<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 10
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
Malibu Entertainment Worldwide, Inc.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
561182106
---------
(CUSIP Number)
Malibu Entertainment Worldwide, Inc.
5895 Windward Parkway
Suite 220
Alpharetta, Georgia 30202
(770) 442-6640
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With a copy to:
Robert A. Profusek, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
(212) 326-3939
November 14, 1996
-------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with this statement [x].
<PAGE>
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CUSIP No. 561182106 13D-1 Page 2 of ___ Pages
---------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEI Holdings, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
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10 TYPE OF REPORTING PERSON
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 3 of ___ Pages
---------
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================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEI GenPar, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
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10 TYPE OF REPORTING PERSON
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 4 of ___ Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HH GenPar Partners
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
Texas
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
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10 TYPE OF REPORTING PERSON
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 5 of ___ Pages
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================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hampstead Associates, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Texas
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
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10 TYPE OF REPORTING PERSON
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 6 of ___ Pages
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================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RAW GenPar, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Texas
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 7 of ___ Pages
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================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
InMed, Inc. d/b/a Incap, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Texas
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 8 of ___ Pages
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================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Donald J. McNamara
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
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10 TYPE OF REPORTING PERSON
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 9 of ___ Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert A. Whitman
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
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CUSIP No. 561182106 13D-1 Page 10 of ___ Pages
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================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Daniel A. Decker
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,323,513(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
(1) Does not reflect additional Common Shares to which the Reporting Person
may be entitled, without the payment of additional consideration, upon
the occurrence of certain future events beyond the Reporting Persons'
control. See Item 5.
<PAGE>
This Amendment No. 10 amends and supplements the Statement on
Schedule 13D first filed on June 17, 1996, as amended by Amendments No. 1
through 9 (the "Schedule 13D"), by MEI Holdings, L.P., a Delaware limited
partnership ("Holdings"), and certain other persons.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 is hereby amended to read as follows:
Holdings has entered into a Loan Agreement, dated as of June 5, 1997
(the "Loan Agreement"), with Nomura Asset Capital Corporation, as Lender
("Nomura"), pursuant to which it borrowed $10.0 million. In connection with
such borrowing, Holdings pledged 38,323,513 Common Shares beneficially owned
by Holdings under a Pledge and Security Agreement, dated as of June 5,
1997, between Holdings and Nomura. The proceeds of such borrowings will be
used to fund a $10.0 million loan to the Company. Pursuant to the
Subordination Agreement, dated as of June 5, 1997 (the "Subordination
Agreement"), among the Company, Holdings and Foothill Capital Corporation
("Foothill"), the Company's obligations to Holdings in respect of such loan
are subordinate and junior in right of payment to senior obligations of the
Company incurred under a Loan and Security Agreement, dated as of August 22,
1996, between the Company, certain subsidiaries of the Company and Foothill.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 - Loan Agreement, dated as of June 5, 1997
Exhibit 2 - Pledge and Security Agreement, dated as of
June 5, 1997
Exhibit 3 - Subordination Agreement, dated as of
June 5, 1997
Exhibit 4 - Subordinated Promissory Note, dated as of
June 5, 1997
2
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI GenPar, L.P., HH GenPar
Partners, Hampstead Associates, Inc., RAW GenPar, Inc., InMed, Inc., Donald J.
McNamara, Robert A. Whitman and Daniel A. Decker.
Dated: June 6, 1997
MEI HOLDINGS, L.P.
By: MEI GenPar, L.P.
Its General Partner
By: HH GenPar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
-----------------------------------------
Daniel A. Decker
Executive Vice President
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI Holdings, L.P., HH GenPar
Partners, Hampstead Associates, Inc., RAW GenPar, Inc., InMed, Inc., Donald J.
McNamara, Robert A. Whitman and Daniel A. Decker.
Dated: June 6, 1997
MEI GENPAR, L.P.
By: HH GenPar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
--------------------------------------------
Daniel A. Decker
Executive Vice President
<PAGE>
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI Holdings, L.P., MEI GenPar,
L.P., Hampstead Associates, Inc., RAW GenPar, Inc., InMed, Inc., Donald J.
McNamara, Robert A. Whitman and Daniel A. Decker.
Dated: June 6, 1997
HH GENPAR PARTNERS
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
-------------------------------------------------
Daniel A. Decker
Executive Vice President
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI Holdings, L.P., MEI GenPar,
L.P., HH GenPar Partners, RAW GenPar, Inc., InMed, Inc., Donald J. McNamara,
Robert A. Whitman and Daniel A. Decker.
