<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Mountasia Entertainment International, Inc.
- - - --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, NO PAR VALUE
- - - --------------------------------------------------------------------------------
(Title of Class of Securities)
624547105
--------------------------
(CUSIP Number)
MEI Holdings, L.P.
4200 Texas Commerce Tower West
2200 Ross Ave.
Dallas, Texas 75201
Attention: Daniel A. Decker
(214) 220-4900
- - - --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With a copy to:
Robert A. Profusek, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York
(212) 326-3939
June 6, 1996
------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with this statement /x/.
<PAGE> 2
SCHEDULE 13D
================================================================================
CUSIP No. 624547105 Page 2 of Pages
================================================================================
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEI Holdings, L.P.
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /x/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBERS OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIAL 10,819,666*
LY OWNED --------------------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /x/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
----------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant
to the Investment Agreement described herein pursuant to which Holdings
will acquire 44.44% of the issuer's common shares to be outstanding
immediately after the closing thereunder. The actual number of shares to be
acquired may be more or less than 10,819,666 depending on the number of the
issuer's shares outstanding at the time of such closing.
<PAGE> 3
SCHEDULE 13D
================================================================================
CUSIP No. 624547105 Page 3 of Pages
================================================================================
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEI GenPar, L.P.
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /x/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBERS OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIAL 10,819,666*
LY OWNED --------------------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /x/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
----------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant
to the Investment Agreement described herein pursuant to which Holdings
will acquire 44.44% of the issuer's common shares to be outstanding
immediately after the closing thereunder. The actual number of shares to be
acquired may be more or less than 10,819,666 depending on the number of the
issuer's shares outstanding at the time of such closing.
<PAGE> 4
SCHEDULE 13D
================================================================================
CUSIP No. 624547105 Page 4 of Pages
================================================================================
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HH Genpar Partners
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /x/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBERS OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIAL 10,819,666*
LY OWNED --------------------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /x/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
----------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant
to the Investment Agreement described herein pursuant to which Holdings
will acquire 44.44% of the issuer's common shares to be outstanding
immediately after the closing thereunder. The actual number of shares to be
acquired may be more or less than 10,819,666 depending on the number of the
issuer's shares outstanding at the time of such closing.
<PAGE> 5
SCHEDULE 13D
================================================================================
CUSIP No. 624547105 Page 5 of Pages
================================================================================
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hampstead Associates, Inc.
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /x/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBERS OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIAL 10,819,666*
LY OWNED --------------------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /x/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
----------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant
to the Investment Agreement described herein pursuant to which Holdings
will acquire 44.44% of the issuer's common shares to be outstanding
immediately after the closing thereunder. The actual number of shares to be
acquired may be more or less than 10,819,666 depending on the number of the
issuer's shares outstanding at the time of such closing.
<PAGE> 6
SCHEDULE 13D
================================================================================
CUSIP No. 624547105 Page 6 of Pages
================================================================================
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RAW GenPar, Inc.
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /x/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBERS OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIAL 10,819,666*
LY OWNED --------------------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /x/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
----------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant
to the Investment Agreement described herein pursuant to which Holdings
will acquire 44.44% of the issuer's common shares to be outstanding
immediately after the closing thereunder. The actual number of shares to be
acquired may be more or less than 10,819,666 depending on the number of the
issuer's shares outstanding at the time of such closing.
<PAGE> 7
SCHEDULE 13D
================================================================================
CUSIP NO. 624547105 PAGE 7 OF ___ PAGES
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
InMed, Inc.
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /X/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
-------------------------------------------------------------
NUMBERS OF 8 SHARED VOTING POWER
SHARES 10,819,666*
BENEFICIAL -------------------------------------------------------------
LY OWNED 9 SOLE DISPOSITIVE POWER
BY EACH 0
REPORTING -------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /X/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- - - ----------------------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant to
the Investment Agreement described herein pursuant to which Holdings will
acquire 44.44% of the issuer's common shares to be outstanding immediately after
the closing thereunder. The actual number of shares to be acquired may be more
or less than 10,819,666 depending on the number of the issuer's shares
outstanding at the time of such closing.
<PAGE> 8
SCHEDULE 13D
================================================================================
CUSIP NO. 624547105 PAGE 8 OF ___ PAGES
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Donald J. McNamara
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /X/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
-------------------------------------------------------------
NUMBERS OF 8 SHARED VOTING POWER
SHARES 10,819,666*
BENEFICIAL -------------------------------------------------------------
LY OWNED 9 SOLE DISPOSITIVE POWER
BY EACH 0
REPORTING -------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /X/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- - - -----------------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant to
the Investment Agreement described herein pursuant to which Holdings will
acquire 44.44% of the issuer's common shares to be outstanding immediately after
the closing thereunder. The actual number of shares to be acquired may be more
or less than 10,819,666 depending on the number of the issuer's shares
outstanding at the time of such closing.
<PAGE> 9
SCHEDULE 13D
================================================================================
CUSIP NO. 624547105 PAGE 9 OF ___ PAGES
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert A. Whitman
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /X/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
-------------------------------------------------------------
NUMBERS OF 8 SHARED VOTING POWER
SHARES 10,819,666*
BENEFICIAL -------------------------------------------------------------
LY OWNED 9 SOLE DISPOSITIVE POWER
BY EACH 0
REPORTING -------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /X/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- - - ----------------------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant to
the Investment Agreement described herein pursuant to which Holdings will
acquire 44.44% of the issuer's common shares to be outstanding immediately after
the closing thereunder. The actual number of shares to be acquired may be more
or less than 10,819,666 depending on the number of the issuer's shares
outstanding at the time of such closing.
<PAGE> 10
SCHEDULE 13D
================================================================================
CUSIP NO. 624547105 PAGE 10 OF ___ PAGES
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Daniel A. Decker
- - - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a / /
b /X/
- - - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- - - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
- - - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- - - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
-------------------------------------------------------------
NUMBERS OF 8 SHARED VOTING POWER
SHARES 10,819,666*
BENEFICIAL -------------------------------------------------------------
LY OWNED 9 SOLE DISPOSITIVE POWER
BY EACH 0
REPORTING -------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,819,666*
- - - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,819,666*
- - - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /X/
- - - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.4%
- - - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- - - ----------------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant to
the Investment Agreement described herein pursuant to which Holdings will
acquire 44.44% of the issuer's common shares to be outstanding immediately after
the closing thereunder. The actual number of shares to be acquired may be more
or less than 10,819,666 depending on the number of the issuer's shares
outstanding at the time of such closing.
<PAGE> 11
Item 1. Security and Issuer.
This Statement on Schedule 13D (this "Statement") relates to the Common
Stock (the "Common Stock") of Mountasia Entertainment International, Inc. (the
"Company"), a Georgia corporation. The principal executive offices of the
Company are located at 5895 Windward Parkway, Suite 220, Alpharetta, Georgia
30202, and its telephone number at such address is (770) 442-6650.
Item 2. Identity and Background.
This statement is filed by (i) MEI Holdings, L.P., a Delaware limited
partnership ("Holdings"); (ii) MEI GenPar, L.P., a Delaware limited partnership
("MEI GP"); (iii) HH GenPar Partners, a Texas general partnership ("HH GP");
(iv) Hampstead Associates, Inc., a Texas corporation ("Associates"); (v) RAW
GenPar, Inc., a Texas corporation ("RAW GP"); (vi) InMed, Inc. (d/b/a InCap,
Inc.), a Texas corporation ("InMed"); (vii) Donald J. McNamara; (viii) Robert A.
Whitman; and (vix) Daniel A. Decker. Messrs. McNamara, Whitman and Decker are
United States citizens. Holdings, MEI GP, HH GP, Associates, RAW GP and InMed
and Messrs. McNamara, Whitman and Decker are referred to herein collectively as
the "Reporting Persons."
Holdings is a newly formed entity that was organized by the other Reporting
Persons to invest in the Company. MEI GP is, and its principal business is to
act as, the sole general partner of Holdings. HH GP is, and its principal
business is to act as, the managing general partner of MEI GP (and various other
partnerships). Associates is, and its principal business is to act as, the
managing general partner of HH GP. RAW GP and InMed are the only other general
partners of HH GP. The principal business of each of RAW GP and InMed is to
invest in HH GP. The address of the principal executive office of Holdings, MEI
GP, HH GP, Associates, RAW GP and InMed is 4200 Texas Commerce Tower West, 2200
Ross Avenue, Dallas, Texas 75201.
Mr. McNamara is the Chairman, President and a director of Associates. Mr.
Whitman is the President, Treasurer and a director of RAW GP. Mr. Decker is the
Chairman, President and a director of InMed and the Executive Vice President and
Assistant Secretary of Associates.
Each of Donald J. McNamara, Robert A. Whitman and Daniel A. Decker is
employed by The Hampstead Group, L.L.C. ("Hampstead"). Mr. McNamara is the
Chairman and Co-Chief Executive Officer of Hampstead, Mr. Whitman is the
President and Co-Chief Executive Officer of Hampstead and Mr. Decker is the
Executive Vice President and General Counsel of Hampstead. The principal
business of Hampstead is to provide management services in respect of
investments in site-based businesses. The business address of Hampstead and of
each such individual is 4200 Texas Commerce Tower West, 2200 Ross Avenue,
Dallas, Texas 75201.
-20-
<PAGE> 12
None of the Reporting Persons and, to their knowledge, none of the other
persons identified herein as officers of Associates, RAW GP and InMed has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
Item 3. Source and Amount of Funds or Other Consideration.
On June 6, 1996, the Company and Holdings entered into an Investment
Agreement, dated June 5, 1996 (the "Investment Agreement"). Under the
Investment Agreement, the Company has agreed to sell to Holdings for $40.00
million (i) a number of newly issued shares of the Company's Common Stock equal
to 44.44% of the Company's Common Stock outstanding immediately following the
closing of the transactions contemplated by the Investment Agreement (the
"Closing"), and (ii) a warrant (the "Warrant") allowing Holdings to acquire
(without payment of further consideration) additional Common Stock to adjust
for any post-Closing issuances of Common Stock under existing commitments below
130% of the per-share investment price as of the Closing. The Investment
Agreement provides that if the Company seeks additional equity capital within
18 months after the closing, it will use its best efforts to raise such equity
capital through one or more rights offerings to holders of the Common Stock.
Subject to applicable limitations in a separate Standstill Agreement (a copy of
which is attached hereto as Exhibit 5 and incorporated herein by reference), in
any such rights offering Holdings will exercise all rights to purchase Common
Stock distributed to it and, if the rights offered are not assignable, Holdings
will purchase from the Company all shares of the Common Stock not purchased by
distributees of rights. This commitment of Holdings with respect to rights
offerings is limited to $30 Million. The foregoing paragraph is qualified in
its entirety by reference to the Investment Agreement and the Warrant, the full
text of which are incorporated herein by reference to Exhibits 1 and 2 attached
hereto.
As an accommodation to the Company, MEI Financings, L.P., a Delaware
partnership affiliated with Holdings (the "Lender"), provided to the Company a
commitment letter pursuant to which the Lender agreed to provide an aggregate of
up to $33.0 million under two multi-draw term loan facilities to the Company. At
Closing, any portion of such financing may be forgiven to pay a portion of the
purchase price in lieu of cash. A copy of the foregoing commitment is
incorporated herein by reference to Exhibit 3 attached hereto. As of the date
hereof, the Company has borrowed approximately $13 million under such loan
facilities.
The source of funds for Holding's purchase of Common Stock pursuant to the
Investment Agreement is expected to be Holding's working capital, which is
expected to be derived from capital
-21-
<PAGE> 13
contributions from its partners. However, Holdings reserves the right to obtain
such funds in whole or in part from other sources, including indebtedness. If
Holdings does so obtain such financing from other sources, it will promptly file
an amendment to this Statement.
Pursuant to the Investment Agreement, the Closing is subject to various
conditions, including the following:
(i) The repurchase from the holders thereof of all of the
Company's issued and outstanding Class D Preferred Stock of the Company for
the stated value thereof plus accumulated and unpaid dividends, or for such
other consideration as Holdings may approve;
(ii) The confirmation from certain employees and option holders
that the transaction and related matters will not trigger their rights
under severance, option and other agreements;
(iii) The consummation of the transactions contemplated by an
existing agreement of the Company to purchase certain interests in National
Entertainment Funding, L.P.;
(iv) The reconstitution of the Company's Board of Directors (as
described below) to include representatives of Holdings (one of whom would
be designated as the Chairman of the Board);
(v) The absence of any material adverse change in the business,
financial condition, results of operations or prospects of the Company and
its subsidiaries taken as a whole;
(vi) The adoption of the management equity program described below
in substitution for the Company's existing management equity plan and
options thereunder;
(vii) The termination of certain financial advisory agreements and
of certain other arrangements relating to financings;
(viii) The reacquisition of the Company's domestic
intellectual property rights for not more than $2.1 million and the
confirmation that the Company has reacquired its international intellectual
property rights;
(ix) The completion (prior to July 1, 1996) to the satisfaction of
Holdings of its confirmatory due diligence review, including in respect of
Holdings's assumptions as to financial, operational and legal matters;
-22-
<PAGE> 14
(x) The amendment to the Company's By-Laws as set forth in Exhibit
4 attached hereto and incorporated herein by reference (including without
limitation changes with respect to the taking of action by written consent
by the Company's shareholders); and
(xi) The completion of the closing on or before July 24, 1996,
subject to extension to not later than August 15, 1996 in the event of
litigation regarding the transaction.
As a result of the foregoing conditions and other matters, including
matters which may be beyond the control of Holdings and the Company, there can
be no assurance as to whether, or the terms upon which, the transactions
contemplated by the Investment Agreement will be consummated.
The Investment Agreement also contains various provisions relating to the
conduct of the Company's business prior to the closing (Section 4.1), Holdings'
access to information (Section 4.2), limitations on the Company's ability to
solicit or negotiate other offers (Section 4.5), indemnification (Article VI),
termination (Article VII) and expenses (Section 8.1), all of which are
incorporated herein by reference to the Investment Agreement attached hereto as
Exhibit 1.
The management equity program referred to in clause (vi) above would
provide for the reservation of approximately 2.25 million shares of Common Stock
for employee incentive programs. As of the Closing, the Company would sell up to
1.2 million shares (the "Initial Management Shares") at the per share price paid
by Holdings at the Closing to key employees designated by the Compensation
Committee of the Board (after reasonable consultation with Holdings). Any such
designee will be required to surrender all options held by him/her in order to
receive any Initial Management Shares. To fund the purchase of the Initial
Management Shares, the Company would make available to employees a five-year
recourse loan bearing interest at 8.5% per annum secured by the stock being
purchased. If an employee's employment with the Company were terminated within
five years of the Closing, the entire balance due under such employee's would
become due and payable and the Company would have the right to repurchase all of
such employee's Initial Management Shares (plus accrued interest at 8.5% per
annum) which have not "vested" according to a five year schedule (in which no
vesting occurs during the first two years).
Pursuant to agreements to be entered into at the Closing, each of L. Scott
Demerau and Julia Demerau will agree with the Company that they will not sell
the Common Stock beneficially owned by them prior to June 30, 1998 except in
certain circumstances. Such circumstances are set forth in the Management
Lock-up Agreements a copy of which is attached hereto as Exhibit 7 and
incorporated herein by reference.
Item 4. Purpose of Transaction.
The responses to Items 3, 5 and 6 are incorporated herein by this
reference.
The principal purpose of Holdings' acquisition of the beneficial ownership
of the shares of Common Stock pursuant to the Investment Agreement was to
acquire a significant equity interest in the Company. The purpose of each of the
other Reporting Persons' acquisition of beneficial ownership was to facilitate
the acquisition by Holdings. The Reporting Persons may acquire additional shares
of Common Stock pursuant to the Warrant, depending on their evaluations of the
Company's business, financial condition, and prospects, the market for the
Common Stock, economic conditions, money and stock market conditions and other
future developments and, subject to the limitation described below, the
Reporting Persons may acquire additional shares of Common Stock or dispose of
shares of Common Stock.
Pursuant to the Investment Agreement, subject to the Closing, Holdings has
obtained the right to designate up to six members of the Company's Board of
Directors (which would be increased to 14 members), including the Chairman of
the Board.
In addition, the Company has amended the Rights Agreement between the
Company and Continental Stock Transfer & Trust Agreement dated April 24, 1996 to
add as an "Exempt Person" under
-23-
<PAGE> 15
that Agreement any person, or a transferee thereof or of any such transferee,
who acquires from the Company beneficial ownership of 20% or more of the
outstanding Common Stock subject to the terms of an agreement approved by a
majority of the members of the Company's Board of Directors who are not either
an Affiliate or an Associate (as defined in the Rights Agreement) of such
person.
Pursuant to the Standstill Agreement to be entered into at the Closing,
Holdings will agree not to acquire beneficial ownership of any company
securities if after such acquisition Holdings would beneficially own more than
50% of the Common Stock unless such acquisition has received the prior approval
of the members of the Board of Directors not affiliated with Holdings or
employed by the Company or any of its Subsidiaries. The foregoing description of
the Standstill Agreement is qualified in its entirety by reference to the form
of Standstill Agreement, the full text of which is incorporated herein by
reference to Exhibit 5 attached hereto.
Pursuant to a Registration Rights Agreement to be entered into at the
Closing, the Company will agree, subject to certain limitations and under
certain circumstances, to register for sale any shares of Common Stock (and
other securities of the Company that are exercisable to purchase, convertible
into or exchangeable for shares of capital stock of the Company) that are held
by the parties thereto (collectively, the "Registrable Securities"). All of the
shares of Common Stock beneficially owned by the Reporting Persons will be
Registrable Securities.
-24-
<PAGE> 16
The foregoing description of the Registration Rights Agreement is qualified
in its entirety by reference to the form of Registration Rights Agreement, the
full text of which is incorporated herein by reference to Exhibit 6 attached
hereto.
Holdings is currently engaged in its confirmatory due diligence examination
of the Company contemplated in the Investment Agreement. While Holdings and the
other Reporting Persons presently have no plans or proposals of the type
required to be disclosed by Item 4 of Schedule 13D that are not set forth above,
such persons intend to review their investments in the Company (whether as a
result of such due diligence examination or otherwise) from time to time and
reserve the right to take or propose any action in the future.
Item 5. Interest in Securities of the Issuer.
(a) Based on the number of shares of Common Stock the Reporting Persons
believe to be outstanding as of this date, each of the Reporting Persons has the
right to acquire and beneficially owns 10,819,666* shares of Common Stock.
Holdings beneficially owns such shares directly and each of the other Reporting
Persons beneficially owns such shares indirectly through the relationships
described in Item 2 above. Messrs. McNamara, Whitman and Decker disclaim
beneficial ownership of all Common Stock held by Holdings. Because the
Investment Agreement provides that Holdings will acquire 44.44% of the shares of
Common Stock outstanding as of the Closing, the actual number of shares to be
acquired Holdings directly (and by the other Reporting Persons indirectly) may
be more or less than 10,819,666.
(b) Each of the Reporting Persons has shared power to vote and dispose of
10,819,666 shares of Common Stock (subject to variation in the number of shares
as described above). Messrs. McNamara, Whitman and Decker disclaim beneficial
ownership of all Common Stock held by Holdings.
(c) Not applicable.
- - - --------------------
*Represents shares of common stock issuable to MEI Holdings, L.P. pursuant to
the Investment Agreement described herein pursuant to which Holdings will
acquire 44.44% of the issuer's common shares to be outstanding immediately after
the closing thereunder. The actual number of shares to be acquired may be more
or less than 10,819,666 depending on the number of the issuer's shares
outstanding at the time of such closing.
-25-
<PAGE> 17
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relations with Respect to
Securities of the Issuer.
The responses to Items 3, 4 and 5 are incorporated hereunder by reference,
including in particular the descriptions of the following documents:
Investment Agreement. See Items 3 and 4 above.
Warrant. See Item 4 above.
Financial Commitment Letter. See Item 3 above.
By-law Amendments. See Item 4 above.
Standstill Agreement. See Item 4 above.
Registration Rights Agreement. See Item 4 above.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Investment Agreement, dated as of June 5, 1996.
Exhibit 2 - Form of Warrant attached as Exhibit A to the Investment
Agreement.
Exhibit 3 - Financing Commitment letter, dated June 5, 1996.
Exhibit 4 - Form of By-law Amendments attached as Exhibit C to the
Investment Agreement.
Exhibit 5 - Form of Standstill Agreement attached as Exhibit D to the
Investment Agreement.
Exhibit 6 - Form of Registration Rights Agreement attached as Exhibit E to
the Investment Agreement.
Exhibit 7 - Form of Management Lock-up Agreements attached as Exhibit F to
the Investment Agreement.
Exhibit 99 - Agreement Among Filing Parties (filed herewith).
-26-
<PAGE> 18
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be filed collectively on
behalf of it and each of MEI GenPar, L.P., HH Genpar Partners, Hampstead
Associates, Inc., RAW Genpar, Inc., InMed, Inc., Donald J. McNamara, Robert A.
Whitman and Daniel A. Decker.
Dated: June 17, 1996 MEI HOLDINGS, L.P.
By: MEI GenPar, L.P.
Its General Partner
By: HH Genpar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
---------------------------
Daniel A. Decker
Executive Vice President
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of it and each of MEI Holdings, L.P., HH Genpar Partners, Hampstead
Associates, Inc., RAW Genpar, Inc., InMed, Inc., Donald J. McNamara, Robert A.
Whitman and Daniel A. Decker.
Dated: June 17, 1996 MEI GENPAR, L.P.
By: HH Genpar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
-------------------------------
Daniel A. Decker
Executive Vice President
-27-
<PAGE> 19
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of it and each of MEI Holdings, L.P., MEI Genpar, L.P., Hampstead
Associates, Inc., RAW Genpar, Inc., InMed, Inc., Donald J. McNamara, Robert A.
Whitman and Daniel A. Decker.
Dated: June 17, 1996 HH GENPAR PARTNERS
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
-----------------------------
Daniel A. Decker
Executive Vice President
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of it and each of MEI Holdings, L.P., MEI Genpar, L.P., HH GenPar
Partners, RAW Genpar, Inc., InMed, Inc., Donald J. McNamara, Robert A. Whitman
and Daniel A. Decker.
Dated: June 17, 1996 HAMPSTEAD ASSOCIATES, INC.
By: /s/ Daniel A. Decker
----------------------------------
Daniel A. Decker
Executive Vice President
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of it and each of MEI Holdings, L.P., MEI Genpar, L.P., HH GenPar
Partners, Hampstead Associates, Inc., InMed, Inc., Donald J. McNamara, Robert A.
Whitman and Daniel A. Decker.
Dated: June 17, 1996 RAW GENPAR, INC.
By: /s/ Robert A. Whitman
-----------------------------------
Robert A. Whitman
President
-28-
<PAGE> 20
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of it and each of MEI Holdings, L.P., MEI Genpar, L.P., HH GenPar
Partners, Hampstead Associates, Inc., RAW GenPar, Inc., Donald J. McNamara,
Robert A. Whitman and Daniel A. Decker.
Dated: June 17, 1996 INMED, INC.
By: /s/ Daniel A. Decker
----------------------------------
Daniel A. Decker
President
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of him and each of MEI Holdings, L.P., MEI Genpar, L.P., HH GenPar
Partners, Hampstead Associates, Inc., RAW GenPar, Inc., InMed, Inc., Robert A.
Whitman and Daniel A. Decker.
Dated: June 17, 1996 /s/ Donald J. McNamara
---------------------------------------
Donald J. McNamara
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of him and each of MEI Holdings, L.P., MEI Genpar, L.P., HH GenPar
Partners, Hampstead Associates, Inc., RAW GenPar, Inc., InMed, Inc., Donald J.
McNamara and Daniel A. Decker.
Dated: June 17, 1996 /s/ Robert A. Whitman
---------------------------------------
Robert A. Whitman
-29-
<PAGE> 21
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct and agrees that this statement may be jointly filed on
behalf of him and each of MEI Holdings, L.P., MEI Genpar, L.P., HH GenPar
Partners, Hampstead Associates, Inc., RAW GenPar, Inc., InMed, Inc., Donald J.
McNamara and Robert A. Whitman.
Dated: June 17, 1996 /s/ Daniel A. Decker
---------------------------------------
Daniel A. Decker
-30-
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- - - ------- ----------- ----
<S> <C> <C>
1 Investment Agreement, dated as of June 5, 1996.
2 Form of Warrant attached as Exhibit A to the
Investment Agreement.
3 Financing Commitment letter, dated June 5, 1996.
4 Form of By-law Amendments attached as Exhibit C to the
Investment Agreement .
5 Form of Standstill Agreement attached as Exhibit D to
the Investment Agreement.
6 Form of Registration Rights Agreement attached as
Exhibit E to the Investment Agreement.
7 Form of Management Lock-up Agreement attached as Exhibit F to the
Investment Agreement.
99 Agreement Among Filing Parties.
</TABLE>
-31-
<PAGE> 23
AGREEMENT AMONG FILING PARTIES
THIS AGREEMENT is made and entered into on June 17, 1996, by and among MEI
Holdings, L.P., a Delaware limited partnership, MEI GenPar, L.P., a Delaware
limited partnership, HH GenPar Partners, a Texas general partnership, Hampstead
Associates, Inc., a Texas corporation, RAW Genpar, Inc., a Texas corporation,
InMed, Inc. (d/b/a InCap, Inc.), a Texas corporation, Donald J. McNamara, Robert
A. Whitman and Daniel A. Decker (collectively referred to herein as the "Filing
Parties").
