<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ________)*
Mountasia Entertainment International, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, no par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
624547-10-5
----------------------------------------------------
(CUSIP Number)
Edward J. Hardin, Esq.
Rogers & Hardin
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303 404/522-4700
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(Name, Address and Telephone Number of Person Authorized to
receive Notices and Communications)
September 17, 1996
----------------------------------------------------
(Date of Event which Requires filing 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 the statement[ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 624547-10-5 PAGE 2 OF 9 PAGES
<TABLE>
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
L. SCOTT DEMERAU SSN# ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OF PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
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7 SOLE VOTING POWER
NUMBER OF 1,179,895
SHARES ----------------------------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
1,179,895
----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ------------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,179,895
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
PURSUANT TO RULE 13D-4, L. SCOTT DEMERAU DISCLAIMS ANY BENEFICIAL OWNERSHIP OF SHARES OWNED
DIRECTLY BY JULIA E. DEMERAU.
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.57%
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14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 624547-10-5 PAGE 3 OF 9 PAGES
<TABLE>
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JULIA E. DEMERAU SSN# ###-##-####
- ------------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OF PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
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7 SOLE VOTING POWER
NUMBER OF 627,829
SHARES ----------------------------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
627,829
----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ------------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
627,829
- ------------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
PURSUANT TO RULE 13D-4, JULIA E. DEMERAU DISCLAIMS ANY BENEFICIAL OWNERSHIP OF SHARES OWNED
DIRECTLY BY L. SCOTT DEMERAU.
- ------------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.43%
- ------------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
CUSIP NO. 624547-10-5 PAGE 4 OF 9 PAGES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the shares of common stock, no par value
per share (the "Common Stock"), of Mountasia Entertainment International, Inc.
(the "Issuer"), together with one Common Stock purchase right for each share of
Common Stock, which right was distributed by the Issuer pursuant to that
certain Rights Agreement dated as of April 24, 1996 between the Issuer and
Continental Stock Transfer & Trust Company, a copy of which has been filed as
an exhibit to the Issuer's Current Report on Form 8-K filed with the Commission
on May 7, 1996. Such Common Stock purchase rights shall be included in the
term "Common Stock" for purposes of this Schedule 13D. The address of the
principal executive offices of the Issuer is 5895 Windward Parkway, Suite 220,
Alpharetta, Georgia 30202-4182.
ITEM 2. IDENTITY AND BACKGROUND
(a) Name
1. L. Scott Demerau ("Mr. Demerau")
2. Julia E. Demerau ("Mrs. Demerau")
Mr. Demerau and Mrs. Demerau (occasionally referred to herein
collectively as the "Reporting Persons") each disclaim any
obligation to file this Schedule 13D pursuant to Section 13(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 13d-1 thereunder, because each of
the Reporting Persons now owns less than five percent of the
outstanding Common Stock of the Issuer. This Schedule 13D,
however, is being filed merely as a protective filing in
response to concerns regarding any possible noncompliance with
Section 13(d) of the Exchange Act and Rule 13d-1 thereunder.
(b) Address
1. 5895 Windward Parkway
Suite 220
Alpharetta, Georgia 30202-4182
2. 5895 Windward Parkway
Suite 220
Alpharetta, Georgia 30202-4182
(c) Present Principal Occupation or Employment
1. Mr. Demerau is Chief Executive Officer and President
of the Issuer.
2. Mrs. Demerau is an Executive Vice President and
Director of the Issuer.
(d) Neither of the Reporting Persons has during the past five
years been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) Neither of the Reporting Persons has during the past five
years been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or
final order enjoining future
<PAGE> 5
CUSIP NO. 624547-10-5 PAGE 5 OF 9 PAGES
violations of, prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Citizenship:
1. Mr. Demerau is a United States citizen.
2. Mrs. Demerau is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Reporting Persons acquired shares of Common Stock pursuant to an
exchange offer, effective as of July 1, 1991, whereby four closely-held
corporations and four limited partnerships that the Reporting Persons had
organized during the preceding five years combined to form the Issuer
(hereinafter referred to as the "Consolidation"). Specifically, Mr. Demerau
received 442,272 shares of Common Stock and Mrs. Demerau received 415,207
shares of Common Stock by virtue of the Consolidation. In addition, the
Reporting Persons remained officers, directors and/or controlling shareholders
of various corporations that either (i) owned directly or (ii) were general
partners of limited partnerships that owned directly, an additional 633,137
shares of Common Stock. At the time, the shares of Common Stock beneficially
owned, directly and indirectly, by Mr. Demerau totalled 1,082,723 shares of
Common Stock and represented 17.3% of the total outstanding shares of Common
Stock, while the shares of Common Stock beneficially owned, directly and
indirectly, by Mrs. Demerau totalled 1,055,659 shares of Common Stock and
represented 16.9% of the total outstanding shares of Common Stock. Thereafter,
on November 3, 1993, the Issuer consummated its initial public offering of
Common Stock registered under the Securities Act of 1933, as amended, and the
Reporting Persons filed a Schedule 13G in accordance with the provisions of
Rule 13d-1, promulgated under the Securities Exchange Act of 1934, as amended.
The following changes occurred to each of the Reporting Persons's
ownership of shares of Common Stock since the date each of the Reporting
Persons first acquired such shares:
(a) On March 1, 1993, a stock option granted to Mr. Demerau
under the Issuer's 1993 Incentive Stock Option Plan (the "Plan")
vested. Such stock option, which remained unexercised, granted Mr.
Demerau the right to purchase 7,315 shares of Common Stock until March
1, 1998 at an exercise price of $7.00 per share. In addition, a stock
option granted to Mr. Demerau under the Plan for the purchase of 7,315
shares of Common Stock until March 1, 1998 at an exercise price of
$7.00 per share vested on March 1, 1994, but remained unexercised. On
June 1, 1994, one of the limited partnerships, the corporate general
partner of which Mr. Demerau was a control person, sold 90,000 shares
of Common Stock. On March 1, 1995, a stock option granted to Mr.
Demerau under the Plan for the purchase of 7,315 shares of Common
Stock until March 1, 1998 at an exercise price of $7.00 per share
vested, but remained unexercised. On March 15, 1995, Mr. Demerau
resigned as an officer and director and was no longer a controlling
shareholder of each of the corporate general partners of various
limited partnerships which, in the aggregate, owned 543,137 shares of
Common Stock, and Mr. Demerau disclaimed beneficial ownership of such
shares at that time. On September 30, 1995, Mr. Demerau tendered
41,637 shares of Common Stock to the Issuer at a price of $7.14 per
share in satisfaction of a loan made by the Issuer to Mr. Demerau to
assist Mr. Demerau in satisfying a margin call on his shares of Common
Stock. On March 1, 1996, a stock option granted to Mr. Demerau under
the Plan for the purchase of 7,315 shares of Common Stock until March
1, 1998 at an exercise price of $7.00 per share vested, but remained
unexercised. In January 1996, Mr. Demerau entered into an Employment
Agreement with the Issuer which includes stock options granting Mr.
Demerau the right to acquire 350,000 shares of Common Stock at an
exercise price of $7.00 per share. The options were granted under the
Plan, become exercisable in 50,000 share increments, of which the
first increment became exercisable as of January 1, 1996, and expire
on January 1, 2006. Finally, on September 17, 1996, Mr. Demerau
executed and delivered to the
<PAGE> 6
CUSIP NO. 624547-10-5 PAGE 6 OF 9 PAGES
Issuer that certain Share Purchase Agreement dated September 17,
1996 between Mr. Demerau and the Issuer, a copy of which is attached
hereto as Exhibit "A" and incorporated herein by this reference,
whereby Mr. Demerau purchased, and the Issuer issued and sold to Mr.
Demerau, 750,000 previously unissued shares of the Common Stock. As
consideration for the purchase of such shares of Common Stock, Mr.
Demerau (i) surrendered to the Issuer all of his unexercised stock
options and other rights to purchase Common Stock by executing and
delivering to the Issuer a Cancellation Agreement, a copy of which is
attached hereto as Exhibit "B" and incorporated herein by this
reference; (ii) executed and delivered to the Issuer a Promissory Note
in the principal amount of $1,996,875.00, a copy of which is attached
hereto as Exhibit "C" and incorporated herein by this reference; and
(iii) executed and delivered to the Issuer a Pledge Agreement, a copy
of which is attached hereto as Exhibit "D" and incorporated herein by
this reference, to secure the repayment of Mr. Demerau's Promissory
Note.
(b) On March 1, 1993, a stock option granted to Mrs. Demerau
under the Plan for the purchase of 7,315 shares of Common Stock at an
exercise price of $7.00 per share until March 1, 1998 vested, but
remained unexercised. In addition, a stock option granted to Mrs.
Demerau under the Plan for the purchase of 7,315 shares of Common
Stock until March 1, 1998 at an exercise price of $7.00 per share
vested on March 1, 1994, but remained unexercised. On June 1, 1994,
one of the limited partnerships, the corporate general partner of
which Mrs. Demerau was a control person, sold 90,000 shares of Common
Stock. On March 1, 1995, a stock option granted to Mrs. Demerau under
the Plan for the purchase of 7,315 shares of Common Stock at an
exercise price of $7.00 per share until March 1, 1998 vested, but
remained unexercised. On March 15, 1995, Mrs. Demerau resigned as an
officer and director and was no longer a controlling shareholder of
each of the corporate general partners of various limited partnerships
which, in the aggregate, owned 543,137 shares of Common Stock, and
Mrs. Demerau disclaimed beneficial ownership of such shares at that
time. On September 30, 1995, Mrs. Demerau tendered 41,638 shares of
Common Stock to the Issuer at a price of $7.14 per share in
satisfaction of a loan made by the Issuer to Mrs. Demerau to assist
Mrs. Demerau in satisfying a margin call on his shares of Common
Stock. On March 1, 1996, a stock option granted to Mrs. Demerau under
the Plan for the purchase of 7,315 shares of Common Stock at an
exercise price of $7.00 per share until March 1, 1998 vested, but
remained unexercised. In January 1996, Mrs. Demerau entered into an
Employment Agreement with the Issuer which includes stock options
granting Mrs. Demerau the right to acquire 150,000 shares of Common
Stock at an exercise price of $7.00 per share. The options were
granted under the Plan, become exercisable in 30,000 share increments,
of which the first increment became exercisable as of January 1, 1996,
and expire on January 1, 2006. Finally, on September 17, 1996, Mrs.
Demerau executed and delivered to the Issuer that certain Share
Purchase Agreement dated September 17, 1996 between Mrs. Demerau
and the Issuer, a copy of which is attached hereto as Exhibit "E" and
incorporated herein by this reference, whereby Mrs. Demerau purchased,
and the Issuer issued and sold to Mrs. Demerau, 225,000 previously
unissued shares of the Common Stock. As consideration for the
purchase of such shares of Common Stock, Mrs. Demerau (i) surrendered
to the Issuer all of her unexercised stock options and other rights to
purchase Common Stock by executing and delivering to the Issuer a
Cancellation Agreement, a copy of which is attached hereto as Exhibit
"F" and incorporated herein by this reference; (ii) executed and
delivered to the Issuer a Promissory Note in the principal amount of
$599,062.50, a copy of which is attached hereto as Exhibit "G" and
incorporated herein by this reference; and (iii) executed and
delivered to the Issuer a Pledge Agreement, a copy of which is
attached hereto as Exhibit "H" and incorporated herein by this
reference, to secure the repayment of Mrs. Demerau's Promissory Note.
ITEM 4. PURPOSE OF THE TRANSACTION
The responses to Items 2(a) and 3 are incorporated herein by this
reference.
<PAGE> 7
CUSIP NO. 624547-10-5 PAGE 7 OF 9 PAGES
The Reporting Persons acquired shares of Common Stock in connection
with the Consolidation, the vesting of certain stock options granted by the
Issuer under the Plan and the purchase of shares of Common Stock as of
September 17, 1996. The Reporting Persons surrendered all of the Reporting
Persons' stock options and other rights to purchase shares of Common Stock as
partial consideration for the purchase of the shares of Common Stock purchased
as of September 17, 1996. Other than as provided herein, the Reporting Persons
presently have no plans or proposals which relate to or would otherwise result
in:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number or term of
directors or fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure, including, but not limited to, if the Issuer is a
registered closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by section 13 of
the Investment Company Act of 1940;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or
(j) Any action similar to those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) See Rows 7 through 11 and 13, inclusive, of the Cover Page
hereof.
(b) See Rows 7 through 11 and 13, inclusive, of the Cover Page
hereof.
(c) Except as otherwise disclosed in this Schedule 13D, the
Reporting Persons have not effected any transaction in shares of the Common
Stock during the preceding 60 days.
(d) The Reporting Persons have the sole right to receive the
dividends or the proceeds from the sale of shares reported on the cover pages
of this Schedule 13D.
(e) Each of the Reporting Persons ceased to be the beneficial
owners of more than five percent of the shares of Common Stock on March 15,
1995, the date the Reporting Persons resigned as officers and
<PAGE> 8
CUSIP NO. 624547-10-5 PAGE 8 OF 9 PAGES
directors and ceased to be controlling shareholders of various corporate
general partners of limited partnerships owning 543,137 shares of Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The responses to Item 3 are incorporated herein by this reference.
The Reporting Persons executed and delivered a Credit Agreement, a Promissory
Note and a Stock Pledge Agreement, each dated as of October 6, 1995, between
the Reporting Persons and NationsBank of Georgia, N.A., a national banking
association (the "Bank"), whereby the Bank loaned to the Reporting Persons
$1,600,000 (the "Loan"), and the Reporting Persons granted the Bank a first
priority security interest in 857,479 shares of Common Stock beneficially owned
by the Reporting Persons as collateral for the Loan. The Reporting Persons
also executed and delivered a Collateral Maintenance Agreement dated as of
October 6, 1995, which guarantees that the outstanding principal balance of the
Loan will never equal or exceed an amount which is equal to 38% of the
Collateral Value (as defined in the Collateral Maintenance Agreement) of such
shares. Copies of the Credit Agreement, the Promissory Note, the Stock Pledge
Agreement and the Collateral Maintenance Agreement are attached hereto as
Exhibits "I", "J", "K" and "L", respectively. Other than as set forth in this
Item 6, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the Reporting Persons or between the Reporting
Persons and any person with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(a) Share Purchase Agreement dated September 17, 1996 between
L. Scott Demerau and the Issuer.
(b) Cancellation Agreement dated September 17, 1996 between
L. Scott Demerau and the Issuer.
(c) Promissory Note dated September 17, 1996 between L. Scott
Demerau and the Issuer.
(d) Pledge Agreement dated September 17, 1996 between L.
Scott Demerau and the Issuer.
(e) Share Purchase Agreement dated September 17, 1996 between
Julia E. Demerau and the Issuer.
(f) Cancellation Agreement dated September 17, 1996 between
Julia E. Demerau and the Issuer.
(g) Promissory Note dated September 17, 1996 between Julia E.
Demerau and the Issuer.
(h) Pledge Agreement dated September 17, 1996 between Julia
E. Demerau and the Issuer.
(i) Credit Agreement dated as of October 6, 1995 between the Reporting
Persons and NationsBank of Georgia, N.A.
(j) Promissory Note dated as of October 6, 1995 between the Reporting
Persons and NationsBank of Georgia, N.A.
(k) Stock Pledge Agreement dated as of October 6, 1995 between the
Reporting Persons and NationsBank of Georgia, N.A.
(l) Collateral Maintenance Agreement effective as of October 6, 1995
between the Reporting Persons and NationsBank of Georgia, N.A.
<PAGE> 9
CUSIP NO. 624547-10-5 PAGE 9 OF 9 PAGES
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned hereby certify that the information set forth in this statement
is true, complete and correct.
Dated: 10/9/96 /s/ L. Scott Demerau
----------------------- ----------------------------------------
L. SCOTT DEMERAU
Dated: 10/9/96 /s/ Julia E.Demerau
----------------------- ----------------------------------------
JULIA E. DEMERAU
<PAGE> 10
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT (this "Agreement") effective executed
this 17th day of September, 1996 by and between Mountasia Entertainment
International, Inc., a Georgia corporation (the "Company"), and L. Scott Demerau
(the "Executive").
RECITALS:
A. The Executive is a key employee of the Company.
B. The Company desires to issue and sell certain shares
of the Common Stock of the Company, no par value (the "Common Stock"), to the
Executive and to lend the Executive the purchase price to be paid for such
shares of Common Stock and the Executive desires to purchase such shares of
Common Stock and to accept such financing.
C. As a condition to entering into this Agreement, the
Company has required that the Executive surrender, and the Executive has agreed
to surrender, to the Company all unexercised options, if any, or other rights,
if any, to receive or purchase shares of Common Stock previously issued to the
Executive by the Company (collectively, the "Company Options").
D. As a condition to entering into this Agreement and to
evidence the Executive's obligation for the payment for the purchase of shares
of Common Stock as herein provided, the Company also has required that the
Executive enter into, and the Executive also has agreed to enter into, the
Promissory Note (the "Note") and the Pledge Agreement (the "Pledge Agreement")
attached hereto as Exhibits A and B, respectively.