Dated: June 6, 1997
HAMPSTEAD ASSOCIATES, INC.
By: /s/ Daniel A. Decker
--------------------------------------------------
Daniel A. Decker
Executive Vice President
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI Holdings, L.P., MEI GenPar,
L.P., HH GenPar Partners, Hampstead Associates, Inc., InMed, Inc., Donald J.
McNamara, Robert A. Whitman and Daniel A. Decker.
Dated: June 6, 1997
RAW GENPAR, INC.
By: /s/ Robert A. Whitman
--------------------------------------------------
Robert A. Whitman
President
<PAGE>
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI Holdings, L.P., MEI GenPar,
L.P., HH GenPar Partners, Hampstead Associates, Inc., RAW GenPar, Inc., Donald
J. McNamara, Robert A. Whitman and Daniel A. Decker.
Dated: June 6, 1997
INMED, INC.
By: /s/ Daniel A. Decker
--------------------------------------------------
Daniel A. Decker
President
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI Holdings, L.P., MEI GenPar,
L.P., HH GenPar Partners, Hampstead Associates, Inc., RAW GenPar, Inc., InMed,
Inc., Robert A. Whitman and Daniel A. Decker.
Dated: June 6, 1997
By: /s/ Donald J. McNamara
-------------------------------------------------
Donald J. McNamara
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement may be
filed collectively on behalf of it and each of MEI Holdings, L.P., MEI GenPar,
L.P., HH GenPar Partners, Hampstead Associates, Inc., RAW GenPar, Inc., InMed,
Inc., Donald J. McNamara and Daniel A. Decker.
Dated: June 6, 1997
By: /s/ Robert A. Whitman
--------------------------------------------------
Robert A. Whitman
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement
may be filed collectively on behalf of it and each of MEI Holdings, L.P., MEI
GenPar, L.P., HH GenPar Partners, Hampstead Associates, Inc., RAW GenPar,
Inc., InMed, Inc., Donald J. McNamara and Robert A. Whitman.
Dated: June 6, 1997
By: /s/ Daniel A. Decker
--------------------------------------------------
Daniel A. Decker
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
1 Loan Agreement, dated as of June 5, 1997
2 Pledge and Security Agreement, dated as of June 5, 1997
3 Subordination Agreement, dated as of June 5, 1997
4 Subordinated Promissory Note, dated as of June 5, 1997
<PAGE>
EXHIBIT 99.1
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LOAN AGREEMENT
Dated as of June 5, 1997
Between
MEI HOLDINGS, L.P.
as Borrower
and
NOMURA ASSET CAPITAL CORPORATION,
as Lender
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.............................. 1
Section 1.1 Definitions........................................ 1
Section 1.2 Principles of Construction......................... 5
II. GENERAL TERMS........................................................ 5
Section 2.1 Loan Commitment; Disbursement...................... 5
2.1.1 Initial Loan; Phase II Loan........................ 5
2.1.2 The Note........................................... 7
Section 2.2 Use of Proceeds.................................... 7
Section 2.3 Loan Repayment..................................... 7
2.3.1 Repayment and Prepayment........................... 7
2.3.2 Recourse........................................... 7
Section 2.4 Interest and Principal............................. 8
2.4.1 Generally.......................................... 8
2.4.2 Default Rate....................................... 8
Section 2.5 Payments and Computations.......................... 8
2.5.1 Making of Payments................................. 8
2.5.2 Computations....................................... 8
III. CONDITIONS PRECEDENT................................................. 9
Section 3.1 Conditions Precedent to Closing.................... 9
IV. REPRESENTATIONS AND WARRANTIES....................................... 10
Section 4.1 Borrower Representations........................... 10
Section 4.2 Survival of Representations........................ 12
V. AFFIRMATIVE COVENANTS................................................ 12
Section 5.1 Borrower Covenants................................. 12
VI. NEGATIVE COVENANTS................................................... 15
Section 6.1 Borrower's Negative Covenants...................... 15
i
<PAGE>
VII. DEFAULTS............................................................. 15
Section 7.1 Event of Default................................... 15
Section 7.2 Remedies........................................... 17
Section 7.3 Remedies Cumulative................................ 18
Section 7.4 Indemnification Against Tax........................ 18
VIII. MISCELLANEOUS........................................................ 18
Section 8.1 Survival........................................... 18
Section 8.2 Lender's Discretion................................ 19
Section 8.3 Governing Law...................................... 19
Section 8.4 Modification; Waiver in Writing.................... 20
Section 8.5 Delay Not a Waiver................................. 20
Section 8.6 Notices............................................ 21
Section 8.7 Trial by Jury...................................... 22
Section 8.8 Headings........................................... 22
Section 8.9 Severability....................................... 22
Section 8.10 Preferences........................................ 23
Section 8.11 Waiver of Notice................................... 23
Section 8.12 Remedies of Borrower............................... 23
Section 8.13 Expenses........................................... 23
Section 8.14 Exhibits and Schedules Incorporated................ 24
Section 8.15 Offsets, Counterclaims and Defenses................ 24
Section 8.16 No Joint Venture or Partnership; No Third
Party Beneficiaries................................ 25
Section 8.17 Publicity.......................................... 25
Section 8.18 Waiver of Counterclaim............................. 25
Section 8.19 Conflict; Construction of Documents; Reliance...... 25
Section 8.20 Brokers and Financial Advisors..................... 26
Section 8.21 Prior Agreements................................... 26
Exhibit A - Form of Pledge and Security Agreement
Schedule 2.2 -- Indebtedness of Malibu To Be Repaid.