WHEREAS, Rule 13-d(f)(1)(iii) under the Securities Exchange Act of 1934,
as amended (the "Act"), requires that, when a Schedule 13D is filed on behalf of
more than one person, an agreement be executed and filed as an exhibit to the
Schedule 13D reflecting that the Schedule 13D is being filed on behalf of all
such persons;
NOW THEREFORE, in consideration of the premises and the mutual promises
stated herein, the Filing Parties hereby agree as follows:
(i) Each Filing Party agrees that a single Schedule 13D (and any
amendments thereto) will be filed jointly on behalf of all the Filing Parties
with respect to the shares of common stock, no par value per share, of Mountasia
Entertainment International, Inc., a Georgia corporation.
(ii) Each Filing Party acknowledges and agrees that, pursuant to Rule
13d-1(f)(1) under the Act, each Filing Party individually is (i) eligible to use
the Schedule 13D and (ii) responsible for the timely filing of such Schedule 13D
and any amendments thereto and for the completeness and accuracy of the
information concerning such Filing Party contained in such Schedule 13D. None of
the Filing Parties, however, will be responsible for the completeness or
accuracy of information concerning any other Filing Party contained in such
Schedule 13D, or any amendments thereto, unless such Filing Party knows or has
reason to believe that such information is incomplete or inaccurate.
(iii) This agreement will not be assignable by any Filing Party. Any
assignment in violation of the foregoing will be null and void.
(iv) This agreement will terminate upon the written notice of termination
given by any Filing Party to the other Filing Parties.
(v) This agreement may be executed in several counterparts, each of which
will be deemed to be an original copy hereof.
-32-
<PAGE> 24
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement Among
Filing Parties as of the date or dates set forth below.
Dated: June 17, 1996 MEI HOLDINGS, L.P.
By: MEI GenPar, L.P.,
Its General Partner
By: HH Genpar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
---------------------------
Daniel A. Decker
Executive Vice President
Dated: June 17, 1996 MEI GENPAR, L.P.
By: HH Genpar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
----------------------------------
Daniel A. Decker
Executive Vice President
Dated: June 17, 1996 HH GENPAR PARTNERS
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
----------------------------------------
Daniel A. Decker
Executive Vice President
Dated: June 17, 1996 HAMPSTEAD ASSOCIATES, INC.
By: /s/ Daniel A. Decker
----------------------------------------
Daniel A. Decker
Executive Vice President
-33-
<PAGE> 25
Dated: June 17, 1996 RAW GENPAR, INC.
By: /s/ Robert A. Whitman
----------------------------------------
Robert A. Whitman
President
Dated: June 17, 1996 INMED, INC.
By: /s/ Daniel A. Decker
----------------------------------------
Daniel A. Decker
Executive Vice President
Dated: June 17, 1996 /s/ Donald J. McNamara
----------------------------------------
Donald J. McNamara
Dated: June 17, 1996 /s/ Robert A. Whitman
----------------------------------------
Robert A. Whitman
Dated: June 17, 1996 /s/ Daniel A. Decker
----------------------------------------
Daniel A. Decker
-34-
<PAGE> 1
Exhibit 1
INVESTMENT AGREEMENT
--------------------
Investment Agreement, dated as of June 5, 1996, between MEI
Holdings, L.P., a Delaware limited partnership (the "Purchaser"), and Mountasia
Entertainment International, Inc., a Georgia corporation (the "Company").
I. SHARE PURCHASE; WARRANT
-----------------------
1.1. SHARE PURCHASE. (a) The Company has authorized the
issuance and sale to the Purchaser hereunder of (i) a number of newly issued
shares of Common Stock, no par value (the "Common Stock"), of the Company that
equals 44.44% of the Closing Outstanding Shares (defined below), rounded up to
the nearest whole number (the "Shares"), and (ii) a warrant substantially in the
form of Exhibit A hereto (the "Warrant"), which will entitle the holder thereof
to have issued to it shares of Common Stock on the terms and subject to the
conditions of the Warrant (such shares of Common Stock, the "Warrant Shares").
For purposes of this Agreement, the term "Closing Outstanding Shares" means the
number of shares of Common Stock outstanding immediately following the Closing.
(b) Subject to Section 1.1(c), on the terms and subject to the
conditions hereinafter set forth, at the Closing, the Company will issue and
sell to the Purchaser, and the Purchaser will purchase from the Company, for an
aggregate price equal to $40.0 million (the "Purchase Price"), the Shares and
the Warrant (collectively, the "Securities").
(c) As an inducement to the Company to enter into this
Agreement and to consummate the transactions contemplated hereby, the Purchaser
is willing to make available to the Company certain interim financing on the
terms and subject to the conditions set forth in the documents attached as
Exhibit B (collectively, the "Interim Financing Facility Commitment").
1.2. PURCHASE PRICE. The Purchase Price will be payable on the
terms and subject to the conditions hereof in cash by bank wire transfer of New
York Clearing House funds to an account of the Company designated by the Company
by written notice to the Purchaser at least five calendar days prior to the
Closing Date. Notwithstanding the foregoing, if the Purchaser makes available to
the Company any financing under the Interim Financing Facility Commitment, then
upon notice by the Purchaser up to the entire principal amount thereof (plus
accrued and unpaid interest thereon) may be forgiven by the Purchaser in lieu of
cash to pay a portion of the Purchase Price. If the Closing occurs, any such
election must be made prior to Closing; if this Agreement is terminated, any
such election must be made by September 1, 1996.
<PAGE> 2
1.3. CLOSING. The closing (the "Closing") of the purchase and
sale of the Securities will take place at the offices of Jones, Day, Reavis &
Pogue ("JDR&P"), 599 Lexington Avenue, New York, New York, at 10:00 a.m. local
time on July 2, 1996 or, if later, two business days after satisfaction or
waiver of the conditions (other than the conditions to be satisfied concurrently
with the Closing) set forth in Article V (or such other date to which the
parties may agree); PROVIDED, that all conditions set forth in Article V are
satisfied or waived at Closing. (The date on which the Closing occurs is the
"Closing Date".)
1.4. CLOSING DELIVERIES. (a) At or prior to the
Closing, the Purchaser will deliver to the Company:
(i) the Purchase Price, in accordance with Section
1.2;
(ii) a certificate executed by an authorized signatory of the
general partner of the Purchaser ("Purchaser's GP") certifying that the
conditions set forth in Section 5.1(a) have been satisfied;
(iii) copies of the Standstill Agreement duly executed
by the Purchaser; and
(iv) the legal opinion of JDR&P, addressed to the Company and
dated as of the Closing Date, generally as to the matters covered by
Sections 3.1 and 3.2.
(b) At or prior to the Closing, the Company will
deliver to the Purchaser:
(i) such number of validly issued stock certificates
evidencing the Shares as the Purchaser requests at least two business
days before the Closing;
(ii) the Warrant duly executed by the Company;
(iii) a certificate executed by each of the Chief Executive
Officer and Chief Financial Officer of the Company certifying that the
conditions set forth in Section 5.2(a) have been satisfied and that the
By-Laws of the Company have been amended and restated to be in their
entirety as set forth in Exhibit C;
(iv) copies of the Standstill Agreement duly executed
by the Company;
(v) copies of the Registration Rights Agreement duly
executed by the Company; and
(vi) the legal opinion of Rogers & Hardin, counsel to
the Company, addressed to the Purchaser and dated as of the
2
<PAGE> 3
Closing Date, generally as to the matters set forth in Section 2.1 (as
to the Company only), 2.2(a), 2.3, 2.4, 2.8 and 2.13.
(c) At or prior to the Closing, the Company and the Purchaser
will deliver to each other such other documents and instruments required to be
delivered by them pursuant to Article V.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company acknowledges that the Purchaser was induced to
enter into, and entered into, this Agreement relying upon the representations,
warranties and covenants of the Company set forth in this Agreement.
Accordingly, the Company represents and warrants to, and covenants with, the
Purchaser as follows:
2.1. ORGANIZATION. (a) Each of the Company and each of its
Subsidiaries (which for the purposes of this Agreement will include any and all
corporations, partnerships or other legal entities in which the Company or one
or more of its other Subsidiaries has the power to (x) elect a majority of the
board of directors or similar governing body or (y) otherwise direct the
management and operations thereof, including without limitation limited
partnerships in which the Company or other Subsidiaries are general partners),
other than wholly inactive Subsidiaries of the Company having no liabilities,
material assets or operations (which inactive Subsidiaries are identified as
such on SCHEDULE 2.1): (i) is a corporation or other legal entity duly organized
or formed, validly existing and in good standing or otherwise authorized to
transact business under the laws of the jurisdiction of its organization, (ii)
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, and (iii) is duly qualified
or licensed and in good standing or otherwise authorized to transact business in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or license
necessary, except in each case to the extent that (A) any Subsidiary's failure
to be so organized, existing, in good standing or otherwise authorized or
qualified or (B) the Company's or any Subsidiary's failure to be so licensed
could not be reasonably expected to have a Material Adverse Effect. For purposes
of this Agreement, the term "Material Adverse Effect" means the existence or
occurrence of any event or circumstance which, alone or together with like
events and circumstances, could have a material adverse effect on (1) the
business, operations, property, condition (financial or otherwise) or prospects
of the Company, any Significant Subsidiary or of Non-Significant Subsidiaries
which together would constitute a Significant Subsidiary taken as a whole, (2)
the ability of the Company or any Subsidiary freely and without liability to
perform its obligations under this Agreement and the other documents
contemplated hereby or any Material Contract, or (3) the validity
3
<PAGE> 4
or enforceability of any of the documents referred to in the immediately
proceeding clause (2) or the rights or remedies of the Purchaser hereunder or
thereunder. For purposes of this Agreement, the term "Significant Subsidiary"
means, at any time, any Subsidiary, the book value (net of applicable loss
allowances and other reserves) of the total assets of which aggregates at least
5% of the consolidated book value (net of applicable loss allowances and other
reserves) of the total assets of the Company and its consolidated subsidiaries.
(b) SCHEDULE 2.1 sets forth a true and correct list of all of
the Subsidiaries, their jurisdictions of organization or formation, the
percentage or other interests owned (directly or indirectly) by the Company and
the owners of all other capital stock or equity interests therein.
2.2. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock and 6,000,000 shares of
preferred stock, no par value (the "Preferred Stock"), of which the shares of
each series listed by series on SCHEDULE 2.2(A) (such shares, the "Outstanding
Preferred Stock") are issued and outstanding on the date hereof. Schedule 2.2(a)
also sets forth the dividend rate and liquidation preference of each series of
Outstanding Preferred Stock and a brief description of the voting and conversion
rights, if any, relating thereto.
(b) SCHEDULE 2.2(B) lists all of the Subsidiaries that own or
are entitled to receive shares of the capital stock of the Company and the
number of such shares owned by each listed Subsidiary. Except as set forth in
the preceding sentences of this Section 2.2, there are no shares of capital
stock of the Company authorized, issued or outstanding.
(c) Except for the obligations of the Company arising under
(i) the Outstanding Preferred Stock, (ii) the indebtedness listed on SCHEDULE
2.2(C) (the "Convertible Debt"), (iii) the options and warrants listed on
SCHEDULE 2.2(C) (the "Existing Options and Warrants") (which Schedule lists the
holders of the Existing Options and Warrants, the strike prices thereof, the
number of shares of capital stock subject thereto, the expiration date thereof
and any anti-dilution provisions relating thereto), and (iv) this Agreement and
the Warrant, there are no outstanding subscriptions, options, warrants, rights,
convertible securities or any other agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock or other
securities of the Company or any Subsidiary obligating the Company or any
Subsidiary to (A) issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any Subsidiary, (B)
grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment, or (C) make
payment of money or incurrence of indebtedness based upon market
4
<PAGE> 5
prices of the Company's securities or changes in the Company's capitalization.
2.3. VALIDITY OF SHARES, ETC. Each of the Shares and the
Warrant Shares have been duly authorized for issuance and, when issued to the
Purchaser for the consideration set forth herein and as otherwise provided
herein, will be duly and validly issued, fully paid, non-assessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. At the Closing and upon exercise of the Warrant, from time to time, as
the case may be, the Purchaser will acquire good and valid title to the relevant
Shares and Warrant Shares, in each case free and clear of any and all liens,
claims, charges, encumbrances, restrictions on voting or alienation or
otherwise, or adverse interests (collectively, "Encumbrances").
2.4. AUTHORITY; BINDING EFFECT; ETC. (a) The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and the other documents contemplated hereby (collectively, the "Transaction
Documents"), to perform its obligations and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by the
Company of the Transaction Documents, the performance by the Company of its
obligations thereunder and the consummation by the Company of the transactions
contemplated thereby have been duly and validly authorized by the Board of
Directors of the Company (the "Board"), and no other corporate authorizations,
approvals or proceedings are required in connection with such execution,
delivery, performance or consummation under the Company's Articles of
Incorporation, By-Laws, any agreement or instrument to which the Company is a
party or any law, rule, regulation or requirement to which the Company is
subject. The Transaction Documents have been or will be duly and validly
executed and delivered by the Company, and each of the Transaction Documents
constitutes or will constitute valid and binding agreement of the Company,
enforceable against the Company in accordance with its respective terms.
(b) The Board has taken all actions necessary to (i) approve
each of the Transaction Documents and the transactions contemplated thereby and,
accordingly, neither the transactions contemplated thereby nor any subsequent
transactions involving the Purchaser are subject to Parts 2 and 3 of Article 11
of the Georgia Business Corporation Code (the "GBCC") and (ii) amend the Rights
Agreement, dated April 24, 1996, between the Company and Continental Stock
Transfer & Trust Company, and rights thereunder as specified in SCHEDULE 2.4(B)
(the "Rights Plan Amendment").
2.5. SEC FILINGS. (a) Except as described on Schedule 2.5(a),
the Company and each of its Subsidiaries have filed all required forms, reports
and documents with the Securities and Exchange Commission (the "SEC") since
January 1, 1994, including without limitation all exhibits thereto
(collectively, the "SEC Documents"), each of which complied in all material
respects with
5
<PAGE> 6
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the dates so filed. None of the SEC Documents
(as of their respective filing dates) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) Except as described on Schedule 2.5(b), the audited and
unaudited consolidated financial statements, together with notes thereto, of the
Company and its Subsidiaries included (or incorporated by reference) in the SEC
Documents filed by the Company present fairly the financial position of the
Company and its consolidated Subsidiaries as of the date thereof and the results
of their operations for the periods then ended. The audited and unaudited
financial statements, together with the notes thereto, of each Subsidiary
included (or incorporated by reference) in the SEC Documents filed by such
Subsidiary present fairly the financial position of each such Subsidiary and its
consolidated Subsidiaries as of the dates thereof and the results of their
operations for the periods then ended. Except as described on Schedule 2.5, all
audited financial statements referred to above have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
("GAAP") for year-end financial information and with the instructions to Form
10-K and Regulation S-X, and all unaudited financial statements referred to
above have been prepared in accordance with GAAP for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, except as described on Schedule 2.5(b), while such unaudited
financial statements do not include all the information and footnotes required
by GAAP for complete financial statements, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Neither the Company nor any of its Subsidiaries has any liabilities or
obligations, fixed or contingent, not reflected in such financial statements,
except for (i) liabilities and obligations which in the aggregate are not
material and have been incurred in the ordinary course of business since
December 31, 1995 and (ii) liabilities and obligations specifically listed and
described in reasonable detail on SCHEDULE 2.5(B).
(c) The Company's exchange offer, dated March 29, 1996, as
amended, has been terminated and withdrawn in accordance with the terms thereof
and applicable Law without any material cost or liability to the Company and
without the purchase of any Common Stock tendered for exchange pursuant thereto,
and all shares of such Common Stock tendered pursuant thereto were or will be
promptly returned to the holders thereof. All partnership, joint venture or
other interests acquired or agreed to be acquired by the Company or a Subsidiary
thereof, and all acquisitions of businesses or assets (either directly or by
stock
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or other security acquisition, merger or otherwise), have been carried out by
the Company or a Subsidiary thereof in conformity with all securities and other
Laws (including without limitation so-called "roll-up" Laws) and the terms of
all contracts and commitments of the Company relating thereto, and the Company
has no liabilities or obligations, fixed or contingent, in respect thereof
except as described in SCHEDULE 2.5(C).
2.6. ABSENCE OF CERTAIN CHANGES, ETC. (a) Except as disclosed
on SCHEDULE 2.6(A), since December 31, 1995, neither the Company nor any of its
Subsidiaries has entered into any Material Contract (other than the Transaction
Documents and the transactions contemplated thereby) or any material
transaction, or conducted its business and operations other than in the ordinary
course of business consistent with past practice, and no Material Adverse Effect
has occurred or been suffered since such date.
(b) Except (i) as disclosed in SEC Documents filed prior to
the date hereof, (ii) for compensation and benefits paid or payable to officers,
directors and employees described (to the extent required) in the SEC Documents
(or, if subsequent thereto, not materially different than the compensation and
benefits so described), or (iii) as listed and described on Schedule 2.6(b),
since January 1, 1995 the Company and its Subsidiaries have not entered into any
transaction, or made any payment to or for the benefit of, directly or
indirectly, any officer, director or shareholder of the Company or any
Subsidiary, or any Affiliate, Associate or relative of any of the foregoing, or
made or entered into any transaction or agreement that would be required to be
described on Schedule 2.6(b) pursuant to Rules 401 or 402 of the SEC's
Regulation S-K if such Rules applied to disclosures by the Company on SCHEDULE
2.6(B). Schedule 2.6(b) also sets forth a list of all outstanding accounts
payable or receivable between the Company and any of its directors or officers
(other than routine requests for expense reimbursements).
2.7. DISCLOSURE. No representation or warranty made by the
Company in this Agreement or to be made in the other documents contemplated
hereby, no statement contained in any written financial or operating data
furnished or to be furnished by or on behalf of the Company to the Purchaser in
connection with the transactions contemplated hereby and thereby (including
without limitation the unaudited interim financial statements, consolidated or
otherwise, of the Company delivered to the Purchaser, but excluding any
financial forecasts or projections) contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were or will be made, not misleading, or
necessary in order fully to provide the information required or purported to be
provided therein.
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2.8. NO VIOLATION. Except as set forth on SCHEDULE 2.8(A),
neither the negotiation, execution or delivery by the Company of the Transaction
Documents, the performance by the Company of its obligations thereunder, nor the
consummation by the Company of the transactions contemplated thereby (a) has
constituted or will constitute a breach or violation under the Articles of
Incorporation or By-Laws of the Company or the governing documents of any of its
Subsidiaries or (b) has constituted or will constitute a breach, violation or
default (or be an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any Encumbrances upon any
of the properties or assets of the Company or any of its Subsidiaries under, any
Material Contract or any other note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument to which the Company or any of its
Subsidiaries is a party or by which they or any of their respective properties
or assets are bound or otherwise, or (c) has constituted or will constitute a
violation of any order, writ, injunction, decree, statute, rule or regulation of
any court or governmental authority applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except in the case
of clauses (b) and (c) above, such breaches, violations, defaults, terminations,
accelerations or creation of Encumbrances which, singly or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. Nothing in
this Agreement will constitute a representation or warranty of the Company with
respect to the application of Schedule D of the rules of the National
Association of Securities Dealers to this Agreement or the transactions
contemplated hereby.
2.9. ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE
2.9, to the best knowledge of the Company after due inquiry, each of the
representations and warranties set forth in paragraphs (a) through (e) of this
Section 2.9 is true and correct with respect to each parcel of real property
owned leased, managed or operated by the Company or any of its Subsidiaries (the
"Properties"), except as circumstances giving rise to any such failure to be so
true and correct could not reasonably be expected to have a Material Adverse
Effect:
(a) The Properties do not contain, and have not previously
contained, therein, thereon or thereunder, including without limitation the soil
and groundwater thereunder, any Hazardous Materials (defined below) in
concentrations which violate Environmental Laws (defined below).
(b) The Properties, and all operations and facilities at the
Properties, are in compliance with all Environmental Laws, and there is no
Hazardous Materials contamination or violation of any Environmental Law that
could interfere with the continued operation of any of the Properties or impair
the fair saleable value thereof.
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(c) Neither the Company nor any of its Subsidiaries has
received any written complaint, or notice of violation, alleged violation,
investigation, advisory action, potential liability or potential responsibility,
regarding environmental protection matters or permit compliance with regard to
the Properties, nor is any governmental authority contemplating delivering to
the Company or any of its Subsidiaries any such notice.
(d) Except in compliance with Environmental Laws, Hazardous
Materials have not been generated, released, treated, stored or disposed of at,
on or under any of the Properties, nor have any Hazardous Materials been
transferred from the Properties to any other location.
(e) There are no governmental, administrative or judicial
actions or proceedings pending or contemplated under any Environmental Laws to
which the Company or any of the Subsidiaries is or will be named as a party with
respect to the Properties, nor are there any consent decrees, other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements, outstanding under any Environmental Law with respect
to any of the Properties.
For the purposes of this Agreement, the following terms have the following
meanings: (i) "Environmental Laws" means any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or requirements of any governmental authority regulating, relating to or
imposing liability or standards or conduct concerning public or occupational
health and safety, the environment or any Hazardous Material as now in effect
and applied, or as in effect and applied at the time the event occurred, which
gave rise to the alleged violation, as the case may be, and (ii) "Hazardous
Materials" means (A) petroleum and petroleum products, radioactive materials,
asbestos in any form that is or could become friable, transformers or other
equipment that contained polychlorinated biphenyls, and radon gas, (B) any other
chemicals, materials or substances defined as of included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous pollutants," "contaminants" or "pollutants," or words of similar
import, under any applicable Environmental Law, and (C) any other chemical,
material or substance exposure to which is regulated by any governmental
authority.
2.10. EMPLOYEE BENEFIT MATTERS. (a) DISCLOSURE.
SCHEDULE 2.10(A) lists all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and
all bonus pay, stock option, restricted stock, deferred and incentive
compensation, supplemental retirement, stock purchase, severance, vacation pay,
sick pay or other plans, programs or arrangements to which the Company or any
"Control Group Member" (all entities that are
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required to be treated as a single employer with the Company under Section 414
of the Code (defined below)) maintains or sponsors (the "Benefit Plans"). Each
of the Benefit Plans has been administered in compliance with its terms and all
filing, reporting, disclosure, funding and other applicable requirements of
ERISA and the Internal Revenue Code of 1986, as amended (the "Code"). With
respect to each Benefit Plan, the Company has furnished the Purchaser with true
and correct copies of (i) all such Benefit Plans, (ii) each summary plan
description and summary of material modification, (iii) the most recently filed
Internal Revenue Service ("IRS") Form 5500, and (iv) the most recently received
IRS determination letter.
(b) QUALIFIED RETIREMENT PLANS. None of the Benefit Plans
which is a "pension plan" (as defined in Section 3(2) of ERISA) (the "Pension
Plans") is a "multiemployer plan" as defined in Section 3(37) of ERISA, or is
subject to the requirements of Title IV of ERISA, Section 302 or ERISA or
Section 412 of the Code. Each Pension Plan that is intended to be "qualified"
within the meaning of Section 401(a) of the Code has received a determination
letter from the IRS that it is so qualified, and no fact or event has occurred
since the date of such determination letter that could adversely affect the
qualified status of any such Pension Plan. Neither the Company nor any Control
Group Member has incurred any liability for any penalty of tax under Sections
4971, 1972, 4975, 4979 or 1980 of the Code or Section 502 of ERISA.
(c) WELFARE BENEFIT PLANS. Each of the Benefit Plans which is
a "welfare plan", as defined in Section 3(1) of ERISA (the "Welfare Plans") has
at all times been in compliance with the provisions of Section 4980B of the
Code. None of the Welfare Plans provides for or promises post-retirement health
or life benefits to current employees or retirees of the Company or any Control
Group Member.
(d) OTHER. Neither the Company nor any Control Group Member
has incurred any liability under Title IV of ERISA, including without limitation
any liability in connection with the termination or reorganization of any
pension plan subject to Title IV of ERISA, or withdrawal from multiemployer
plan, and no fact or event exists which could give rise to any such liability.
All contributions, premiums or payments required to be made with respect to any
Benefit Plan have been made on or before their due date. Except as described in
SCHEDULE 2.10(D), neither the Company nor any of its Subsidiaries has any
obligation to pay any money, incur any liability or take any other action in
respect of any present or former employee as a result of the Transaction
Documents or any transaction contemplated thereby, none of the Company or any
such Subsidiary is a party to any so-called "golden parachute," "tin parachute,"
severance agreement or similar agreement or plan nor do any options or other
rights vest or accelerate as a result thereof.
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2.11. BREACHES, VIOLATIONS AND DEFAULTS. Except as set forth
on SCHEDULE 2.11, neither the Company nor any Subsidiary is (a) in breach or
violation of or default under, nor has an event occurred which, with notice or
lapse of time or both, would constitute a default under, any Material Contract
or any other note, bond, mortgage, indenture, deed of trust, license,
certificate, permit, approval, lease agreement or other instrument to which the
Company or any of its Subsidiaries is a party or by which they or any of their
respective properties or assets are bound or pursuant to which they operate any
of their businesses or facilities or (b) in violation of any order, writ,
injunction, decree, statute, rule or regulation of any court or governmental
authority applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets (collectively, "Laws"), except such breaches,
violations, defaults, terminations, accelerations or creation of Encumbrances
which, singly or in the aggregate, could not reasonably be expect to have a
Material Adverse Effect.