E. The shares of Common Stock purchased hereby are
intended to be subject to a "substantial risk of forfeiture" within the meaning
of that term under Section 83 of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. Purchase of Shares; Payment of Aggregate Purchase
Price; Surrender of Company Options; Delivery of Shares. (a) The Company has
authorized the issuance and sale to the Executive hereunder of 750,000 newly
issued shares of Common Stock (such shares of Common Stock, in the aggregate,
the "Shares"). On the terms and subject to the conditions hereinafter set
forth, on the date hereof (the "Issuance Date"), the Company will issue and
<PAGE> 11
sell to the Executive, and the Executive will purchase from the Company, for
the aggregate purchase price of $1,996,875.00 (the "Aggregate Purchase Price"),
the Shares.
(b) On the Issuance Date, the Aggregate Purchase
Price will be payable as follows: the Executive will surrender and deliver the
Company Options, if any, to the Company and, by such surrender and delivery,
waive all the rights, title and interest in and to such Options; the Executive
will duly execute and deliver the Note and the Pledge Agreement to the Company;
and the Company will apply the proceeds of the Note to payment of the Aggregate
Purchase Price.
(c) As soon as practicable following its receipt
of the Aggregate Purchase Price, the Company will issue to the Executive
certificates evidencing the Shares. Such certificates, together with a stock
power that will be endorsed in blank by the Executive with respect to the
Shares, will be held in custody by the Company until the restrictions on
transfer imposed hereunder, and described in Section 2 hereof, lapse. Upon the
release of restrictions of the Shares in accordance with Section 2 hereof, the
Company will, subject to Section 6 hereof, deliver to the Executive one or more
new certificates, evidencing the releasing of restriction on such Shares and
the lapse of the restrictions on transfer imposed hereunder, but such Shares
will in all events be subject to the Pledge Agreement.
2. Restrictions; Certain Conversions. (a) Initially,
all Shares will be restricted so as to be not subject to alienation or transfer
by the Executive (such Shares, "Restricted Shares") and will be subject to the
Company's repurchase option set forth herein. Except as otherwise provided in
Sections 2(b) and 3 hereof and in the Pledge Agreement, Restricted Shares will
no longer be so restricted or subject to such repurchase option (such Shares,
"Unrestricted Shares") cumulatively to the extent of 15,625 Restricted Shares,
being 1/48th of all Shares, on each monthly anniversary of the Date of
Issuance, provided that the Executive remains in the continuous full-time
employment of the Company until such anniversary and no default or event of
default has occurred under the Note or the Pledge Agreement. If the Executive
ceases to be so employed for any reason (including voluntary termination of
employment by the Executive) or without reason, no further Restricted Shares
will become Unrestricted Shares. For purposes of this Agreement, the
continuous full-time employment of the Executive with the Company will not be
deemed to have been interrupted, and the Executive will not be deemed to have
ceased to be a full-time employee of the Company, by reason of the transfer of
his or her employment among the Company and its Affiliates or a leave of
absence specifically approved by the Board of Directors of the Company (the
"Board").
(b) Notwithstanding the provisions of Section
2(a) hereof, and except as otherwise provided in Section 3 hereof and in the
Pledge Agreement, if the Executive's full-time
-2-
<PAGE> 12
employment with the Company terminates prior to the 48-month anniversary of the
Date of Issuance by reason of his or her death or total and permanent
disability, all Restricted Shares hereunder will become, without further
action, Unrestricted Shares.
(c) In connection with any merger, consolidation
or other transaction involving the conversion or exchange of Common Stock of
the Company (a "Capital Event"), (i) all Unrestricted Shares hereunder will be
treated like any other then-outstanding shares of Common Stock of the Company
and (ii) all Restricted Shares (A) will be converted or exchanged into the
securities hereunder and other property (other than cash) into which
then-outstanding shares of Common Stock of the Company is converted or
exchanged (such securities and other property to be thereafter the "Shares" for
purposes hereof and of the Note and Pledge Agreement) on the same basis as
applicable to then-outstanding shares of Common Stock of the Company and (B)
any cash into which then-outstanding shares of Common Stock of the Company is
converted or exchanged will be applied to pay amounts then outstanding under
the Note, with the balance (if any) to be paid over to the Executive.
3. Repurchase of the Shares. Without limiting the
generality or effect of any other provision hereof, upon the termination of the
Executive's full-time employment with the Company for any reason, the Company
will have the right, in its sole and absolute discretion, to purchase from the
Executive (the "Company Call"), and the Executive will have the right, in his
sole and absolute discretion, to sell to the Company in the circumstances set
forth in Section 3(a) below, (the "Executive Put"), all or part of the
Restricted Shares in accordance with and to the extent provided in this Section
3. Each purchase of Restricted Shares by the Company under this Section 3 will
be in consideration of the Company's payment of the applicable amount in cash
or through a reduction in the amounts owing under the Note by the applicable
amount; provided, however, in certain circumstances described below, the
Aggregate Purchase Price will be allocated between Restricted and Unrestricted
Shares.
(a) Termination by Company Without Cause. If
the Executive's employment is terminated by the Company where Cause
does not exist, upon exercise of the Company Call or the Executive
Put, as the case may be, an amount equal to the portion of the
Aggregate Purchase Price attributable to the Restricted Shares which
the Company has elected to repurchase or which the Executive has
elected to have the Company repurchase, plus interest on such amount
from the Issuance Date to the date of repurchase calculated in the
manner and using the rate of interest specified in the Note (the
"Repurchase Price"), will be deemed payable to the Executive and will
be applied by the Company against any amounts then due under the Note
to be paid or prepaid to the Company (as applicable) to the extent so
applied, with any
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<PAGE> 13
excess amount to be payable by the Company to the Executive in cash.
(b) Termination by Company With Cause or Voluntary
Termination by the Executive. If the Executive's employment is
terminated by the Company at any time where Cause exists, or the
Executive voluntarily terminates his employment with the Company at
any time, upon exercise of the Company Call, an amount equal to the
lesser of (i) the then Fair Market Value of the Restricted Shares and
(ii) the Repurchase Price determined under Section 3(a) will be
payable to the Executive and will be applied by the Company against
any amounts then due under the Note and to be paid or prepaid to the
Company (as applicable) to the extent so applied, with any excess
amount to be payable by the Company to the Executive in cash.
(c) Election and Consummation of Share Purchases Under
This Section 3.
(i) The exercise of the Executive Put or the Company
Call under this Section 3 must be effected by the Executive or
the Company, as the case may be, giving written notice to the
other party within 15 calendar days after the date of the
Executive's termination of employment. Such notice must
specify the Restricted Shares to be repurchased and the price
therefor.
(ii) Any certificate evidencing Shares to be
purchased by the Company and which are not then held in
custody by the Company will promptly be returned by the
Executive to the Company.
(iii) The Executive understands and acknowledges
that he or she will not be entitled to any payment,
reimbursement or compensation in respect of any Restricted
Shares repurchased hereunder except as expressly provided
herein. For purposes of the foregoing, the "Fair Market
Value" of Restricted Shares will be the "Average Stock Price"
(as defined below) of the Company's Common Stock for the 15
trading days immediately preceding the date on which Executive
terminates employment with the Company. Average Stock Price
means, the closing price on the principal securities market on
which Common Stock is then traded for each such day as
reported in the Wall Street Journal for the next trading day.
4. Compliance with Law. The Company will make
reasonable efforts to comply with all applicable securities laws in connection
with the sale of the Shares hereunder to the Executive; provided, however,
that, notwithstanding any other provision of this Agreement, the Shares may not
be sold or
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<PAGE> 14
transferred by the Executive if such action would result in a violation of any
such laws.
5. Transferability. Except as otherwise provided in the
Pledge Agreement, prior to the release of restrictions of the Shares in
accordance with Section 2 hereof, the Executive will not make, agree to make or
offer to make any sale, assignment, transfer, exchange, pledge, hypothecation
or encumbrance of any such Shares, other than a disposition by will or
intestate distribution.
6. Withholding Taxes. If the Company is required to
withhold any tax in connection with any transfer of or release of restrictions
on the Shares or any election by the Executive with respect to such shares, the
Executive will pay the tax or make provisions that are satisfactory to the
Company for the payment thereof. The Company may defer any transfer of Shares
or delivery of certificates evidencing such shares contemplated hereunder until
the Executive has paid such tax or made such provisions.
7. Right to Terminate Employment and Adjust
Compensation. No provision of this Agreement will limit in any way whatsoever
any right that the Company or an Affiliate may otherwise have to terminate the
employment or adjust the compensation of the Executive at any time.
8. Relation to Other Benefits. Any economic or other
benefit to the Executive under this Agreement or the Note will not be taken
into account in determining any benefits to which the Executive may be entitled
under any employee benefit or compensation plan or program maintained by the
Company or an Affiliate and will not affect the amount of any life insurance
coverage available to any beneficiary under any life insurance plan covering
employees of the Company or an Affiliate.
9. Amendments. This Agreement may be amended at any
time by a written instrument executed by the Executive and an authorized
officer or representative of the Company.
10. Severability. In the event that one or more of the
provisions of this Agreement shall be invalidated for any reason by a court of
competent jurisdiction, any provision so invalidated will be deemed to be
separable from the other provisions hereof, and the remaining provisions hereof
will continue to be valid and fully enforceable.
11. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof confirmed), or five
business days after having been mailed by United States registered or
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<PAGE> 15
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier
service such as Federal Express or UPS, addressed to the Company (to the
attention of the Chairman of the Board of the Company) at its principal
executive office and to the Executive at his principal residence, or to such
other address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
12. Governing Law. This Agreement is made under, and
will be construed in accordance with, the laws of the State of Georgia.
13. Definitions. As used in this Agreement:
(a) "Affiliate" means a corporation, partnership,
joint venture, unincorporated association or other entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with, the Company.
(b) "Cause" means that, prior to the termination
of the Executive's employment, the Board will have determined that the
Executive shall have committed:
(1) an act of fraud, embezzlement or
theft in connection with his duties or in the course of his employment
with the Company or any Affiliate;
(2) wrongful damage to property of the
Company or any Affiliate;
(3) wrongful disclosure of any
confidential or proprietary information of the Company or any
Affiliate;
(4) wrongful engagement in any
Competitive Activity; or
(5) any other act or omission which the
Board determines constitutes a basis for termination of the
Executive's employment.
(c) "Competitive Activity" means the Executive's
participation, without the written consent of Board, in the management of or
service as advisors or consultants to any business enterprise if such enterprise
engages in substantial and direct competition with the Company and such
enterprise's revenues from family entertainment or recreation centers amounted
to at least 25% of such enterprise's net sales for its most recently completely
fiscal year. "Competitive Activity" will not include the mere ownership of less
than 5% of any class of publicly traded securities of any such enterprise and
the exercise of rights appurtenant thereto.
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<PAGE> 16
IN WITNESS WHEREOF, the undersigned have entered into this
Agreement as of the date first written above.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: /s/ Julia E. Demerau
------------------------------------
Name: Julia E. Demerau
Title: Executive Vice President
/s/ L. Scott Demerau
------------------------------------
Executive
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<PAGE> 17
CANCELLATION AGREEMENT
The undersigned, a resident of the State of Georgia and a holder of
unexercised options or other rights (the "Options") to receive or purchase
shares of no-par common stock (the "Common Stock") of Mountasia Entertainment
International, Inc., a Georgia corporation (the "Company"), for and in
consideration of the Company's issuance and sale of Common Stock to the
undersigned pursuant to a Share Purchase Agreement of same date between the
undersigned and the Company, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, agrees as follows:
1. CANCELLATION OF OPTIONS. All Options that have been issued to
the undersigned prior to the date of this Cancellation Agreement are hereby
cancelled, and all instrument(s) granting such Options to the undersigned (the
"Instruments") are hereby terminated, effective as of the date hereof. The
undersigned shall surrender all of the Instruments to the Company immediately;
provided, however, that failure to do so does not effect the cancellation of
the Options and termination of the Instruments under this paragraph or any
other obligations of the undersigned under this Cancellation Agreement.
2. RELEASE. The undersigned hereby releases and forever
discharges the Company from any and all claims, rights or liabilities
whatsoever which the undersigned has, may have, or may claim to have against
the Company arising out of or in any way connected with the Options or the
Instruments.
3. ENTIRE AGREEMENT. This Cancellation Agreement contains the
entire agreement between the undersigned and the Company relating to the
matters provided herein, and no representations, promises or agreements, oral
or otherwise, not expressly contained or incorporated by reference herein shall
be binding on either party.
4. GOVERNING LAW. This Agreement is made and entered into in the
State of Georgia and shall be governed by and construed in accordance with the
laws thereof, without giving effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the undersigned has caused this Cancellation
Agreement to be duly executed and delivered this 17th day of September, 1996.
By: /s/ L. Scott Demerau
----------------------------
Name: L. Scott Demerau
Acknowledged and Agreed:
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ Julia E. Demerau
---------------------------------
Name: Julia E. Demerau
Title: Executive Vice President
<PAGE> 18
EXHIBIT A
PROMISSORY NOTE
$1,996,875.00 Atlanta, Georgia
September 17, 1996
FOR VALUE RECEIVED, the undersigned L. Scott Demerau ("Maker"),
promises to pay to the order of Mountasia Entertainment International, Inc., a
Georgia corporation (the "Company" and, together with any subsequent holder of
this Note, "Holder"), at its principal corporate offices, or at such other
address as Holder may from time to time designate in writing, the principal sum
of $1,996,875.00, together with interest thereon from the date hereof on the
unpaid principal balance at the rate herein provided. Unless otherwise
expressly authorized by Holder in writing, all payments on this Note will be
made (i) in cash in the form of immediately available funds represented by
currency or check or other cash equivalent acceptable to the Holder or (ii) in
whole shares of Common Stock of the Company, the value of which will be
determined based on the "Average Stock Price" (as defined below) of the
Company's Common Stock for the 15 trading days immediately preceding the date
on which the Executive terminates employment with the Company. Average Stock
Price means, the closing price on the principal securities market on which
Common Stock is then traded for each such day as reported in the Wall Street
Journal for the next trading day.
The principal amount of this Note and all accrued and unpaid
interest thereon will become due and be paid on the fifth anniversary of the
date hereof or any earlier date on which such principal and interest become due
under the terms of this Note.
The principal amount from time to time outstanding hereunder
will bear interest at the rate per annum of (i) 7% for the first two years,
(ii) 7.50% for the third year, (iii) 8.00% for the fourth year, and (iv) 8.50%
for the fifth year (the "Interest Rate"). Interest on the unpaid balance of
the Note will be computed on the actual number of days elapsed, and a year of
360 days, and will be compounded annually. Interest will be due at maturity.
At any time and from time to time after the date of this Note,
Maker may prepay this Note, in whole or in part, without penalty or premium,
together with accrued and unpaid interest on the principal amount prepaid. In
addition, at any time and from time to time after the date of this Note, the
principal amount outstanding hereunder may, be deemed, in accordance with
Section 3(b) of that certain Share Purchase Agreement between the Company and
the Maker (the "Share Purchase Agreement"), to be paid or prepaid, in whole or
in part, without
<PAGE> 19
penalty or premium, together with accrued and unpaid interest on the principal
amount deemed to be paid or prepaid.
The principal amount evidenced by this Note, together with
accrued and unpaid interest, may be declared to be, or may automatically
become, immediately due and payable upon the occurrence and during the
continuance of any of the following events (each a "Default"):
(a) Maker fails to make any payment of principal or
interest or other amounts due hereunder when the same becomes due and
payable; or
(b) (i) Maker generally does not pay its debts as such
debts become due, admits in writing its inability to pay its debts
generally or makes a general assignment for the benefit of creditors,
or (ii) any proceeding is instituted by or against Maker seeking to
adjudicate Maker as bankrupt or insolvent, or seeking reorganization,
protection or relief of Maker or Maker's debts under any law relating
to bankruptcy, insolvency, reorganization or relief of debtors; or
(c) Maker's employment with the Company and all
Affiliates (as defined below) terminates prior to the fifth
anniversary of the Date of Issuance for any reason other than (i)
Maker's death or total and permanent disability, or (ii) termination
without Cause;
(d) Ninety days after Maker's employment with the Company and
all Affiliates is terminated by (i) the Company without Cause or (ii)
by the Maker for any reason;
then, and in every such event, (i) if such Default is not a Default specified
in clause (b) above, Holder may, by notice in writing to Maker, immediately
declare this Note to be, and it will thereupon become, due and immediately
payable without presentment, demand, protest, or other notice of any kind, all
of which are hereby expressly waived, and if such Default is a Default
specified in clause (b) above, this Note will automatically become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and (ii) Holder will have such
other rights to enforce all or any of the obligations of the Maker under this
Note, the Share Purchase Agreement and the Pledge Agreement as are given
hereunder or thereunder or by law.
"Affiliates" mean any corporations, partnerships, joint
ventures, unincorporated associations or other entities that directly, or
indirectly through one or more intermediaries, control, are controlled by or
are under common control with the Company.
