness shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of Maker or any
wholly owned subsidiary of Maker in respect of the Senior Indebtedness until
the Senior Indebtedness shall be paid in full. For purposes of such
subrogation, payments or distributions to the holders of Senior Indebtedness of
any money, property or securities to which any holder of Debentures or other
Subordinated Indebtedness would be entitled to except for the provisions of
this Debenture or other Subordinated Indebtedness shall be deemed, as between
Maker and its creditors other than the holders of Senior Indebtedness and such
holder of Debentures or other Subordinated Indebtedness, to be a payment by
Maker to or on account of the Debentures or other Subordinated Indebtedness, it
being understood that the provisions of this Debenture are, and are intended
solely, for the purpose of defining the relative rights of the holders of
Debentures or other Subordinated Indebtedness on the one hand, and the holders
of Senior Indebtedness on the other hand.
(j) Each holder of Debentures or other Subordinated
Indebtedness consents that, without the necessity of any reservation of rights
against any holder of Debentures or other Subordinated Indebtedness, and
without notice to or further assent by any holder of Debentures or other
Subordinated Indebtedness:
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Debenture due January 1, 2002)
(i) any demand for payment of any Senior
Indebtedness may be rescinded in whole or in part and any Senior
Indebtedness may be continued, and the Senior Indebtedness, or the
liability of Maker or any guarantor or any other party upon or for any
part thereof, or any collateral security or guaranty thereof or right
of offset with respect thereto, or any obligation or liability of
Maker or any wholly owned subsidiary of Maker or any other person,
may, from time to time, in whole or in part, be renewed, extended,
modified, accelerated, compromised, waived, surrendered or released by
any holder of Senior Indebtedness; and
(ii) any Senior Indebtedness and any agreement,
document or instrument governing or evidencing such indebtedness or
otherwise relating thereto may be amended, modified, supplemented or
terminated, in whole or in part, as the holder of such Senior
Indebtedness may deem advisable from time to time, and any collateral
security at any time held for the payment of any of the Senior
Indebtedness may be sold, exchanged, waived, surrendered or released,
in each case above in this Section 10(j) without notice to or further
assent by any holder of Debentures or other Subordinated Indebtedness,
which will remain bound hereunder, and without impairing, abridging,
releasing or affecting the subordination provided for herein.
(k) Each holder of Debentures or other Subordinated
Indebtedness waives any and all notice of the creation, renewal, extension or
accrual of any of the Senior Indebtedness and notice of or proof of reliance by
the holders of Senior Indebtedness upon the provisions of this Section 10.
(l) So long as any of the Senior Indebtedness shall
remain outstanding (including, without limitation, any commitment to extend
credit under any Senior Secured Debt), no holder of Debentures or other
Subordinated Indebtedness shall, without the consent of each holder of the
Senior Secured Debt, permit the Debentures or other Subordinated Indebtedness
to be amended, supplemented or otherwise modified.
(m) To the maximum extent permitted by law, each holder
of Debentures or other Subordinated Indebtedness waives any claim it might have
against the holders of Senior Indebtedness with respect to, or arising out of,
any action or failure to act or any error of judgment, negligence, or mistake
or oversight whatsoever on the part of the holders of Senior Indebtedness, or
any part thereof, or any of the directors, officers, employees or agents of any
such holder, with respect to any exercise of rights or remedies in respect of
the Senior Indebtedness. No holder of Senior Indebtedness nor any of its
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any collateral or guaranty for the Senior
Indebtedness or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any such collateral or guaranty upon the request
of Maker or any holder of Debentures or other Subordinated Indebtedness or any
other person or to take any other action whatsoever with regard to any such
collateral or guaranty or any part thereof.
(n) All powers, authorizations or agencies contained in
this Debenture are coupled with an interest and are irrevocable until the
Senior Indebtedness is paid in full in cash and any commitments to extend
Senior Indebtedness are terminated.
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<PAGE> 17
(page 17 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
11. Default. Each of the following shall constitute a "Default"
under this Debenture:
(i) the Maker shall fail to pay the principal amount hereof and
all accrued and unpaid interest on the Maturity Date as required pursuant to
Section 5 hereof including such a failure upon an election by Payee of
rescission.