2.12. LITIGATION. Except as disclosed in the SEC Documents, on
SCHEDULE 2.12 or in a writing delivered by the Company to the Purchaser on the
date hereof and prior to the execution of this Agreement which makes express
reference to this Section 2.12, (a) neither the Company nor its Subsidiaries is
a party to any, and there are no pending or, to the best of the best knowledge
of the Company after due inquiry, threatened, legal, administrative, arbitration
or other proceedings, claims, actions or governmental investigations or
inquiries of any nature whatsoever against any of them or to which any of their
assets or properties are subject, which could reasonably be expected to have a
Material Adverse Effect, (b) neither the Company nor its Subsidiaries or their
respective officers and directors, nor any of their respective properties is a
party to any order, judgment or decree of any court, governmental agency,
commission, arbitrator, or regulatory authority which could reasonably be
expected to have a Material Adverse Effect, and (c) there is no agreement, order
or memorandum in writing by, from or with any regulatory agency specifically
affecting or relating to the assets, properties or operations of the Company or
any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
2.13. CONSENTS AND APPROVALS. Except for the requirements of
the Exchange Act and except as set forth in SCHEDULE 2.13, no authorization,
consent or approval of, or filing with, any court or any public body or
authority and no consent or approval of any third party or parties is necessary
for the execution, performance and consummation by the Company of the
transactions contemplated by this Agreement or the other documents contemplated
hereby.
2.14. INDEBTEDNESS. SCHEDULE 2.14 lists all indebtedness of
the Company and each of the Subsidiaries for borrowed money, the deferred
purchase price of property or
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services and so-called capitalized leases (collectively, "Indebtedness") and all
guarantees and similar arrangements in respect of Indebtedness of others,
including without limitation Affiliates, together, in each case, with a
description (or a copy) of the instruments or agreements giving rise to such
Indebtedness or guarantee obligation, including without limitation all
modifications and amendments thereto and a list of any assets securing each item
of such Indebtedness.
2.15. CREDIT AGREEMENT; MATERIAL CONTRACTS. The Company has
delivered to the Purchaser true and correct copies of the Credit Agreement and
all other Material Contracts together with all amendments, modifications or
alterations thereto.
2.16. BROKERS. Except as described on Schedule 2.16, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries.
2.17. TAXES. (a) The Company and each of its Subsidiaries (i)
has filed when due (taking into account extensions) with the appropriate
federal, state, local, foreign and other governmental agencies, all tax returns,
estimates and reports required to be filed by it, (ii) has either paid when due
and payable or established adequate reserves or otherwise accrued all requisite
taxes, and (iii) has or will establish in accordance with GAAP accruals and
reserves that are adequate for the payment of all taxes not yet due and payable
and attributable to any period preceding the Closing Date. SCHEDULE 2.17 sets
forth those tax returns of the Company and its Subsidiaries (or any predecessor
entities) for all periods that currently are the subject of audit by any
federal, state, local or foreign taxing authority and accurately describes the
nature and amount of all deferred taxes and the manner in which the Company has
made accruals thereof.
(b) Neither the Company nor its Subsidiaries (nor any
predecessor corporation to either the Company or such Subsidiary) has executed
or filed with the Internal Revenue Service or any other taxing authority, any
agreement or other document extending, or having the effect of extending, the
period of assessment or collection of any taxes.
(c) Neither the Company nor any of its Subsidiaries is a party
to, is bound by, nor has any obligation under any tax sharing or similar
agreement or arrangement.
2.18. CHARTER AND BY-LAWS. True and complete copies of the
Articles of Incorporation and By-Laws of the Company currently in effect,
including all amendments and modifications thereto, are attached hereto as
SCHEDULE 2.18.
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2.19. LABOR MATTERS. Except as set forth in SCHEDULE 2.19, (a)
neither the Company nor any Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or any Subsidiary and there are no organizational campaigns, petitions
or other unionization activities seeking recognition of a collective bargaining
unit which could affect the Company or any Subsidiary; (b) neither the Company
nor any Subsidiary has breached or otherwise failed to comply in all material
respects with the provisions of any collective bargaining or union contract and
there are no grievances outstanding against the Company or any Subsidiary under
any such agreement or contract which could reasonably be expected to have a
Material Adverse Effect; (c) there are no unfair labor practice complaints
pending against the Company or any Subsidiary before the National Labor
Relations Board or any other governmental authority or any current union
representation questions involving employees of the Company or any Subsidiary
which could reasonably be expected to have a Material Adverse Effect; (d) the
Company and each Subsidiary is currently in compliance in all material respects
with all applicable Laws relating to the employment of labor; (e) neither the
Company nor any Subsidiary is a party to, or otherwise bound by, any consent
decree with, or citation by, any governmental authority relating to employees or
employment practices; (f) there is no charge or proceeding with respect to a
material violation of any occupational safety or healthy standards that has been
asserted or is now pending or, to the knowledge of the Company, threatened with
respect to the Company or any Subsidiary; and (g) there is no charge of
discrimination in employment or employment practices, for any reason, including
without limitation age, gender, race, religion, sexual preference or other
legally protected category, which has been asserted or is now pending or, to the
best knowledge of the Company after due inquiry, threatened before the United
States Equal Employment Opportunity Commission, or any governmental authority in
any jurisdiction in which the Company or any Subsidiary has employed or
currently employs any person.
2.20. MATERIAL CONTRACTS. (a) SCHEDULE 2.20(A) sets forth a
list of all of the following contracts (including without limitation oral and
informal arrangements) of the Company or any of the Subsidiaries (such
contracts, together with all material contracts, leases and subleases concerning
the management or operation of any real property to which the Company or any
Subsidiary is a party, being "Material Contracts") organized by category of
contract listed below:
(i) all joint venture, partnership or limited liability entity
contracts to which the Company or any Subsidiary is a party, whether as
a general or as a limited partner or participant;
(ii) all leases for real property to which the Company
or any Subsidiary is a party as lessee (including a
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description of the termination dates thereof and any extension or
purchase options);
(iii) all brokerage, agency, sales promotion, market research,
marketing, consulting and advertising contracts involving exclusive
rights or requiring payments in excess of $25,000 individually to which
the Company or any Subsidiary is a party that are not cancelable by the
Company or such Subsidiary without penalty or further payment on 30
calendar days' notice or less;
(iv) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) involving
exclusive rights or requiring payments in excess of $25,000
individually to which the Company or any Subsidiary is a party, that
are not cancelable by the Company or such Subsidiary without penalty or
further payment on 30 calendar days' notice or less;
(v) all contracts with any governmental authority to
which the Company or any Subsidiary is a party;
(vi) all material contracts that limit or purport to limit the
ability of the Company or any Subsidiary to compete in any line or
business or with any person or in any geographic area or during any
period of time;
(vii) all contracts between or among the Company or
any Subsidiary on the one hand and an Affiliate of any
thereof on the other hand;
(viii) all development contracts relating to capital
expenditures in excess of $50,000 to which the Company or
any Subsidiary is a party;
(ix) all tax-sharing or tax indemnity contracts;
(x) all contracts relating to the acquisition or
divestiture of any business or facility;
(xi) all policies of insurance, including without
limitation director and officer liability insurance;
(xii) all registration rights agreements;
(xiii) all documents relating to any Indebtedness of
the Company or any Subsidiary; and
(xiv) all other contracts which are material to the Company,
or any Subsidiary or the conduct of the business of any thereof, or
which would be required to be disclosed under item 601 of Regulation
S-K.
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For purposes of this Agreement, the term "lease" includes any and all leases,
subleases, sale/leaseback agreements or similar arrangements.
(b) Each Material Contract (i) is valid and binding on the
respective parties thereto and is in full force and effect and (ii) upon
consummation of the transactions contemplated by this Agreement, except to the
extent that any consents set forth on SCHEDULE 2.13 are not obtained, will
continue in full force and effect without penalty or other adverse consequence.
Except as set forth on SCHEDULE 2.20(B), neither the Company nor any Subsidiary
is in breach of or default under any Material Contract which breach or default
could be reasonably expected to have a Material Adverse Effect.
(c) Except as disclosed on SCHEDULE 2.20(C), to the Company's
best knowledge after due inquiry, no other party to any Material Contract is in
breach thereof or default thereunder, which breach or default could, singly or
in the aggregate, be reasonably expected to have a Material Adverse Effect.
Except as disclosed on Schedule 2.20(c), the Company and its Subsidiaries have
no liabilities or obligations under any contract referred to in Section
2.20(a)(ix) or (x) other than liabilities and obligations that were satisfied in
full prior to March 31, 1996.
(d) There is no contract or other arrangement granting any
person any preferential right to purchase, other than in the ordinary course of
business, any of the securities, properties or assets of the Company or any
Subsidiary.
(e) Except as described on Schedule 2.20(e), the Company or a
wholly owned Subsidiary thereof owns and has the exclusive right to use all
trade names, trademarks, copyrights and all other intellectual property rights,
and related registrations thereof and applications therefor, necessary to
conduct the business of the Company and its Subsidiaries anywhere in the world,
including without limitation the Company's "off track" operations (collectively,
the "IP Rights"). A list and brief description of the IP Rights is attached as
SCHEDULE 2.20(E). Neither the Company nor any Subsidiary thereof has any
liability or obligation, fixed or contingent, for the violation of any
intellectual property rights of any other person or entity.
(f) The assets of the Company and its Subsidiaries are (i)
owned by the Company or its Subsidiaries free and clear of any Encumbrances,
except for Encumbrances which are described in the SEC Reports or which do not
have a Material Adverse Effect, (ii) in good condition and repair, ordinary wear
and tear excepted, and (iii) sufficient for the continued conduct of the
business of the Company and its Subsidiaries substantially as presently
conducted and as proposed to be conducted. Except as described in Schedule
2.20(f), none of the Subsidiaries of the Company other than wholly owned
Subsidiaries owns any assets
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which are reflected in the consolidated balance sheet of the Company as of March
31, 1996 or are material to the Company and its consolidated Subsidiaries, taken
as a whole.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser acknowledges that the Company was induced to
enter into, and entered into, this Agreement relying upon the representations,
warranties and covenants of the Purchaser set forth in this Agreement.
Accordingly, the Purchaser represents and warrants to, and covenants with, the
Company, with respect to itself, as follows:
3.1. ORGANIZATION. The Purchaser (i) is duly organized,
validly existing, in good standing and otherwise authorized to transact business
under the laws of its jurisdiction of organization, (ii) has all requisite
partnership or limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
(iii) is duly qualified or licensed and otherwise authorized to transact
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
license necessary, except to the extent that the failure by such entity to be so
organized, existing, in good standing or otherwise authorized, qualified or
licensed could not reasonably be expected to have a material adverse effect on
the ability of such entity to perform its respective obligations hereunder.
3.2. AUTHORITY; BINDING EFFECT; ETC. Such entity has the
requisite partnership or limited liability company power and authority to
execute and deliver the Transaction Documents, to perform its respective
obligations thereunder and to consummate the transactions contemplated thereby.
The execution and delivery of the Transaction Documents by such entity, the
performance by it of its respective obligations thereunder and the consummation
by it of the transactions contemplated thereby have been duly and validly
authorized. This Agreement has been duly and validly executed and delivered by
it and constitutes the valid and binding agreement of it, enforceable against it
in accordance with its terms.
3.3. NO VIOLATION. Neither the negotiation, execution or
delivery of the Transaction Documents by such entity nor the performance by such
entity of its obligations thereunder nor the consummation by such entity of the
transactions contemplated thereby has or will (a) constitute a breach or
violation under such entity's constituent documents, (b) constitute a breach,
violation or default (or be an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
result in the creation of any Encumbrance upon any of such entity's properties
or assets under, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument to which such entity is a
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party or by which entity of any of its properties or assets are bound, or (c)
constitute a violation of any order, writ, injunction, decree, statute, rule or
regulation of any court or governmental authority applicable to it or any of its
properties or assets, in each case except for such breaches, violations,
defaults, terminations or Encumbrances that could not reasonably be expected to
have a material adverse effect on the ability of such entity to perform its
respective obligations hereunder (including without limitation any post-Closing
obligations).
3.4. CONSENTS AND APPROVALS. No authorization, consent or
approval of, or filing with, any court or any public body or authority and no
consent or approval of any third party or parties is necessary by such entity
for the consummation by it of the transactions contemplated by this agreement
except for such authorizations, consents, approvals and filings (i) made or
obtained prior to the Closing Date, or those not required to be made or obtained
until on or after the Closing Date, (ii) required under the Exchange Act or the
HSR Act, or (iii) set forth in SCHEDULE 3.4.
3.5. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of such entity.
3.6. FUNDS. The Purchaser has available to it sufficient funds
to consummate the transactions contemplated hereby to be consummated by it.
3.7. INVESTMENT INTENT. The Purchaser is purchasing the Shares
and Warrant to be purchased by it for its own account and for investment
purposes, and does not intend to redistribute the Shares or the Warrant (except
as contemplated herein or in a transaction or transactions exempt from
registration under the federal and state securities laws or pursuant to an
effective registration statement under such laws).
3.8. INVESTOR SOPHISTICATION. The Purchaser has such knowledge
and experience in financial business matters that it is capable of evaluating
the merits and risks of an investment in the Shares and the Warrant.
3.9 CERTAIN AGREEMENTS. As of the date hereof, neither the
Purchaser nor any of its Affiliates is a party to any legally enforceable
agreement (written or oral) with any officer or director of the Company nor any
understanding relating to the voting of any voting security of the Company
issued or to be issued by the Company.
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IV. ADDITIONAL AGREEMENTS
---------------------
4.1. CONDUCT OF BUSINESS PRIOR TO THE CLOSING. The Company
covenants and agrees that between the date hereof and the Closing Date, neither
the Company nor any Subsidiary will conduct its business other than in the
ordinary course and consistent with the Company's and such Subsidiary's past
practice. Without limiting the generality or effect of the foregoing and except
as herein expressly provided to the contrary, between the date hereof and the
Closing Date the Company will, and will cause each Subsidiary to:
(a)(i) use its best efforts to preserve intact its business
organizations, (ii) use its best efforts to keep available the services of the
employees of the Company and each Subsidiary (other than by increasing
compensation of employees), (iii) continue in full force and effect without
material modification all existing policies or binders of insurance currently
maintained in respect of the Company and each Subsidiary and their respective
assets, (iv) use its best efforts to preserve its current relationships with
persons with which it has significant business relationships, and (v) pay its
Indebtedness punctually when and as the same shall become due and payable and
perform and observe, in all material respects, its duties and obligations under
the Material Contracts.
(b) not (i) engage in any practice, take any action, fail to
take any action or enter into any transaction which could cause any
representation or warranty of the Company to be untrue or result in a breach of
any covenant made by the Company in this Agreement, (ii) except as contemplated
by Purchaser's Interim Credit Facility, create, incur or assume any Indebtedness
of any kind otherwise than in the ordinary courses of the business of the
Company not to exceed $25,000 in any one instance or $150,000 in the aggregate,
(iii) make any investments in, or acquisitions of, any person or entity, (iv)
purchase or acquire, other than in the ordinary course of business, any
business, property or assets of any person or entity, (v) create, assume or
incur any mortgage, pledge, security interest or other Encumbrance in respect of
any of its properties or assets, nor suffer to exist any such mortgage, pledge,
security interest or other Encumbrance, except for those disclosed in SCHEDULES
2.14 and 2.20(A), (B) AND (C), (vi) sell, assign, lease (as lessor) or otherwise
transfer or dispose of any of its properties or assets, other than in the
ordinary course of business consistent with past practice, or any facility,
whether by sale of stock or assets, merger or otherwise, (vii) consolidate with
or merge into or with any person or entity or enter into or undertake any plan
of consolidation or merger with any person or entity, (viii) except for the
issuance of the Shares or Common Stock issuable upon conversion, exchange or
exercise of Convertible Debt, the Outstanding Preferred Stock or Existing
Options and Warrants, issue (whether by way of dividend or otherwise), sell or
grant to any person or persons, commit or otherwise obligate to issue,
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sell or grant to any person, firm or corporation, (A) any shares of its capital
stock of any class, (B) any securities convertible into or exchangeable for or
carrying any rights to acquire from the Company or its Subsidiaries any shares
of its capital stock of any class, or (C) any options, warrants or any other
rights to acquire from the Company or its Subsidiaries any shares of capital
stock of any class, (ix) declare or pay any dividends of any kind on any shares
of its capital stock of any class except regular dividends on Outstanding
Preferred Stock, (x) except as contemplated by Purchaser's Interim Credit
Facility, make any payments of any kind on account of the purchase or other
acquisition or redemption or other retirement of any shares of its capital stock
of any class or any options or warrants to purchase any such shares, (xi) make
any other distributions of any kind in respect of any shares of its capital
stock of any class or in respect of any such options or warrants, (xii) commit
or otherwise obligate itself to make, any capital expenditure, capital addition
or capital improvement, other than these commitments or obligations disclosed as
Material Contracts in SCHEDULE 2.20(A), (xiii) modify or amend its governing
documents, (xiv) hire or promote any officer or grant any increase in the
remuneration payable to directors, officers, employees, agents, consultants or
advisors, other than such increases (other than with respect to (A) officers and
directors, or (B) agents, consultants or advisors that are Affiliates of the
Company or of any director or officer of the Company) made in the ordinary
course of business consistent with past practice, (xv) enter into, modify or
amend any Benefit Plans, or other fringe benefit plan, trust agreement or
arrangement, or any employment agreement, compensation agreement, consulting
agreement or other similar agreement or contract, (xvi) modify or amend any
Material Contract or instrument or agreement with respect to any Indebtedness,
(xvii) settle, compromise or agree to settle or compromise any claim in excess
of $25,000 against any person or entity, or (xviii) commence, join or otherwise
participate in any action, suit or proceeding seeking to enjoin, invalidate, be
awarded damages as a result of, rescind or otherwise avoid any of the
Transaction Documents or any of the actions contemplated thereby except, and
solely to the extent, based upon a breach thereof by the Purchaser.
4.2. ACCESS TO INFORMATION. (a) From the date hereof until the
Closing, upon reasonable notice, the Company will, and will cause the
Subsidiaries and each of the Company's and the Subsidiaries' officers,
directors, employees, agents, representatives, accountants and counsel to: (i)
afford the officers, employees and authorized agents, accountants, counsel,
financing sources and representatives of the Purchaser reasonable access, during
normal business hours and without unreasonable interference with business
operations, to the offices, properties, other facilities, books and records of
the Company and each Subsidiary and to those officers, directors, employees,
agents, accountants and counsel of the Company and of each Subsidiary who have
any knowledge relating to the Company or any
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Subsidiary and (ii) furnish to the officers, employees and authorized agents,
accountants, counsel, financing sources and representatives of the Purchaser,
such additional financial and operating data and other information regarding the
assets, properties and goodwill of the Company and the Subsidiaries (or legible
copies thereof) as the Purchaser may from time to time reasonably request.
(b) No investigation pursuant to this Agreement will affect
any representation, warranty or covenant in this Agreement of any party hereto
or any condition to the obligations of the parties hereto.
4.3. CONFIDENTIALITY. All information obtained by the
Purchaser pursuant to Section 4.2 will be kept confidential in accordance with
the separate confidentiality agreement between an affiliate of the Purchaser and
the Company governing information received by the Purchaser (the
"Confidentiality Agreement"). At the Closing, the Confidentiality Agreement will
be deemed to have terminated without further action by the parties thereto.
4.4. OTHER AUTHORIZATIONS; NOTICES AND CONSENTS. (a) Each
party hereto will use its best efforts to obtain (or in the case of the Company
to cause the Subsidiaries to obtain) all authorizations, consents, orders,
licenses, permits and approvals of all governmental authorities and officials
and third parties that may be or become necessary (i) for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and the other documents contemplated hereby and (ii) to permit the continued
operations of the business of the Company and its Subsidiaries, and in each case
the parties hereto will cooperate fully with each other in promptly seeking to
obtain all such authorizations, consents, orders and approvals.
(b) The Company will and will cause the Subsidiaries to use
all best efforts to give such notices to third parties and use all best efforts
to obtain such third party consents, licenses or permits as the Purchaser may
reasonably deem necessary or desirable in connection with the transactions
contemplated by this Agreement.
(c) The Purchaser will cooperate and use reasonable best
efforts to assist the Company in giving such notices and obtaining such
consents; PROVIDED, HOWEVER, that the Purchaser will not have an obligation to
give any guarantee or other consideration of any nature in connection with any
such notice or consent or to consent to any change in the terms of any agreement
or arrangement which the Purchaser may reasonably deem adverse to its interests
or those of the Company.
4.5. NO SOLICITATION OR NEGOTIATION. The Company agrees that
between the date of this Agreement and the earlier of (a) the Closing and (b)
the termination of this Agreement, the Company will not, and will not authorize
or permit any
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Subsidiary, or any Affiliate, officer, director or employee of, or any financial
adviser, accountant or other representative retained by, the Company or any
Subsidiary (collectively, the "Representatives"), to, directly or indirectly,
solicit or encourage any inquiries or proposals for (or which may reasonably be
expected to lead to), or engage in discussions or negotiations with or provide
any information to any person or entity (other than a Representative of the
Company or the Purchaser) in connection with, (i) the acquisition of any stock,
assets or business of the Company or any Subsidiary, (ii) any merger or
consolidation involving the Company or any Subsidiary, or (iii) any
recapitalization or restructuring of the Company or any Subsidiary, in each
case, regardless of whether a third party is involved, PROVIDED, HOWEVER, that
the foregoing will not prohibit the Company from providing information to any
person or entity to the extent that the Board determines in good faith, after
consultation with outside counsel as to legal matters, that its fiduciary duties
require it to do so, provided that prior to providing such information (i) the
Company notifies and reasonably consults with the Purchaser in connection
therewith and (ii) such person or entity has entered into a customary
confidentiality agreement reasonably acceptable to the Board. The Company
immediately will cease and cause to be terminated all existing discussions,
conversations, negotiations and other communications with any persons conducted
heretofore with respect to any of the foregoing, except as required hereby or
expressly permitted pursuant to the immediately preceding sentence. The Company
will notify the Purchaser, in writing, promptly (but in any event no later than
one business day) after any such proposal or offer or any inquiry or other
contact with any person with respect thereto, is made and will, in any such
notice to the Purchaser, (A) indicate in reasonable detail the identity of the
person, firm, corporation or other entity making such proposal, offer, inquiry
or contact and the terms and conditions of such proposal, offer, inquiry or
other contact and (B) include all written materials received with respect
thereto. The Company agrees not to, and to cause each Subsidiary not to, without
the prior written consent of the Purchaser, release any person, firm,
corporation or other entity from, or waive any provision of, and confidentiality
agreement to which the Company or any Subsidiary is a party.
4.6. PUBLIC ANNOUNCEMENTS. The Purchaser and the Company will
agree as to the form and content of any press releases or public statements with
respect to this Agreement and the transactions contemplated hereby before
issuing, or permitting any agent or Affiliate to issue any such release or
statement; provided, however, that nothing contained herein will prevent either
party from making any such public disclosure or announcement as its counsel
shall advise to be required to comply with law; provided, further however, that
such party will use reasonable efforts to assure that, if reasonable in the
circumstances, the other party will have the opportunity to review any
disclosure or announcement prior to release.
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4.7. USE OF PROCEEDS. The Company will use the proceeds of the
transactions contemplated hereby (i) to pay the Company's expenses reasonably
incurred in connection with the negotiation of this Agreement and the other
documents contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, (ii) to pay the expenses of the Purchaser as
contemplated by Section 8.1, and (iv) as otherwise specified in SCHEDULE 4.7.
4.8. BOARD OF DIRECTORS, ETC. The Company will cause the Board
to be reconstituted as of the Closing in order to be comprised of 14 directors,
up to six of whom will be designated by the Purchaser (prior to or after the
Closing) and the balance of whom will be designated by the Company, all as
specified on SCHEDULE 4.8. A majority of the directors not designated by the
Purchaser must be neither officers nor employees of the Company nor Affiliates
of the Purchaser. Following the Closing, the Agreement in the form of Exhibit D
(the "Standstill Agreement") will apply in respect of the composition of the
Board and all committees thereof.
4.9. REGISTRATION RIGHTS. The Purchaser and its transferees
will be entitled to the registration of all shares of and rights to acquire
shares of capital stock of the Company held by them under the Securities Act and
the so-called state Blue Sky laws upon request, which rights will be evidenced
by a registration rights as contemplated by the Registration Rights Agreement in
the form of Exhibit E (the "Registration Rights Agreement").
4.10. FURTHER ACTION. Each of the parties hereto will use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such document and other papers, as may
be required to carry out the provisions of this Agreement and the other
documents contemplated hereby and consummate and make effective the transactions
contemplated hereby and thereby.