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<PAGE> 20
All payments and prepayments of amounts due hereunder will be
applied as follows:
(1) First, to payment or reimbursement of all costs and
expenses of Holder to be paid or reimbursed by Maker and not
theretofore paid or reimbursed;
(2) Second, to the payment of all interest theretofore
accrued and unpaid hereunder; and
(3) Third, to the payment in full of the entire principal
amount outstanding hereunder.
If Maker fails to make any payment of principal, accrued and
unpaid interest or any other amount due hereunder on any due date therefor,
whether at stated maturity, by required prepayment, by acceleration or
otherwise, the unpaid amount (including, to the extent enforceable at law, any
unpaid amount of interest) will bear interest at the Interest Rate until paid.
Maker will also pay to Holder, in addition to the amount due, all reasonable
costs and expenses incurred by Holder in collecting or enforcing, or attempting
to collect or enforce, this Note, including without limitation court costs and
reasonable attorneys' fees and expenses.
Holder will not by any act, delay, omission or otherwise be
deemed to have modified, amended, waived, extended, discharged or terminated
any of its rights or remedies, and no modification, amendment, waiver,
extension, discharge or termination of any kind will be valid unless in writing
and signed by Holder. All rights and remedies of Holder under the terms of
this Note and applicable statutes or rules of law will be cumulative, and may
be exercised successively or concurrently. Maker agrees that there are no
defenses, equities or setoffs with respect to the obligations set forth herein,
and to the extent any such defenses, equities, or setoffs may exist, the same
are hereby expressly released, forgiven, waived and forever discharged. The
obligations of Maker hereunder will be binding upon and enforceable against
Maker and its successors and assigns.
Maker may not assign or delegate this Note or any of its
rights or obligations hereunder without the prior consent of Holder (which
consent may be given or withheld in the sole discretion of Holder). Holder may
assign or delegate this Note or any of its rights or obligations hereunder
without prior consent of or notice to Maker.
Wherever possible, each provision of this Note will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note is prohibited by or invalid under applicable
law, such provision will be ineffective to the extent of such prohibition or
invalidity,
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<PAGE> 21
without invalidating the remainder of such provision or the remaining
provisions of this Note.
Holder may, at its option, release to Maker any collateral
given to secure the indebtedness evidenced hereby, and no such release will
impair the obligations of Maker to Holder.
This Note is made under, and will be governed by and construed
in accordance with, the laws of the State of Georgia.
This Note is secured by, and entitled to the benefits of, a
Pledge Agreement between Maker and Holder dated concurrently herewith.
IN WITNESS WHEREOF, Maker has duly executed this Note on the
day and year first above written.
MAKER
/s/ L. Scott Demerau
----------------------------
Name: L. Scott Demerau
ATTEST:
/s/ Julia E. Demerau
- -------------------------------
Name: Julia E. Demerau
Date: September 17, 1996
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<PAGE> 22
EXHIBIT B
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement") dated September 17, 1996
by and between Mountasia Entertainment International, Inc., a Georgia
corporation ("Pledgee"), and L. Scott Demerau ("Pledgor").
RECITALS:
A. Pledgor and Pledgee have entered into a Share
Purchase Agreement, dated as of the date hereof (the "Share Purchase
Agreement"), which provides for the sale to Pledgor of certain Shares. (All
initial capitalized terms used in this Agreement and not otherwise defined have
the meanings given them in the Share Purchase Agreement.)
B. As a condition to entering into the Share Purchase
Agreement, Pledgee has required that Pledgor enter into, and Pledgor has agreed
to enter into, this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Pledgor, and in
order to induce Pledgee to enter into the Share Purchase Agreement, the parties
hereto agree as follows:
1. Pledge. (a) Pledgor hereby pledges, hypothecates,
assigns, transfers, sets over and delivers unto Pledgee, and grants to Pledgee
a security interest in, all of Pledgor's right, title, and interest, whether
now owned or hereafter acquired, in, to, and under the following (collectively,
the "Pledged Collateral"): (1) the Shares; (2) any cash, additional shares of
Common Stock or other property at any time and from time to time receivable or
otherwise distributable in respect of, in exchange for, or in substitution for,
any such Shares; and (3) any and all products and proceeds of any of the
foregoing, together with and all other rights, titles, interests, privileges
and preferences pertaining to said property.
(b) The rights and security interest of Pledgee
hereunder, and obligations of Pledgor hereunder, are absolute and unconditional
irrespective of the value, genuineness, validity, regularity or enforceability
of the Note or the Share Purchase Agreement, or any substitution, release or
exchange of any other security for any of the Secured Obligations (as hereafter
defined), and, to the fullest extent permitted by applicable law, irrespective
of any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of Pledgor, it being the intent of this Section
1(b) that the obligations of Pledgor hereunder will be absolute and
<PAGE> 23
unconditional under any and all circumstances. Pledgor hereby expressly waives
diligence, presentment, demand of payment, protest and all notices whatsoever,
and any requirement that Pledgee exhaust any right, power or remedy or proceed
against Pledgor under the Note, the Share Purchase Agreement or any other
agreement or instrument, or against any other person or entity in connection
with, any of the Secured Obligations and any right to require marshalling.
2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to Pledgee, to secure the following
obligations (collectively, the "Secured Obligations"): (a) Pledgor's
obligations to Pledgee under the Note; (b) Pledgor's obligations to Pledgee
under this Agreement; and (c) any reasonable costs or expenses incurred by
Pledgee or Pledgee's counsel in connection with the realization of the security
for which this Agreement provides, including, without limitation, any
reasonable costs or expenses of any proceedings to which this Agreement may
give rise.
3. Delivery of Pledged Collateral. All certificates and
instruments representing or evidencing the Pledged Collateral will be delivered
to and held by or on behalf of Pledgee pursuant hereto and will be in form
suitable for transfer by delivery, or will be accompanied by duly executed
undated instruments of transfer or assignment, in blank, all in form and
substance satisfactory to Pledgee.
4. Representations and Warranties. Pledgor hereby
represents and warrants to Pledgee that Pledgee is, and will at all times
continue to be, the legal and beneficial owner of the Pledged Collateral, and
none of the Pledged Collateral is subject to any lien or other encumbrance (a
"Lien") other than tax Liens arising as a matter of law in respect of
liabilities that are not overdue or that are being contested in good faith
("Permitted Liens"). No financing statement under the Uniform Commercial Code
("UCC") of any jurisdiction which names Pledgor as debtor and covers any of the
Pledged Collateral, or any other notice filed in the public records indicating
the existence of a Lien thereon, has been filed in any state or other
jurisdiction, other than UCC financing statements filed in favor of Pledgee,
and Pledgor has not signed any such financing statement or notice or any
security agreement authorizing the filing of any such financing statement or
notice, other than UCC financing statements filed in favor of Pledgee.
5. No Liens; No Sale of Pledged Collateral. Pledgor
will not create, assume, incur, or permit or suffer to exist or to be created,
assumed or incurred, any Lien on any of the Pledged Collateral (or any interest
therein) other than Liens in favor of Pledgee and Permitted Liens, and, except
as otherwise provided in the Share Purchase Agreement, will not, without the
prior written consent of Pledgee, sell, lease, assign, transfer
-2-
<PAGE> 24
or otherwise dispose of all or any portion of the Pledged Collateral (or any
interest therein).
6. Voting Rights; Dividends; Etc. (a) So long as no
Default (as hereafter defined) shall have occurred and be continuing:
(i) Pledgor will be entitled to exercise
any and all voting and/or consensual rights and powers accruing to an
owner of the Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms and conditions of this Agreement and
the Share Purchase Agreement; provided, however, that Pledgor will not
exercise, or refrain from exercising, any such right or power if any
such action would have a materially adverse effect on the value of
such Pledged Collateral in the judgment of Pledgee; and
(ii) Subject to the provisions of the
Share Purchase Agreement applicable to a Capital Event, Pledgor will
be entitled to retain and use cash dividends paid on the Pledged
Collateral, if any, but any and all stock and/or liquidating
dividends, other distributions in property, return of capital or other
distributions made on or in respect of Pledged Collateral, whether
resulting from a subdivision, combination or reclassification of
Shares which are pledged hereunder or received in exchange for Pledged
Collateral or any part thereof will be and become part of the Pledged
Collateral pledged hereunder and, if received by Pledgor, will
forthwith be delivered to Pledgee to be held as collateral subject to
the terms and conditions of this Agreement.
(b) Upon the occurrence and during the
continuance of a Default, all rights of Pledgor to exercise the voting and/or
consensual rights and powers that Pledgor is entitled to exercise pursuant to
Section 6(a)(i) above and/or to receive the dividends that Pledgor is
authorized to receive and retain pursuant to Section 6(a)(ii) above will cease,
and all such rights thereupon will become immediately vested in Pledgee. Any
and all money and other property paid over to or received by Pledgee pursuant
to the provisions of this Section 6(b) will be retained by Pledgee as
additional collateral hereunder and shall be applied in accordance with the
provisions of Section 7. If Pledgor shall receive any dividends or other
property that it is not entitled to receive under this Section, Pledgor will
hold the same in trust for Pledgee, without commingling the same with other
funds or property of or held by Pledgor, and will promptly deliver the same to
Pledgee upon receipt by Pledgor in the identical form received, together with
any necessary endorsements.
7. Remedies upon Default. For purposes of this
Agreement, a "Default" means a "Default" as defined under the
-3-
<PAGE> 25
Note. Except as otherwise provided in the Share Purchase Agreement, if any
Default shall have occurred and be continuing:
(a) Pledgee may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies provided for
herein or in the Share Purchase Agreement or otherwise available to it, all the
rights and remedies of a secured party after default under the UCC in effect in
the State of Georgia at that time, and Pledgee may also (but will not be
required to), without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any office of Pledgee or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Pledgee may deem commercially reasonable. Pledgor agrees that, to the extent
notice of sale is required by law, at least ten calendar days' notice to
Pledgor of the time and place of any public sale or the time after which any
private sale is to be made will constitute reasonable notification. Pledgee
will not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned. Pledgor hereby waives any claims against Pledgee
arising because the price at which any Pledged Collateral may have been sold at
such a private sale was less than the price that might have been obtained at a
public sale, even if Pledgee accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree.
(b) Any cash held by Pledgee as Pledged
Collateral and all cash proceeds received by Pledgee in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral may be applied by Pledgee, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Pledged Collateral or in any way relating to the
Pledged Collateral or the rights of Pledgee hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Secured Obligations, and only after such application
and after the payment by Pledgee of any other amount required by any provision
of law, including, without limitation, Section 9-504(1)(c) of the UCC, need
Pledgee account for the surplus, if any, to Pledgor.
8. Registration Rights; Private Sales. Pledgor
recognizes that Pledgee may be unable to effect a public sale of any or all the
Pledged Collateral, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act") and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities
-4-
<PAGE> 26
for their own account for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, and agrees that any such private
sale will be deemed to have been made in a commercially reasonable manner (even
if Pledgee accepts the first offer received or offers the Pledged Collateral or
any portion thereof to only one offeree). Pledgee will be under no obligation
to delay a sale of any of the Pledged Collateral for the period of time
necessary to permit such issuer to register such securities for public sale
under the Securities Act, or under applicable state securities laws, even if
such issuer would agree to do so.
9. No Duty on Secured Party's Part. The powers conferred
on Pledgee hereunder are solely to protect Pledgee's interests in the Pledged
Collateral and will not impose any duty upon Pledgee to exercise any such
powers. Except for the duty of Pledgee described in Section 11 hereof, and the
accounting by Pledgee for moneys actually received by it hereunder, Pledgee will
not have any duties hereunder as to any Pledged Collateral. Pledgee will be
accountable only for amounts that it actually receives as a result of the
exercise of the powers conferred on Pledgee hereunder, and neither it nor any of
its officers, directors, employees, or agents will be responsible to Pledgor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
10. Pledgee Appointed Attorney-in-Fact. Pledgor hereby
constitutes and appoints Pledgee as the attorney-in-fact of Pledgor with full
power of substitution either in Pledgee's name or in the name of Pledgor to
carry out the provisions of this Agreement and to take any action and execute
any instrument necessary or advisable to accomplish the purposes hereof. The
foregoing appointment is irrevocable and coupled with an interest.
11. Reimbursement of Pledgee. Pledgor agrees to pay upon
demand to Pledgee the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, that Pledgee may incur in connection with (a) the
administration of this Agreement, (b) the custody or preservation of, or any
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (c) the exercise or enforcement of any of the rights of Pledgee
hereunder, or (d) the failure by Pledgor to perform or observe any of the
provisions hereof.
12. Limitation on Duties Regarding Preservation of
Collateral. (a) Pledgee's sole duty with respect to the custody, safekeeping,
and physical preservation of the Pledged Collateral in its possession, under
Section 9-207 of the UCC or otherwise, will be to deal with it in the same
manner as Pledgee deals with similar property for its own account. Pledgee will
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<PAGE> 27
not have any duties hereunder as to any Pledged Collateral. Neither Pledgee,
nor any of its directors, officers, employees or agents will be liable for
failure to demand, collect or realize upon all or any part of the Pledged
Collateral or for any delay in doing so.
(b) The rights of Pledgee hereunder will not be
conditioned or contingent upon the pursuit by Pledgee of any right or remedy
against any issuer or against any other person who or which may be or become
liable in respect of all or any part of the Secured Obligations or against any
collateral security therefor, guarantee therefor or right of offset with
respect thereto. Except as otherwise provided in the Share Purchase Agreement,
Pledgee will not be under any obligation to sell or otherwise dispose of any
Pledged Collateral upon the request of Pledgor or any other person or to take
any other action whatsoever with regard to the Pledged Collateral or any part
thereof.
13. Further Assurances. Pledgor agrees that at any time
and from time to time, at the cost and expense of Pledgor, Pledgor will
promptly execute and deliver all further instruments and documents, and take
all further action, that may be reasonably necessary or desirable, or that
Pledgee may reasonably request, to perfect and protect the Lien granted or
purported to be granted hereby, to enable Pledgee to exercise and enforce
Pledgee's rights and remedies hereunder with respect to any Pledged Collateral,
to defend the title to the Pledged Collateral and the Lien thereon in favor of
Pledgee against the claim of any other person and to maintain and preserve such
Lien and security interest until indefeasible payment in full of all of the
Secured Obligations.
14. Continuing Security Interest. This Agreement will
create a continuing security interest in the Pledged Collateral and will remain
in full force and effect until it terminates in accordance with its terms.
15. No Waiver. Neither the failure on the part of
Pledgee to exercise, nor the delay on its part in exercising any right, power
or remedy hereunder, nor any course of dealing between Pledgee and Pledgor,
will operate as a waiver thereof, nor will any single or partial exercise of
any such right, power or remedy hereunder preclude any other or the further
exercise thereof or the exercise of any other right, power or remedy.
16. Notices. Notices, requests and other communications
required or permitted hereunder shall be given in accordance with the
applicable terms of the Share Purchase Agreement.
17. Governing Law. This Agreement will be governed by,
and construed in accordance with, the laws of the State of Georgia.
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<PAGE> 28
18. Amendments. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Pledgor herefrom will in any
event be effective unless the same is made in writing and signed by the parties
hereto, and then such waiver or consent will be effective only in the specific
instance and for the specific purpose for which given.
19. Binding Agreement; Assignment. This Agreement will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Pledgor will not be permitted to
assign this Agreement or any interest herein or in the Pledged Collateral, or
any part thereof, or any cash or property held by Pledgee as collateral under
this Agreement.
20. Termination. Upon indefeasible payment in full
(including through set off in accordance with the Share Purchase Agreement and
the Note) of all of the Secured Obligations, this Agreement will terminate.
Upon such termination of this Agreement, Pledgee agrees to take such actions as
Pledgor may reasonably request, and at the sole cost and expense of Pledgor,
(a) to return the Pledged Collateral to Pledgor and (b) to evidence the
termination of this Agreement, including, without limitation, the filing of any
releases or any termination statements under the UCC.
21. Severability. Whenever possible, each provision of
this Agreement will be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provisions will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
IN WITNESS WHEREOF, Pledgor has executed and delivered this
Pledge Agreement as of the date first written above.
PLEDGOR
/s/ L. Scott Demerau
----------------------------------
Name: L. Scott Demerau
Agreed to, accepted and acknowledged
as of the date first written above.
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ Julie E. Demerau
------------------------------
Name: Julia E. Demerau
Title: Executive Vice President
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<PAGE> 29
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT (this "Agreement") executed this 17th
day of September, 1996 by and between Mountasia Entertainment International,
Inc., a Georgia corporation (the "Company"), and Julia Demerau (the
"Executive").
RECITALS:
A. The Executive is a key employee of the Company.
B. The Company desires to issue and sell certain shares
of the Common Stock of the Company, no par value (the "Common Stock"), to the
Executive and to lend the Executive the purchase price to be paid for such
shares of Common Stock and the Executive desires to purchase such shares of
Common Stock and to accept such financing.