(ii) the Maker shall fail to pay interest as required pursuant to
Section 3 hereof and such failure shall continue for a period of three (3) days
thereafter;
(iii) the Maker shall fail to convert all or any portion of this
Debenture as required pursuant to Section 7 hereof; provided, however, Maker's
failure upon such conversion to deliver registered shares as required by
Section 9 hereof shall, subject to the following proviso, not constitute a
"Default" hereunder but shall entitle Payee to the rights and remedies
specified in Section 8 hereof and the voting and other rights specified in
Section 12 hereof; provided, further, however, that notwithstanding the
foregoing Maker's failure to so convert all or any portion of this Debenture
shall constitute a Default upon the expiration of the ninety (90) day period
following the Original Date.
(iv) Maker shall fail to pay in cash when due the amounts payable
pursuant to Section 8 hereof;
(v) Maker shall default in the performance or observance of any
other covenant contained in this Debenture or in the Purchase Agreement and
such default shall continue for a period of fifteen (15) days after Maker
receives notice thereof from the holders of fifty percent (50%) or more of the
outstanding principal amount of the Debentures;
(v) There shall exist an uncured, unwaived Senior Default.
12. Voting and Other Rights. Upon the occurrence and during the
continuance of a Default or upon Maker's failure upon conversion to deliver
registered shares as required by Section 9 hereof, the holders of the
Debentures shall be entitled, notwithstanding any of the provisions of Section
10 hereof, to vote together with the holders of the Common Stock of the Maker,
voting together as one class, on all actions to be voted on by the shareholders
of the Maker. The holder of this Debenture shall be entitled to a number of
votes equal to the number of shares of Common Stock into which this Debenture
would be convertible, assuming a Conversion Price of $4.75 during the sixty
days beginning on the occurrence of such Default and $4.50 thereafter.
Holders of the Debentures shall be entitled to notice of all
shareholder meetings or written consents whether or not they would be entitled
to vote at such meetings or with respect to such consents, which notice would
be provided pursuant to the Maker's By-Laws and applicable statutes. Holders
of the Debentures shall also be entitled to receive all reports and other
information or materials distributed to the holders of the Maker' s Common
Stock at the time and in the manner such items are distributed to the holders
of the Maker's Common Stock.
Except as provided in this Section 12, this Debenture shall not
entitle the holder hereof to any of the rights of a shareholder of Maker.
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<PAGE> 18
(page 18 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
13. Certain Covenants. (a) So long as any principal amount of the
Debentures remain outstanding, all transactions between the Maker and any
separate public company into which the Maker may transfer any of its operations
or assets in a reorganization and all transactions between the Maker and any
affiliate of the Maker (other than wholly owned subsidiaries of the Maker)
shall be approved by a majority of the independent directors of the Maker's
Board of Directors and will be on an arms-length basis and fair to the Maker
and to such other entity or affiliate; provided, however, no further approval
shall be required for any transactions pursuant to the Amended and Restated
Investment Agreement between Maker and MEI Holdings, L.P. or pursuant to any
other agreement or instrument entered into in connection with such Investment
Agreement. For purposes of this Section 13 (a), an "affiliate of the Maker
shall mean any officer, director or beneficial owner, directly or indirectly,
of more than five percent of the Maker's Common Stock (and if such beneficial
owner is a corporation, any person controlling, controlled by or under common
control with such beneficial owner, or any officer or director of such
beneficial owner or of any corporation occupying any such control relationship)
or any other person which, directly or indirectly, controls or is controlled by
or is under common control with the Maker. For purposes of this Section 13
(a), "control" with respect to any person shall mean possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise. For purposes of this Section 14 (a), "independent
director" shall mean each director who is not an officer or employee of the
Maker or an "affiliate."
(b) The Maker shall, as a condition of any spin-off of
its operations or assets to a separate public company in a reorganization,
cause such separate public company to agree to be bound by the provisions of
this Debenture applicable to it. In addition, the Maker shall, as a condition
of any Change of Control Transaction to which it is a party, cause the person
acquiring control of the Maker pursuant to the Change of Control Transaction to
agree to be bound by the provisions of this Debenture applicable to it.