4.11. THIRD-PARTY CLAIMS. Without limiting any other provision
hereof, if an action, suit or proceeding contemplated by Section 5.2(b) hereof
has been commenced or threatened against the Company or any of its Subsidiaries,
officers or directors, the Company will afford the Purchaser the right to
participate in the defense thereof.
4.12. INDEMNIFICATION. (a) Notwithstanding any other provision
hereof, the Company will indemnify and hold harmless each of the Purchaser and
its Affiliates and Associates and their respective partners, officers,
directors, employees, attorneys, advisors and agents controlling and any person
or entity controlling, controlled by or under common control with any of the
foregoing within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, including
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without limitation The Hampstead Group, L.L.C. and its Affiliates and Associates
(collectively, the "Indemnified Parties"), from and against all losses, claims,
liabilities, damages, costs (including without limitation costs of preparation
and attorneys' fees and charges) and expenses (including without limitation
expenses incurred in connection with investigating, preparing or defending any
action, claim or proceeding, whether or not in connection with pending or
threatened litigation in which any Indemnified Party is a party) or actions in
respect thereof arising out of any actual or threatened claim against such
Indemnified Party by a person or entity related to or arising out of or in
connection with this Agreement, the Warrant, the Credit Agreement, the
Standstill Agreement or any other Transaction Document or any actions taken by
any Indemnified Party pursuant hereto or thereto or in connection with the
transactions contemplated hereby or thereby (whether or not the transactions
contemplated hereby or thereby are consummated) (collectively, "Transactional
Losses"); PROVIDED, HOWEVER, that the Company will not be liable to any
Indemnified Party for any Transactional Losses to the extent, but only to the
extent, that it is finally judicially determined by a court of competent
jurisdiction (which determination is not subject to appeal) that such
Transactional Losses resulted primarily from (i) such Indemnified Party's
material breach of this Agreement or (ii) a misstatement or omission contained
in a report filed by such Indemnified Party pursuant to the Exchange Act unless
such misstatement or omission relates to information furnished or confirmed by
or on behalf of the Company. The indemnification provisions of this Section 4.12
are expressly intended to cover Transactional Losses relating to an Indemnified
Party's own negligence. The Company will promptly reimburse each Indemnified
Party for all such Transactional Losses as they are incurred. The rights of any
Indemnified Party hereunder will not be exclusive of the rights of any
Indemnified Party under any other agreement or instrument to which the Company
is a party. Nothing in such other agreement or instrument will be interpreted as
limiting or otherwise adversely affecting an Indemnified Party's rights
hereunder and nothing in this Agreement will be interpreted as limiting or
otherwise adversely affecting the Indemnified Party's rights under any such
other agreement or instrument, provided, however, that no Indemnified Party will
be entitled hereunder to recover more than its indemnified Transactional Losses.
(b) If the foregoing indemnity is unavailable to any
Indemnified Party or insufficient to hold any Indemnified Party harmless, then
the Company will contribute to the amount paid or payable by such Indemnified
Party as a result of such Transactional Loss in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand, and
such Indemnified Party, on the other, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and any
Indemnified Party, on the other, will be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
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untrue statement of a material fact or omission or alleged omission to state a
material fact, has been taken by, or relates to information supplied by, the
Company or such Indemnified Party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent any such action,
statement or omission. The amount paid or payable by a party as a result of any
Transactional Losses will be deemed to include any legal or other fees or
expenses incurred by such party in connection with any action, suit or
proceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by PRO RATA allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to above. No person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(c) The provisions of this Section 4.12 will survive
notwithstanding any termination hereof or the Closing of any of
the transactions contemplated hereby.
(d) The indemnity, contribution and expense reimbursement
obligation of the Company in this Agreement will be in addition to any liability
the Company may otherwise have. The obligations of the Company to each
Indemnified Party will be separate obligations, and the liability of the Company
to any Indemnified Party will not be extinguished solely because any other
Indemnified Party is not entitled to indemnity or contribution hereunder.
4.13. BOARD ATTENDANCE, ETC. (a) From the date hereof to the
Closing, the Company will notify the Purchaser at least 48 hours (or, if
shorter, when a general notice is given pursuant to the By-Laws) in advance of
every meeting of the Board (or any committee thereof) and will permit a
representative of the Purchaser to attend, as an observer, such meeting
(including, at the option of the Purchaser, by telephone); PROVIDED, HOWEVER,
that (i) if, in the opinion of the Chairman of the Board of the Company, the
Board is required to deliberate as to a matter involving an actual and material
conflict of interest between Purchaser, on the one hand, and the Company on the
other hand, the Chairman may exclude such observer from that portion of any
meeting relating to such matter but only if no action is taken with respect to
any other matter during such observer's absence, and (ii) the Purchaser will not
be deemed to have such a conflict of interest in respect of a proposal by
another person or entity to acquire control of the Company, whether by merger,
consolidation or otherwise (a "Third-Party Takeover Bid") unless and until the
Purchaser informs the Company that it or any of its Affiliates has determined to
make a proposal to acquire control of the Company, whether by tender or exchange
offer, by merger, consolidation or otherwise (a "Purchaser Takeover Bid").
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(b) In the event that, prior to the Closing Date, the Board
determines in good faith, based upon the advice of outside counsel as to legal
matters, that its fiduciary duties require it to consider a Third-Party Takeover
Bid, then the Company will immediately notify the Purchaser thereof and afford
the Purchaser a reasonable opportunity (not less than five business days) to
consider whether to make a Purchaser Takeover Bid in response thereto. If the
Purchaser (or an Affiliate thereof) submits a Purchaser Takeover Bid that
provides substantially equivalent or higher value to the shareholders of the
Company (other than the Purchaser and its Affiliates) than a Third-Party
Takeover Bid which the Board otherwise proposes to authorize the Company to
accept, the Company will, unless prohibited by Law, accept the Purchaser's
Takeover Bid without any subsequent rounds of bidding and the Purchaser's
Takeover Bid will not be terminable by the Company in the event of a subsequent
Third Party Takeover Bid.
(c) Notwithstanding any other term or provision hereof,
nothing in this Section 4.13 will affect the parties' respective obligations in
respect of the purchase and sale of the Shares and Warrant provided for herein
whether or not a Third-Party Takeover Bid shall have been made.
4.14. LISTING. Without limiting the generality or effect of
any other provision hereof, the Company will use its best efforts to cause the
Shares and the Warrant Shares to be eligible for trading on NASDAQ or, if NASDAQ
fails or declines to approve the Shares or the Warrant Shares to be so eligible
for trading or otherwise acts so that the Common Stock is not so eligible for
such trading (whether prior to or after the Closing), to cause all of the
Company's Common Stock, including the Shares and the Warrant Shares, to be
listed for trading on the American Stock Exchange or such other exchange as the
Board may determine to be appropriate.
4.15. CERTAIN RIGHTS OFFERINGS. In the event that the Company
determines to seek to raise additional equity capital during the 18-month period
immediately following the Closing, the Company agrees that it will use its best
efforts to raise such equity capital through one or more rights offerings to the
holders of Common Stock. Subject to the limitations of the Standstill Agreement
(if applicable), in any such rights offering, the Purchaser will exercise all
rights to purchase Common Stock distributed to it and, if the rights offered are
not assignable, the Purchaser will purchase from the Company, on the same terms
as those governing the rights offering, all shares of Common Stock not purchased
by distributees of rights, provided, however, that the Purchaser will not be
obligated to pay more than $30.0 million pursuant to this Section 4.15.
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V. CONDITIONS TO CLOSING
------------------------
5.1. CLOSING TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, at or prior to the Closing, or each of the following
conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Purchaser contained in this Agreement
shall have been true and correct when made and shall be true and correct in all
material respects (other than those qualified by material adverse effect, which
shall be true and correct in all respects) as of the Closing, with the same
force and effect as if made as of the Closing, other than such representations
and warranties as are made as of another date (which shall be true and correct
as of the other date), and the covenants and agreements contained in this
Agreement to be complied with by the Purchaser as of or before the Closing Date
shall have been complied with in all material respects.
(b) INJUNCTIONS. No injunction or order shall have been
entered and continue to be in effect in any action, suit or proceeding commenced
by or before any governmental authority against the Company enjoining,
restraining or materially and adversely altering the transactions contemplated
hereby.
(c) INCUMBENCY CERTIFICATE OF THE PURCHASER. The Company shall
have received a certificate of the Purchaser certifying the names and signatures
of the persons authorized to sign this Agreement and the other documents to be
delivered hereunder on their behalf.
(d) CONSENTS AND APPROVALS. The Company shall have received,
in form and substance satisfactory to it in its reasonable good faith
determination, all authorizations, consents, orders and approvals set forth in
SCHEDULE 2.13.
(e) CLOSING. The Closing shall have occurred on or before July
24, 1996 (the "Outside Date"). (Notwithstanding the foregoing, if an action,
suit or proceeding contemplated by Section 5.2(b) hereof (a "Transaction
Action") is commenced prior to, and is continuing on, any date that would
otherwise be the Outside Date and the Purchaser does not nonetheless, elect to
waive the condition in Section 5.2(b), the term "Outside Date" will mean the
fifth business day following the date such Transaction Action is settled or
finally judicially determined or no longer renders it impossible or unlawful to
consummate the transactions contemplated thereby; PROVIDED, HOWEVER, that the
Outside Date may not be so extended beyond August 15, 1996 without the consent
of all of the parties.)
(f) DELIVERIES. All items set forth in Section 1.4(a)
hereof shall have been delivered to the Company and the Purchaser
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shall have duly executed and delivered to the Company a copy of the Standstill
Agreement.
5.2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Company contained in this Agreement shall
have been true and correct when made and shall be true and correct in all
material respects (other than those qualified by Material Adverse Effect, which
shall be true and correct in all respects) as of the Closing with the same force
and effect as if made as of the Closing, other than such representations and
warranties as are made as of another date (which shall be true and correct as of
the other date), and the covenants and agreements contained in this Agreement to
be complied with by the Company as of or before the Closing Date shall have been
complied with in all material respects.
(b) LITIGATION. No action, suit or proceeding shall have been
commenced or threatened by or before any court or other governmental authority
against the Purchaser, the Company or any of their respective Affiliates,
seeking to restrain or materially and adversely alter the transactions
contemplated hereby or by the other documents contemplated hereby, which in the
reasonable good faith determination of the Purchaser is likely to render it
impossible or unlawful to consummate the transactions contemplated hereby or
thereby or which could have a Material Adverse Effect or otherwise render
inadvisable, in the opinion of the Purchaser, the consummation of the
transactions contemplated hereby or thereby; PROVIDED, HOWEVER, that the
provisions of this Section 5.2(b) will not apply if the Purchaser has directly
or indirectly initiated any such action.
(c) RESOLUTIONS OF THE COMPANY. The Purchaser shall have
received a true and complete copy, certified by the secretary or an Assistant
Secretary of the Company, of the resolutions duly and validly adopted by the
Board dated at least one day prior to Closing evidencing its authorization of
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, the reconstitution of the Board as
contemplated hereby, the amendment to the By-Laws of the Company contemplated
hereby and the Board's approval of the acquisition of the Shares and the Warrant
by the Purchaser pursuant to Sections 14-2-1111 and 14-2-1132 of the GBCC.
(d) INCUMBENCY CERTIFICATE OF THE COMPANY. The Purchaser shall
have received a certificate of the Secretary or an Assistant Secretary of the
Company certifying the names and signatures of the officers of the Company
authorized to sign this Agreement and the other documents to be delivered
hereunder.
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(e) CONSENTS AND APPROVALS. The Purchaser and the Company
shall have received, each in form and substance satisfactory to the Purchaser in
its reasonable good faith determination, all authorizations, consents, orders,
permits, licenses and approvals of all governmental authorities and officials
and all third party consents required for consummation of the transactions
contemplated hereby.
(f) ORGANIZATIONAL DOCUMENTS. The Purchaser shall have
received a copy of (i) the Articles of Incorporation, as amended to date (or
similar organizational documents), including the Articles of Amendment of the
Company and of each active Subsidiary, certified by the secretary of state of
the jurisdiction in which each such entity is incorporated or organized, as of a
date not earlier that 15 calendar days prior to the date of the Closing and
accompanied by a certificate of the Secretary or Assistant Secretary of each
such entity, dated as of the day of the Closing, stating that no amendments have
been made to such Articles of Incorporation (or similar organizational
documents) since such date, and (ii) the By-Laws (or similar organizational
documents) of the Company and of each active Subsidiary, certified by the
Secretary or Assistant Secretary of each such entity and amended as contemplated
herein.
(g) GOOD STANDING; QUALIFICATION TO DO BUSINESS. The Purchaser
shall have received long-form good standing (or equivalent) certificates for the
Company and for each active Subsidiary from the Secretary of State of such
jurisdictions reasonably requested by the Purchaser, in each case dated as of a
date not earlier that 15 calendar days prior to the day of the Closing.
(h) NO MATERIAL ADVERSE EFFECT. Since December 31, 1995, no
event or events (other than those described on Schedule 2.6) shall have occurred
with respect to the Company or any Subsidiary, or be reasonably likely to occur
with respect to any thereof, which could reasonably be expected to have a
Material Adverse Effect.
(i) CLOSING. The Closing shall have occurred on or
before the Outside Date.
(j) DELIVERIES. All items set forth in Section 1.4(b) hereof
shall have been delivered to the Purchaser, the Company shall have duly executed
and delivered to the Purchaser a copy of the Standstill Agreement and the
Registration Rights Agreement and the Company and the officers of the Company
named in the letter agreement in the form of Exhibit F shall have duly executed
such letter agreement and delivered a copy thereof to the Purchaser.
(k) OTHER MATTERS. The Company shall have taken the
actions referred to in SCHEDULE 5.2(K), including without
limitation reacquiring all of the properties and rights
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designated thereon as "Domestic IP Rights" with the result that the Company
shall be the sole owner thereof prior to the Closing. In connection therewith,
(i) the Company's total expenditures and other obligations in respect of the
reacquisition of the properties and rights designated on SCHEDULE 5.2(K) as the
"Domestic IP Rights" shall not exceed $2.0 million and (ii) such action and the
actions taken in respect of the reacquisition of the properties and rights
designated on SCHEDULE 5.2(K) as "Nondomestic IP Rights" shall be satisfactory
to the Purchaser and its counsel in their reasonable discretion.
(l) MANAGEMENT EQUITY. The Board shall have taken the actions
described on SCHEDULE 5.2(L) with respect to management equity incentives.
(m) FOOTHILL. The commitment letter, as amended, for up to $25
million of financing from Foothill Capital Corporation ("Foothill") to the
Company shall have been terminated or expired and the Company shall have no
liability or obligation (except for the obligation to indemnify Foothill on the
terms and subject to the conditions thereof) thereunder which shall not have
been previously discharged or satisfied in full on terms acceptable to the
Purchaser in its sole discretion.
(n) RIGHTS PLAN. The Rights Plan Amendment shall continue to
be in effect and since the date hereof the Board shall not have taken or
authorized the Company to take any action affecting the capitalization of the
Company except as contemplated in Schedule 5.2(n).
(o) DUE DILIGENCE. Without limiting the generality or effect
of any other provision hereof, the Purchaser shall have completed its due
diligence review of the matters referred to in SCHEDULE 5.2(O) to its
satisfaction, PROVIDED, HOWEVER, that (i) in the event that the Purchaser
notifies the Company on or prior to July 1, 1996 that it is not so satisfied,
the parties will negotiate in good faith with respect to possible amendments
hereto in light of the matters as to which the Purchaser is not so satisfied
(neither the Purchaser nor the Company being liable to the other in the event
that they are unable to agree as to any such amendment) and (ii) if the
Purchaser does not give any such notice to the Company on or prior to July 1,
1996, then without further action this condition will be deemed to have been
waived.
(p) THIRD PARTY REGISTRATION RIGHTS. The Company shall have
obtained the consents of the holders of existing registration rights to the
Company's grant of registration rights to Purchaser under the Registration
Rights Agreement (if such consent is required under the existing agreements
providing such registration rights in order to grant registration rights as
contemplated by the Registration Rights Agreement).
(q) SECURITIES LAW FILINGS. The Company and, if
applicable, the officers and directors of the Company shall have
29
<PAGE> 30
made such filings and taken such actions as the Purchaser reasonably requires to
ensure that the Company and its officers and directors are in compliance with
the filing requirements of the Exchange Act, including without limitation any
remedial filings or actions reasonably necessary to cure any previous Exchange
Act compliance deficiencies.
VI. INDEMNIFICATION
---------------
6.1. INDEMNIFICATION OF THE PURCHASER. (a) RIGHT OF
INDEMNIFICATION. Subject to the terms of this Article VI, the Company covenants
and agrees to indemnify and hold harmless each Indemnified Party from and
against any loss, damage or expense, including without limitation reasonable
attorneys' and accountants' fees and charges (each such individual occurrence is
hereinafter referred to as a "Loss" and collectively, as "Losses") suffered by
any Indemnified Party, directly or indirectly, as a result of any inaccuracy in
or breach of any of the representations, warranties, covenants or agreements
made by the Company hereunder or in any other document contemplated hereby or
any inaccuracy or misrepresentation by the Company or any Subsidiary in a
document, certificate or affidavit delivered by the Company at the Closing or in
any thereof. The rights of any Indemnified Party hereunder will not be exclusive
of the rights of any Indemnified Party under any other agreement or instrument
to which the Company is a party. Nothing in such other agreement or instrument
will be interpreted as limiting or otherwise adversely affecting an Indemnified
Party's rights hereunder and nothing in this Agreement will be interpreted as
limiting or otherwise adversely affecting the Indemnified Party's rights under
any such other agreement or instrument, provided, however, that no Indemnified
Party will be entitled hereunder to recover more than its indemnified Loss.
(b) THRESHOLD. No Indemnified Party will be entitled to
indemnification pursuant to this Section 6.1 with respect to any claims in
respect of breaches of representations and warranties until the aggregate amount
of all Losses (other than Transactional Losses) suffered by Indemnified Parties
in the aggregate exceeds $100,000 (the "Threshold"), whereupon Indemnified
Parties will be entitled to indemnification pursuant to this Section 6.1 from
the Company for the full amount of all such Losses (other than Transactional
Losses) suffered by Indemnified Parties (regardless of the Threshold) up to an
aggregate total amount of the Purchase Price (the "Cap"). The foregoing
provision of this Section 6.1(b) notwithstanding, the Threshold and the Cap will
not apply with respect to any Loss or Losses relating directly or indirectly to
claims of any nature whatsoever (i) relating to, resulting from or arising out
of any breach of any covenant or agreement hereunder or in any other document
contemplated hereby or (ii) against any Indemnified Party or Parties made by or
on behalf of any director or officer of the Company or any of its Subsidiaries.
30
<PAGE> 31
6.2. PROCEDURE FOR CLAIMS. (a) NOTICE OF CLAIM. After
obtaining knowledge of any claim or demand which has given rise to, or could
reasonably give rise to, a claim for indemnification under this Article IV
(referred to herein as an "Indemnification Claim"), and Indemnified Party will
be required to give written notice to the Company of such Indemnification Claim
("Notice of Claim"). A Notice of Claim will be given with respect to all
Indemnification Claims, whether or not the Threshold has been reached; PROVIDED,
HOWEVER, that the failure to give Notice of Claim to the Company will not
relieve the Company from any lability that it may have to an Indemnified Party
hereunder to the extent that the Company is not prejudiced by such failure. No
Indemnified Party will be entitled to give a Notice of Claim after December 31,
1997. The Notice of Claim will be required to set forth the amount (or a
reasonable estimate) of the Loss or Losses suffered, or which may be suffered,
by an Indemnified Party as a result of such Indemnification Claim, whether or
not the Threshold has been reached, and a brief description of the facts giving
rise to such Indemnification Claim. The Indemnified Party will furnish to the
Company such information (in reasonable detail) it may have with respect to such
Indemnification Claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same).
(b) THIRD PARTY CLAIM. (i) If the claim or demand set forth in
the Notice of Claim is a claim or demand asserted by a third party (a "Third
Party Claim"), the Company will have 15 calendar days after the date of receipt
by the Company of the Notice of Claim (the "Notice Date") to notify the
Indemnified Parties in writing of the election by the Company to defend the
Third Party Claim on behalf of the Indemnified Parties, PROVIDED, HOWEVER, that
the Company will be entitled to assume the defense of any such Third Party Claim
only if it unconditionally and irrevocably undertakes to indemnify all
Indemnified Parties in respect thereof.
(ii) If the Company elects to defend a Third Party Claim on
behalf of the Indemnified Parties, the Indemnified Parties will make available
to the Company and their agents and representatives all records and other
materials in their possession which are reasonably required in the defense of
the Third Party Claim and the Company will pay all expenses payable in
connection with the defense of the Third Party Claim as they are incurred.
(iii) In no event may the Company settle or compromise any
Third Party Claim without the Indemnified Parties' consent, which may not be
unreasonably withheld, PROVIDED, HOWEVER, that if a settlement is presented by
the Company to the Indemnified Parties for approval and the Indemnified Parties
withhold their consent thereto, then any amount by which the final Losses
(including reasonable attorneys' fees and charges) resulting from
31
<PAGE> 32
the resolution of the matter exceeds the rejected settlement amount, plus
attorneys' fees incurred to such date, will be excluded from the amount covered
by the indemnification provided for in this Agreement and shall be borne by the
Indemnified Parties.
(iv) If the Company elects to defend a Third Party Claim, the
Indemnified Parties will have the right to participate in the defense of the
Third Party Claim, at the Indemnified Parties' expense (and without the right to
indemnification for such expense under this Agreement), PROVIDED, HOWEVER, that
the reasonable fees and expenses of counsel retained by the Indemnified Parties
will be at the expense of the Company if (A) the use of the counsel chosen by
the Company to represent the Indemnified Parties would present such counsel with
a conflict of interest; (B) the parties to such proceeding include both
Indemnified parties and the Company and there may be legal defenses available to
Indemnified Parties which are different from or additional to those available by
the Company; (C) within 10 calendar days after being advised by the Company of
the identity of counsel to be retained to represent Indemnified Parties, they
shall have objected to the retention of such counsel for valid reasons (which
shall be stated in a written notice to the Company), and the Company shall not
have retained different counsel satisfactory to the Indemnified Parties; or (D)
the Company shall have authorized the Indemnified Parties to retain a single
separate counsel at the expense of the Company, such authorization to be made by
the directors who are not designees of the Purchaser or its Affiliates.
(v) If the Company does not elect to defend a Third Party
Claim, or does not defend a Third Party Claim in good faith, the Indemnified
Parties will have the right, in addition to any other right or remedy it may
have hereunder, at the sole and exclusive expense of the Company, to defend such
Third Party Claim.
(c) COOPERATION IN DEFENSE. The Indemnified Parties will
cooperate with the Company in the defense of a Third Party Claim and make
reasonably available the facts relating to the Third Party Claim. Subject to the
foregoing, (i) no Indemnified Party will have any obligation to participate in
the defense of or to defend any Third Party Claim and (ii) no Indemnified
Parties' defense of or their participation in the defense of any Third Party
Claim will in any way diminish or lessen their right to indemnification as
provided in this Agreement.
6.3. INDEMNIFICATION OF THE COMPANY. The Purchaser will
indemnify and hold harmless the Company and its current and future officers,
directors, employees and agents from and against damage or expense (including
without limitation reasonable attorneys' and accountants' fees and charges)
suffered by any of them as a result of any inaccuracy in or breach of any of the
representations, warranties or covenants may by the Purchaser
32
<PAGE> 33
hereunder. The procedures for and limits on indemnification in respect of the
obligations of the Purchaser under this Section 6.2 will be the same as those
set forth in Section 6.1(b) and 6.2 with the exception of the time limits set
forth in the third sentence of Section 6.2(a).
VII. TERMINATION AND WAIVER
----------------------
7.1. TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by the Purchaser if, between the date hereof and the
Closing; (i) an event or condition occurs that has resulted in or that could
reasonably be expected to result in an Material Adverse Effect, (ii) any
representation or warranty of the Company contained in this Agreement shall not
have been true and correct in all material respects when made, (iii) the Company
shall not have substantially complied with any covenant or agreement to be
complied with by it and contained in this Agreement, or (iv) the Company or any
Subsidiary makes a general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against the Company or any Subsidiary
seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any law relating to bankruptcy,
insolvency or reorganization; PROVIDED, HOWEVER, that in the case of events
described in clause (ii) or (iii) of this sentence, the Purchaser may not
terminate this Agreement pursuant to this Section 7.1(a) unless the Purchaser
shall have notified the Company of its intention to do so and given the Company
the opportunity to cure any breach of this Agreement (if and to the extent
curable) during the period commencing with the date of such notice and ending on
the earlier of (A) July 24, 1996 and (B) ten business days after the date of
such notice;
(b) by the Company if, between the date hereof and the
Closing: (i) any representation or warranty of the Purchaser contained in this
Agreement shall not have been true and correct in all material respects when
made or (ii) the Purchaser shall not have substantially complied with any
covenant or agreement to be complied with by any of them contained in this
Agreement; PROVIDED, HOWEVER, that the Company may not terminate this Agreement
pursuant to this Section 7.1(b) unless the Company shall have notified the
Purchaser of its intention to do so and given the Purchaser the opportunity to
cure any breach of this Agreement (if and to the extent curable) during the
period commencing with the date of such notice and ending on the earlier of (A)
July 24, 1996 and (B) ten business days after the date of such notice;
(c) by any of the Company or the Purchaser if the
Closing shall not have occurred by the Outside Date; PROVIDED,
33
<PAGE> 34
HOWEVER, that the right to terminate this Agreement under this Section 7.1(c)
will not be available to any party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur on or prior to such date;
(d) by any of the Purchaser or the Company in the event that
any government authority shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable; or
(e) by the mutual written consent of the Company and the
Purchaser.