C. As a condition to entering into this Agreement, the
Company has required that the Executive surrender, and the Executive has agreed
to surrender, to the Company all unexercised options, if any, or other rights,
if any, to receive or purchase shares of Common Stock previously issued to the
Executive by the Company (collectively, the "Company Options").
D. As a condition to entering into this Agreement and to
evidence the Executive's obligation for the payment for the purchase of shares
of Common Stock as herein provided, the Company also has required that the
Executive enter into, and the Executive also has agreed to enter into, the
Promissory Note (the "Note") and the Pledge Agreement (the "Pledge Agreement")
attached hereto as Exhibits A and B, respectively.
E. The shares of Common Stock purchased hereby are
intended to be subject to a "substantial risk of forfeiture" within the meaning
of that term under Section 83 of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. Purchase of Shares; Payment of Aggregate Purchase
Price; Surrender of Company Options; Delivery of Shares. (a) The Company has
authorized the issuance and sale to the Executive hereunder of 225,000 newly
issued shares of Common Stock (such shares of Common Stock, in the aggregate,
the "Shares"). On the terms and subject to the conditions hereinafter set
forth, on the date hereof (the "Issuance Date"), the Company will issue and
sell to the Executive, and the Executive will purchase from the
<PAGE> 30
Company, for the aggregate purchase price of $599,062.50 (the "Aggregate
Purchase Price"), the Shares.
(b) On the Issuance Date, the Aggregate Purchase
Price will be payable as follows: the Executive will surrender and deliver the
Company Options, if any, to the Company and, by such surrender and delivery,
waive all the rights, title and interest in and to such Options; the Executive
will duly execute and deliver the Note and the Pledge Agreement to the Company;
and the Company will apply the proceeds of the Note to payment of the Aggregate
Purchase Price.
(c) As soon as practicable following its receipt
of the Aggregate Purchase Price, the Company will issue to the Executive
certificates evidencing the Shares. Such certificates, together with a stock
power that will be endorsed in blank by the Executive with respect to the
Shares, will be held in custody by the Company until the restrictions on
transfer imposed hereunder, and described in Section 2 hereof, lapse. Upon the
release of restrictions of the Shares in accordance with Section 2 hereof, the
Company will, subject to Section 6 hereof, deliver to the Executive one or more
new certificates, evidencing the releasing of restriction on such Shares and
the lapse of the restrictions on transfer imposed hereunder, but such Shares
will in all events be subject to the Pledge Agreement.
2. Restrictions; Certain Conversions. (a) Initially,
all Shares will be restricted so as to be not subject to alienation or transfer
by the Executive (such Shares, "Restricted Shares") and will be subject to the
Company's repurchase option set forth herein. Except as otherwise provided in
Sections 2(b) and 3 hereof and in the Pledge Agreement, Restricted Shares will
no longer be so restricted or subject to such repurchase option (such Shares,
"Unrestricted Shares") cumulatively to the extent of 4687.5 Restricted Shares,
being 1/48th of all Shares, on each monthly anniversary of the Date of
Issuance, provided that the Executive remains in the continuous full-time
employment of the Company until such anniversary and no default or event of
default has occurred under the Note or the Pledge Agreement. If the Executive
ceases to be so employed for any reason (including voluntary termination of
employment by the Executive) or without reason, no further Restricted Shares
will become Unrestricted Shares. For purposes of this Agreement, the
continuous full-time employment of the Executive with the Company will not be
deemed to have been interrupted, and the Executive will not be deemed to have
ceased to be a full-time employee of the Company, by reason of the transfer of
his or her employment among the Company and its Affiliates or a leave of
absence specifically approved by the Board of Directors of the Company (the
"Board").
(b) Notwithstanding the provisions of Section
2(a) hereof, and except as otherwise provided in Section 3 hereof and in the
Pledge Agreement, if the Executive's full-time employment with the Company
terminates prior to the 48-month anniversary of
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<PAGE> 31
the Date of Issuance by reason of his or her death or total and permanent
disability, all Restricted Shares hereunder will become, without further
action, Unrestricted Shares.
(c) In connection with any merger, consolidation
or other transaction involving the conversion or exchange of Common Stock of
the Company (a "Capital Event"), (i) all Unrestricted Shares hereunder will be
treated like any other then-outstanding shares of Common Stock of the Company
and (ii) all Restricted Shares (A) will be converted or exchanged into the
securities hereunder and other property (other than cash) into which
then-outstanding shares of Common Stock of the Company is converted or
exchanged (such securities and other property to be thereafter the "Shares" for
purposes hereof and of the Note and Pledge Agreement) on the same basis as
applicable to then-outstanding shares of Common Stock of the Company and (B)
any cash into which then-outstanding shares of Common Stock of the Company is
converted or exchanged will be applied to pay amounts then outstanding under
the Note, with the balance (if any) to be paid over to the Executive.
3. Repurchase of the Shares. Without limiting the
generality or effect of any other provision hereof, upon the termination of the
Executive's full-time employment with the Company for any reason, the Company
will have the right, in its sole and absolute discretion, to purchase from the
Executive (the "Company Call"), and the Executive will have the right, in his
sole and absolute discretion, to sell to the Company in the circumstances set
forth in Section 3(a) below, (the "Executive Put"), all or part of the
Restricted Shares in accordance with and to the extent provided in this Section
3. Each purchase of Restricted Shares by the Company under this Section 3 will
be in consideration of the Company's payment of the applicable amount in cash
or through a reduction in the amounts owing under the Note by the applicable
amount; provided, however, in certain circumstances described below, the
Aggregate Purchase Price will be allocated between Restricted and Unrestricted
Shares.
(a) Termination by Company Without Cause. If the
Executive's employment is terminated by the Company where Cause does
not exist, upon exercise of the Company Call or the Executive Put, as
the case may be, an amount equal to the portion of the Aggregate
Purchase Price attributable to the Restricted Shares which the Company
has elected to repurchase or which the Executive has elected to have
the Company repurchase, plus interest on such amount from the Issuance
Date to the date of repurchase calculated in the manner and using the
rate of interest specified in the Note (the "Repurchase Price"), will
be deemed payable to the Executive and will be applied by the Company
against any amounts then due under the Note to be paid or prepaid to
the Company (as applicable) to the extent so applied, with any excess
amount to be payable by the Company to the Executive in cash.
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<PAGE> 32
(b) Termination by Company With Cause or Voluntary
Termination by the Executive. If the Executive's employment is
terminated by the Company at any time where Cause exists, or the
Executive voluntarily terminates his employment with the Company at
any time, upon exercise of the Company Call, an amount equal to the
lesser of (i) the then Fair Market Value of the Restricted Shares and
(ii) the Repurchase Price determined under Section 3(a) will be
payable to the Executive and will be applied by the Company against
any amounts then due under the Note and to be paid or prepaid to the
Company (as applicable) to the extent so applied, with any excess
amount to be payable by the Company to the Executive in cash.
(c) Election and Consummation of Share Purchases Under
This Section 3.
(i) The exercise of the Executive Put or the
Company Call under this Section 3 must be effected by the
Executive or the Company, as the case may be, giving written
notice to the other party within 15 calendar days after the
date of the Executive's termination of employment. Such
notice must specify the Restricted Shares to be repurchased
and the price therefor.
(ii) Any certificate evidencing Shares to be
purchased by the Company and which are not then held in
custody by the Company will promptly be returned by the
Executive to the Company.
(iii) The Executive understands and acknowledges
that he or she will not be entitled to any payment,
reimbursement or compensation in respect of any Restricted
Shares repurchased hereunder except as expressly provided
herein. For purposes of the foregoing, the "Fair Market
Value" of Restricted Shares will be the "Average Stock Price"
(as defined below) of the Company's Common Stock for the 15
trading days immediately preceding the date on which Executive
terminates employment with the Company. Average Stock Price
means, the closing price on the principal securities market on
which Common Stock is then traded for each such day as
reported in the Wall Street Journal for the next trading day.
4. Compliance with Law. The Company will make
reasonable efforts to comply with all applicable securities laws in connection
with the sale of the Shares hereunder to the Executive; provided, however,
that, notwithstanding any other provision of this Agreement, the Shares may not
be sold or transferred by the Executive if such action would result in a
violation of any such laws.
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<PAGE> 33
5. Transferability. Except as otherwise provided in the
Pledge Agreement, prior to the release of restrictions of the Shares in
accordance with Section 2 hereof, the Executive will not make, agree to make or
offer to make any sale, assignment, transfer, exchange, pledge, hypothecation
or encumbrance of any such Shares, other than a disposition by will or
intestate distribution.
6. Withholding Taxes. If the Company is required to
withhold any tax in connection with any transfer of or release of restrictions
on the Shares or any election by the Executive with respect to such shares, the
Executive will pay the tax or make provisions that are satisfactory to the
Company for the payment thereof. The Company may defer any transfer of Shares
or delivery of certificates evidencing such shares contemplated hereunder until
the Executive has paid such tax or made such provisions.
7. Right to Terminate Employment and Adjust Compensation.
No provision of this Agreement will limit in any way whatsoever any right that
the Company or an Affiliate may otherwise have to terminate the employment or
adjust the compensation of the Executive at any time.
8. Relation to Other Benefits. Any economic or other
benefit to the Executive under this Agreement or the Note will not be taken
into account in determining any benefits to which the Executive may be entitled
under any employee benefit or compensation plan or program maintained by the
Company or an Affiliate and will not affect the amount of any life insurance
coverage available to any beneficiary under any life insurance plan covering
employees of the Company or an Affiliate.
9. Amendments. This Agreement may be amended at any
time by a written instrument executed by the Executive and an authorized
officer or representative of the Company.
10. Severability. In the event that one or more of the
provisions of this Agreement shall be invalidated for any reason by a court of
competent jurisdiction, any provision so invalidated will be deemed to be
separable from the other provisions hereof, and the remaining provisions hereof
will continue to be valid and fully enforceable.
11. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof confirmed), or five
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business days after
having been sent by a nationally recognized overnight courier service such as
Federal Express or
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<PAGE> 34
UPS, addressed to the Company (to the attention of the Chairman of the Board of
the Company) at its principal executive office and to the Executive at his
principal residence, or to such other address as any party may have furnished
to the other in writing and in accordance herewith, except that notices of
changes of address shall be effective only upon receipt.
12. Governing Law. This Agreement is made under, and
will be construed in accordance with, the laws of the State of Georgia.
13. Definitions. As used in this Agreement:
(a) "Affiliate" means a corporation, partnership,
joint venture, unincorporated association or other entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with, the Company.
(b) "Cause" means that, prior to the termination
of the Executive's employment, the Board will have determined that the
Executive shall have committed:
(1) an act of fraud, embezzlement or
theft in connection with his duties or in the course of his employment
with the Company or any Affiliate;
(2) wrongful damage to property of the
Company or any Affiliate;
(3) wrongful disclosure of any
confidential or proprietary information of the Company or any
Affiliate;
(4) wrongful engagement in any
Competitive Activity; or
(5) any other act or omission which the
Board determines constitutes a basis for termination of the
Executive's employment.
(c) "Competitive Activity" means the Executive's
participation, without the written consent of Board, in the management of or
service as advisors or consultants to any business enterprise if such
enterprise engages in substantial and direct competition with the Company and
such enterprise's revenues from family entertainment or recreation centers
amounted to at least 25% of such enterprise's net sales for its most recently
completely fiscal year. "Competitive Activity" will not include the mere
ownership of less than 5% of any class of publicly traded securities of any
such enterprise and the exercise of rights appurtenant thereto.
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<PAGE> 35
IN WITNESS WHEREOF, the undersigned have entered into this
Agreement as of the date first written above.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
------------------------------------
Name: L. Scott Demerau
Title: President
/s/ Julia E. Demerau
------------------------------------
Executive
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<PAGE> 36
CANCELLATION AGREEMENT
The undersigned, a resident of the State of Georgia and a holder of
unexercised options or other rights (the "Options") to receive or purchase
shares of no-par common stock (the "Common Stock") of Mountasia Entertainment
International, Inc., a Georgia corporation (the "Company"), for and in
consideration of the Company's issuance and sale of Common Stock to the
undersigned pursuant to a Share Purchase Agreement of same date between the
undersigned and the Company, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, agrees as follows:
1. CANCELLATION OF OPTIONS. All Options that have been issued to
the undersigned prior to the date of this Cancellation Agreement are hereby
cancelled, and all instrument(s) granting such Options to the undersigned (the
"Instruments") are hereby terminated, effective as of the date hereof. The
undersigned shall surrender all of the Instruments to the Company immediately;
provided, however, that failure to do so does not effect the cancellation of
the Options and termination of the Instruments under this paragraph or any
other obligations of the undersigned under this Cancellation Agreement.
2. RELEASE. The undersigned hereby releases and forever
discharges the Company from any and all claims, rights or liabilities
whatsoever which the undersigned has, may have, or may claim to have against
the Company arising out of or in any way connected with the Options or the
Instruments.
3. ENTIRE AGREEMENT. This Cancellation Agreement contains the
entire agreement between the undersigned and the Company relating to the
matters provided herein, and no representations, promises or agreements, oral
or otherwise, not expressly contained or incorporated by reference herein shall
be binding on either party.
4. GOVERNING LAW. This Agreement is made and entered into in the
State of Georgia and shall be governed by and construed in accordance with the
laws thereof, without giving effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the undersigned has caused this Cancellation
Agreement to be duly executed and delivered as of this 17th day of September,
1996.
By: /s/ Julia E. Demerau
----------------------------------
Name: Julia E. Demerau
Acknowledged and Agreed:
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
--------------------------------
Name: L. Scott Demerau
Title: President
<PAGE> 37
EXHIBIT A
PROMISSORY NOTE
$599,062.50 Atlanta, Georgia
September 17, 1996
FOR VALUE RECEIVED, the undersigned Julia E. Demerau ("Maker"),
promises to pay to the order of Mountasia Entertainment International, Inc., a
Georgia corporation (the "Company" and, together with any subsequent holder of
this Note, "Holder"), at its principal corporate offices, or at such other
address as Holder may from time to time designate in writing, the principal sum
of $599,062.50, together with interest thereon from the date hereof on the
unpaid principal balance at the rate herein provided. Unless otherwise
expressly authorized by Holder in writing, all payments on this Note will be
made (i) in cash in the form of immediately available funds represented by
currency or check or other cash equivalent acceptable to the Holder or (ii) in
whole shares of Common Stock of the Company, the value of which will be
determined based on the "Average Stock Price" (as defined below) of the
Company's Common Stock for the 15 trading days immediately preceding the date
on which the Executive terminates employment with the Company. Average Stock
Price means, the closing price on the principal securities market on which
Common Stock is then traded for each such day as reported in the Wall Street
Journal for the next trading day.
The principal amount of this Note and all accrued and unpaid
interest thereon will become due and be paid on the fifth anniversary of the
date hereof or any earlier date on which such principal and interest become due
under the terms of this Note.
The principal amount from time to time outstanding hereunder
will bear interest at the rate per annum of (i) 7% for the first two years,
(ii) 7.50% for the third year, (iii) 8.00% for the fourth year, and (iv) 8.50%
for the fifth year (the "Interest Rate"). Interest on the unpaid balance of
the Note will be computed on the actual number of days elapsed, and a year of
360 days, and will be compounded annually. Interest will be due at maturity.
At any time and from time to time after the date of this Note,
Maker may prepay this Note, in whole or in part, without penalty or premium,
together with accrued and unpaid interest on the principal amount prepaid. In
addition, at any time and from time to time after the date of this Note, the
principal amount outstanding hereunder may, be deemed, in accordance with
Section 3(b) of that certain Share Purchase Agreement between the Company and
the Maker (the "Share Purchase Agreement"), to be paid or prepaid, in whole or
in part, without
<PAGE> 38
penalty or premium, together with accrued and unpaid interest on the principal
amount deemed to be paid or prepaid.
The principal amount evidenced by this Note, together with
accrued and unpaid interest, may be declared to be, or may automatically
become, immediately due and payable upon the occurrence and during the
continuance of any of the following events (each a "Default"):
(a) Maker fails to make any payment of principal or
interest or other amounts due hereunder when the same becomes due and
payable; or
(b) (i) Maker generally does not pay its debts as such
debts become due, admits in writing its inability to pay its debts
generally or makes a general assignment for the benefit of creditors,
or (ii) any proceeding is instituted by or against Maker seeking to
adjudicate Maker as bankrupt or insolvent, or seeking reorganization,
protection or relief of Maker or Maker's debts under any law relating
to bankruptcy, insolvency, reorganization or relief of debtors; or
(c) Maker's employment with the Company and all
Affiliates (as defined below) terminates prior to the fifth
anniversary of the Date of Issuance for any reason other than (i)
Maker's death or total and permanent disability, or (ii) termination
without Cause;
(d) Ninety days after Maker's employment with the Company and
all Affiliates is terminated by (i) the Company without Cause or (ii)
by the Maker for any reason;
then, and in every such event, (i) if such Default is not a Default specified
in clause (b) above, Holder may, by notice in writing to Maker, immediately
declare this Note to be, and it will thereupon become, due and immediately
payable without presentment, demand, protest, or other notice of any kind, all
of which are hereby expressly waived, and if such Default is a Default
specified in clause (b) above, this Note will automatically become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and (ii) Holder will have such
other rights to enforce all or any of the obligations of the Maker under this
Note, the Share Purchase Agreement and the Pledge Agreement as are given
hereunder or thereunder or by law.