ii
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of June 5, 1997 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this "Agreement"
or "Loan Agreement"), is between NOMURA ASSET CAPITAL CORPORATION, a Delaware
corporation, having an address at Two World Financial Center, Building B, New
York, New York 10281 ("Lender"), and MEI HOLDINGS, L.P., a Delaware limited
partnership whose address is c/o The Hampstead Group, Texas Commerce Tower, 2200
Ross Ave., Suite 4200-W, Dallas, Texas 75201 ("Borrower").
Certain capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.
W I T N E S S E T H:
WHEREAS, Borrower has requested Lender to extend credit to it in an
aggregate principal amount of $10,000,000; and
WHEREAS, Lender is willing to extend such credit to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereto
hereby covenant, agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"Applicable Interest Rate" shall mean a rate per annum equal to
LIBOR plus 350 basis points. The Applicable Interest Rate shall be adjusted
monthly on the Determination Date.
<PAGE>
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York, New York are not open for
business.
"Closing Date" shall mean June 5, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, the Note together with all interest accrued and unpaid thereon and
all other sums due to Lender in respect of the Loan under the Note, this
Agreement, or any other Loan Document.
"Default" shall mean the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per
annum (adjusted monthly on each Determination Date) equal to the Applicable
Interest Rate plus 500 basis points; provided, however, in no event shall such
rate exceed the maximum rate permitted by applicable law.
"Determination Date" shall mean the date which is two Eurodollar
Business Days prior to the first day of a calendar month.
"Disclosure Document" shall mean any filing regarding Malibu made by
Borrower under the Exchange Act.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Eurodollar Business Day" shall mean a Business Day on which banks
in the City of London, England, are open for interbank or foreign exchange
transactions.
"Event of Default" shall have the meaning set forth in Section
7.1(a).
"Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended.
"Fiscal Year" shall mean each twelve month period commencing on
January 1 and ending on December 31 during the term of the Loan.
2
<PAGE>
"GAAP" shall mean generally accepted accounting principles in the
United States of America.
"Governmental Authority" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
unit (federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.
"LIBOR" shall mean the rate (expressed as a percentage per annum)
for deposits in U.S. dollars, for a one-month period, that appears on Telerate
Page 3750 (or the successor thereto) as of 11:00 a.m., London, England time, on
the related Determination Date. If such rate does not appear on Telerate Page
3750 as of 11:00 a.m., London, England time, on the related Determination Date,
LIBOR shall be the arithmetic mean of the offered rates (expressed as a
percentage per annum) for deposits in U.S. dollars for a one-month period that
appear on the Reuters Screen LIBOR Page as of 11:00 a.m., London, England time,
on such Determination Date, if at least two such offered rates so appear. If
fewer than two such offered rates appear on the Reuters Screen LIBOR Page as of
11:00 a.m., London, England time, on such Determination Date, Lender shall
request the principal London, England office of any four major reference banks
in the London interbank market selected by Lender to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London, England time, on such Determination Date for the amounts of not
less than U.S. $1,000,000. If at least two such offered quotations are so
provided, LIBOR shall be the arithmetic mean of such quotations. If fewer than
two such offered quotations are so provided, Lender shall request any three
major banks in New York City selected by Lender to provide such bank's rate
(expressed as a percentage per annum) for loans in U.S. dollars to leading
European banks for a one-month period as of approximately 11:00 a.m., New York
City time, on the applicable Determination Date for amounts of not less than
U.S. $1,000,000. If at least two such rates are so provided, LIBOR shall be the
arithmetic mean of such rates. If fewer than two such rates are so provided,
then LIBOR shall be LIBOR as in effect on the Eurodollar Business Day
immediately preceding the applicable Determination Date. LIBOR shall be
determined in accordance with this paragraph by Lender or its agent.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting Borrower or any of its properties or assets,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"Loan" shall mean the Loan made by Lender to Borrower, as set forth
in, and evidenced by, the Note and secured by the other Loan Documents.