14. Amendments. This Debenture shall not be amended without the
prior written approval of the holders of at least two-thirds of the outstanding
principal amount of the Debentures.
15. Waiver. Maker and any and all sureties, guarantors and
endorsers of this Debenture and all other parties now or hereafter liable
hereon, severally waive grace, demand, presentment for payment, protest, notice
of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(a) to all extensions and partial payments, with or without notice, before or
after maturity, (b) to any substitution, exchange or release of any security
now or hereafter given for this Debenture, (c) to the release of any party
primarily or secondarily liable hereon, and (d) that it will not be necessary
for the Payee, in order to enforce payment of this Debenture, to first
institute or exhaust the Payee's remedies against Maker or any other party
liable therefor or against any security for this Debenture.
16. Costs of Collection. If a Default occurs hereunder or under
any of the instruments securing payment hereof or if Maker shall fail upon
conversion to issue shares of its Common Stock registered under the Securities
Act as required by Section 9 (whether or not suit is filed), or if this
Debenture is collected or enforced by suit or legal proceedings or through the
probate court or bankruptcy proceedings, Maker agrees to pay all reasonable
attorneys, fees and all expenses of collection and enforcement and costs of
court.
18
<PAGE> 19
(page 19 of 17 of Mountasia Entertainment International, Inc. Convertible
Debenture due January 1, 2002)
17. Interest Adjustments. It is the intention of the parties
hereto to comply with applicable usury laws (now or hereafter enacted):
accordingly, notwithstanding any provision to the contrary in this Debenture,
or in any of the documents securing payment hereof or otherwise relating
hereto, in no event shall this Debenture or such documents require the payment
or permit the collection of interest in excess of the maximum amount permitted
by such laws. If any such excess of interest is contracted for, charged,
taken, reserved or received under this Debenture or under the terms of any of
the documents securing payment hereof or otherwise relating hereto, or in the
event the maturity of the indebtedness evidenced by this Debenture is
accelerated in whole or in part, so that under any of such circumstances the
amount of interest contracted for, charged, taken, reserved or received under
this Debenture or under any of the instruments securing payment hereof or
otherwise relating hereto, on the amount of principal actually outstanding from
time to time under this Debenture shall exceed the maximum amount of interest
permitted by applicable usury laws, now or hereafter enacted, then in any such
event (i) the provisions of this paragraph shall govern and control, (ii) any
such excess which may have been collected at final maturity of said
indebtedness either shall be applied as a credit against the then unpaid
principal amount hereof or refunded to Maker, at the Payee's option, (iii) if,
as a result of the application of the provisions of this paragraph, the Payee
shall receive interest payments under this Debenture in an amount less than the
amount otherwise provided hereunder, such deficit will, to the fullest extent
permitted by applicable laws, cumulate and be carried forward (without
interest) until the payment in full of this Debenture, and interest otherwise
payable to Payee hereunder for any subsequent period shall be increased by the
maximum amount of such deficit that may be so added without causing the Payee
to receive interest in excess of the maximum amount then permitted by
applicable laws, and (iv) upon such final maturity, the effective rate of
interest shall be automatically reduced to the maximum lawful rate allowed
under applicable usury laws as now or hereafter construed by the courts having
jurisdiction thereof. Without limiting the foregoing, all calculations of the
rate of interest contracted for, charged, taken, reserved or received under
this Debenture or under such other documents which are made for the purpose of
determining whether such rate exceeds the maximum lawful rate, shall be made,
to extent permitted by applicable laws, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of the
loan evidence hereby, all interest at any time contracted for, charged, taken,
reserved or received from Maker or otherwise by the Payee connection with such
indebtedness.
18. Applicable Law. This Debenture shall be governed and
construed under the applicable laws of the State of Georgia without regard to
the conflicts of law provisions thereof.
19. No Waiver by the Payee. Any check, draft, money order or
other instrument given in payment of all or any portion hereof may be accepted
by the Payee and handled in collection in the Payee's customary manner, but the
same shall not constitute payment hereunder or diminish any rights of the Payee
except to the extent that actual cash proceeds of such instrument are
unconditionally received by the Payee.
19