"Affiliates" mean any corporations, partnerships, joint
ventures, unincorporated associations or other entities that directly, or
indirectly through one or more intermediaries, control, are controlled by or
are under common control with the Company.
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<PAGE> 39
All payments and prepayments of amounts due hereunder will be
applied as follows:
(1) First, to payment or reimbursement of all costs and
expenses of Holder to be paid or reimbursed by Maker and not
theretofore paid or reimbursed;
(2) Second, to the payment of all interest theretofore
accrued and unpaid hereunder; and
(3) Third, to the payment in full of the entire principal
amount outstanding hereunder.
If Maker fails to make any payment of principal, accrued and
unpaid interest or any other amount due hereunder on any due date therefor,
whether at stated maturity, by required prepayment, by acceleration or
otherwise, the unpaid amount (including, to the extent enforceable at law, any
unpaid amount of interest) will bear interest at the Interest Rate until paid.
Maker will also pay to Holder, in addition to the amount due, all reasonable
costs and expenses incurred by Holder in collecting or enforcing, or attempting
to collect or enforce, this Note, including without limitation court costs and
reasonable attorneys' fees and expenses.
Holder will not by any act, delay, omission or otherwise be
deemed to have modified, amended, waived, extended, discharged or terminated
any of its rights or remedies, and no modification, amendment, waiver,
extension, discharge or termination of any kind will be valid unless in writing
and signed by Holder. All rights and remedies of Holder under the terms of
this Note and applicable statutes or rules of law will be cumulative, and may
be exercised successively or concurrently. Maker agrees that there are no
defenses, equities or setoffs with respect to the obligations set forth herein,
and to the extent any such defenses, equities, or setoffs may exist, the same
are hereby expressly released, forgiven, waived and forever discharged. The
obligations of Maker hereunder will be binding upon and enforceable against
Maker and its successors and assigns.
Maker may not assign or delegate this Note or any of its
rights or obligations hereunder without the prior consent of Holder (which
consent may be given or withheld in the sole discretion of Holder). Holder may
assign or delegate this Note or any of its rights or obligations hereunder
without prior consent of or notice to Maker.
Wherever possible, each provision of this Note will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note is prohibited by or invalid under applicable
law, such provision will be ineffective to the extent of such prohibition or
invalidity,
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<PAGE> 40
without invalidating the remainder of such provision or the remaining provisions
of this Note.
Holder may, at its option, release to Maker any collateral
given to secure the indebtedness evidenced hereby, and no such release will
impair the obligations of Maker to Holder.
This Note is made under, and will be governed by and construed
in accordance with, the laws of the State of Georgia.
This Note is secured by, and entitled to the benefits of, a
Pledge Agreement between Maker and Holder dated concurrently herewith.
IN WITNESS WHEREOF, Maker has duly executed this Note on the
day and year first above written.
MAKER
/s/ Julia E. Demerau
---------------------------------
Name: Julia E. Demerau
ATTEST:
/s/ L. Scott Demerau
- --------------------------------
Name: L. Scott Demerau
Date: September 17, 1996
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<PAGE> 41
EXHIBIT B
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement") dated September 17,
1996 by and between Mountasia Entertainment International, Inc., a Georgia
corporation ("Pledgee"), and Julia E. Demerau ("Pledgor").
RECITALS:
A. Pledgor and Pledgee have entered into a Share
Purchase Agreement, dated as of the date hereof (the "Share Purchase
Agreement"), which provides for the sale to Pledgor of certain Shares. (All
initial capitalized terms used in this Agreement and not otherwise defined have
the meanings given them in the Share Purchase Agreement.)
B. As a condition to entering into the Share Purchase
Agreement, Pledgee has required that Pledgor enter into, and Pledgor has agreed
to enter into, this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Pledgor, and in
order to induce Pledgee to enter into the Share Purchase Agreement, the parties
hereto agree as follows:
1. Pledge. (A) Pledgor hereby pledges, hypothecates,
assigns, transfers, sets over and delivers unto Pledgee, and grants to Pledgee
a security interest in, all of Pledgor's right, title, and interest, whether
now owned or hereafter acquired, in, to, and under the following (collectively,
the "Pledged Collateral"): (1) the Shares; (2) any cash, additional shares of
Common Stock or other property at any time and from time to time receivable or
otherwise distributable in respect of, in exchange for, or in substitution for,
any such Shares; and (3) any and all products and proceeds of any of the
foregoing, together with and all other rights, titles, interests, privileges
and preferences pertaining to said property.
(b) The rights and security interest of Pledgee
hereunder, and obligations of Pledgor hereunder, are absolute and unconditional
irrespective of the value, genuineness, validity, regularity or enforceability
of the Note or the Share Purchase Agreement, or any substitution, release or
exchange of any other security for any of the Secured Obligations (as hereafter
defined), and, to the fullest extent permitted by applicable law, irrespective
of any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of Pledgor, it being the intent of this Section
1(b) that the obligations of Pledgor hereunder will be absolute and
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unconditional under any and all circumstances. Pledgor hereby expressly waives
diligence, presentment, demand of payment, protest and all notices whatsoever,
and any requirement that Pledgee exhaust any right, power or remedy or proceed
against Pledgor under the Note, the Share Purchase Agreement or any other
agreement or instrument, or against any other person or entity in connection
with, any of the Secured Obligations and any right to require marshalling.
2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to Pledgee, to secure the following
obligations (collectively, the "Secured Obligations"): (a) Pledgor's
obligations to Pledgee under the Note; (b) Pledgor's obligations to Pledgee
under this Agreement; and (c) any reasonable costs or expenses incurred by
Pledgee or Pledgee's counsel in connection with the realization of the security
for which this Agreement provides, including, without limitation, any
reasonable costs or expenses of any proceedings to which this Agreement may
give rise.
3. Delivery of Pledged Collateral. All certificates and
instruments representing or evidencing the Pledged Collateral will be delivered
to and held by or on behalf of Pledgee pursuant hereto and will be in form
suitable for transfer by delivery, or will be accompanied by duly executed
undated instruments of transfer or assignment, in blank, all in form and
substance satisfactory to Pledgee.
4. Representations and Warranties. Pledgor hereby
represents and warrants to Pledgee that Pledgee is, and will at all times
continue to be, the legal and beneficial owner of the Pledged Collateral, and
none of the Pledged Collateral is subject to any lien or other encumbrance (a
"Lien") other than tax Liens arising as a matter of law in respect of
liabilities that are not overdue or that are being contested in good faith
("Permitted Liens"). No financing statement under the Uniform Commercial Code
("UCC") of any jurisdiction which names Pledgor as debtor and covers any of the
Pledged Collateral, or any other notice filed in the public records indicating
the existence of a Lien thereon, has been filed in any state or other
jurisdiction, other than UCC financing statements filed in favor of Pledgee,
and Pledgor has not signed any such financing statement or notice or any
security agreement authorizing the filing of any such financing statement or
notice, other than UCC financing statements filed in favor of Pledgee.
5. No Liens; No Sale of Pledged Collateral. Pledgor
will not create, assume, incur, or permit or suffer to exist or to be created,
assumed or incurred, any Lien on any of the Pledged Collateral (or any interest
therein) other than Liens in favor of Pledgee and Permitted Liens, and, except
as otherwise provided in the Share Purchase Agreement, will not, without the
prior written consent of Pledgee, sell, lease, assign, transfer
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or otherwise dispose of all or any portion of the Pledged Collateral (or any
interest therein).
6. Voting Rights; Dividends; Etc. (a). So long as no
Default (as hereafter defined) shall have occurred and be continuing:
(i) Pledgor will be entitled to exercise
any and all voting and/or consensual rights and powers accruing to an
owner of the Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms and conditions of this Agreement and
the Share Purchase Agreement; provided, however, that Pledgor will not
exercise, or refrain from exercising, any such right or power if any
such action would have a materially adverse effect on the value of
such Pledged Collateral in the judgment of Pledgee; and
(ii) Subject to the provisions of the
Share Purchase Agreement applicable to a Capital Event, Pledgor will
be entitled to retain and use cash dividends paid on the Pledged
Collateral, if any, but any and all stock and/or liquidating
dividends, other distributions in property, return of capital or other
distributions made on or in respect of Pledged Collateral, whether
resulting from a subdivision, combination or reclassification of
Shares which are pledged hereunder or received in exchange for Pledged
Collateral or any part thereof will be and become part of the Pledged
Collateral pledged hereunder and, if received by Pledgor, will
forthwith be delivered to Pledgee to be held as collateral subject to
the terms and conditions of this Agreement.
(b) Upon the occurrence and during the continuance
of a Default, all rights of Pledgor to exercise the voting and/or consensual
rights and powers that Pledgor is entitled to exercise pursuant to Section
6(a)(i) above and/or to receive the dividends that Pledgor is authorized to
receive and retain pursuant to Section 6(a)(ii) above will cease, and all such
rights thereupon will become immediately vested in Pledgee. Any and all money
and other property paid over to or received by Pledgee pursuant to the
provisions of this Section 6(b) will be retained by Pledgee as additional
collateral hereunder and shall be applied in accordance with the provisions of
Section 7. If Pledgor shall receive any dividends or other property that it is
not entitled to receive under this Section, Pledgor will hold the same in trust
for Pledgee, without commingling the same with other funds or property of or
held by Pledgor, and will promptly deliver the same to Pledgee upon receipt by
Pledgor in the identical form received, together with any necessary
endorsements.
7. Remedies upon Default. For purposes of this
Agreement, a "Default" means a "Default" as defined under the
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Note. Except as otherwise provided in the Share Purchase Agreement, if any
Default shall have occurred and be continuing:
(a) Pledgee may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies provided for
herein or in the Share Purchase Agreement or otherwise available to it, all the
rights and remedies of a secured party after default under the UCC in effect in
the State of Georgia at that time, and Pledgee may also (but will not be
required to), without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any office of Pledgee or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Pledgee may deem commercially reasonable. Pledgor agrees that, to the extent
notice of sale is required by law, at least ten calendar days' notice to
Pledgor of the time and place of any public sale or the time after which any
private sale is to be made will constitute reasonable notification. Pledgee
will not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned. Pledgor hereby waives any claims against Pledgee
arising because the price at which any Pledged Collateral may have been sold at
such a private sale was less than the price that might have been obtained at a
public sale, even if Pledgee accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree.
(b) Any cash held by Pledgee as Pledged
Collateral and all cash proceeds received by Pledgee in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral may be applied by Pledgee, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Pledged Collateral or in any way relating to the
Pledged Collateral or the rights of Pledgee hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Secured Obligations, and only after such application
and after the payment by Pledgee of any other amount required by any provision
of law, including, without limitation, Section 9-504(1)(c) of the UCC, need
Pledgee account for the surplus, if any, to Pledgor.
8. Registration Rights; Private Sales. Pledgor
recognizes that Pledgee may be unable to effect a public sale of any or all the
Pledged Collateral, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act") and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities
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for their own account for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, and agrees that any such private
sale will be deemed to have been made in a commercially reasonable manner (even
if Pledgee accepts the first offer received or offers the Pledged Collateral or
any portion thereof to only one offeree). Pledgee will be under no obligation
to delay a sale of any of the Pledged Collateral for the period of time
necessary to permit such issuer to register such securities for public sale
under the Securities Act, or under applicable state securities laws, even if
such issuer would agree to do so.
9. No Duty on Secured Party's Part. The powers
conferred on Pledgee hereunder are solely to protect Pledgee's interests in the
Pledged Collateral and will not impose any duty upon Pledgee to exercise any
such powers. Except for the duty of Pledgee described in Section 11 hereof,
and the accounting by Pledgee for moneys actually received by it hereunder,
Pledgee will not have any duties hereunder as to any Pledged Collateral.
Pledgee will be accountable only for amounts that it actually receives as a
result of the exercise of the powers conferred on Pledgee hereunder, and
neither it nor any of its officers, directors, employees, or agents will be
responsible to Pledgor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
10. Pledgee Appointed Attorney-in-Fact. Pledgor hereby
constitutes and appoints Pledgee as the attorney-in-fact of Pledgor with full
power of substitution either in Pledgee's name or in the name of Pledgor to
carry out the provisions of this Agreement and to take any action and execute
any instrument necessary or advisable to accomplish the purposes hereof. The
foregoing appointment is irrevocable and coupled with an interest.
11. Reimbursement of Pledgee. Pledgor agrees to pay upon
demand to Pledgee the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, that Pledgee may incur in connection with (a) the
administration of this Agreement, (b) the custody or preservation of, or any
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (c) the exercise or enforcement of any of the rights of Pledgee
hereunder, or (d) the failure by Pledgor to perform or observe any of the
provisions hereof.
12. Limitation on Duties Regarding Preservation of
Collateral. (a) Pledgee's sole duty with respect to the custody, safekeeping,
and physical preservation of the Pledged Collateral in its possession, under
Section 9-207 of the UCC or otherwise, will be to deal with it in the same
manner as Pledgee deals with similar property for its own account. Pledgee will
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not have any duties hereunder as to any Pledged Collateral. Neither Pledgee,
nor any of its directors, officers, employees or agents will be liable for
failure to demand, collect or realize upon all or any part of the Pledged
Collateral or for any delay in doing so.
(b) The rights of Pledgee hereunder will not be
conditioned or contingent upon the pursuit by Pledgee of any right or remedy
against any issuer or against any other person who or which may be or become
liable in respect of all or any part of the Secured Obligations or against any
collateral security therefor, guarantee therefor or right of offset with
respect thereto. Except as otherwise provided in the Share Purchase Agreement,
Pledgee will not be under any obligation to sell or otherwise dispose of any
Pledged Collateral upon the request of Pledgor or any other person or to take
any other action whatsoever with regard to the Pledged Collateral or any part
thereof.
13. Further Assurances. Pledgor agrees that at any time
and from time to time, at the cost and expense of Pledgor, Pledgor will
promptly execute and deliver all further instruments and documents, and take
all further action, that may be reasonably necessary or desirable, or that
Pledgee may reasonably request, to perfect and protect the Lien granted or
purported to be granted hereby, to enable Pledgee to exercise and enforce
Pledgee's rights and remedies hereunder with respect to any Pledged Collateral,
to defend the title to the Pledged Collateral and the Lien thereon in favor of
Pledgee against the claim of any other person and to maintain and preserve such
Lien and security interest until indefeasible payment in full of all of the
Secured Obligations.
14. Continuing Security Interest. This Agreement will
create a continuing security interest in the Pledged Collateral and will remain
in full force and effect until it terminates in accordance with its terms.
15. No Waiver. Neither the failure on the part of
Pledgee to exercise, nor the delay on its part in exercising any right, power
or remedy hereunder, nor any course of dealing between Pledgee and Pledgor,
will operate as a waiver thereof, nor will any single or partial exercise of
any such right, power or remedy hereunder preclude any other or the further
exercise thereof or the exercise of any other right, power or remedy.
16. Notices. Notices, requests and other communications
required or permitted hereunder shall be given in accordance with the
applicable terms of the Share Purchase Agreement.
17. Governing Law. This Agreement will be governed by,
and construed in accordance with, the laws of the State of Georgia.
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18. Amendments. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Pledgor herefrom will in any
event be effective unless the same is made in writing and signed by the parties
hereto, and then such waiver or consent will be effective only in the specific
instance and for the specific purpose for which given.
19. Binding Agreement; Assignment. This Agreement will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Pledgor will not be permitted to
assign this Agreement or any interest herein or in the Pledged Collateral, or
any part thereof, or any cash or property held by Pledgee as collateral under
this Agreement.
20. Termination. Upon indefeasible payment in full
(including through set off in accordance with the Share Purchase Agreement and
the Note) of all of the Secured Obligations, this Agreement will terminate.
Upon such termination of this Agreement, Pledgee agrees to take such actions as
Pledgor may reasonably request, and at the sole cost and expense of Pledgor,
(a) to return the Pledged Collateral to Pledgor and (b) to evidence the
termination of this Agreement, including, without limitation, the filing of any
releases or any termination statements under the UCC.
21. Severability. Whenever possible, each provision of
this Agreement will be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provisions will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
IN WITNESS WHEREOF, Pledgor has executed and delivered this
Pledge Agreement as of the date first written above.
PLEDGOR
/s/ Julia E. Demerau
------------------------------------
Name: Julia E. Demerau
Agreed to, accepted and acknowledged
as of the date first written above.
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ L. Scott Demerau
----------------------------------
Name: L. Scott Demerau
Title: President
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NATIONSBANK OF GEORGIA, N.A.