7.2. EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 7.1, this Agreement will forthwith become
void and there will be no liability on the part of any party hereto except that
(a) Sections 1.2, 4.3, 4.12, 6.1 and 8.1 and Article VI will remain in full
force and effect and (b) nothing herein will relieve any party from liability
for any breach of this Agreement.
7.3. WAIVER. Any party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of any other
party, (b) waive any inaccuracies in the representations and warranties of any
other party contained herein or in any document delivered by any other party
pursuant hereto, or (c) waive compliance with any of the agreements or condition
of the other party contained herein. Any such extension or waiver will be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or conditions of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights. After the Closing, this Agreement may be waived or amended
by the Company only with the approval of a majority of the members of the Board
not designated for election by the Purchaser.
VIII. GENERAL PROVISIONS
------------------
8.1. EXPENSES. Without limiting the generality or effect of
any other provision hereof, including without limitation Section 6.1 or any
agreement or instrument contemplated hereby, including without limitation
Purchaser's Interim Financing Facility Agreement, if (a) the Closing occurs, (b)
the Closing does not occur and the Company has breached any of its
representations, warranties, covenants or agreements herein, or (c) the Company
incurs any Indebtedness, or the
34
<PAGE> 35
Purchaser or an Affiliate thereof advances any funds or acquires any
Indebtedness, pursuant to the Purchaser's Interim Financing Facility Agreement,
the Company will, upon request by the Purchaser, promptly reimburse the
Purchaser for all out-of-pocket fees, costs and expenses, including without
limitation legal, accounting, financing, inspection and appraisal fees and
charges, relating to this Agreement, the other documents contemplated hereby and
thereby and the transactions contemplated hereby and thereby (collectively
"Expenses") and filing fees under the HSR Act (including in respect of any
subsequent acquisition of securities), regardless of whether such transactions
are consummated. If the Closing does not occur and the Company has not breached
any of its representations, warranties, covenants or agreements herein, the
Company will have the right, upon notice to the Purchaser (the "Stock Payment
Notice"), to satisfy its obligation to make the reimbursement payments provided
for in this Section 8.1 by issuing shares of Common Stock to the Purchaser
valued based on the average NASDAQ closing price therefor for the 20 trading
days prior to the date hereof, and will use its best efforts promptly to cause
such shares of Common Stock to be registered for resale and eligible for trading
on the NASDAQ; PROVIDED, HOWEVER, that in the event that the Purchaser notifies
the Company within five business days of receipt of the Stock Payment Notice
that it has elected to do so, the amounts otherwise payable in Common Stock will
be added to the Indebtedness outstanding under Purchaser's Interim Credit
Facility.
8.2. NOTICES. All notices, requests, claims, demands and other
communications hereunder must be in writing and will be given or made (and will
be deemed to have been duly given or made upon receipt) by delivery in person,
by courier services, by cable, by fax, by telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 8.2):
(a) if to the Company:
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202-4128
Attention: Chief Executive Officer
Fax: (770) 442-6655
with a copy to:
Rogers & Hardin
2700 Cain Tower
229 Peachtree Street
Atlanta, Georgia 30303
Attention: Edward J. Hardin
Fax: (404) 525-2224
35
<PAGE> 36
(b) If to the Purchaser:
MEI Holdings, L.P.
4200 Texas Commerce Tower
Dallas, Texas 75201
Attention: Daniel A. Decker
Fax: (214) 220-4949
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Fax: (212) 755-7306
8.3. HEADINGS. The descriptive headings contained in
this Agreement are for convenience of reference only and will not
affect in any way the meaning or interpretation of this
Agreement.
8.4. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced under any law or
public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect as long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provisions is invalid, illegal or incapable of being enforced, the parties
hereto will negotiate in good faith to modify this Agreement to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transaction contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
8.5. ENTIRE AGREEMENT. This Agreement and the other agreements
and instruments referenced herein (including all Exhibits and Schedules
referenced herein or therein) constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, between the Company and the
Purchaser with respect to the subject matter hereof and thereof.
8.6. ASSIGNMENT. This Agreement may not be assigned by
operation of law or otherwise (other than an assignment to a Related Person of
the Purchaser) without the express written consent of the non-assigning party or
parties (which consent may be granted or withheld in the sole discretion of such
parties). "Related Person" of the Purchaser means any Affiliate of the Purchaser
or any investment fund, investment account or investment entity whose investment
manager, investment advisor or principal thereof, is such Purchaser, an
Affiliate of such Purchaser or an investment manager, investment advisor or
principal of such Purchaser or Affiliate.
36
<PAGE> 37
8.7. NO THIRD PARTY BENEFICIARIES. This Agreement will be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and, except as provided herein with respect to Indemnified
Parties (who are intended third-party beneficiaries hereof), nothing herein,
express or implied, is intended to or will confer upon any other person any
legal or equitable right, benefit or remedy of any mature whatsoever under or by
reason of this Agreement.
8.8. AMENDMENT. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Company
and the Purchaser or (b) by a waiver in accordance with Section 7.3.
8.9. GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof.
8.10. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together will constitute one and the same agreement.
8.11. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
8.12. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations and warranties in this Agreement will survive for the time
periods set forth in Section 6.2.
8.13. MISCELLANEOUS. As used in this Agreement, (i) references
to Sections, Articles, Exhibits and Schedules are to Sections, Articles,
Exhibits and Schedules of or to this Agreement, (ii) terms used herein with
initial capital letters have the meanings ascribed to them herein, (iii) the
terms "Affiliate" and "Associate" have the meanings ascribed to those terms in
Rule 405 under the Securities Act, (iv) the word "or" is disjunctive but not
exclusive, (v) no provision hereof will be interpreted in favor of or against
any party by reason of which party drafted such provision or this Agreement as
an entirety, and (vi) terms used herein which are defined in GAAP have the
meanings ascribed to them therein.
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<PAGE> 38
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above by their respective officers
thereto duly authorized.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
MEI HOLDINGS, L.P.
By: MEI GenPar, L.P., its
general partner
By: HH GenPar Partners,
its general partner
and co-manager
By: Hampstead Associates,
Inc.,
its general partner and
co-manager
By:
-------------------------
Name:
-----------------------
Title:
----------------------
38
<PAGE> 1
Exhibit 2
EXHIBIT A
TO INVESTMENT
AGREEMENT
-------------
WARRANT FOR SHARES OF COMMON STOCK
OF
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
(a Georgia corporation)
This certifies that MEI Holdings, L.P., a Delaware limited
partnership (together with its permitted successors and assigns, the "Holder"),
is entitled to receive the number of shares of Common Stock, without par value
(the "Common Stock"), of Mountasia Entertainment International, Inc., a Georgia
corporation (the "Corporation"), specified by the provisions and upon the terms
and conditions hereinafter set forth. This Warrant is granted pursuant to the
Investment Agreement, by and between the Corporation and the Holder, dated June
5, 1996 ("Investment Agreement").
1. AUTOMATIC EXERCISE. The right represented by this Warrant
will be deemed automatically exercised under the occurrence of any Dilutive
Issuance (as defined in Section 2 below) without any notice being given or other
action being taken by the Holder. The Holder will not be required to pay any
consideration in connection with any such automatic exercise of this Warrant
(other than that paid prior to the date hereof). The Corporation covenants that
Holder will become treated for all purposes as the holder of record of the
shares issued as a result of any such automatic exercise commencing as of the
close of business on the date of the Dilutive Issuance causing such automatic
exercise, and that, within ten calendar days after such date, certificates
causing of Common Stock will be delivered by the Corporation to the Holder.
2. EXERCISABILITY; NUMBER OF SHARES. (a) This Warrant will be
deemed to have been exercised by the Holder upon any conversion or exchange of
any security outstanding on the date hereof, or any exercise of any warrant,
option or other right outstanding on the date hereof (other than this Warrant),
for a Consideration (as defined below) of less than the Trigger Price as defined
below). All such convertible or exchangeable securities, warrants, options or
rights are hereinafter called the "Subject Securities" and each such issuance in
accordance with the terms thereof for a consideration below the Trigger Price is
hereinafter called a "Dilutive Issuance". As used herein, "Consideration"
includes the amount of any cash, other property (valued at its current fair
market value), principal amount of indebtedness, liquidation value of preferred
or senior securities, or other consideration to be paid or surrendered to the
Corporation in connection with any such conversion, exchange or exercise. The
Corporation represents and warrants that, as of the date hereof, Schedule A
hereto contains a true and complete list of all Subject Securities.
1
<PAGE> 2
(b) The number of shares which the Holder shall receive ("New
Shares") in connection with any Dilutive Issuance will be determined by the
application of the following formula:
TC TC Holder Shares
New Shares = ( ---- - ------------- ) X ------------------
SP Trigger Price Outstanding Shares
in which:
TC = the total amount of Consideration received by the
Corporation for such Dilutive Issuance;
SP = the Consideration per share received by the
Corporation for such Dilutive Issuance;
Trigger Price = 130% of the amount equal to (i) $40,000,000
divided by (ii) the number of shares of Common Stock
purchased by the Holder pursuant to the Investment
Agreement at the closing thereunder.
Holder Shares = the total number of shares of Common Stock
owned by the Holder immediately after the closing
under the Investment Agreement, plus (i) the total
number of shares of Common Stock issued pursuant to
this Warrant and (ii) all shares of Common Stock
received by Holder in any stock split, stock dividend
or other distribution on any such shares; and
Outstanding
Shares = the number of shares of Common Stock issued and
outstanding on the date immediately prior to the
record date of such Dilutive Issuance.
3. ADJUSTMENTS. The Trigger Price, the number of Holder
Shares, and the number and kind of shares receivable pursuant to this Warrant
("Warrant Shares") will be subject to adjustment as follows:
(a) If the Corporation (i) pays a dividend or makes a
distribution on the Common Stock in shares of Common Stock or
shares of the capital stock other than Common Stock, (ii)
subdivides the outstanding shares of Common Stock into a
greater number of shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issues any shares of its
capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
or surviving corporation), then, immediately after the
Determination Date (as defined below) with respect to such
dividend, distribution, subdivision, combination or issuance
in a reclassification, the number and kind of shares issuable
hereunder upon exercise of this Warrant after a subsequent
Dilutive Issuance will be equitably adjusted so that after
such time the Holder will be entitled to receive following any
Dilutive Shares a number of shares of Common Stock recomputed
properly to give effect to such dividend, distribution,
subdivision, combination or issuance.
2
<PAGE> 3
(b) For purposes of this Warrant, "Determination
Date" means (i) with respect to any dividend, distribution or
issuance, the date fixed for the determination of the holders
of shares of Common Stock entitled to receive such dividend,
distribution or issuance, or if a dividend or distribution is
paid or made or issuance is made without fixing a date, the
date of such dividend, distribution or issuance and (ii) with
respect to any subdivision, combination or reclassification,
the effective date thereof.
(c) In the event that at any time, as a result of an
adjustment made pursuant to this Section 3, a holder of this
Warrant becomes entitled to acquire upon a Dilutive Issuance
any securities of the Corporation other than Common Stock,
thereafter the number of such other securities so purchasable
upon exercise of each Warrant will be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to
the Warrant Shares contained in this Section 3.
(d) Whenever the kind or number of securities
receivable upon exercise of the Warrants is adjusted pursuant
to any of the provisions of this Section 3, the Corporation
will promptly, and in any event within 10 calendar days after
the occurrence of the event giving rise to such adjustment,
give notice to the Holder of such adjustment or adjustments
setting forth the changes in the Trigger Price and in the
number of Holder Shares a brief statement of the facts
requiring such adjustments and the computations upon which
such adjustments are based. Unless the Holder objects thereto
within 20 calendar days after receipt of such notice, such
determination will be final. If the Holder does so object, the
parties will discuss in good faith the items in dispute. If
such items in dispute are not so resolved, the matter will be
referred for determination by Deloitte & Touche (or, if such
firm is unable or unwilling so to act, another professional
firm mutually acceptable to the Holder and the Corporation),
which firm's determination thereof will be final. The fees and
expenses of such firm will be borne by the Corporation.
(e) In case of any consolidation of the Corporation
with or merger of the Corporation into another corporation or
in case of any sale, transfer or lease to another corporation
of all or substantially all the property of the Corporation,
the Corporation or such successor or purchasing corporation,
as the case may be, will execute an agreement providing that
the Holder will have the right thereafter to receive the kind
and amount of shares and other securities and property that it
would have been entitled to receive immediately after the
occurrence of such consolidation, merger, sale, transfer or
lease had this Warrant been exercised immediately prior to
such action. Such agreement will provide for adjustments that
will be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of
this Section 3 will similarly apply to successive
consolidations, mergers, sales, transfers or leases.
3
<PAGE> 4
(f) Whether or not any adjustments in the number or
kind of shares issuable upon the exercise of this Warrant has
been made, this Warrant (and any substitutes or replacements
herefor) may continue to express the same provisions as are
initially stated in this Warrant.
4. COVENANTS. (a) All shares of Common Stock which may be
issued by the Corporation pursuant of this Warrant in accordance with its terms
will, upon issuance, be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges of the Corporation with respect to the issue
thereof.
(b) During the term of this Warrant, the Corporation will at
all times have authorized and reserved for issuance to the Holder a sufficient
number of shares of its Common Stock to provide for the automatic exercise of
this Warrant.
(c) The Corporation will not, by amendment of its Articles of
Incorporation or through reorganization, consolidation, merger, dissolution,
issue or sale of securities, sale of assets or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith perform such terms and take all
such action as may be reasonably necessary to protect the Holder against
impairment.
5. FRACTIONAL SHARES. No fractional shares of Common Stock
will be issued in connection with any issuance upon exercise of this Warrant.
6. TERM. This Warrant will expire upon the earlier of (a) such
time as the Holder no longer owns any shares of Common Stock and (b) such time
when no Subject Securities are any longer outstanding.
7. NOTICE OF DILUTIVE ISSUANCES. The Corporation will notify
Holder in writing promptly upon receipt of any notice initiating a Dilutive
Issuance, which notice shall set forth the identity of such person giving such
notice, the TC and SP with respect to such Dilutive Issuance and the number of
shares of Common Stock to be issued pursuant to this Warrant by reason thereof.
8. NO SHAREHOLDER RIGHTS. The Holder hereof, solely by virtue
of this Warrant, will not be entitled to any rights of a shareholder of the
Corporation.
9. TRANSFERS. This Warrant may be transferred in whole, but
not in part, by MEI Holdings, L.P. and by any subsequent holder of this Warrant.
The Holder, by acceptance hereof, agrees that this Warrant and the shares of
Common Stock issued or issuable upon exercise of this Warrant may not be offered
or sold except in compliance with the Securities Act of 1933, as amended, and
any applicable state securities laws. The Holder consents to the Corporation's
making a notation on its records in order to implement such restriction on
transferability.
4
<PAGE> 5
10. LOSS OR DESTRUCTION. Upon receipt by the Corporation of
evidence satisfactory to it (in the exercise of reasonable discretion) of the
ownership of and the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft, or destruction) of indemnity satisfactory to it (in
the exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof the Corporation will execute and deliver in
lieu hereof a new Warrant.
11. GOVERNMENTAL APPROVALS. The Corporation will use its best
efforts to take all action which may be necessary to obtain and keep effective
any and all permits, consents and approvals of governmental agencies and
authorities and filings required, which may be or become required in connection
with the issuance and delivery of this Warrant, and the issuance and delivery of
the Common Stock issued or deliverable upon exercise of this Warrant.
12. SUCCESSORS AND ASSIGNS. All the covenants and provisions
of this Warrant will bind and inure to the benefit of Holder and the Corporation
and their respective successors and assigns.
13. NOTICES. All notices and other communications given
pursuant to this Warrant will be in writing and will be deemed to have been
given when faxed or personally delivered or when mailed by prepaid registered,
certified or express mail, return receipt requested. Notices should be addressed
as follows:
(a) If to the Corporation, then to:
Mountasia Entertainment International, Inc.
5895 Woodward Parkway
Suite 220, Alpharetta, Georgia 30202-4182
Attention: Chief Executive Office
Fax: (770) 442-6655
With a copy to (which will not constitute notice):
Rogers & Hardin
2700 Cain Tower
229 Peachtree Street
Atlanta, Georgia 30303
Attention: Edward J. Hardin
Fax: (404) 525-2224
(b) If to the holder then to:
MEI Holdings, L.P.
4200 Texas Commerce Tower
Dallas, TX 75201
Attention: Daniel A. Decker
5
<PAGE> 6
Fax: (214) 220-4949
With a copy to (which will not constitute notice):
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Fax: (212) 755-7306
Such addresses for notices may be charged by any party by notice to the other
party pursuant to this section.
14. AMENDMENT. This agreement may be amended only by an
instrument in writing signed by the Corporation and the Holder.
15. GOVERNING LAW. This Warrant will be construed and enforced
in accordance with and governed by the laws of the State of Delaware without
regard to the conflict of laws provisions of such state.
16. FURTHER ASSURANCES. The parties hereto agree to execute
such other documents, instruments or affidavits, and to perform such other acts,
as may be necessary or desirable to carry out the purpose of this agreement.
Dated as of this ___ day of ___________, 1996.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
Attest:
_____________________________
Name: _______________________
Title: ______________________
6
<PAGE> 7
SCHEDULE A
TO WARRANT
----------
(to be updated prior
to issuance of Warrant)
SUBJECT SECURITIES
Preferred Stock
---------------
<TABLE>
<CAPTION>
CLASS A PREFERRED NONVOTING STOCK
- - - ---------------------------------
<S> <C>
Shares authorized: 2,000
Shares outstanding: None
Voting Rights: None unless required by Georgia law
Dividend Rights: None
Liquidation Preference: Prior to common stock, on parity with any class
hereafter created that is specifically ranked on parity with
Class A ("Parity Securities")
Liquidation Value: $10,000 plus 8% per annum since date of issuance
Conversion:
At Holder's Option: at any time according to this formula
[(.08)(N/365)(10,000)] plus 10,000
----------------------------------
Conversion Price
N = number of days between issuance and conversion
Conversion Price = the lesser of (x)
$8.15625 or (y) 85% of the average
closing bid price for the five days
preceding the conversion date
At Company's Option: After August 31, 1996, upon 15 days prior written notice
at the Conversion Price set forth above. (No forced
conversion right if Company "makes any planned press
release either (a) on the effective date of conversion or
(b) prior to the close of trading on the following business
day.")
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C>
Automatic Conversation: None
Redemption: The Company has the right to redeem all or part of the
shares submitted for conversion
Redemption Price: [(.08)(N/365)(10,000)] x Closing Bid Price
-----------------
Conversion Price
CLASS B PREFERRED STOCK
- - - -----------------------
Shares authorized: 2,000
Shares outstanding: 430
Voting Rights: None unless required by Georgia law
Dividend Rights: None
Liquidation Preference: Prior to common stock, on parity with Class A preferred
and any class hereafter created that is specifically ranked
on parity with Class D ("Parity Securities")
Liquidation Value: $10,000 per share plus 8% per annum from date of
issuance
Conversion:
At Holder's Option: Beginning on April 16, 1996 based on this formula:
[(.08)(N/365)(10,000)] plus 10,000
----------------------------------
Conversion Price
N = the number of days between the date of issuance
and the date of conversion
Conversion Price = the lesser of (x)
$5.125 or (y) 85% of the average
closing bid price for the five
trading days immediately preceding
the conversion date
At Company's Option: None
Automatic Conversion: On January 11, 1998 at the Conversion Price
Redemption: The Company has the right to redeem all or part of the
shares submitted for conversion
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C>
Redemption Price: [(.08)(N/365)(10,000)] x Closing Bid Price
-----------------
Conversion Price
CLASS C PREFERRED STOCK
- - - -----------------------
Shares authorized: 1,000
Shares outstanding: 500
Voting Rights: None
Dividend Rights: 13% cumulative payable quarterly in cash out of legally
available funds
Liquidation Preference: Prior to common stock, on parity with Class A, B, and
C preferred and any class hereafter created that is
specifically ranked on parity with Class D
Liquidation Value: $1,000 plus 10% per annum since date of issuance
Conversion:
At Holder's Option: Beginning 40 days after issuance according to this
formula:
[(.10)(N/365)(1,000)] plus 1,000
--------------------------------
Conversion Price
N = the number of shares of Class C preferred for
which the conversion is being elected
Conversion Price = the closing bid price on the date of
purchase of the Class C preferred
At Company's Option: None
Automatic Conversion: Two years after date of issuance
Redemption: Right to redeem all or part of Class C preferred at any
time during the 90 day period beginning six months
following the purchase of Class C preferred.
Redemption Price: The original purchase price plus accrued dividends
Put Right: On the first anniversary of the holder's purchase at the
original purchase price plus accrued dividends
</TABLE>
9
<PAGE> 10
<TABLE>
<S> <C>
CLASS D PREFERRED STOCK
- - - -----------------------
Shares authorized: 20,000
Shares outstanding: 5937
Voting Rights: None except as required under Georgia law
Dividend Rights: 4% cumulative, payable semi-annually in (at the
Company's option) cash or common stock at a
conversion price equal to the lesser of $6.00 per share or
the average of the closing bid prices for the five trading
days prior to payment
Only entitled to receive when declared by the Board out
of legally available assets
In the event of a conversion, the holder is entitled to the
prorated portion of the annual dividend
Liquidation Preference: Prior to common stock, on parity with Class A, B, and
C preferred and any class hereafter created that is
specifically ranked on parity with Class D ("Parity
Securities")
Liquidation Value: $1,000 per share
Conversion:
At Holder's Option: Beginning 60 days after issuance
N x 1000
----------------
Conversion Price
N = the number of shares of Class D
Preferred Stock for which the
conversion is being elected
Conversion Price = the lesser of (x)
$6.00 or (y) the average closing bid
price for the five trading days
preceding the conversion (the
"Market Price"), provided however
that the Conversion Price cannot be
less than 70% of the Market Price
At Company's Option: None
</TABLE>
10
<PAGE> 11
<TABLE>
<S> <C>
Automatic Conversion: Two years after the date of issuance at the Conversion
Price
Redemption: If the Conversion Price is less than $3.00 per share, the
Company has the right to redeem all or part of the share
submitted for conversion
Redemption Price: (N x 1,000) x Closing Price
----------------
Conversion Price
CLASS E PREFERRED STOCK
- - - -----------------------
Shares authorized: 3,500,000
Shares outstanding: None
Voting Rights: None unless required by Georgia law, provided,
however, that in the event of a failure to pay six
quarterly dividends, the holders of the Class E preferred
have the right to elect one director
Dividend Rights: 10% cumulative payable quarterly
Liquidation Preference: Parity with other classes of preferred stock
Liquidation Value: $12 per share
Conversion:
At Holder's Option: At any time at $8.00 per share
At Company's Option: If the trading price of the Company's stock exceeds $10
for 15 days, the Company can force conversion at the
$8.00
Automatic Conversion: None
Redemption (mandatory): On the fifth anniversary of issuance at $12.00 per share
payable, at the option of the Company, in cash, Common
Stock, or some combination of cash and stock
Listing: The Company intends to apply for listing of the Class E
preferred on the Nasdaq
</TABLE>
11
<PAGE> 12
Convertible Debt and Existing Options and Warrants
--------------------------------------------------
Convertible Debt:
- - - -----------------
<TABLE>
<CAPTION>
Current
Balance
----------
<S> <C>
Cole Young World-Convertible Mortgage Note $2,170,000
9% Convertible Subordinated Debenture $5,650,000
10% Convertible Subordinated Debenture $4,184,289
</TABLE>
Existing Warrants:
- - - ------------------
<TABLE>
<CAPTION>
# of Shares Exercise Expiration
Outstanding Price per share Date
----------- --------------- ----------
<S> <C> <C> <C>
Schwartz (Fee for 10% sub-debt 2/95) 38,138 $5.13 Sep-00
Schwartz (Fee for 10% sub-debt 12/95) 43,931 $8.70 Sep-00
Schwartz (Class A 2/96) 69,517 $8.70 Sep-00
Schwartz (Class A 2/96) 41,617 $5.13 Sep-00
Allen & Co. (Financial Advisor Fee) 180,000 $9.00 Jun-05
Allen & Co. (Financial Advisor Fee) 270,000 $12.25 Jun-05
Commonwealth 11/93 * 425,750 $9.30 Nov-98
Malibu Grand Prix 3/94 * 61,461 $9.76 Mar-99
Kerr Worthy (Capital Trust) * 228,194 $6.04 Jul-04
Commonwealth 11/94 * 93,902 $4.93 Nov-99
Malibu Grand Prix 11/94 * 225,001 $10.67 Nov-99
Langland Bay (NEF) * 18,739 $6.54 1,658
Furman Selz 150,000 $6.25 Nov-05
Feltman 15,800 $5.50 Feb-01
-----------
1,861,950
<FN>
* MOUNTASIA TO DESCRIBE ANTI-DILUTION ADJUSTMENTS
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
# of Shares Exercise Expiration
Existing Options: Outstanding Price per share Date
- - - ----------------- ----------- --------------- ----------
<S> <C> <C> <C>
Mountasia Incentive Stock Option Plan 106,400 $8.00
Mountasia Incentive Stock Option Plan 32,400 $7.25 - $12.50 Mar-98
L. Scott Demerau 29,260 $4.78 Mar-98
Julia E. Demerau 29,260 $4.78 Mar-98
Judith E. Demerau 29,260 $4.78
Ralph C. Dilorio 21,945 $5.47 Jan-05
Ervin E. Lewis, Sr. (Director Options) 25,000 $7.53 Jan-05
William M. Kearns (Director Options) 25,000 $7.53 Jan-05
Bert W. Wasserman (Director Options) 25,000 $7.53
Steven A. Cunningham (Director Options) 25,000 $7.53 Jan-05
Non-employee Stock Option Plan 3,000 Market Jan-05
Non-employee Stock Option Plan 70,000 $7.53 Jan-06
L. Scott Demerau 350,000 $7.00 Jan-06
Julia E. Demerau 150,000 $7.00 Jan-06
Greg Waters 100,000 $9.00 Oct-05
Ken Grissom 10,000 $9.00 Jul-05
Ken Grissom 12,500 $12.50 Jul-05
-----------
1,044,025
</TABLE>
13
<PAGE> 1
Exhibit 3
EXHIBIT B
TO INVESTMENT
AGREEMENT
-------------
MEI FINANCINGS, L.P.
