Thomas K. and Billie J. Scallen - Page 8




                                        - 8 -                                         
          Rides, Inc., with respect to the term note.  Mr. Wood required              
          petitioner’s guaranty as a condition precedent to his acceptance            
          of the note from IBC Amusement Rides, Inc.  Petitioner                      
          reluctantly agreed to this guaranty in order to close the                   
          purchase agreement and in recognition that the acquisition                  
          transaction was in jeopardy without his guaranty.  A resolution             
          by IBC’s board of directors describes the circumstances of the              
          guaranty and authorizes a guaranty fee be paid to petitioner:               
               In May 1989, at the time the acquisition of Mr. Wood’s                 
               interests in Great Escape and Fantasy Island were in                   
               the final stage of negotiation, NatWest requested that                 
               Mr. Wood’s three-year promissory note be subordinated                  
               in all respects to the obligation of the Company to                    
               NatWest.  Mr. Wood, when advised of this request,                      
               declined to complete the transaction unless he received                
               adequate security for the $1,500,000 obligation of the                 
               Company and that adequate security, in his opinion, was                
               the personal guarantee of Thomas K. Scallen, who was                   
               reluctant to provide the guarantee.  However, in                       
               recognition that the transaction was in jeopardy,                      
               Thomas K. Scallen agreed to provide the guarantee.                     
               The Directors discussed possible alternative financing                 
               to the guarantee or payment to Mr. Wood in order to                    
               determine the appropriateness of fees.  Mr. Denis A                    
               Mola discussed the approach of an investment banker,                   
               including comparisons to “bridge loans” which would                    
               normally require 5 points over the life of the loan                    
               taking into consideration periodicity.  Mr. Mola                       
               further advised that to obtain such a “bridge loan”                    
               would have required the Company give a substantial                     
               equity call on the Company.  The Directors discussed                   
               the lack of security or the subordination, and the                     
               availability of potential alternatives for Mr. Thomas                  
               K. Scallen’s personal guarantee; the timing of the                     
               granting of the guarantee; the reluctance of Mr. Wood                  
               to go forward with the transaction unless the guarantee                
               was provided; the comparison to the “bridge loans” and                 
               the requirement to give up equity to provide it.  After                
               further discussion, Mr. Lawrence Beasley moved and Mr.                 





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011