CREDIT AGREEMENT
(INDIVIDUALS)
This Credit Agreement ("Agreement") dated as of October 6, 1995, by
and between NationsBank of Georgia, N.A., a national banking association
("Bank") and the Debtor described below:
In consideration of the financial accommodations described below and
the mutual covenants and agreements contained herein, and intending to be
legally bound hereby, Bank and Debtor agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms
defined herein, the following terms shall have the meaning set forth with
respect thereto:
A. Debtor. L. Scott Demerau and Julia E. Demerau.
B. Debtor's Address. 8465 Swiss Air Road, Gainesville, GA
30506.
C. Credit. The Term Loan described in Section 2 hereof, and any
other loans and other financial accommodations made by Bank to Borrower in the
future which specifically reference this Loan Agreement.
D. Credit Documents. This Agreement, promissory note or notes
and guaranties executed pursuant to Section 2 hereof and any and all other
documents, instruments, certificates and agreements executed and/or delivered
by Borrower in connection therewith.
E. Use of Proceeds. Refinance existing indebtedness to Bank.
F. Other Referential Provisions. All accounting terms not
specifically defined or specified herein shall have the meanings generally
attributed to such terms under generally accepted accounting principles, as in
effect from time to time, consistently applied.
2. CREDIT.
A. Term Loan. The $1,600,000.00 term loan extended now, existing
now or extended hereafter by Bank to Debtor and all renewals, extensions or
rearrangements thereof to Debtor by Bank in an amount, and having a maturity
date, repayment terms and interest rate as set forth on any promissory note or
notes evidencing the loan.
3. SECURITY. Debtor agrees to grant to Bank a first lien (unless
otherwise agreed to in writing by Bank) in the collateral described in (i) that
certain Stock Pledge Agreement, dated of even date herewith, made by Debtor in
favor of Bank and (ii) that certain Pledge and Security Agreement, dated of
even date herewith, made by Debtor in favor of Bank (the "Collateral") and
agrees to do all things as may be required by Bank to perfect and protect the
lien of Bank in such Collateral.
4. REPRESENTATIONS AND WARRANTIES. Debtor hereby represents and warrants
to Bank as follows:
CREDIT AGREEMENT/INDIVIDUAL
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5. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of Debtor under the Credit Documents, Debtor will, unless Bank
consents otherwise in writing (and without limiting any requirement of any
other Credit Document):
A. Financial Statements. Debtor will:
1. Furnish to Bank annual financial statements of Debtor within
ninety days after the anniversary date of the most recent
financial statement provided to Bank, in form and substance
satisfactory to Bank, and including without limitation a listing of
all assets and liabilities, a listing of all sources of income, a
listing of the uses of income, the amount and sources of contingent
liabilities, identification of joint owners as to listed assets, and
an annual projection of sources and uses of income.
2. Cause to be furnished to Bank financial statements of
Mountasia Entertainment International, Inc. for each fiscal year of
Mountasia Entertainment International, Inc. within ninety days after
the close of each such fiscal year, the form and substance of which
must be satisfactory to Bank, and prepared in accordance with
generally accepted accounting principles consistently applied.
3. Cause to be furnished to Bank financial statements of Fantasy
Golf, S.A. for each fiscal year of Fantasy Golf, S.A. within ninety
days after the close of each such fiscal year, which financial
statements must be in form and substance satisfactory to Bank, and
include without limitation a listing of all assets and liabilities, a
listing of all sources of income, a listing of the uses of income, the
amount and sources of contingent liabilities, identification of joint
owners of listed assets, and an annual projection of sources and uses
of income.
4. Furnish to Bank copies of Debtor's federal income tax returns
and all supporting schedules within ninety days of filing same with
the Internal Revenue Service.
5. Furnish or cause to be furnished to Bank promptly such
additional information, reports and statements respecting the business
operations and financial condition of Debtor, Mountasia Entertainment
International, Inc. and Fantasy Golf, S.A., respectively, from time to
time, as Bank may reasonably request.
B. Compliance. Maintain Debtor's qualification to do business,
where required, and comply with all laws, regulations and governmental
requirements including, without limitation, Environmental Laws applicable to
Debtor or to any of Debtor's property, business operations and transactions.
C. Adverse Conditions or Events. Promptly advise Bank in writing
of (i) any condition, event or act which comes to Debtor's attention that would
or might materially adversely affect Debtor's financial condition or
operations, the Collateral, or Bank's rights under the Credit Documents; (ii)
any litigation filed by or against Debtor; (iii) any default under the Credit
Documents; and (iv) any default under any agreement, mortgage, indenture or
contract in favor of Bank and binding on Debtor or affecting any of Debtor's
property.
D. Taxes and Other Obligations. Pay all of Debtor's taxes and
other obligations as the same become due and payable, except to the extent
being contested in good faith by appropriate proceedings.
CREDIT AGREEMENT/INDIVIDUAL
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6. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of Debtor under the Credit Documents, Debtor will not, without the
prior written consent of Bank (and without limiting any requirement of any
other Credit Document):
A. Transfer of Assets. Sell, lease, assign or otherwise dispose
of or transfer all or substantially all of Debtor's assets which in the
aggregate would have a material adverse effect.
B. Liens. Grant, suffer or permit any contractual or
noncontractual lien on or security interest in Debtor's assets, except (i)
liens in favor of Bank and (ii) a first mortgage loan on Debtor's primary
residence in an amount not to exceed $2,900,000.00, or fail to promptly pay
when due all lawful claims, whether for labor, materials or otherwise.
C. Loans. Make any loan or advance to any person, including
without limitation any partnership, corporation or other entity of which Debtor
is a partner, shareholder, officer or member, which in the aggregate exceeds
$25,000.00.
D. Borrowings. Create, incur, assume or become liable in any
manner for any additional indebtedness (for borrowed money, deferred payment
for the purchase of assets, lease payments, as surety or guarantor for the debt
of another, or otherwise) except (i) indebtedness to Bank, (ii) a first
mortgage loan on Debtor's primary residence in an amount not to exceed
$2,900,000.00 and (iii) other indebtedness which in the aggregate is
$25,000.00 or less.
E. Other Covenants. Violate or fail to comply with any covenants
or agreements regarding other indebtedness to Bank.
7. DEFAULT. The occurrence of any of the following shall constitute a
default under this Agreement and under each of the other Credit Documents:
A. Debtor shall fail to pay in full within ten days of the date
due any periodic payment of principal, interest, fee or other amount payable to
Bank prior to maturity under any Credit Document or any other obligation of
Debtor to Bank; or
B. Debtor shall fail to pay in full at maturity any principal,
interest, fee or other amount payable to Bank under any Credit Document or any
other obligation of Debtor to Bank; or
C. The discovery by Bank that any representation or warranty by
Debtor or any guarantor in any Credit Document or in any financial statement,
certificate, report or opinion submitted to Bank in connection with the Credit
was incorrect or misleading in any material respect when made; or
D. Debtor shall fail to pay in full or deposit with Bank such
cash payments or additional collateral as may be required under the terms of
that certain Collateral Maintenance Agreement dated of even date herewith
between Debtor and Bank, within the time periods set forth therein; or
E. Debtor shall fail to timely and properly observe, keep or
perform any term, covenant, agreement or condition in any Credit Document or in
any other security agreement, deed of trust, mortgage, assignment or other
contract securing payment of any indebtedness of Debtor to Bank, other than
those referred to in Subpart A, B, C and D above, and with respect to any such
default which by
CREDIT AGREEMENT/INDIVIDUAL
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its nature can be cured, such default shall continue for a period of thirty
days after notice of such default to or by Debtor; or
F. Any judgment against Debtor or any guarantor or other levy or
attachment against any property of Debtor in excess of $50,000.00 remains
unpaid, undischarged, not bonded or not dismissed for a period of 30 days; or
G. The death or legal incapacity of Debtor or any guarantor; or
H. Debtor or any guarantor, or any general partner or joint
venturer of Debtor or any guarantor (i) makes an assignment for the benefit of
creditors; (ii) admits in writing its inability to pay or fails to pay its
debts generally as they become due; (iii) files a petition for relief under any
chapter of the Bankruptcy Code or any other bankruptcy or debtor relief law,
domestic or foreign, as now or hereafter in effect, or seeking the appointment
of a trustee, receiver, custodian, liquidator or similar official for it or any
Collateral or any of its other property; or any such action is commenced
against it and it admits, acquiesces in or does not contest diligently the
material allegations thereof, or the action results in entry of an order for
relief against it, or it does not obtain permanent dismissal and discharge
thereof before the earlier of trial thereon or 60 days after commencement of
the action; or (iv) makes a transfer or incurs an obligation which is
fraudulent under any applicable law as to any creditor.
I. The liquidation, termination, dissolution or failure to
maintain good standing in the appropriate states of any guarantor.
8. REMEDIES UPON DEFAULT. If an event of default shall occur,
A. Any indebtedness of Debtor under any of the Credit Documents
shall, at Bank's option, without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
hereby expressly waived by Debtor;
B. The obligation, if any, of Bank to permit further borrowings
under any of the Credit Documents shall at Bank's option immediately cease and
terminate;
C. Bank shall have all rights, powers and remedies available
under each of the Credit Documents, or afforded by law, including without
limitation the right to resort to any or all of the Collateral and to exercise
any or all of the rights of a secured party pursuant to applicable law. All
rights, powers and remedies of Bank in connection with each of the Credit
Documents may be exercised at any time by Bank and from time to time after the
occurrence of any event of default, are cumulative and not exclusive, and shall
be in addition to any other rights, powers or remedies provided by law or
equity.
9. NOTICES. All notices, requests or demands which any party is required
or may desire to give to any other party under any provision of this Agreement
must be in writing delivered to each party at the following address:
Debtor: L. Scott Demerau & Julia E. Demerau
8465 Swiss Air Road
Gainesville, GA 30506
CREDIT AGREEMENT/INDIVIDUAL
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Bank: NationsBank of Georgia, N.A.
600 Peachtree Street, NE
Suite 1100
Atlanta, Georgia 30308
Attn: Private Banking
or to such other address as any party may designate by written notice to all of
the parties. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by hand delivery, upon delivery;
B. If sent by mail, upon the earlier of the date of receipt or
five (5) days after receipt in the U.S. Mail, first class postage prepaid.
10. MISCELLANEOUS. Debtor and Bank further covenant and agree as follows,
without limiting any requirement of any other Credit Document except as
provided in paragraph 10.F. of this Agreement:
A. Expenses. Debtor agrees to pay all out-of-pocket expenses of
Bank, including but not limited to all reasonable attorney's fees and expenses
actually incurred, incurred in connection with the Credit Documents and the
enforcement and collection of the Credit.
B. Cumulative Rights and No Waiver. Each and every right granted
to Bank under any Credit Document, or allowed it by law or equity shall be
cumulative of each other and may be exercised in addition to any and all other
rights of Bank, and no delay in exercising any right shall operate as a waiver
thereof, nor shall any single or partial exercise by Bank of any right preclude
any other or future exercise thereof or the exercise of any other right. Debtor
expressly waives any presentment, demand, protest or other notice of any kind,
including but not limited to notice of intent to accelerate and notice of
acceleration. No notice to or demand on Debtor or any guarantor in any case
shall, of itself, entitle Debtor to any other or future notice or demand in
similar or other circumstances.
C. Applicable Law. This Agreement and the rights and obligations
of the parties hereunder shall be governed by and interpreted in accordance
with the laws of the State in which Bank is located as indicated by Bank's
address in Section 9 of this Agreement and applicable United States federal
law.
D. Amendment. No modification, consent, amendment or waiver of
any provision of this Agreement, nor consent to any departure by Debtor
therefrom, shall be effective unless the same shall be in writing and signed by
a Vice President or higher level officer of Bank, and then shall be effective
only in the specific instance and for the purpose for which given. This
Agreement is binding upon Debtor, Debtor's heirs, personal representatives,
successors and assigns, and inures to the benefit of Bank, its successors and
assigns; however, no assignment or other transfer of Debtor's rights or
obligations hereunder shall be made or be effective without Bank's prior
written consent nor shall it relieve Debtor of any obligations hereunder. There
is no third party beneficiary of this Agreement. If more than one person
executes this Agreement as Debtor, the obligations of Debtor hereunder shall be
joint and several.
E. Documents. All documents, certificates and other items
required under this Agreement to be executed and/or delivered to Bank shall be
in form and content satisfactory to Bank and its counsel.
CREDIT AGREEMENT/INDIVIDUAL
PAGE 6
<PAGE> 53
F. Compliance with Usury Laws. All existing and future agreements
regarding the Credit are hereby limited so that in no event (including
prepayment, default, demand for payment, or acceleration) shall the interest
taken, reserved, contracted for, charged or received exceed the maximum
nonusurious amount permitted by applicable law (the "Maximum Amount"); any
document possibly to the contrary shall be automatically reformed and the
interest payable automatically reduced to the Maximum Amount, without necessity
of execution of any amendment or new document; if Bank ever receives interest
in an amount which apart from this provision would exceed the Maximum Amount,
the excess shall, without penalty, be applied to principal in inverse order of
maturity of installments or be refunded to the payor if the principal is paid
in full; and all interest paid or agreed to be paid shall be spread throughout
the full term (including extensions) of the debt so that the amount of interest
does not exceed the Maximum Amount.
G. Partial Invalidity. A determination that any provision of any
Credit Document is unenforceable or invalid shall not affect the enforceability
or validity of any other provision and the determination that the application
of any provision of any Credit Document to any person or circumstance is
illegal or unenforceable shall not affect the enforceability or validity of
such provision as it may apply to other persons or circumstances.
H. Survivability. All covenants, agreements, representations and
warranties made herein or in the other Credit Documents shall survive the
making of the Credit and shall continue in full force and effect so long as the
Credit is outstanding or the obligation of Bank to make any advances under the
Line shall not have expired.
I. Payment Of Fees. Debtor shall pay Bank a loan fee in the amount of
Twelve Thousand and 00/100 Dollars ($12,000.00) which is fully earned by Bank
and shall not be applied to principal or interest. Debtor hereby agrees to pay
for all costs and expenses, including reasonable attorneys' fees actually
incurred, incurred in connection with the preparation of this Agreement and the
Credit Documents.
11. ADDITIONAL PROVISIONS (which shall be controlling in the event of any
conflict with the preceding provisions, except that paragraph 10.F. of this
Agreement shall be controlling in any event).
12. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED
ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION
IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY
OF THE BORROWER'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE
OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN NINETY
CREDIT AGREEMENT/INDIVIDUAL
PAGE 7
<PAGE> 54
(90) DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL
ONLY, UPON SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL SIXTY (60) DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION
OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY
THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK HERETO
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED
TO) INJUNCTIVE RELIEF OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE
SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL
OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. AT BANK'S OPTION, FORECLOSURE
UNDER A DEED OF TRUST OR MORTGAGE MAY BE ACCOMPLISHED BY ANY OF THE FOLLOWING:
BY EXERCISE OF ANY POWER OF SALE SET FORTH IN THE DEED OF TRUST OR MORTGAGE, OR
BY JUDICIAL FORECLOSURE. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE
INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR
ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
THIS WRITTEN AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
DEBTOR: BANK:
/s/ L. Scott Demerau
- -------------------------------- NationsBank of Georgia, N.A
L. Scott Demerau
/s/ Julia E. Demerau
- -------------------------------- By: /s/ Brenda O. Mead
Julia E. Demerau ------------------------
Name: Brenda O. Mead
-----------------------
Title: Senior Vice President
---------------------
CREDIT AGREEMENT/INDIVIDUAL
PAGE 8
<PAGE> 55
PROMISSORY NOTE
$1,600,000.00 October 6, 1995
1. Payment Schedule and Maturity Date. FOR VALUE RECEIVED, the
undersigned (herein called "Maker," whether one or more) hereby promises to pay
to the order of NationsBank of Georgia, N.A., a national banking association
("Lender"), without offset, in immediately available funds in lawful money of
the United States of America, at NationsBank Plaza, 600 Peachtree Street, N.E.
in the City of Atlanta, Fulton County, Georgia, the principal sum of ONE
MILLION SIX HUNDRED THOUSAND AND NO/100 DOLLARS ($1,600,000.00) (or the unpaid
balance of all principal advanced against this Note, if that amount is less)
together with interest on the unpaid principal balance of this Note from day to
day outstanding as hereinafter provided, as follows:
Interest at the rate(s) provided herein shall be due and payable
monthly, in arrears, commencing on November 1, 1995 (with payment of all
interest accrued during the month of October, 1995), and continuing on the
first (1st) day of each and every month thereafter (with payment of all
interest accrued during the immediately preceding calendar month) through and
including August 1, 1996, and on August 18, 1996, the entire outstanding
principal balance hereof, together with all accrued but unpaid interest
thereon, shall be due and payable in full.
2. Security; Loan Documents. The security for this Note includes a Stock
Pledge Agreement and a Pledge and Security Agreement (which, as they may have
been or may be amended, restated, modified or supplemented from time to time,
are herein called the "Pledge Agreements") of even date herewith from Maker to
Lender. This Note, the Pledge Agreements, the Loan Agreement between Maker and
Lender of even date herewith and any other documents now or hereafter securing,
guaranteeing or executed in connection with the loan evidenced by this Note,
are, as the same have been or may be amended, restated, modified or
supplemented from time to time, herein sometimes called individually a "Loan
Document" and together the "Loan Documents."