4200 Texas Commerce Tower
Dallas, Texas 75201
June 5, 1996
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202
Attention: Mr. Scott Demerau
Chief Executive Officer
Re: FINANCING COMMITMENT
--------------------
Ladies and Gentlemen:
Mountasia Entertainment International, Inc. (the "BORROWER")
has requested MEI Financings, L.P. (the "LENDER") to provide an aggregate of up
to $33,000,000 under two multi-draw term loan facilities (collectively, the
"FACILITY") to the Borrower which would provide, in part, for the purchase by
the Lender from NationsBank of the outstanding indebtedness of the Borrower and
of its affiliate, National Entertainment Funding, L.P. ("NEF"), to NationsBank
in an aggregate amount specified in the Statement of Terms and Conditions (the
"TERM SHEET") attached as ANNEX A to this letter.
Lender is pleased to advise you that it is willing to provide
the Facility on the principal terms and conditions set forth in the Term Sheet.
The parties acknowledge that Lender is making such commitment solely as an
accommodation to Borrower in connection with ongoing discussions of a possible
substantial equity investment in Borrower (the "PROPOSED EQUITY INVESTMENT") by
MEI Holdings, L.P. ("MEIH").
Upon your execution and delivery of this letter, the Lender
shall deposit into the MEIF Escrow Closing Subaccount (as defined in the Escrow
Subaccount Agreement, dated as of June 5, 1996 (the "ESCROW AGREEMENT"), among
you, the Lender and Jones, Day, Reavis & Pogue) $11,842,862.98 in immediately
available funds to be released to you as Term Loans (as defined in the Term
Sheet) or otherwise applied in accordance with (and subject to the conditions
set forth in) the terms of the Escrow Agreement and this letter.
You agree to assist the Lender, promptly upon request, with
all information deemed necessary by it to complete the documentation for the
Facility.
<PAGE> 2
You represent and warrant and covenant that all information
which has been or is hereafter made available to MEIH or the Lender by you or
any of your representatives in connection with the transactions contemplated
hereby is and will be complete and correct in all material respects and does not
and will 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
materially misleading in light of the circumstances under which such statements
are made and that there is no fact or circumstance, the existence of which could
have a material adverse effect on the financial or other condition, business,
operations or prospects of the Borrower or NEF, that has not been fully
disclosed to MEIH or the Lender prior to the execution and delivery of this
letter and each other Debt Financing Document (as defined below). You agree to
supplement the information referred to above from time to time promptly so that
the representations and warranties in the preceding sentence remain correct
(including with respect to information hereafter made available).
The Lender's commitment is subject to the conditions precedent
described in the Term Sheet. Subject to the terms hereof (including the Term
Sheet) and the Escrow Agreement, funds for the NationsBank Purposes (as defined
in the Term Sheet) will be available to the Borrower immediately after the
execution of and the closing of the transactions under documentation relating
thereto with NationsBank and execution of the Investment Agreement.
The Borrower agrees, as a condition to this commitment and
MEIH's and the Lender's respective obligations under the Facility and the Debt
Financing Documents, if any, that (i) at the Lender's request, it will accept
any refinancing of the Facility from any third party that is on terms that, in
the aggregate, are not materially less favorable than those governing the
proposed Foothill debt financing (including Warrants) and will pay to any
proposed refinancing entity normal commitment fees other customary in financings
of that type not to exceed 2% of the maximum amount of the refinancing facility
and other customary up-front fees, (ii) the NationsBank debt will be
consolidated under the Facility and will, together with all other obligations
under the Facility, be collateralized on the terms set forth in the Term Sheet,
(iii) if MEIH does not close on its equity investment under the Investment
Agreement (as defined in the Term Sheet) for any reason other than a default by
MEIH, the Borrower will immediately proceed to use its best efforts to refinance
the Facility, (iv) if the Borrower agrees to accept from any person or entity
(other than MEIH or any affiliate), an equity investment, (1) all amounts owing
under the Facility will become due and payable in full upon closing of such
investment proposal and all commitments to lend under the Facility will
terminate upon acceptance of any such proposal and (2) Lender will assign the
Facility and any related documents to any person or entity designated by
Borrower upon payment to Lender of all such amounts, (v) Borrower will negotiate
in good faith to reach definitive Debt Financing Documents, and (vi) Borrower
will reimburse any refinancing entity or proposed refinancing entity for all of
their respective out-of-pocket costs and expenses in connection with the
Facility and any refinancing thereof, and provide such entity with an
indemnification with respect to any third party claims and expenses related to
the foregoing no less favorable to such entity than the indemnification
provisions set forth hereinafter in this letter; and default in any of the
foregoing, or in any representation, warranty or other agreement contained
elsewhere in this letter, will constitute a default under the Facility.
2
<PAGE> 3
The Borrower agrees to pay on demand (i) all costs and
expenses of MEIH and the Lender in connection with the preparation, execution,
delivery, administration, modification and amendment of this letter and all
agreements and documents relating to the Facility (all of the foregoing,
collectively, the "DEBT FINANCING DOCUMENTS") (including, without limitation,
(A) all due diligence, collateral review, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel, accountants and
other professional advisors to MEIH or the Lender with respect thereto, with
respect to advising MEIH or the Lender as to its rights and responsibilities, or
the perfection, protection or preservation of rights or interests, under the
Debt Financing Documents, with respect to negotiations with the Borrower or NEF
or any of their respective affiliates (all of the foregoing, collectively, the
"LOAN PARTIES") or with other creditors of any Loan Party arising out of any
default or any events or circumstances that may give rise to a default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto) and (ii) all costs and expenses
of MEIH and the Lender in connection with the enforcement of the Debt Financing
Documents, whether in any action, suit or litigation, or any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally
(including, without limitation, the reasonable fees and expenses of counsel for
MEIH and the Lender with respect thereto). In addition, the Borrower will pay
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of the Debt Financing Documents and
agrees to save MEIH and the Lender harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or failure to
pay such taxes.
The Borrower agrees to indemnify and hold harmless MEIH and
the Lender and each of their respective affiliates and their respective
officers, directors, partners, employees, agents and advisors (each, an
"INDEMNIFIED PARTY") from and against any and all claims, damages, losses
(including, without limitation, economic and investment losses), liabilities and
expenses (including, without limitation, reasonable fees and expenses of counsel
and any loss of investment under any Debt Financing Document or the Proposed
Equity Investment or any agreements relating thereto) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with, (i) the Facility, the actual or proposed use
of the proceeds of the loans thereunder, the Debt Financing Documents, the
Proposed Equity Investment referred to above or any agreements relating thereto,
or any of the transactions contemplated hereby or thereby, including, without
limitation, any acquisition or proposed acquisition by the Borrower or any of
its subsidiaries or other affiliates of all or any portion of the stock or the
assets of any person or entity or (ii) the actual or alleged presence of
hazardous materials on any property of the Borrower or NEF or any of their
respective subsidiaries or other affiliates or any investigation, litigation or
proceeding, under or relating to any environmental law or regulation, relating
in any way to the Borrower or NEF or any of their respective subsidiaries or
other affiliates, in each case whether or not such investigation, litigation or
proceeding is brought by or against any Indemnified Party or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
3
<PAGE> 4
contemplated hereby or by any of the other Debt Financing Documents or such
Proposed Equity Financing are consummated, except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have primarily resulted from such
Indemnified Party's gross negligence or willful misconduct or (iii) any
investigation, litigation or proceeding brought or commenced against the
Borrower or NEF or any subsidiary or other affiliate thereof by any person or
entity (including without limitation any governmental authority) other than MEIH
or the Lender relating to any negligent act or omission, or any violation of any
law, rule or regulation, by the Borrower or NEF or any subsidiary or other
affiliate thereof or any shareholder, officer, director, employee or affiliate
thereof and any losses or liabilities of the Borrower or NEF or any subsidiary
or other affiliate thereof arising from or related to the foregoing. The
Borrower also agrees not to assert any claim against MEIH or the Lender or any
of their subsidiaries or other affiliates, or any of their respective officers,
directors, partners, employees, attorneys and agents, or any affiliate of any
thereof, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Facility, the
actual or proposed use of the proceeds of the loans thereunder, or the Debt
Financing Documents, or the Proposed Equity Investment or any agreement relating
thereto, or any of the transactions contemplated hereby or thereby.
Without prejudice to the survival of any other agreement of
the Borrower hereunder or under any other Debt Financing Document or any other
agreement between MEIH and/or the Lender and the Borrower and/or NEF or any
other person or entity, the agreements and obligations of the Borrower contained
in the preceding two paragraphs will survive the payment in full of, and/or the
conversion to equity of, principal, interest and all other amounts payable under
any of the other Debt Financing Documents and any termination of this letter or
any other Debt Financing Document or any commitment hereunder or under any other
Debt Financing Document, and the Borrower shall remain bound thereby.
This letter is delivered to you on the understanding that
neither this letter nor any of its terms or substance shall be disclosed without
our prior written consent, directly or indirectly, to any other person except to
your employees, agents and advisers who are directly involved in the
consideration of this matter or to NationsBank or as disclosure may be compelled
in a judicial or administrative proceeding or as otherwise required by law.
If you are in agreement with the foregoing, please sign and
return to MEIH the enclosed copies of this letter no later than 5:00 p.m., New
York time, on June 12, 1996. This offer shall terminate at such time unless
prior there to we shall have received signed copies of such letter.
We look forward to working with you on this transaction.
Very truly yours,
MEI FINANCINGS, L.P.
4
<PAGE> 5
By: MEI Financings GenPar, L.P. a Delaware
limited partnership, general partner
By: HH GenPar Partners, a Texas general
partnership, general partner
By: Hampstead Associates, Inc., a Texas
corporation, general partner and co-
manager
By: ________________________________
Name:
Title:
Accepted and agreed to as of the date first above written:
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: _______________________
Name: Scott Demerau
Title: Chief Executive Officer
5
<PAGE> 6
Annex A
TO FINANCING
COMMITMENT
------------
Statement of Terms and Conditions
---------------------------------
I. Amount and Terms of Facility
----------------------------
Borrower: Mountasia Entertainment International, Inc. (the
"BORROWER")
Lender: MEI Financings, L.P. (the "LENDER")
Type of Facilities: Multi-draw, non-revolving term loan
facilities (the "FACILITIES")
Amount of
Facilities: $33,000,000 in aggregate amount, available pursuant
to two separate facilities as follows:
(1) BASIC FACILITY - The aggregate amount of
Term Loans (defined below) drawable under
the Basic Facility is $23,500,000. The
aggregate amount of Term Loans drawable
under the Basic Facility for Basic
Purposes is $18,000,000.
(2) CONVERSION FACILITY - The aggregate amount
of Term Loans drawable under the
Conversion Facility is $9,500,000.
Availability: Loans (the "TERM LOANS") will be available under
the Facilities in one or more drawings to be made
prior to February 28, 1997 (the "EXPIRATION
DATE").
Maturity: The Term Loans will be repayable in a single
payment due January 2, 1998 (such date, or the
date to which the maturity of the Term Loans may
be extended as provided below, the "MATURITY
DATE"). The Maturity Date may be extended for one
six-month period on the condition that (i) the
Borrower has used its best efforts to refinance
the Term Loans outstanding under the Facility
during the period preceding any such extension but
has failed to do so, (ii) on the date of any such
extension and after giving effect thereto no
default or event of default shall have occurred
and be continuing and (iii) the Borrower has paid
the Extension Fee of 25 basis points on the
outstanding principal amount of the Term Loans for
such extension.
Purposes: The Facilities will be available for the following
purposes subject to the limitations set forth
hereinafter:
<PAGE> 7
"NATIONSBANK PURPOSES" means the following:
(1) Acquisition (at par) by the Lender of debt
outstanding under the Borrower's
$13,000,000 and $10,000,000 NationsBank
facilities in an aggregate amount not to
exceed $8,500,000 plus accrued and unpaid
interest and fees and all other amounts
owing under such facilities.
(2) Acquisition (at par) by the Lender of the
note held by NationsBank under the
$5,000,000 facility with National
Entertainment Funding, L.P. ("NEF") in an
aggregate amount not to exceed $2,800,000
plus accrued and unpaid interest and fees
and all other amounts owing under such
facility.
"BASIC PURPOSES" means the following:
(1) The NationsBank Purposes.
(2) To fund the redemption of up to 30% of (x)
the outstanding shares of the Borrower's
Class B Preferred Stock and (y) the
outstanding principal amount of the
Borrower's 10% Convertible Subordinated
Debentures, in an aggregate amount
(including in the case of clause (y)
principal and accrued unpaid interest)
under this item (2) not to exceed
$3,000,000.
(3) The refinancing (at par) of the Note
issued by the Borrower in connection with
the Borrower's acquisition of the Houston,
Texas Katy Freeway Family Entertainment
Center in an aggregate amount (including
principal and accrued unpaid interest) not
to exceed $1,909,000.
(4) To repurchase up to 200,000 shares of the
Borrower's common stock from a previous
holder of the Borrower's Class B Preferred
Stock at the then current market price for
such common stock, such repurchase to be
made as promptly as practicable.
(5) General working capital purposes in an
amount not to exceed the lesser of (a)
$1,800,000 and (b) an amount equal to the
excess of (x) $18,000,000 over (y) the
aggregate principal amount of Term Loans
drawn for the purposes set forth in
clauses (1), (2), (3) and (4) above.
2
<PAGE> 8
"CONVERSION PURPOSES" means payments in respect of
redemptions of (a) the outstanding shares of the
Borrower's Class B Preferred Stock in excess of
payments made pursuant to subclause (x) of clause
(2) under "Basic Purposes" above, (b) the
outstanding shares of the Borrower's Class D
Preferred Stock, (c) the outstanding shares of the
Borrower's Class C Preferred Stock and (d) the
outstanding principal amount of the Borrower's 10%
Convertible Subordinated Debentures in excess of
payments made pursuant to subclause (y) of clause
(2) under "Basic Purposes" above, in the case of
clauses (a) through (d) above, inclusive, in an
aggregate amount up to $9,500,000, and PROVIDED
that the Conversion Facility shall be available
for the purposes set forth in clauses (a) and (d)
above only after the Borrower shall have exhausted
the availability of the Basic Facility for the
purposes set forth in clause (2) under "Basic
Purposes."
"EXPANDED PURPOSES" means the following:
(1) Those permitted uses of proceeds specified
under Section 7.16 of the draft form of
proposed Consolidated, Amended and
Restated Loan and Security Agreement with
Foothill Capital Corporation delivered to
MEI Holdings, L.P. ("MEIH") on June 3,
1996 and not constituting one of the Basic
Purposes or Conversion Purposes.
(2) The repayment (at par) of the subordinated
seller financing relating to the
Spartanburg, S.C. Family Entertainment
Center and known as the "Young World of
Spartanburg Note" in an aggregate amount
(including principal and accrued unpaid
interest) not to exceed $2,170,000.
BASIC FACILITY LIMITS. Term Loans under the Basic
Facility may be drawn solely for Basic Purposes
until Borrower satisfies the Special Covenant
referred to in Part III below. Thereafter, Term
Loans under the Basic Facility may be drawn solely
for Basic Purposes and Expanded Purposes.
CONVERSION FACILITY LIMITS. During the period (the
"DUE DILIGENCE PERIOD") from the date of execution
by MEIH and the Borrower of the definitive
investment agreement (the "INVESTMENT AGREEMENT")
governing the Proposed Equity Investment (as
defined in the commitment letter attached hereto)
through July 1, 1996, and prior to the occurrence
of a
3
<PAGE> 9
Termination Event (as defined herein), Term Loans
under the Conversion Facility may be drawn solely
for Conversion Purposes. Following a Termination
Event, Term Loans under the Conversion Facility
may be drawn solely for Conversion Purposes as to
which the Borrower has, prior to the Termination
Event, entered into an irrevocable contractual
commitment to fund. Upon the Equity Closing (as
defined herein), the Conversion Facility shall
automatically terminate and no additional Term
Loans may be drawn thereunder and all Conversion
Purposes shall thereafter be funded from equity
proceeds.
II. General Provisions
------------------
Interest Rate: Prime Rate + 1%. Prime Rate to be NationsBank's
prime rate, so long as the Lender (or any
financial institution that does not itself
publish a prime rate) holds the Term Loans,
otherwise the prime rate published by the
financial institution holding the Term Loans.
Interest Payment
Dates: Interest to be paid monthly, in arrears.
Overdue Rate: Overdue principal, interest, fees and other
amounts will bear interest at the Prime Rate + 3%.
Collateral: The Facility and all guaranties thereof will be
(to the same extent proposed in the Foothill
facility, and with the exceptions agreed to in
connection therewith) secured by a perfected first
priority security interest and lien on all real
and personal property (wherever located) of the
Borrower and its direct and indirect subsidiaries
and of NEF and its direct and indirect
subsidiaries, if any, after the acquisition, if
any, thereof and prior thereto if permitted under
NEF's organizational documents.
Additionally, the Borrower's obligations under the
Note Purchase Agreement relating to the $5,000,000
NationsBank facility with NEF shall be
cross-collateralized with all collateral securing
the Facility.
Guaranties: All obligations of the Borrower under the Facility
will be unconditionally guarantied by each of the
Borrower's direct and indirect subsidiaries and by
NEF and its direct and indirect subsidiaries if
permitted under NEF's organizational documents.
4
<PAGE> 10
Rate Basis: 360 days for actual days elapsed.
Optional
Prepayments: Without premium or penalty.
Mandatory
Prepayments: Net proceeds of asset sales.
Funding Mechanics: Term Loans will be available pursuant to a Notice
of Borrowing given by the Borrower to the Lender
at least three Business Days prior to the proposed
borrowing date specifying the proposed borrowing
date, the amount of the borrowing, the applicable
Facility and the permitted purpose to which the
proceeds thereof are to be applied. Proceeds of
each Term Loan (other than any Term Loan drawn for
general working capital purposes as provided in
and subject to the limitations set forth in clause
(5) under "Basic Purposes") shall be applied to
the applicable permitted purpose within two
Business Days following the date of such loan.
III. Special Covenant
----------------
Within 10 days after the execution of the Investment Agreement by the
Borrower and MEIH, the Borrower shall (x) execute and deliver to the
Lender documentation (the "DEBT FINANCING DOCUMENTS") governing the
Facilities in form and substance satisfactory to the Lender, such
documentation (i) to be in substantially the form of the drafts of the
proposed Foothill documents delivered to the Lender prior to the date
hereof (subject to modifications necessary to reflect the change in
lender from Foothill to the Lender and the other terms set forth herein
and other technical and "clean-up" changes requested by the Lender not
materially adverse to the Borrower), (ii) to provide collateral
co-extensive with and on the same terms and conditions as that proposed
under the Foothill documents (but to include in any event the Houston,
Texas Katy Freeway Family Entertainment Center and all other property
subject to a lien securing any indebtedness refinanced or acquired with
proceeds of the Term Loans), and (iii) to include conditions to
borrowing typical for facilities of this type and substantially the
same as those in the proposed Foothill documents delivered to the
Lender prior to the date hereof (subject to modifications necessary to
reflect the change in lender from Foothill to the Lender and the other
terms set forth herein and other technical and "clean-up" changes
requested by the Lender not materially adverse to the Borrower) and (y)
deliver all such documents and instruments, including without
limitation, all such UCC financing statements, and take all such other
actions, as are necessary to provide the Lender with a perfected
first-priority lien on all such collateral, as contemplated in the
Foothill documents and hereby. The Lender agrees to waive specified
financial covenant defaults existing under the NationsBank debt to be
acquired by the Lender as provided under "NationsBank Purposes" for the
10-day period referred to in the preceding sentence. Pending entry into
the Debt Financing
5
<PAGE> 11
Documents required pursuant to the foregoing provisions, such
NationsBank debt shall continue to be governed by the NationsBank
documents, as amended in connection herewith.
IV. Conditions to Term Loans
------------------------
All Term Loans
for NationsBank
Purposes: (1) Borrower and MEIH shall have entered into
the Investment Agreement; and
(2) NationsBank and the Lender shall have
entered into, and the closing shall have
occurred under, a Purchase and Sale
Agreement in form and substance
satisfactory to the Lender, it being
understood and agreed that the form of the
draft Purchase and Sale Agreement between
NationsBank and Foothill delivered to MEIH
prior to the date hereof is satisfactory
to the Lender.
All Term Loans other
than for NationsBank
Purposes: (1) Borrower and MEIH shall have entered into
the Investment Agreement;
(2) Satisfaction of Special Covenant (above);
and
(3) Satisfaction of conditions precedent set
forth in the Debt Financing Documents (per
clause (x)(iii) of Special Covenant
above);
PROVIDED, HOWEVER, that, upon satisfaction of the
conditions applicable to the availability of Term
Loans for NationsBank Purposes but prior to the
satisfaction of the foregoing conditions
applicable to the availability of Term Loans other
than for NationsBank Purposes, Term Loans shall be
available under the Conversion Facility solely for
the purpose of funding unsolicited redemptions of
shares of the Borrower's Class C and Class D
Preferred Stock that are, in each case, made on
the last day permitted for such redemptions under
the terms of the instruments providing for the
designation of such securities.
V. Representations and Warranties, Covenants and Events of Default.
----------------------------------------------------------------
Representations
and Warranties: As provided in the Foothill documentation and
herein.
6
<PAGE> 12
Affirmative
Covenants: As provided in the Foothill documentation and
herein.
Negative
Covenants: As provided in the Foothill documentation.
Financial
Covenants: As provided in the Foothill documentation (to be
adjusted appropriately at the Lender's request to
reflect the equity infusion pursuant to the
Investment Agreement and the extension of credit
under the Facilities in an aggregate principal
amount in excess of $23.5 million).
Events of
Default: As provided in the Foothill documentation and
herein.
VI. Certain Other Provisions.
-------------------------
Conversion to Equity
at Closing of Equity
Investment: PRINCIPAL: Upon the closing of the Proposed Equity
Investment as contemplated by the Investment
Agreement (the "EQUITY CLOSING"), the Lender may,
at its option, elect to convert to common equity
of the Borrower at a conversion price of 0.1111%
of the total common shares of the Borrower per
$100,000 of principal converted (the "CONVERSION
PRICE") all or any portion of the aggregate
principal amount of Term Loans outstanding under
the Facilities as of the date of the Equity
Closing. At the time of any such conversion, the
amount of any accrued and unpaid interest in
respect of the principal amount so converted shall
become due and payable.
UNFUNDED COMMITMENTS: Upon the Equity Closing, the
Lender may, at its option, elect to reduce or
terminate any or all of the then unfunded
commitments under the Facilities.
Conversion to Equity
at Termination of
Investment
Agreement: If, prior to the Equity Closing, MEIH shall notify
the Borrower of its election to terminate the
Investment Agreement or if the Investment
Agreement shall otherwise terminate in accordance
with its terms (each, a "TERMINATION EVENT"), the
Lender may, at its option, (x) within 10 days
after such Termination Event, elect to convert to
common equity of the Borrower at the Conversion
Price all or any portion of the aggregate
principal
7
<PAGE> 13
amount of Term Loans outstanding under the
Conversion Facility as of the Termination Event
and (y) within 10 days of the making of each Term
Loan under the Conversion Facility following a
Termination Event, elect to convert to common
equity of the Borrower at the Conversion Price all
or any portion of the principal amount of such
Term Loan. At the time of any such conversion, the
amount of any accrued and unpaid interest in
respect of the principal amount so converted shall
become due and payable.
Anti-Dilution: Any conversion of Term Loans to equity securities
as provided above shall be made pursuant to
documentation providing anti-dilution protections
satisfactory in form and substance to the Lender
and consistent with those in the Investment
Agreement.
Governing Law: State of New York.
Indemnities
and
Reimbursements: The Borrower will reimburse and indemnify and hold
harmless the Lender and its partners, directors,
officers, employees and agents for and against any
loss, liability, cost or expense incurred in
respect of the financing contemplated hereby or
the use of proceeds hereunder.