3. Interest Rate. Subject to the further provisions of this Section 3,
the unpaid principal balance of this Note from day to day outstanding which is
not past due shall bear
2
<PAGE> 56
interest at a rate per annum equal to the lesser of (i) the Maximum Rate
(hereinafter defined) or (ii) the Stated Rate (hereinafter defined) computed on
the Annual Basis (hereinafter defined). The term "Stated Rate" as used in this
Note means a variable rate ("Variable Rate") equal to the Prime Rate of Lender
plus 1.5% per annum.
The Stated Rate shall, unless otherwise specified herein and subject to the
following clause, change with each change in such Variable Rate as of the date
of any such change, without notice, subject always to the limitations set out
in this Section 3; provided, however, that if on any day the Variable Rate
shall exceed the maximum permitted by application of the Maximum Rate in effect
on that day, the Variable Rate shall be limited to, but shall remain at and
vary with, the maximum permitted by application of the Maximum Rate on that day
and on each day thereafter until the total amount of interest accrued at the
Variable Rate on the unpaid balance of this Note equals the total amount of
interest which would have accrued if there were no limitation by the Maximum
Rate, or until the earlier payment in full of this Note.
The "Annual Basis" referred to in this Note means computation of interest for
the actual number of days elapsed and as if each year were composed of 365 days
(366 in a leap year).
However, use of the Annual Basis is subject always to limitation by the Maximum
Rate and in no event shall any such computation result in an amount of interest
in excess of the Maximum Amount (hereinafter defined). In any event, all
interest at the Maximum Rate shall be computed on the Annual Basis of 365 days
(366 in a leap year).
The term "Prime Rate" as used in this Note means, on any day, the rate of
interest per annum then most recently established by Lender as its "prime
rate." Any such rate is a general reference rate of interest, may not be
related to any other rate, and may not be the lowest or best rate actually
charged by Lender to any customer or a favored rate and may not correspond with
future increases or decreases in interest rates charged by other lenders or
market rates in general.
From and after maturity (whether by acceleration or otherwise), any principal
of, and to the extent permitted by applicable law, any interest on this Note,
and any other sum
2
<PAGE> 57
payable hereunder, shall bear interest, payable on demand, at a rate per annum
(the "Past Due Rate") equal to the lesser of (i) the Stated Rate plus four
percent (4%) or (ii) the Maximum Rate.
If any principal or interest is not paid when due, Maker shall pay, on demand,
a late charge of four cents ($.04) for each dollar of each installment which
becomes past due for a period exceeding ten (10) days to help defray the added
expense incurred in handling said delinquent installment, provided that in no
event shall interest be due or payable in excess of the Maximum Rate.
The term "Maximum Rate" as used in this Note means the maximum nonusurious rate
of interest per annum permitted by whichever of applicable United States
federal law or the law of the state indicated in Section 8 hereof permits the
higher interest rate, including to the extent permitted by applicable law, any
amendments thereof hereafter or any new law hereafter coming into effect to the
extent a higher Maximum Rate is permitted thereby. The Maximum Rate shall be
applied by taking into account all amounts characterized by applicable law as
interest on the debt evidenced by this Note, so that the aggregate of all
interest does not exceed the maximum nonusurious amount permitted by applicable
law (the "Maximum Amount").
4. Prepayment. Maker may prepay the principal balance of this Note, in
full at any time or in part from time to time. If this Note is prepaid in full,
any commitment of Lender for further advances shall automatically terminate.
5. Certain Provisions Regarding Payments. All payments made as scheduled
on this Note shall be applied, to the extent thereof, to accrued but unpaid
interest, unpaid principal, and any other sums due and unpaid to Lender under
the Loan Documents, in such manner and order as Lender may elect in its
discretion. All prepayments on this Note shall be applied, to the extent
thereof, to accrued but unpaid interest on the amount prepaid, to the remaining
principal installments, and any other sums due and unpaid to Lender under the
Loan Documents, in such manner and order as Lender may elect in its discretion,
including but not limited to application to principal installments in inverse
order of maturity. Remittances in payment of any part of the indebtedness other
than in the required amount in immediately available U.S. funds shall not,
regardless of any receipt or credit issued therefor, constitute payment until
the required amount is actually received by the holder hereof in immediately
available U.S. funds and shall be made
3
<PAGE> 58
and accepted subject to the condition that any check or draft may be handled
for collection in accordance with the practice of the collecting bank or banks.
Acceptance by the holder hereof of any payment in an amount less than the
amount then due on any indebtedness shall be deemed an acceptance on account
only and shall not in any way excuse the existence of a Default (hereinafter
defined).
6. Defaults. It shall be a default "Default") under this Note and each of
the other Loan Documents if (a) any periodic payment of principal, interest or
other amount of money due under this Note prior to maturity is not paid in full
within ten days when due; or (b) any principal, interest or other amount of
money due at maturity under this Note is not paid in full at maturity; or (c)
there shall occur any default or event of default under the Loan Agreement, the
Pledge Agreements or any other Loan Document which is not cured within any
applicable notice, cure or grace period. Upon the occurrence of a Default, the
holder hereof shall have the rights to declare the unpaid principal balance and
accrued but unpaid interest on this Note at once due and payable (and upon such
declaration, the same shall be at once due and payable), to foreclose any liens
and security interests securing payment hereof and to exercise any of its other
rights, powers and remedies under this Note, under any other Loan Document, or
at law or in equity.
All of the rights, remedies, powers and privileges (together, "Rights") of the
holder hereof provided for in this Note and in any other Loan Document are
cumulative of each other and of any and all other Rights at law or in equity.
The resort to any Right shall not prevent the concurrent or subsequent
employment of any other appropriate Right. No single or partial exercise of any
Right shall exhaust it, or preclude any other or further exercise thereof, and
every Right may be exercised at any time and from time to time. No failure by
the holder hereof to exercise, nor delay in exercising any Right, including but
not limited to the right to accelerate the maturity of this Note, shall be
construed as a waiver of any Default or as a waiver of any Right. Without
limiting the generality of the foregoing provisions, the acceptance by the
holder hereof from time to time of any payment under this Note which is past
due or which is less than the payment in full of all amounts due and payable at
the time of such payment, shall not (i) constitute a waiver of or impair or
extinguish the right of the holder hereof to accelerate the maturity of this
Note or to exercise any other Right at the time or at any subsequent time, or
nullify any prior exercise of any such Right, or (ii) constitute a waiver of
the requirement
4
<PAGE> 59
of punctual payment and performance or a novation in any respect.
If any holder of this Note retains an attorney in connection with any Default
or at maturity or to collect, enforce or defend this Note or any other Loan
Document in any lawsuit or in any probate, reorganization, bankruptcy or other
proceeding, or if Maker sues any holder in connection with this Note or any
other Loan Document and does not prevail, then Maker agrees to pay to each such
holder, in addition to principal, interest and any other sums owing to Lender
under the Loan Documents, all reasonable costs and expenses incurred by such
holder in trying to collect this Note or in any such suit or proceeding,
including reasonable attorneys' fees actually incurred.
7. Controlling Agreement. All parties to the Loan Documents intend to
comply with applicable usury law. All existing and future agreements regarding
the debt evidenced by this Note are hereby limited and controlled by the
provisions of this Section. In no event (including but not limited to
prepayment, default, demand for payment, or acceleration of maturity) shall the
interest taken, reserved, contracted for, charged or received under this Note
or under any of the other Loan Documents or otherwise, exceed the Maximum
Amount. If, from any possible construction of any document, interest would
otherwise be payable in excess of the Maximum Amount, then, ipso facto, such
document shall be reformed and the interest payable reduced to the Maximum
Amount, without necessity of execution of any amendment or new document. If the
holder hereof ever receives interest in an amount which apart from this
provision would exceed the Maximum Amount, the excess shall, without penalty,
be applied to the unpaid principal of this Note in inverse order of maturity of
installments and not to the payment of interest, or be refunded to the payor,
at the election of the holder hereof in its sole discretion or as required by
applicable law. The holder hereof does not intend to charge or receive unearned
interest on acceleration. All interest paid or agreed to be paid to the holder
hereof shall be spread throughout the full term (including any renewal or
extension) of the debt so that the amount of interest does not exceed the
Maximum Amount.
8. General Provisions. Time is of the essence with respect to Maker's
obligations under this Note. If more than one person or entity executes this
Note as Maker, all of said parties shall be jointly and severally liable for
payment of the indebtedness evidenced hereby. Maker and all sureties,
5
<PAGE> 60
endorsers, guarantors and any other party now or hereafter liable for the
payment of this Note in whole or in part, hereby severally (i) waive demand,
presentment for payment, notice of dishonor and of nonpayment, protest, notice
of protest, notice of intent to accelerate, notice of acceleration and all
other notices (except any notices which are specifically required by this Note
or any other Loan Document), filing of suit and diligence in collecting this
Note or enforcing any of the security herefor; (ii) agree to any substitution,
subordination, exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; (iii) agree that the holder
hereof shall not be required first to institute suit or exhaust its remedies
hereon against Maker or others liable or to become liable hereon or to perfect
or enforce its rights against them or any security herefor; (iv) consent to any
extensions or postponements of time of payment of this Note for any period or
periods of time and to any partial payments, before or after maturity, and to
any other indulgences with respect hereto, without notice thereof to any of
them; and (v) submit (and waive all rights to object) to non-exclusive personal
jurisdiction in the State of Georgia, and venue in the county in which payment
is to be made as specified in Section 1 of this Note, for the enforcement of
any and all obligations under the Loan Documents.
Maker hereby warrants, represents and covenants that no funds disbursed
hereunder shall be used for personal, family or household purposes.
A determination that any provision of this Note is unenforceable or invalid
shall not affect the enforceability or validity of any other provision and the
determination that the application of any provision of this Note to any person
or circumstance is illegal or unenforceable shall not affect the enforceability
or validity of such provision as it may apply to other persons or
circumstances. This Note may not be amended except in a writing specifically
intended for the purpose and executed by the party against whom enforcement of
the amendment is sought. The holder of this Note may, from time to time, sell
or offer to sell the loan evidenced by this Note, or interests therein, to one
or more assignees or participants and is hereby authorized to disseminate any
information it has pertaining to the loan evidenced by this Note, including,
without limitation, any security for this Note and credit information on Maker,
any of its principals and any guarantor of this Note, to any, such assignee or
participant or prospective assignee or prospective participant, and to the
extent, if any,
6
<PAGE> 61
specified in any such assignment or participation, such assignee(s) or
participant(s) shall have the rights and benefits with respect to this Note and
the other Loan Documents as such person(s) would have if such person(s) were
Lender hereunder. Maker warrants and represents to Lender and all other holders
of this Note that the loan evidenced by this Note is and will be for business
or commercial purposes and not primarily for personal, family, or household
use. The terms, provisions, covenants and conditions hereof shall be binding
upon Maker and the heirs, devisees, representatives, successors and assigns of
Maker. Captions and headings in this Note are for convenience only and shall be
disregarded in construing it. THIS NOTE, AND ITS VALIDITY, ENFORCEMENT AND
INTERPRETATION, SHALL BE GOVERNED BY GEORGIA LAW (WITHOUT REGARD TO ANY
CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, Maker has duly executed and sealed this Note as of the date
first above written.
MAKER:
/s/ L. Scott Demerau
-------------------------------L.S.
L. Scott Demerau
Maker's Federal Tax Identification Number: ###-##-####
-----------
/s/ Julia E. Demerau
-------------------------------L.S.
Julia E. Demerau
Maker's Federal Tax Identification Number: ###-##-####
-----------
7
<PAGE> 62
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), given as of this 6th
day of October, 1995, by L. SCOTT DEMERAU and JULIA E. DEMERAU (collectively,
the "Pledgor") in favor of NATIONSBANK OF GEORGIA, N.A., a national banking
association ("Bank");
WITNESSETH:
WHEREAS, Pledgor and Bank have entered into that certain Loan
Agreement dated as of even date herewith (the "Loan Agreement"); and
WHEREAS, pursuant to the Loan Agreement, Borrower made, executed and
delivered to the Bank that certain Promissory Note in the original principal
amount of One Million Six Hundred Thousand and No/100 Dollars ($1,600,000.00)
(the "Note"); and
WHEREAS, as a condition precedent to the Bank entering into the Loan
Agreement, the Bank required the Pledgor to execute and deliver to the Bank a
pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor is the owner of 857,479 shares of the issued and
outstanding shares of capital stock of Mountasia Entertainment International,
Inc., a Georgia corporation (the "Issuer"), Certificate No. MEC 0551; and
WHEREAS, the Pledgor has agreed to pledge and assign to the Bank all
of the Pledgor's right, title, and interest in and to said shares, together
with the other collateral hereinafter described (collectively, the "Stock"), as
security for the payment and performance of its obligations under the Loan
Agreement and the Note;
NOW THEREFORE, in consideration of the premises, the mutual covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgor covenants and
agrees with the Bank as follows:
1. Warranty. The Pledgor hereby warrants to the Bank that except
for the security interest created hereby, the Pledgor owns the shares of the
Stock free and clear of all liens, charges, and encumbrances, that the Stock is
duly issued, fully paid, and non-assessable, that the Pledgor has the
unencumbered and unrestricted right to pledge the Stock, and that no consent or
approval of any governmental or regulatory authority, or of any securities
exchange, which has not been obtained was or is necessary to the validity of
this pledge.
2. Security Interest. The Pledgor hereby grants, conveys, and
pledges to the Bank a security interest in and security title to all of its
right, title, and interest in and to the Stock, and has transferred to the
Bank, all of its right, title, and interest in and to, the Stock presently held
by the Pledgor together with all proceeds and
<PAGE> 63
products thereof and all dividends paid with respect thereto, as security for
(a) all obligations of the Pledgor to the Bank hereunder, and (b) payment and
performance of all other Obligations. The Pledgor has, on this date delivered
the Stock to and deposited the Stock with the Bank, together with stock powers
endorsed in blank by the Pledgor. In addition, the Pledgor has this date
notified the Issuer of the execution of this Agreement and the pledge of the
Stock to the Bank. The Pledgor agrees that at any time and from time to time,
at the expense of the Pledgor, the Pledgor will promptly execute and deliver
all further instruments and documents, and take all further action that may be
necessary, or that the Bank may reasonably request, in order to perfect and
protect the security interest granted hereby or to enable the Bank to exercise
and enforce its rights and remedies hereunder with respect to all or any
portion of the Stock. The Pledgor hereby appoints the Bank the Pledgor's true
and lawful attorney-in-fact to execute such documents (including, without
limitation, a stock power) upon the occurrence and during the continuance of a
Default (as defined below) as shall be necessary to effect a transfer of the
Stock in connection with any permitted disposition of the Stock by the Bank
(which power of attorney is coupled with an interest and is irrevocable so long
as any of the Obligations are outstanding or the Bank have any obligation to
make advances or other extensions of credit under the Loan Agreement).
3. Additional Shares. In the event that, during the term of this
Agreement:
(a) Any stock dividend, stock split, reclassification,
readjustment, or other change is declared or made in the
capital structure of the Issuer, all new, substituted, and additional
shares, or other securities, issued by reason of any such change and
received by the Pledgor or to which the Pledgor shall be entitled
shall be immediately transferred to the Bank, by delivery, together
with stock powers endorsed in blank by the Pledgor, and shall
thereupon constitute Stock to be held by the Bank under the terms of
this Agreement; and
(b) Subscriptions, warrants, or any other rights or
options shall be issued in connection with the Stock, all new
stock, or other securities acquired through such subscriptions,
warrants, rights, or options by the Pledgor shall be immediately
transferred by delivery to the Bank and shall thereupon constitute
Stock to be held by the Bank under the terms of this Agreement.
4. Default. Upon the occurrence of an Default or Event of Default
under the Note or Loan Agreement and the lapse of any applicable notice, cure
or grace period (any of such occurrences being, hereinafter referred to
collectively as a "Default"), the Bank may transfer, sell, or otherwise
dispose of the Stock or any portion of the Stock at a public or private sale or
make other commercially reasonable disposition of the Stock or any portion
thereof after ten (10) days' notice to the Pledgor, and the Bank and/or the
Bank may purchase the Stock or any portion thereof at any public or private
sale. The proceeds of the public or private sale or other disposition shall be
applied to the costs incurred in connection with the sale, expressly including,
without limitation, any costs under Section 6(a) hereof, and to the other
Obligations, in such order as the Bank may determine, and any remaining
proceeds
2
<PAGE> 64
shall be paid over to the Pledgor or others as by law provided. In the event
the proceeds of the sale or other disposition of the Stock are insufficient to
pay such expenses, interest, principal of the Obligations, and damages, the
Pledgor shall remain liable to the Bank for any such deficiency. All costs and
expenses, including reasonable attorneys' fees and expenses, actually incurred
by the Bank in obtaining performance of or in collecting any payments due under
this Agreement shall be deemed part of the Obligations hereunder.
5. Additional Rights of Secured Party. In addition to their
rights and privileges under this Agreement, the Bank shall have all the rights,
powers, and privileges of secured parties under the Uniform Commercial Code of
the State of Georgia. All rights of the Bank shall be cumulative and not
exclusive.
6. Disposition of Stock by the Bank. If the Stock or any portion
thereof is not registered under the various United States, federal or state
securities acts the disposition thereof after Default may be restricted to one
or more private (instead of public) sales in view of the lack of such
registration. The Pledgor understands that upon such disposition, the Bank may
approach only a restricted number of potential purchasers and further
understands that a sale under such circumstances may yield a lower price for
the Stock than if the Stock was registered pursuant to federal and state
securities legislation and sold on the open market. The Pledgor, therefore,
agrees that:
(a) if the Bank shall, pursuant to the terms of this
Agreement, sell or cause the Stock or any portion thereof to be
sold at a private sale, the Bank shall have the right to rely upon
the advice and opinion of any national brokerage or investment from
having recognized expertise and experience in connection with shares
of companies similar to the Stock (but shall not be obligated to seek
such advice and the failure to do so shall not be considered in
determining the commercial reasonableness of the Bank's action) as to
the best manner in which to expose the Stock for sale and as to the
best price reasonably obtainable at the private sale thereof; and
(b) that such reliance shall be conclusive evidence that
the Bank has handled such disposition in a commercially reasonable
manner.
7. Pledgor's Obligations Absolute. The obligations of the Pledgor
under this Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any remedies against any other person, nor
against other security or liens or encumbrances available to the Bank or any of
its successors, assigns, or agents. The Pledgor hereby waives any right to
require that an action be brought against any other person or entity or to
require that resort be had to any security or to any balance of any deposit
account or credit on the books of the Bank in favor of any other person or
entity prior to any exercise of rights or remedies hereunder.
8. Voting Rights.
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(a) After the occurrence and during the continuation of a
Default and for so long as any of the Obligations remain
unpaid, (i) the Bank may, upon fifteen (15) days' prior written
notice to the Pledgor of its intention to do so, exercise all voting
rights, and all other ownership or consensual rights of the Stock,
but under no circumstances is the Bank obligated by the terms of this
Agreement to exercise such rights, and (ii) the Pledgor hereby
appoints the Bank the Pledgor's true and lawful attorney-in-fact and
IRREVOCABLE PROXY to vote the Stock in any manner the Bank reasonably
deems advisable for or against all matters submitted or which may be
submitted to a vote of shareholders. The power of attorney granted
hereby is coupled with an interest and shall be irrevocable for so
long as any of the Obligations remain unpaid and until the Bank's
obligation to make advances or extensions of credit to the Borrower
under the Loan Agreement have been terminated.
(b) For so long as the Pledgor shall have the right to
vote the Stock, the Pledgor covenants and agrees that it will
not, without the prior written consent of the Bank, vote or take any
consensual action with respect to the Stock which would constitute a
Default under this Agreement.
9. Termination. This Agreement, and the security interest
hereunder granted to the Bank in the Stock, shall terminate on the date on
which (a) all Obligations of the Borrower and the Pledgor to the Bank under
the Note, the Loan Agreement and any other agreement have been fully satisfied,
and (b) the Bank's obligation to make any advances or extensions of credit to
the Borrower under the provisions of the Loan Agreement and any other agreement
has been terminated. Thereafter, upon written demand from the Pledgor, the
Bank, by its acceptance hereof, agrees that it shall promptly release the Stock
by delivery of the Stock to the Pledgor, unless and except to the extent the
Stock has been liquidated or otherwise disposed of pursuant to Section 6
hereof.
10. Security Agreement. This Agreement shall constitute a security
agreement under the Uniform Commercial Code as in effect in the State of
Georgia.
11. General.
(a) Time is of the essence of this Agreement. No waiver
by the Bank of any power or right hereunder or of any Default
by the Pledgor hereunder shall be binding upon the Bank unless in
writing signed by the Bank. No failure or delay by the Bank to
exercise any power or right hereunder or binding waiver of any
Default hereunder shall operate as a waiver of any other or further
exercise of such power or any other Default. This Agreement, together
with all documents referred to herein, constitutes the entire
agreement between the Pledgor and the Bank and may not be modified
except by a writing executed by the Bank and delivered by the Bank to
the Pledgor.
(b) If any paragraph or part thereof shall for any reason
be held or adjudged to be invalid, illegal, or unenforceable by any court of
competent
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<PAGE> 66
jurisdiction, such paragraph or part thereof so adjudicated
invalid, illegal, or unenforceable shall be deemed separate,
distinct, and independent, and the remainder of this Agreement shall
remain in full force and effect and shall not be affected by such
holding or adjudication.
(c) All representations and warranties made and given
herein by the Pledgor shall survive the execution and delivery
of this Agreement and shall remain in full force and effect until
such time as this Agreement is terminated as provided in Section 9
hereof.
(d) The rights and obligations of the parties hereunder
shall inure to the benefit of and bind their respective heirs,
executors, administrators, legal representatives, successors, and
assigns.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.
(f) All notices and demands required or permitted
hereunder or by law shall be in writing and shall be made and
delivered as provided in the Loan Agreement.
(g) The pronouns used in this Agreement shall be
construed as masculine, feminine, or neuter as the occasion may
require.
(h) Captions are for reference only and in no way limit
the terms of this Agreement.
(i) All references herein to any document, instrument, or
agreement shall be deemed to refer to such document,
instrument, or agreement as the same may be amended, modified,
restated, supplemented, or replaced from time to time.
IN WITNESS WHEREOF, the Pledgor has executed this Agreement
under seal as of the day and year first above written.
PLEDGOR:
/s/ L. Scott Demerau L.S.
-----------------------------
L. SCOTT DEMERAU
/s/ Julia E. Demerau L.S.
-----------------------------
JULIA E. DEMERAU
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STOCK POWER
FOR VALUE RECEIVED, L. SCOTT DEMERAU AND JULIA E.
DEMERAU hereby sell, assign and transfer unto ______________________________
____________________________________________________________________________,
857,479 Shares of Common Stock of MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.,
a Georgia corporation, standing in the undersigned's name on the books of said
Corporation represented by Certificate No. MEC 0551 herewith, and does hereby
irrevocably constitute and appoint _________________________________________
_________________________________________ as attorney to transfer the said
stock on the books of said Corporation with full power of substitution in the
premises.
/s/ L. Scott Demerau
-------------------------------
L. SCOTT DEMERAU
/s/ L. Scott Demerau
-------------------------------
JULIA E. DEMERAU
Dated:
------------------
In the presence of:
- --------------------------------
<PAGE> 68
COLLATERAL MAINTENANCE AGREEMENT
This Collateral Maintenance Agreement (this "Agreement"), made and
entered into effective October 6, 1995 by and between L. Scott & Julia E.
Demerau ("Borrower", whether one or more), whose address is 7725 Bamby Road,
Cumming, Georgia 30131-8101, and NATIONSBANK OF GEORGIA, N.A., a national
banking association ("Bank"), whose address is 600 Peachtree Street, N.E.,
Atlanta, Georgia 30308.
WITNESSETH:
WHEREAS, Borrower has requested that Bank make or renew and extend a
loan to it in the maximum principal amount of One Million Six Hundred Thousand
and 00/100 Dollars $1,600,000.00)(the "Loan") to be evidenced by a promissory
note dated of even date herewith (as hereafter modified, renewed, or extended,
the "Note"); and
WHEREAS, as a condition to the Loan, Bank requires Borrower's promise
to collateralize the Loan at all times in accordance with this Agreement; and
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and Borrower hereby agree as follows:
1. Loan. The Loan shall be evidenced by and subject to the terms,
conditions and covenants of the Note, this Agreement, the Stock Pledge
Agreement (hereinafter defined) and all other documents now or hereafter
securing, guaranteeing or otherwise pertaining to the Loan, as renewed,
extended, amended or supplemented from time to time (collectively, the "Loan
Documents"), and shall be due and payable to the Bank as provided therein.
2. Security for the Loan. To secure payment and satisfaction of
the Loan, and all renewals, extensions or rearrangements thereof, Borrower
shall execute and deliver to Bank, contemporaneously with the execution of this
Agreement, a Stock Pledge Agreement (herein so called) and other Loan Documents
in form and substance satisfactory to Bank, pursuant to which Bank will be
granted a valid, perfected and enforceable first priority security interest in
securities satisfactory to Bank and of a type described on Exhibit "A" attached
hereto and made a part hereof (the "Collateral").
Borrower further agrees to execute any and all amendments or
supplements to the Stock Pledge Agreement and other Loan Documents and to take
other actions which Bank reasonably deems necessary to evidence, perfect, or
protect its security interest in any Collateral concurrently herewith or
hereafter pledged to secure the Loan and to comply with all
<PAGE> 69
applicable laws, including without limitation, Federal Reserve Regulation U.
Borrower also agrees to immediately deliver or cause to be delivered to Bank
all Collateral pledged or to be pledged to Bank and such stock or bond powers
as are requested by Bank.
3. Maintenance of Collateral. Borrower agrees at all times during
the term of the Loan, and any renewals, extensions or rearrangements thereof,
to maintain Collateral securing the Loan such that the outstanding principal
balance of the Loan from time to time (the "Loan Balance") will never equal or
exceed the amount (the "Adjusted Collateral Value") determined by multiplying
the Collateral Value (as defined in Paragraph 4 below) by the Margin Call
Percentage for the type of Collateral shown on Exhibit 'A". Only the types of
Collateral shown on Exhibit "A" shall be considered in determining the Adjusted
Collateral value.
4. Value of Collateral. The "Collateral Value" of Collateral
shall be determined at any given time as follows:
(a) If stock, the Collateral Value shall be determined by
multiplying:
(i) The per share price of such stock at the most recent
close of trading on a trading exchange stock; times (ii) the
number of shares of such stock held by Bank as Collateral. In
the event that stock held as Collateral is not traded on an
exchange, the Collateral Value of such stock shall be
determined by obtaining a quote of value of such stock from a
reputable brokerage firm selected by Bank.
(b) If a mutual fund, the Collateral Value shall be determined by
multiplying:
(ii) the most recent per share net asset value of such mutual
fund obtained from the Wall Street Journal; times (ii) the
number of shares of such mutual fund held by Bank as
Collateral. In the event that such net asset value is not
available in the Wall Street Journal, the Collateral Value
shall be the value quoted to Bank by a reputable brokerage
firm selected by Bank.
(c) If corporate bonds, the Collateral Value shall be determined
from the most recent closing price for such bonds obtained from the
Wall Street Journal. If such closing price is not available in the
Wall Street Journal, the Collateral Value shall be the value quoted to
Bank by a reputable brokerage firm selected by Bank.
(d) If government or agency obligations or bonds, the Collateral
Value shall be determined from the most recent closing bid price for
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<PAGE> 70
such bonds obtained from the Wall Street Journal. If such closing bid
price is not available in the Wall Street Journal, the Collateral
Value shall be the value quoted to Bank by a reputable brokerage firm
selected by Bank.
5. Events of Default. Borrower and Bank understand and agree that
if at any time the Loan Balance is greater than the Adjusted Collateral Value,
that such occurrence shall constitute an event of default under the Note, the
Stock Pledge Agreement and the other Loan Documents. Bank shall send Borrower
written notification of such occurrence and Borrower shall have ten (10) days
from the date such written notification is postmarked and placed in the mail to
Borrower at the address listed in the preamble of this Agreement or such notice
is otherwise delivered to Borrower either: (i) pledge additional Collateral
satisfactory to Bank, in Bank's sole opinion, such that the ratio of the Loan
Balance to the Collateral Value does not exceed the Original Advance Percentage
for the type of collateral shown on Exhibit "A" ("Original Advance Percentage')
or (ii) reduce the Loan Balance by an amount such that the ratio of the Loan
Balance to the Collateral Value does not exceed the Original Advance
Percentage. Any such reduction in the Loan Balance shall not affect or reduce
any future principal payments due on the Loan except to the extent such
reductions are applied against Loan payments in accordance with the Loan
Documents. In the event Borrower fails to pledge additional Collateral or
reduce the Loan Balance within said ten (10) day period so that the ratio of
the Loan Balance to the Collateral Value does not exceed the Original Advance
Percentage, all parties to this Agreement agree and acknowledge that, at Bank's
option, all obligations of Bank to extend credit pursuant to the Note and the
other Loan Documents shall terminate and notwithstanding any notice provisions
in the Note or other Loan Documents, at Bank's option, the principal and
interest accrued on the Note shall become due and payable, without any
presentment, acceleration, demand, protest, notice of intent to accelerate,
notice of acceleration, notice of protest or notice of any kind, all of which
are hereby expressly waived by Borrower. In addition to any other remedies that
may be available to Bank, upon an event of default as described herein, Bank
may, and Borrower hereby authorizes Bank to, sell all or any part of the
Collateral in any commercially reasonable manner and to apply the proceeds of
such Collateral to payment of the principal, interest and any other costs or
expenses due on the Loan. Borrower specifically understands and agrees that any
such sales by Bank of all or part of the Collateral pursuant to the terms of
this Agreement may be effected by Bank at times and in manners which could
result in the proceeds of such sales being significantly and materially less
than might have been received if such sales had occurred at different times or
in different manners, and Borrower hereby indemnities Bank from and against any
and all obligations and liabilities arising out of or related to the timing or
manner of any such sales. Unless Borrower has no liability therefor otherwise
than under this Agreement, Borrower shall be liable to Bank for any deficiency
that exists on the Loan if the application of
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<PAGE> 71
such proceeds does not satisfy the principal, interest, and other costs and
expenses due on the Loan in full, and any other proceeds in excess of the
principal, interest and other costs and expenses due on the Loan (if any) shall
be delivered by Bank to the person or persons legally entitled to it. To the
extent necessary to enable Bank to sell the Collateral or any part thereof,
Borrower hereby grants Bank a power of attorney and designates Bank as
Borrower's attorney in fact to sell the Collateral and apply the proceeds as
herein provided. This power of attorney is coupled with an interest, is
irrevocable, and shall not terminate upon the disability of Borrower. Bank may
waive any default without being deemed to have waived any other prior or
subsequent default.
6. Sale or Substitution of Collateral. Subject to the provisions
of paragraph 3 above, Bank and Borrower understand and agree that at any time
Borrower is not in default on the Note, Stock Pledge Agreement, or other Loan
Documents, Borrower may sell or substitute any or all of the Collateral,
provided that the entirety of the net proceeds (i.e., one hundred percent
(100%) of the proceeds net of any brokerage firm sales commission) of any sale
of any Collateral shall be delivered to Bank to be applied by Bank first to the
payment of any unpaid interest then accrued on the Loan and then to the
principal of the Loan, or if a substitution of Collateral, that new Collateral
shall be acceptable to Bank in its sole discretion and the Actual Collateral
Value shall be greater than the Loan Balance. Notwithstanding anything in this
paragraph to the contrary, any sales or substitutions of Collateral shall
comply with Federal Reserve Regulation U.
7. Term of Agreement. This Agreement shall remain in full force
and effect until Loan, including all renewals, extensions and rearrangements
thereof, has been paid in full.
8. Entire Agreement. This Agreement, the Note, and the other Loan
Documents constitute the entire agreement, understanding, representations and
warranties of the parties hereto and supersede all prior agreements,
arrangements and understandings between the parties. Should a conflict in any
terms, conditions or covenants exist between this Agreement and any other
document, this Agreement shall be controlling.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia and federal laws
governing national banking associations .
10. Controlling Agreement. The parties intend to comply with
applicable usury laws. All existing and future agreements regarding the debt
evidenced by the Note are hereby limited and controlled by the provisions of
this paragraph. In no event (including but not limited to prepayment, default,
demand for payment, or acceleration) shall the interest taken, reserved,
contracted for, charged or received under the Note or Loan
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<PAGE> 72
Documents or otherwise exceed the Maximum Amount. If from any possible
construction of any document, interest would otherwise be payable in excess of
the Maximum Amount, such document shall automatically be reformed and the
interest payable automatically reduced to the Maximum Amount, without necessity
of execution of any amendment or new document. If Bank ever receives interest
in an amount which apart from this provision would exceed the Maximum Amount,
the excess shall, without penalty, be applied to principal of the Note in
inverse order of maturity of installments or be refunded to the payor if the
Note is paid in full. Bank does not intend to charge or receive unearned
interest on acceleration. All interest paid or agreed to be paid shall be
spread throughout the full term (including extensions) of the debt so that the
amount of interest does not exceed the Maximum Amount. For purposes of this
paragraph, "Maximum Amount" shall mean the maximum non usurious amount of
interest permitted by whichever of applicable United States federal law or
Georgia law permits the higher interest rates, any amendments thereof hereafter
or any new law hereafter coming into effect to the extent a higher maximum rate
is permitted thereby.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
BORROWER:
/s/ L. Scott Demerau /s/ Julia E. Demerau
- --------------------------- ------------------------------
L. Scott Demerau Julia E. Demerau
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<PAGE> 73
Exhibit "A"
Mountasia Entertainment International, Inc. Margin Call
Common Stock Percentage
857,479 Shares 38%
6