No Commitments: No purchase by the Lender of any debt of the
Borrower outstanding under any NationsBank
facility shall result in the acquisition or
assumption by the Lender of any commitment or
other obligation to extend credit to the Borrower
or any other person under any such facility except
as provided herein.
8
<PAGE> 1
Exhibit 4
EXHIBIT C
TO INVESTMENT
AGREEMENT
-------------
BY-LAW CHANGES
--------------
The Company's By-Laws will be amended as follows as of the
Closing:
1. ACTION BY CONSENT. Section 2.6 will be amended by inserting
immediately after the words "without a meeting" the following phrase:
"(including without limitation any action permitted by Section 3.8 hereof)."
2. NOTICE OF ACTION BY CONSENT. Section 2.10 will be deleted
in its entirety.
3. REMOVAL OF DIRECTOR. Section 3.8 will be amended by
inserting the following phrase at the end thereof: "and provided further that
any action which shareholders are permitted by this Section to take at a meeting
may also be taken by written consent in accordance with Section 2.6 above."
4. NUMBER OF DIRECTORS. The phrase "and no more than nine (9)
members" will be deleted and replaced by the phrase "and no more than 14
directors."
5. COMMITTEES. (a) Section 3.7 will be amended by changing the
phrase "three or more Directors" to read "three directors."
(b) The second sentence of Section 3.7 will be amended and
restated in its entirety as follows. "The Board of Directors may designate one
or more other directors to act as alternate directors on any such committee and,
in the absence of the director as to whom such other director is designated as
an alternate, such alternate directors (in the order designated by the Board of
Directors) may vote and otherwise act as if such alternate directors were
members of the committee designated as such by the Board of Directors."
(c) The fifth sentence of Section 3.7 will be amended by
inserting the following phrase at the end thereof: "PROVIDED, HOWEVER, that any
committee which has the power to exercise any authority of the Board of
Directors may determine its action only with the approval of each member of the
committee (or such person's designated alternate)."
6. INDEMNIFICATION. Article VII will be deleted and restated
in its entirety as follows:
<PAGE> 2
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION. The Company shall indemnify any
individual who was, is, or is threatened to be made a named defendant
or respondent to a threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
and whether formal or informal because he is or was a director,
officer, employee or agent of the Company or an individual who, while a
director, officer, employee or agent of the Company, is or was serving
at the Company's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise against liability incurred in the proceeding if he acted in
a manner he believed in good faith to be in or not opposed to the best
interests of the Company and, in the case of any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful. The
termination of a proceeding by judgment, order, settlement, conviction,
or a plea of nolo contendere or its equivalent, is not, of itself,
determinative that the director, officer, employee or agent of the
Company did not meet the standard of conduct set forth in the
immediately preceding sentence. No indemnification, however, shall be
made in favor of any director in connection with a proceeding by or in
the right of the Company in which the director was adjudged liable to
the Company or in connection with any other proceeding in which he was
adjudged liable on the basis that personal benefit was improperly
received by him. Indemnification in connection with a proceeding by or
in the right of the Company shall be limited to reasonable expenses
(including attorneys' fees) incurred in connection with the proceeding.
7.2. DETERMINATION OF INDEMNIFICATION. Unless ordered
by a court, the Company shall not indemnify a director, officer,
employee or agent under Section 7.1 unless authorized in the specific
case upon a determination that indemnification of the director,
officer, employee, or agent is permissible in the circumstances because
he has met the applicable standard of conduct set forth in Section 7.1.
The determination shall be made:
(i) by the Board of Directors by a majority vote
of a quorum consisting of directors not at the time
parties to the proceeding; or
(ii) if such a quorum is not obtainable, by majority
vote of a committee duly designated by the Board of Directors
(in which designation directors who are parties may
participate), consisting solely of two
<PAGE> 3
or more directors not at the time parties to the
proceedings;
(iii) by special legal counsel:
(A) selected by the Board of
Directors or its committee in the manner
described in paragraph (i) or (ii) of this
Section 7.2; or
(B) if a quorum of the Board of
Directors cannot be obtained under paragraph
(i) of this Section 7.2 and a committee
cannot be designated under paragraph (ii) of
this Section 7.2, then selected by majority
vote of the full Board of Directors (in
which selection directors who are parties
may participate); or
(iv) by the shareholders, but shares owned by or
voted under the control of directors who are at the time
parties to the proceeding may not be voted on the
determination. Authorization of indemnification or an
obligation to indemnify and an evaluation as to reasonableness
of expenses shall be made in the same manner as the
determination that indemnification is permissible, except that
if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled
under paragraph (iii) of this Section 7.2 to select counsel.
7.3 SUCCESSFUL DEFENSE. To the extent that a
director, officer, employee, or agent of the Company has been
successful, on the merits or otherwise, in defense of any action, suit
or proceeding referred to in Section 7.1 or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
7.4 ADVANCE PAYMENT. The Company shall pay for or
reimburse the reasonable expenses incurred by a director, officer,
employee or agent who is an individual who was, is, or is threatened to
be made a named defendant or respondent to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal in
advance of the final disposition of the proceeding if such person
furnishes the Company both a written affirmation of his good-faith
belief that he has met the standard of conduct set forth in Section 7.1
and a written undertaking, executed personally or on his behalf, to
repay any advances if it is ultimately determined that he is not
entitled to
<PAGE> 4
indemnification by the Company as authorized in this
Article.
7.5 SURVIVAL OF INDEMNIFICATION FOLLOWING DEATH OR
TERMINATION. The right to indemnification and advancement of expenses
provided by or granted pursuant to this Article VII shall, continue as
to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
7.6 NON-EXCLUSIVITY. The indemnification and
advancement of expenses provided by this Article VII shall not be
deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any article of incorporation,
by-law, agreement, note of shareholders or directors or otherwise, both
as to action in his official capacity and as to action in another
capacity while holding such office.
7. AMENDMENTS. Article VIII will be amended by the addition of
the following sentence at the end thereof: "Notwithstanding the foregoing, any
alteration, amendment or repeal of any provision of Article II, III or VII of
these ByLaws, and the adoption of any By-Law inconsistent with any provision of
said Articles II, III and VII may be approved only by the affirmative vote of at
least two thirds of all members of the Board of Directors or of the holders of
shares having at least two-thirds of the voting power with respect such
alteration, amendment, repeal or adoption."
<PAGE> 1
Exhibit 5
EXHIBIT D
TO INVESTMENT
AGREEMENT
-------------
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT, dated as of _____ __, 1996, among
Mountasia Entertainment International, Inc., a Georgia corporation (the
"COMPANY"), and MEI Holdings, L.P., a Delaware
limited partnership (the "PURCHASER").
RECITALS
--------
A. The Company and the Purchaser have entered into an
Investment Agreement (the "INVESTMENT AGREEMENT"), dated June 5, 1996, pursuant
to which, among other things, on the terms and subject to the conditions
thereof, Purchaser will acquire certain shares of Common Stock, no par value, of
the Company ("COMMON STOCK").
B. Upon the closing of the purchase and sale of Common Stock
pursuant to the Investment Agreement, the Company and the Purchaser will enter
into a Warrant Agreement in the form attached as Exhibit A to the Investment
Agreement (the "WARRANT AGREEMENT").
C. The Company and the Purchaser desire to make
certain provisions in respect of their relationship during the
next ten years.
NOW, THEREFORE, in consideration of the foregoing, the parties
hereto agree as follows:
I. DEFINITIONS
-----------
1.1 DEFINITIONS. In addition to the terms defined elsewhere
herein, as used herein, the following terms have the following meanings when
used herein with initial capital letters:
(a) "AFFILIATE" of any Person means any other
Person, that, directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, such Person; and
for the purposes of this definition only "control" (including the terms
"controlling", "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management, policies or activities of a Person whether through the ownership
of securities, by contract or agency or otherwise.
(b) A Person will be deemed the "BENEFICIAL
OWNER" of, and will be deemed to "BENEFICIALLY OWN", and will be deemed to have
"BENEFICIAL OWNERSHIP" of:
<PAGE> 2
(i) any securities that such Person or
any of such Person's Affiliates is deemed to "beneficially own" within
the meaning of Rule 13d-3 under the Exchange Act, as in effect on the
date of this Agreement; and
(ii) any securities (the "underlying
securities") that such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (written or oral), or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise (it being understood that such Person will also
be deemed to be the beneficial owner of the securities convertible into
or exchangeable for the underlying securities),
PROVIDED, that a Person will not be deemed to beneficially own shares of Common
Stock receivable upon the exercise of the Warrant unless and until there have
occurred all events necessary to permit the Person to receive such shares.
(c) "BOARD" means the Board of Directors of the
Company.
(d) "BOARD APPROVAL" means the approval of a
majority of the members of the Board who (a) are not employees of the Company or
any of its Affiliates and (b) have not been designated for election to the Board
by the Purchaser pursuant to the terms of Article III hereof.
(e) "EXCHANGE ACT" means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
(f) "PERSON" means an individual, a corporation,
a partnership, an association, a trust or other entity or organization,
including without limitation a government or political subdivision or an agency
or instrumentality thereof.
(g) "RESTRICTED SECURITIES" means any Voting
Securities and any other securities convertible into, exchangeable for or
exercisable for Voting Securities (whether immediately or otherwise), except any
securities acquired pursuant to the Investment Agreement, the Warrant Agreement
[or the Credit Facility].
(h) "SECURITIES ACT" means the Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder.
(i) "SUBSIDIARY" means a subsidiary within the
meaning of Rule 405 under the Securities Act.
2
<PAGE> 3
(j) "TOTAL VOTING POWER" means, at any time,
the aggregate number of votes which may then be cast by all holders of
outstanding Voting Securities in the election of directors of the Company.
(k) "VOTING SECURITIES" means the Common Stock
and all other securities of the Company entitled to vote in the election of
directors of the Company, except to the extent such voting rights are dependent
upon the non-payment of dividends, events of default or bankruptcy or other
events not in the ordinary course of business.
II. COVENANTS OF SHAREHOLDERS
-------------------------
2.1. ACQUISITION OF RESTRICTED SECURITIES. Without prior Board
Approval, the Purchaser will not purchase or otherwise acquire beneficial
ownership of any Restricted Securities if after such acquisition the Purchaser
would have, in the aggregate, beneficial ownership of 50% or more of the Total
Voting Power, provided, however, that the foregoing restriction will not apply
to any acquisition of Restricted Securities (i) pursuant to a rights offering
made to all holders of Common Stock by the Company (including without limitation
any standby underwriting or similar arrangements relating thereto) pursuant to
Board Approval or (ii) otherwise permitted hereunder.
2.2. OTHER RESTRICTIONS. Without prior Board Approval,
except as otherwise permitted hereunder, the Purchaser will not
do any of the following:
(a) solicit proxies from other shareholders of the Company, in
opposition to a recommendation of the Board, for any matter to be
considered at any meeting of the shareholders of the Company [except as
permitted by this Agreement];
(b) form, join or participate in or encourage the formation of
a "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
with respect to any Voting Securities of the Company, other than a
group consisting solely of Affiliates of the Purchaser; and
(c) deposit any Voting Securities of the Company into a voting
trust or subject any such Voting Securities to any arrangement or
agreement with respect to the voting thereof, other than any such
trust, arrangement or agreement (i) the only parties to, or
beneficiaries of, which are Affiliates of the Purchaser; and (ii) the
terms of which do not require or expressly permit any party thereto to
act in a manner inconsistent with this Agreement.
3
<PAGE> 4
2.3. NO BREACH. The Purchaser will not be deemed to
have breached the terms of Section 2.1 above if Restricted Securities
beneficially owned by it exceed the percentage limitation set forth in Section
2.1 due to any reduction in Total Voting Power.
III. COVENANTS OF COMPANY
--------------------
3.1. DIRECTORS AND VOTING. (a) The Board, at each meeting of
stockholders of the Company at which directors are elected, will nominate for
election as directors of the Company such number of persons determined in
accordance with Section 3.1(d), who shall each be designated by the Purchaser.
The Company will solicit proxies from its stockholders for such nominees and
vote all management proxies in favor of such nominees, except for such proxies
that specifically indicate to the contrary.
(b) If any director of the Company designated by the Purchaser
ceases to be a director of the Company, the Board will promptly upon the request
the Purchaser elect a person designated by the Purchaser to replace such
director.
(c) If the total number of seats on the Board (including any
vacant seats) is increased at any time between meetings of stockholders of the
Company at which directors are elected, the Board will elect persons designated
by the Purchaser to fill such additional seats so that after such election the
total number of persons on the Board designated by the Purchaser at least equals
the number determined in accordance with Section 3.1(d).
(d) The number of persons designated by the Purchaser that
must be nominated by the Board for election as directors of the Company as
provided herein will be sufficient so that the number of Board designees of the
Purchaser relative to the number of directors constituting the whole Board is
proportional (rounded down to the next lowest number) to the Purchaser's
then-beneficial ownership of outstanding Voting Securities in relation to the
then Total Voting Power ("Proportional"); PROVIDED, HOWEVER, that (i) so long as
the Purchaser has beneficial ownership of more than 10% of the outstanding
Voting Securities, in no event will the number of such persons be less than two
and (ii) in no event will the Company be obligated to take any action hereunder
that would result in the number of directors elected pursuant to the Purchaser's
designation exceeding more than one less than a majority of the total number of
directors.
(e) At all times after the date hereof at which the Purchaser
has beneficial ownership of more than 10% of the Total Voting Power, the Board
shall ensure that at least one director
4
<PAGE> 5
designated by the Purchaser is a member of each committee of the Board.
Provision will be made by the Company so that each committee member may
designate another director to act as his alternate on such committee. Such an
alternate, in the absence of the director who designated him, may vote and
participate in the activities of the committee as if he were a member thereof.
3.2. NON-SOLICITATION. So long as the Purchaser shall have
beneficial ownership of more than 10.0% of the Total Voting Power, the Company
will not take any action to solicit, promote or arrange for, or (except as
required by law) assist in, the acquisition by any person, entity or group,
together with all persons and entities controlling, controlled, by or under
common control or in a group with it, of 10.0% or more of the Total Voting Power
or of all or any significant part of the assets of the Company; PROVIDED,
HOWEVER, that the Company will be free to respond to and authorize negotiations
with respect to a proposed transaction initiated by a third party and not
solicited by the Company subsequent to the date hereof to the extent required by
the fiduciary duties of the Board.
IV. TERMINATION
-----------
4.1. TERMINATION. This Agreement will terminate upon
the earliest to occur of the following dates or events:
(a) the tenth anniversary of the date of this Agreement;
(b) notice that the Purchaser has determined to terminate this
Agreement effective as of a date stated in such notice, at any time following
the announcement by any person, entity or group (other than the Purchaser) that
it intends to commence a tender offer for or otherwise acquire Voting Securities
if, after the completion of such proposed tender offer or acquisition such
person, entity or group, together with all persons and entities controlling,
controlled by or under common control (or in a group with it), would own 10.0%
or more of the Total Voting Power;
(c) notice that the Purchaser has determined to terminate this
Agreement effective as of a date stated in such notice, at any time following
the acquisition by any person, entity or group of 10% or more of the Total
Voting Power or the filing by any person, entity or group (other than the
Purchaser) of any document with a governmental agency (including without
limitation a Schedule 13D with the Securities and Exchange Commission or a
notification under the Hart-Scott-Rodino Antitrust Improvement Act) to the
effect that such person, entity or group intends or contemplates acquiring
Voting Securities, if after the completion of such proposed acquisition such
person, entity or group, together with all persons and entities
5
<PAGE> 6
controlling, controlled by or under common control or in a group with it, would
own 10% or more of the Total Voting Power.
(d) notice that the Purchaser has determined to terminate this
Agreement effective as of a date stated in such notice, at any time following
the execution, approval by the Board of Directors of the Company, or
announcement of an agreement, agreement in principle or proposal (whether or not
subject to approval by the Board of Directors of the Company or other corporate
action) that provides for or involves (i) the merger of the Company with or into
any other entity, or (ii) the sale of all or any significant part of the assets
of the Company, (iii) the reorganization or liquidation of the Company; or (iv)
any similar transaction or event that is subject to approval by the stockholders
of the Company;
(e) notice that the Purchaser has determined to terminate this
Agreement effective as of a date stated in such notice at any time following the
failure by the Board or the Company to observe any of the provisions of Article
III hereof which breach has continued for at least five calendar days after
notice thereof to the company from the Purchaser;
(f) the failure of the shareholders of the Company to elect
any director designated under this Agreement by the Purchaser or the removal of
any such recommended director from the Board or the failure of the Board to
replace any director designated by the Purchaser with a person designated by the
Purchaser; or the failure of the Board of Directors of the Company to effect
without unreasonable delay and maintain the committee appointments required
under Section 3.1(e); and
(g) the written agreement of the parties to terminate
this Agreement.
V. MISCELLANEOUS
-------------
5.1. SPECIFIC PERFORMANCE. The parties agree that any breach
by any of them of any provision of this Agreement would irreparably injure the
Company or the Purchaser, as the case may be, and that money damages would be an
inadequate remedy therefor. Accordingly, the parties agree that the other
parties will be entitled to one or more injunctions enjoining any such breach
and requiring specific performance of this Agreement and consent to the entry
thereof, in addition to any other remedy to which such other parties are
entitled at law or in equity, provided, however, that in the event the Company
breaches or is unable to perform (even if legally excused therefrom) Section
3.1, the obligations of the Purchaser under Article II hereof will terminate
without further action but the Company will have no liability for damages as a
result thereof.
6
<PAGE> 7
5.2. NOTICES. All notices, requests and other
communications to either party hereunder will be in writing (including telecopy
or similar writing) and will be given,
if to the Company, to:
Mountasia Entertainment International, Inc.
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30202-4128
Attention: Chief Executive Officer
Fax: (770) 442-6655
with a copy to:
Rogers & Hardin
2700 Cain Tower
229 Peachtree Street
Atlanta, Georgia 30303
Attention: Edward J. Hardin
Fax: (404) 525-2224
If to any member of the Purchaser, to:
MEI Holdings, L.P.
4200 Texas Commerce Tower
Dallas, Texas 75201
Attention: Daniel A. Decker
Fax: (214) 220-4949
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Fax: (212) 755-7306
or such other address or telecopier number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice, request
or other communication shall be effective when delivered at the address
specified in this Section 5.2.
5.3. AMENDMENTS: NO WAIVERS. (a) Any provision of
this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an
amendment, by the parties hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder will operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein
7
<PAGE> 8
provided will be cumulative and not exclusive of any rights or remedies provided
by law.
5.4. EXPENSES. Except as otherwise provided herein or
in the Investment Agreement, all costs and expenses incurred in
connection with this Agreement will be paid by the party
incurring such cost or expense.
5.5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, PROVIDED, HOWEVER, that none of the parties
may assign, delegate or otherwise transfer any of their rights or obligations
under this Agreement without the written consent of the other parties hereto,
except that the Purchaser may assign delegate or otherwise transfer any of its
rights hereunder to any of its Affiliates which commits to the Company in
writing to be bound by the terms hereof (but no such transfer shall relieve the
Purchaser of its obligations hereunder). Neither this Agreement nor any
provision hereof is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
5.6. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which will be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement will become effective when each party hereto will have received a
counterpart hereof signed by the other party hereto.
5.7. ENTIRE AGREEMENT. This Agreement, the Investment
Agreement and the documents contemplated thereby (and all exhibits thereto)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect thereto.
No representation, inducement, promise, understanding, condition or warranty not
set forth herein or therein has been made or relied upon by any of the parties
hereto.
5.8. GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of
laws thereof.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MEI HOLDINGS, L.P.
By: MEI GenPar, L.P., its
general partner
By: HH GenPar Partners, its
general partner and
co-manager
By: Hampstead Associates, Inc.,
its general partner and co-
manager
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
9
<PAGE> 1
Exhibit 6
EXHIBIT E
TO INVESTMENT
AGREEMENTS
-------------
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made
and entered into as of _______ __, 1996, by and among Mountasia Entertainment
International, Inc., a Georgia corporation (the "Company") and MEI Holdings,
L.P. a Delaware limited partnership (the "Purchaser").
RECITALS
--------
The parties hereto have entered into, or are equity owners in
entities that have entered into, other agreements which contemplate, among other
things, the execution and delivery of this Agreement by the parties hereto.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
have the following meanings:
(a) ADVICE: As defined in Section 6 hereof.
(b) COMMON STOCK: The Common Stock, without par value, of the Company.
(c) DEMAND NOTICE: As defined in Section 3 hereof.
(d) DEMAND REGISTRATION: As defined in Section 3 hereof.
(e) LOSSES: As defined in Section 8 hereof.
(f) OTHER EQUITY SECURITIES: Any shares of capital stock of the Company
and any other securities issued by the Company that are exercisable to purchase,
convertible into, or exchangeable for shares of capital stock of the Company
that are owned by any party hereto (other than the Company) or any affiliate of
any party hereto (other than the Company), whether acquired prior to, on or
after the date hereof.
(g) PIGGYBACK REGISTRATION: As defined in Section 4 hereof.
(h) PROSPECTUS: The prospectus included in any Registration Statement
(including without limitation a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus
<PAGE> 2
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(i) REGISTRABLE SECURITIES: The Shares, and all Other Equity
Securities, upon the respective original issuance thereof, and at all times
subsequent thereto, until, in the case of any such security, (i) it is
effectively registered under the Securities Act and disposed of in accordance
with the Registration Statement covering it, (ii) it is saleable by the holder
thereof pursuant to Rule 144(k), or (iii) it is distributed to the public
pursuant to Rule 144.
(j) REGISTRATION EXPENSES: As defined in Section 7 hereof.
(k) REGISTRATION STATEMENT: Any registration statement of the Company
under the Securities Act that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
(l) RULE 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
(m) SEC: The Securities and Exchange Commission.
(n) SECURITIES ACT: The Securities Act of 1933, as amended.
(o) SHARES: All shares of Common Stock acquired by the Purchaser or its
designee pursuant to the Investment Agreement, dated as of June 5, 1996, among
the Company and Purchaser.
(p) SPECIAL COUNSEL: As defined in Section 7(b) hereof.
(q) UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. HOLDERS OF REGISTRABLE SECURITIES. Whenever a number or percentage
of Registrable Securities is to be determined hereunder, each then-outstanding
Other Equity Security that is exercisable to purchase, convertible into, or
exchangeable for shares of capital stock of the Company will be deemed to be
equal to the number of shares of Common Stock for which such Other Equity
Security is then convertible.
3. DEMAND REGISTRATION. (a) REQUESTS FOR REGISTRATION. At any time and
from time to time after the date hereof, the holders of Registrable Securities
constituting at least 10% of the total number of Registrable Securities then
outstanding will have the right by written notice delivered to the Company (a
"Demand Notice"), to require the Company to register (a
-2-
<PAGE> 3
"Demand Registration") under and in accordance with the provisions of the
Securities Act the number of Registrable Securities requested to be so
registered (but not less than 5% of the total number of Registrable Securities
then outstanding); PROVIDED, HOWEVER, that no Demand Notice may be given prior
to four months after the effective date of the immediately preceding Demand
Registration. The holders of Registrable Securities will be permitted to
withdraw Registrable Securities from a Piggyback Registration at any time prior
to the effective date of such Piggyback Registration PROVIDED the remaining
number of Registrable Securities subject to a Demand Notice is at least 5% of
the total number of Registrable Securities then outstanding.
The number of Demand Registrations pursuant to this Section
3(a) shall not exceed five; PROVIDED, HOWEVER, that in determining the number of
Demand Registrations to which the holders of Registrable Securities are entitled
there shall be excluded (1) any Demand Registration that is an underwritten
registration if the managing underwriter or underwriters have advised the
holders of Registrable Securities that the total number of Registrable
Securities requested to be included therein exceeds the number of Registrable
Securities that can be sold in such offering in accordance with the provisions
of this Agreement without materially and adversely affecting the success of such
offering, (2) any Demand Registration that does not become effective or is not
maintained effective for the period required pursuant to Section 3(b) hereof,
unless in the case of this clause (2) such Demand Registration does not become
effective after being filed by the Company solely by reason of the refusal to
proceed by the holders of Registrable Securities unless (i) the refusal to
proceed is based upon the advice of counsel relating to a matter with respect to
the Company, or (ii) the holders of the Registrable Securities elect to pay all
Registration Expenses in connection with such Demand Registration and (3) any
Demand Registration in connection with which any other stockholder of the
Company exercises a right of first refusal which it may otherwise have and
purchases all the stock registered and to be sold pursuant to the Demand
Registration.
(b) FILING AND EFFECTIVENESS. The Company will file a Registration
Statement relating to any Demand Registration within 60 calendar days, and will
use its best efforts to cause the same to be declared effective by the SEC
within 120 calendar days, of the date on which the holders of Registrable
Securities first give the Demand Notice required by Section 3(a) hereof with
respect to such Demand Registration.
All requests made pursuant to this Section 3 will specify the
number of Registrable Securities to be registered and will also specify the
intended methods of disposition thereof; PROVIDED, that if the holder demanding
such registration specifies one particular type of underwritten offering, such
method of disposition shall be such type of underwritten offering or a series of
such underwritten offerings (as such demanding holders of Registrable Securities
may elect) during the period during which the Registration Statement is
effective.
If any Demand Registration is requested to be effected as a
"shelf" registration by the holders of Registrable Securities demanding such
Demand Registration, the Company will keep the Registration Statement filed in
respect thereof effective for a period of up to 12
-3-
<PAGE> 4
months from the date on which the SEC declares such Registration Statement
effective (subject to extension pursuant to Sections 5 and 6 hereof) or such
shorter period that will terminate when all Registrable Securities covered by
such Registration Statement have been sold pursuant to such Registration
Statement.
Within ten calendar days after receipt of such Demand Notice,
the Company will serve written notice thereof (the "Notice") to all other
holders of Registrable Securities and will, subject to the provisions of Section
3(c) hereof, include in such registration all Registrable Securities with
respect to which the Company receives written requests for inclusion therein
within 20 calendar days after the receipt of the Notice by the applicable
holder.
(c) PRIORITY ON DEMAND REGISTRATION. If any of the Registrable
Securities registered pursuant to a Demand Registration are to be sold in one or
more firm commitment underwritten offerings, the Company may also provide
written notice to holders of its equity securities (other than Registrable
Securities), if any, who have piggyback registration rights with respect thereto
and will permit all such holders who request to be included in the Demand
Registration to include any or all equity securities held by such holders in
such Demand Registration on the same terms and conditions as the Registrable
Securities. Notwithstanding the foregoing, if the managing underwriter or
underwriters of the offering to which such Demand Registration relates advises
the holders of Registrable Securities that the total amount of Registrable
Securities and securities that such equity security holders intend to include in
such Demand Registration is in the aggregate such as to materially and adversely
affect the success of such offering, then (i) first, the amount of securities to
be offered for the account of the holders of such other equity securities will
be reduced, to zero if necessary (PRO RATA among such holders on the basis of
the amount of such other securities to be included therein by each such holder),
and (ii) second, the number of Registrable Securities included in such Demand
Registration will, if necessary, be reduced and there will be included in such
firm commitment underwritten offering only the number of Registrable Securities
that, in the opinion of such managing underwriter or underwriters, can be sold
without materially and adversely affecting the success of such offering,
allocated PRO RATA among the holders of Registrable Securities on the basis of
the amount of Registrable Securities to be included therein by each such holder.
(d) POSTPONEMENT OF DEMAND REGISTRATION. The Company will be entitled
to postpone the filing period (or suspend the effectiveness) of any Demand
Registration for a reasonable period of time not in excess of 90 calendar days,
if the Company determines, in the good faith exercise of its reasonable business
judgment, that such registration and offering could materially interfere with
BONA FIDE financing plans of the Company or would require disclosure of
information, the premature disclosure of which could materially and adversely
affect the Company. If the Company postpones the filing of a Registration
Statement, it will promptly notify the holders of Registrable Securities in
writing when the events or circumstances permitting such postponement have
ended.
4. PIGGYBACK REGISTRATION. (a) RIGHT TO PIGGYBACK. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to an offering
-4-
<PAGE> 5
of any class of equity securities (other than a registration statement (i) on
Form S-4, S-8 or any successor form thereto or (ii) filed solely in connection
with an offering made solely to employees of the Company), whether or not for
its own account, then the Company will give written notice of such proposed
filing to the holders of Registrable Securities at least 30 calendar days before
the anticipated filing date. Such notice will offer such holders the opportunity
to register such amount of Registrable Securities as each such holder may
request (a "Piggyback Registration"). Subject to Section 4(b) hereof, the
Company will include in each such Piggyback Registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein. The holders of Registrable Securities will be permitted to
withdraw all or part of the Registrable Securities from a Piggyback Registration
at any time prior to the effective date of such Piggyback Registration.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. The Company will cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit holders of Registrable Securities requested to be included in the
registration for such offering to include therein all such Registrable
Securities requested to be so included on the same terms and conditions as any
similar securities, if any, of the Company included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such offering deliver
an opinion to the holders of Registrable Securities to the effect that the total
amount of securities which such holders, the Company and any other persons
having rights to participate in such registration propose to include in such
offering is such as to materially and adversely affect the success of such
offering, then:
(i) if such registration is a primary registration on behalf
of the Company, the amount of securities to be included therein (x) for the
account of holders of Registrable Securities on the one hand (allocated PRO RATA
among such holders on the basis of the Registrable Securities requested to be
included therein by each such holder), and (y) for the account of all such other
persons (exclusive of the Company), on the other hand, will be reduced (to zero
if necessary) PRO RATA in proportion to the respective amounts of securities
requested to be included therein to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters; and
(ii) if such registration is an underwritten secondary
registration on behalf of holders of securities of the Company other than
Registrable Securities, the Company will include therein: (x) first, up to the
full number of securities of such persons exercising "demand" registration
rights that in the opinion of such managing underwriter or underwriters can be
sold or allocated among such holders as they may otherwise so determine, and (y)
second, the amount of Registrable Securities and securities proposed to be sold
by any other person in excess of the amount of securities such persons
exercising "demand" registration rights propose to sell that, in the opinion of
such managing underwriter or underwriters, can be sold (allocated PRO RATA among
the holders of such Registrable Securities and such other persons on the basis
of the dollar amount of securities requested to be included therein).
-5-
<PAGE> 6
(c) REGISTRATION OF SECURITIES OTHER THAN REGISTRABLE SECURITIES.
Without the written consent of the holders of a majority of the then-outstanding
Registrable Securities, the Company will not grant to any person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject to the prior rights of
the holders of Registrable Securities set forth herein, and, if exercised, would
not otherwise conflict or be inconsistent with the provisions of, this
Agreement.
5. RESTRICTIONS ON SALE BY HOLDERS OF REGISTRABLE SECURITIES. Each
holder of Registrable Securities whose Registrable Securities are covered by a
Registration Statement filed pursuant to Section 3 or Section 4 hereof, agrees
and will confirm such agreement in writing, if such holder is so requested
(pursuant to a timely written notice) by the managing underwriter or
underwriters in an underwritten offering, not to effect any public sale or
distribution of any of the Company's equity securities (except as part of such
underwritten offering), including a sale pursuant to Rule 144, during the
10-calendar day period prior to, and during the 90-calendar day period (or such
longer period as any managing underwriter or underwriters may reasonably request
in connection with any underwritten public offering) beginning on, the closing
date of each underwritten offering made pursuant to such Registration Statement.
If a request is made pursuant to this Section 5, the time period during which a
Demand Registration (if a shelf registration) is required to remain continuously
effective pursuant to Section 3(b) will be extended by 100 calendar days or such
shorter period that will terminate when all such Registrable Securities not so
included have been sold pursuant to such Registration Statement.
6. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations pursuant to Sections 3 and 4 hereof, the Company will
effect such registrations to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the holders thereof in
accordance with the intended method or methods of distribution thereof, and
cause each such Registration Statement to become effective and remain effective
as provided herein; PROVIDED, HOWEVER, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto (including
documents that would be incorporated or deemed to be incorporated therein by
reference) the Company will furnish to the holders of the Registrable Securities
covered by such Registration Statement, the Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of such holders, the Special Counsel and
such underwriters, and the Company will not file any such Registration Statement
or amendment thereto or any Prospectus or any supplement thereto (including such
documents which, upon filing, would or would be incorporated or deemed to be
incorporated by reference therein) to which the holders of a majority of the
Registrable Securities covered by such Registration Statement, the Special
Counsel or the managing underwriter, if any, shall reasonably object on a timely
basis.
-6-
<PAGE> 7
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 3; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or to such
Prospectus as so supplemented.
(c) Notify the selling holders of Registrable Securities, the Special
Counsel and the managing underwriters, if any, promptly, and (if requested by
any such person) confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other federal
or state governmental authority for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if at any time the
representations and warranties of the Company contained in any agreement
contemplated by Section 6(n) hereof (including any underwriting agreement) cease
to be true and correct, (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose, (vi) of the
occurrence of any event which makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or which
requires the making of any changes in a Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading and, in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated or is necessary to make the statements therein, in light of the
circumstances under which they wee made, not misleading, and (vii) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) Use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable securities for sale in any jurisdiction, at the earliest possible
moment.
(e) If requested by the managing underwriters, if any, or the holders
of a majority of the Registrable Securities being registered, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such holder agree should
be included therein as may be required by applicable law
-7-
<PAGE> 8
and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; PROVIDED, HOWEVER, that the Company will not be
required to take any actions under this Section 6(e) that are not, in the
opinion of counsel for the Company, in compliance with applicable law.
(f) Furnish to each selling holder of Registrable Securities, the
Special Counsel and each managing underwriter, if any, without charge, at least
one conformed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements (but excluding schedules, all
documents incorporated or deemed incorporated therein by reference and all
exhibits, unless requested in writing by such holder, counsel or underwriter).
(g) Deliver to each selling holder of Registrable Securities, the
Special Counsel and the underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses relating to such Registrable Securities
(including each preliminary prospectus) and any amendment or supplement thereto
as such persons may request; and the Company hereby consents to the use of such
Prospectus or each amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to register
or qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
any seller or underwriter reasonably requests in writing; keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdiction of the Registrable Securities covered by the applicable
Registration Statement; PROVIDED, HOWEVER that the Company will not be required
to (i) qualify generally to do business in any jurisdiction in which it is not
then so qualified or (ii) take any action that would subject it to general
service of process in any such jurisdiction in which it is not then so subject.
(i) Cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold, which
certificates will not bear any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, shall request at least two business days prior to
any sale of Registrable securities to the underwriters.
(j) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States except as may be
required solely as a consequence of the nature of such
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<PAGE> 9
selling holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities.
(k) Upon the occurrence of any event contemplated by Section 6(c)(vi)
or 6(c)(vii) hereof, prepare a supplement or post-effective amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Use its best efforts to cause all Registrable Securities covered by
such Registration Statement to be, at the Company's option (i) listed on each
securities exchange, if any, on which similar securities issued by the Company
are then listed or, if no similar securities issued by the Company are then so
listed, on the New York Stock Exchange or another national securities exchange
if the securities qualify to be so listed or (ii) authorized to be quoted on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or the National Market System of NASDAQ if the securities qualify to be so
quoted; in each case, if requested by the holders of a majority of the
Registrable Securities covered by such Registration statement or the managing
underwriters, if any.
(m) Prior to the effective date of the first Demand Registration or the
first Piggyback Registration, whichever shall occur first, (i) engage an
appropriate transfer agent and provide the transfer agent with printed
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Securities.
(n) Enter into such agreements (including, in the event of an
underwritten offering, an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other actions in
connection therewith (including those requested by the holders of a majority of
the Registrable Securities being sold or, in the event of an underwritten
offering, those requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, (i) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority of the Registrable
Securities being sold) addressed to such selling
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<PAGE> 10
holder of Registrable Securities and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such holders and
underwriters, including without limitation the matters referred to in Section
6(n)(i) hereof; (iii) use its best efforts to obtain "comfort" letters and
updates thereof from the independent certified public accountants of the Company
(and, if necessary, any other certified public accountants of any subsidiary of
the Company or of any business acquired by the Company for which financial
statements and financial data is, or is required to be, included in the
Registration Statement), addressed to each selling holder of Registrable
Securities and each of the underwriters, if any, such letters to be in customary
form and covering matters of the type customarily covered in "comfort" letters
in connection with underwritten offerings; and (iv) deliver such documents and
certificates as may be requested by the holders of a majority of the Registrable
Securities being sold, the Special Counsel and the managing underwriters, if
any, to evidence the continued validity of the representations and warranties of
the Company and its subsidiaries made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in the underwriting
agreement or similar agreement entered into by the Company. The foregoing
actions will be taken in connection with each closing under such underwriting or
similar agreement as and to the extent required thereunder.
(o) Make available for inspection by a representative of the holders of
Registrable Securities being sold, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant retained
by such selling holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
Registration Statement; PROVIDED, HOWEVER, that any records, information or
documents that are designated by the Company in writing as confidential at the
time of delivery of such records, information or documents will be kept
confidential by such persons unless (i) such records, information or documents
are in the public domain or otherwise publicly available, (ii) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquires of regulatory authorities, or (iii)
disclosure of such records, information or documents, in the opinion of counsel
to such person, is otherwise required by law (including, without limitation,
pursuant to the requirements of the Securities Act).
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45
calendar days after the end of any 12-month period (or 90 calendar days after
the end of any 12-month period if such period is a fiscal year) (i) commencing
at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering, and
(ii) if not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company, after the effective date of a
Registration Statement, which statements shall cover said 12-month period.
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<PAGE> 11
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing and the Company
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each holder of Registrable Securities will be deemed to have
agreed by virtue of its acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the occurrence of any event of the
kind described in Section 6(c)(ii), 6(c)(iii), 6(c)(v), 6(c)(vi) or 6(c)(vii)
hereof, such holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(k) hereof, or until it is advised in writing (the
"Advice) by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus.
In the event the Company shall give any such notice, the time period prescribed
in Section 3(a) hereof will be extended by the number of days during the time
period from and including the date of the giving of such notice to and including
the date when each seller of Registrable Securities covered by such Registration
Statement shall have received (x) the copies of the supplemented or amended
Prospectus contemplated by Section 6(k) hereof or (y) the Advice.
7. REGISTRATION EXPENSES. (a) All Registration Expenses will be borne
by the Company whether or not any of the Registration Statements become
effective. "Registration Expenses" will mean all fees and expenses incident to
the performance of or compliance with this Agreement by the Company, including,
without limitation, (i) all registration and filing fees (including without
limitation fees and expenses (x) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (y) of compliance
with securities or "blue sky" laws (including without limitation fees and
disbursements of counsel for the underwriters or selling holders in connection
with "blue sky" qualifications of the Registrable Securities and determination
of the eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or holders of a
majority of the Registrable Securities being sold may designate)), (ii) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depository Trust
Company and of printing prospectuses if the printing of prospectuses is
requested by the holders of a majority of the Registrable Securities included in
any Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company, the Special Counsel for
the sellers of the Registrable Securities, and counsel for the underwriters (v)
fees and disbursements of all independent certified public accountants referred
to in Section 6(n)(iii) hereof (including the expenses of any special audit and
"comfort" letters required by or incident to such performance), (vi) fees and
expenses of any "qualified independent underwriter" or other independent
appraiser participating in an offering pursuant to Section 3 of Schedule E to
the By-laws of the National Association of Securities Dealers, Inc., (vii)
Securities Act liability insurance if the Company so desires such insurance, and
(viii) fees
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<PAGE> 12
and expenses of all other persons retained by the Company, PROVIDED, HOWEVER,
that Registration Expenses will not include fees and expenses of counsel for the
holders of Registrable Securities other than as provided below nor shall it
include underwriting discounts and commissions relating to the offer and sale of
Registrable Securities, all of which shall be borne by such holders. In
addition, the Company will pay its internal expenses (including without
limitation all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange on which similar securities issued by the
Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company.
(b) In connection with any Demand Registration or Piggyback
Registration hereunder, the Company will reimburse the holders of the
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel (the "Special Counsel"),
together with appropriate local counsel, chosen by the holders of a majority of
the Registrable Securities being registered.
8. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. The Company
will, without limitation as to time, indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities registered
pursuant to this Agreement, the officers, directors and agents and employees of
each of them, each person who controls such holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of any such controlling person, from
and against all losses, claims, damages, liabilities, costs (including without
limitation the costs of investigation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based solely upon information furnished in
writing to the Company by such holder expressly for use therein; PROVIDED,
HOWEVER, that the Company will not be liable to any holder of Registrable
Securities to the extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if either (A) (i) such holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such holder of a Registrable Security to the person
asserting the claim from which such Losses arise and (ii) the Prospectus would
have completely corrected such untrue statement or alleged untrue statement or
such omission or alleged omission; or (B) such untrue statement or alleged
untrue statement, omission or alleged omission is completely corrected in an
amendment or supplement to the Prospectus previously furnished by or on behalf
of the Company with copies of the Prospectus as so amended or supplemented, and
such holder thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of a Registrable Security to
the person asserting the claim from which such Losses arise.
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<PAGE> 13
The rights of any holder of Registrable Securities hereunder
will not be exclusive of the rights of any holder of Registrable Securities
under any other agreement or instrument of any holder of Registrable Securities
to which the Company is a party. Nothing in such other agreement or instrument
will be interpreted as limiting or otherwise adversely affecting a holder of
Registrable Securities hereunder and nothing in this Agreement will be
interpreted as limiting or otherwise adversely affecting the holder of
Registrable Securities' rights under any such other agreement or instrument,
provided, however, that no Indemnified Party will be entitled hereunder to
recover more than its indemnified Losses.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In connection
with any Registration Statement in which a holder of Registrable Securities is
participating, such holder of Registrable Securities will furnish to the Company
in writing such information as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus and will severally
indemnify, to the fullest extent permitted by law, the Company, its directors
and officers, agents and employees, each person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
persons, from and against all Losses arising out of or based upon any untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or arising out of or based upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such holder to the Company expressly for use in such Registration Statement or
Prospectus and was relied upon by the Company in the preparation of such
Registration Statement, Prospectus or preliminary prospectus. In no event will
the liability of any selling holder of Registrable Securities hereunder be
greater in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any person shall become
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; PROVIDED, HOWEVER, that the failure to so notify
the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) will be paid to the indemnified party, as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). The
indemnifying party will not consent to entry of any judgment or enter into any
settlement or otherwise seek to terminate any action or proceeding in which any
indemnified party is or could be a party and as to which indemnification or
contribution could be sought by such indemnified party under this Section 8,
unless such judgment, settlement or other termination
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<PAGE> 14
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release, in form and substance
satisfactory to the indemnified party, from all liability in respect of such
claim or litigation for which such indemnified party would be entitled to
indemnification hereunder.
(d) CONTRIBUTION. If the indemnification provided for in this Section 8
is unavailable to an indemnified party under Section 8(a) or 8(b) hereof in
respect of any Losses or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, will, jointly and severally, contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party or indemnifying parties, on the one hand, and
such indemnified party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses will be deemed to include any legal or other fees or expenses
incurred by such party in connection with any action or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by PRO
RATA allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Section 8(d), an indemnifying
party that is a selling holder of Registrable Securities will not be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities sold by such indemnifying party and distributed to
the public exceeds the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement
obligations of the Company hereunder will be in addition to any liability the
Company may otherwise have hereunder, under the Investment Agreement or
otherwise. The provisions of this Section 8 will survive so long as Registrable
Securities remain outstanding, notwithstanding any transfer of the Registrable
Securities by any holder thereof or any termination of this Agreement.
9. RULE 144. The Company will file the reports required to be filed by
it under the Securities Act and the Exchange Act, and will cooperate with any
holder of Registrable
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<PAGE> 15
Securities (including without limitation by making such representations as any
such holder may reasonably request), all to the extent required from time to
time to enable such holder to sell Registrable Securities without registration
under the Securities Act within the limitations of the exemptions provided by
Rule 144. Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has complied
with such filing requirements. Notwithstanding the foregoing, nothing in this
Section 9 will be deemed to require the Company to register any of its
securities under any section of the Exchange Act.
10. UNDERWRITTEN REGISTRATIONS. If any of the Registrable Securities
covered by any Demand Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the holder of Registrable Securities
that gave the Demand Notice with respect to such offering; PROVIDED, that such
investment banker or manager shall be reasonably satisfactory to the Company. If
any Piggyback Registration is an underwritten offering, the Company will have
the right to select the investment banker or investment bankers and managers to
administer the offering.
11. MISCELLANEOUS. (a) REMEDIES. In the event of a breach by the
Company of its obligations under this Agreement, each holder of Registrable
Securities, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it will
waive the defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date
hereof, and will not, on or after the date hereof, enter into any agreement with
respect to its securities which is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of holders of a
majority of the then-outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least 51% of the
Registrable Securities being sold by such holders; PROVIDED, HOWEVER, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
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<PAGE> 16
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and will be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier,
or (iii) one business day after being deposited with a reputable next-day
courier, postage prepaid, to the parties as follows:
(x) if to the Company, initially at 5895 Windward Parkway,
Suite 220, Alpharetta, Georgia 30202-4128, Telecopier Number (770)
442-6655, Attention: Chief Executive Officer, and thereafter at such
other address, notice of which is given to the holders of Registrable
Securities in accordance with the provisions of this Section 11(d);
(y) if to Purchaser, initially at 4200 Texas Commerce Tower
West, 2200 Ross Avenue, Dallas, Texas 75201, Telecopier number (214)
220-4949, Attention: Daniel A. Decker, and thereafter at such other
address, notice of which is given in accordance with the provisions of
Section 11(d); and
(z) if to any other holder of Registrable Securities, at the
most current address given by such holder to the Company in accordance
with the provisions of this Section 11(d).
(e) OWNER OF REGISTRABLE SECURITIES. The Company will maintain, or will
cause its registrar and transfer agent to maintain, a stock book with respect to
the Common Stock, in which all transfers of Registrable Securities of which the
Company has received notice will be recorded. The Company may deem and treat the
person in whose name Registrable Securities are registered in the stock book of
the Company as the owner thereof for all purposes, including without limitation
the giving of notices under this Agreement.
(f) SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and will inure to the benefit of each holder of any Registrable Securities. The
Company may not assign its rights or obligations hereunder without the prior
written consent of each holder of any Registrable Securities. Notwithstanding
the foregoing, no transferee will have any of the rights granted under this
Agreement (i) until such transferee shall have acknowledged its rights and
obligations hereunder by a signed written statement of such transferee's
acceptance of such rights and obligations or (ii) if the transferor notifies the
Company in writing on or prior to such transfer that the transferee shall not
have such rights.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same instrument.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
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<PAGE> 17
(i) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
(j) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein will remain in full force and effect and will in
no way be affected, impaired or invalidated, and the parties hereto will use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the registration rights granted by the Company with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such registration rights.
(l) ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, will be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
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<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: _________________________________
Name: ___________________________
Title: __________________________
MEI HOLDINGS, L.P.
By: MEI GenPar, L.P., its general partner
By: HH GenPar Partners, its general partner
and co-manager
By: Hampstead Associates, Inc., its general
partner and co-manager
By: ________________________________
Name: __________________________
Title: _________________________
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<PAGE> 1
Exhibit 7
EXHIBIT F
to Investment Agreement
_______ __, 1996
Mountasia Entertainment
International, Inc.
5895 Windward Parkway
Suite 220
Alpharetta, Georgia 30202-4128
Ladies and Gentlemen:
The undersigned is the beneficial owner of a substantial
number of shares of Common Stock ("Common Shares") of Mountasia Entertainment
International, Inc. (the "Company"). In connection with a substantial capital
investment in the Company, the undersigned understands that the prospective
investor has expressed concerns that there are presently no restrictions on the
ability of the undersigned, a senior executive officer of the Company, to sell
Common Shares beneficially owned by the undersigned. Accordingly, to induce such
investor to make such investment, the undersigned hereby irrevocably undertakes
not to offer for sale, agree to sell or otherwise sell or transfer any Common
Shares now or hereafter beneficially owned by him or her prior to June 30, 1998,
provided, however, that (a) the foregoing undertaking will not apply to such
sales and transfers (i) effected after involuntary termination of employment,
(ii) to a financial institution pursuant to the foreclosure on bona fide
third-party debt of any of the undersigned, (iii) by the estate or guardian of
any of the undersigned upon the death or permanent disability of any of the
undersigned, and (b) following the disposition by the prospective investor of at
least 25% of the Common Shares beneficially owned by it at the time of its
initial investment in the Company, this undertaking will terminate without
further action as to a like percentage of the undersigned's holdings of Common
Stock, or (iv) pursuant to a tender or exchange offer, merger, consolidation or
other form of business combination transaction to which the Company is a party
or its securities are subject.
_____________________________
Julia Demerau
<PAGE> 2
_______ __, 1996
Mountasia Entertainment
International, Inc.
5895 Windward Parkway
Suite 220
Alpharetta, Georgia 30202-4128
Ladies and Gentlemen:
The undersigned is the beneficial owner of a substantial
number of shares of Common Stock ("Common Shares") of Mountasia Entertainment
International, Inc. (the "Company"). In connection with a substantial capital
investment in the Company, the undersigned understands that the prospective
investor has expressed concerns that there are presently no restrictions on the
ability of the undersigned, a senior executive officer of the Company, to sell
Common Shares beneficially owned by the undersigned. Accordingly, to induce such
investor to make such investment, the undersigned hereby irrevocably undertakes
not to offer for sale, agree to sell or otherwise sell or transfer any Common
Shares now or hereafter beneficially owned by him or her prior to June 30, 1998,
provided, however, that (a) the foregoing undertaking will not apply to such
sales and transfers (i) effected after involuntary termination of employment,
(ii) to a financial institution pursuant to the foreclosure on bona fide
third-party debt of any of the undersigned, (iii) by the estate or guardian of
any of the undersigned upon the death or permanent disability of any of the
undersigned, and (b) following the disposition by the prospective investor of at
least 25% of the Common Shares beneficially owned by it at the time of its
initial investment in the Company, this undertaking will terminate without
further action as to a like percentage of the undersigned's holdings of Common
Stock, or (iv) pursuant to a tender or exchange offer, merger, consolidation or
other form of business combination transaction to which the Company is a party
or its securities are subject.
_____________________________
L. Scott Demerau