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"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Security Agreement, and any other document executed and/or delivered by
Borrower in connection with the Loan.
"Malibu" shall mean Malibu Entertainment Worldwide, Inc., a Georgia
corporation.
"Maturity Date" shall mean the date on which the final payment of
principal of the Note becomes due and payable as therein provided, whether at
the Stated Maturity, by declaration of acceleration, or otherwise.
"Note" shall mean that certain Promissory Note dated as of the date
hereof, made by Borrower in favor of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Obligations" shall mean any and all debt, liabilities and
obligations of Borrower to Lender in connection with the Loan, including,
without limiting the generality of the foregoing, the Debt.
"Officers' Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by any authorized senior officer of the Borrower or
Borrower's controlling general partner.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, estate, trust, unincorporated
association, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Pledged Shares" shall mean the shares of common stock of Malibu
pledged from time to time under the Security Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall mean the Pledge and Security Agreement
made by Borrower in favor of Lender, in the form of Exhibit A hereto, as the
same shall be amended, modified and supplemented and in effect from time to
time.
"Stated Maturity" shall mean July 15, 1997.
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Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified.
Unless otherwise specified, the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.
II. GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement.
2.1.1 Initial Loan; Phase II Loan.
(a) Upon the terms and subject to the conditions of this
Agreement, not later than 1:00 p.m. (New York City time) on the Closing Date,
Lender shall make available to Borrower $10,000,000 aggregate principal amount
of the Loan, in immediately available funds, at an account of Borrower in the
United States designated in writing by Borrower to Lender on or prior to the
Closing Date.
(b) On or prior to the 11th day after the Closing Date (the
"Phase II Notice Date") the Borrower shall have the right to request jointly
with Malibu that, on the third Business Day following the Phase II Notice Date
(the "Second Closing Date"), subject to the conditions precedent set forth in
this Section 2.1.1, $10,000,000 of credit (the "Phase II Loan") be extended by
Lender to a subsidiary of Malibu, on the following terms:
(i) The borrower under the Phase II Loan would be a
newly-formed subsidiary of Malibu (the "SPC"). The SPC shall be a
bankruptcy remote, special purpose entity, whose activities will be
limited to owning and operating the Property (herein defined) and
whose form, structure, ownership and organizational documents shall
be acceptable to Lender in its sole discretion. The managing member,
general partner or board of directors of the SPC shall have at least
one independent director (or the functional equivalent), whose
responsibility will be limited solely to matters involving
insolvency and bankruptcy issues and whose vote will be required to
approve any election by the SPC to voluntarily seek protection from
creditors under any applicable bankruptcy or insolvency laws or the
SPC's dissolution. Lender shall have the right to designate such
director.
(ii) The stated maturity of the Phase II Loan would be
September 30, 1998 (and the stated maturity of the Loan would be
extended to that same date).
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(iii) The Borrower would guaranty the SPC's obligations
under the Phase II loan agreement, and pledge to Lender the Pledged
Shares as security therefor, pursuant to documentation satisfactory
to Lender in its sole discretion.
(iv) Malibu would make a limited recourse guaranty of
the SPC's obligations under the Phase II loan agreement, limited to
a pledge to Lender of the capital stock of the SPC.
(c) The Borrower and Malibu shall give the Lender irrevocable
written notice of their request for a Phase II Loan not later than 1:00 p.m.
(New York City time) on the Phase II Notice Date. Such notice shall be signed by
the chief financial officers of the Borrower and Malibu and shall certify that
on the date thereof (both immediately preceding and after giving effect thereto)
each representation and warranty of the Borrower in this Agreement, and the
other Loan Documents, is true and correct on and as of the date of the proposed
Additional Draw as if made on and as of such date and that no Default or Event
of Default exists on or as of such date.
(d) As additional conditions precedent to Lender's obligation
to fund a Phase II Loan:
(i) the SPC shall have granted Lender collateral
security for the Loan in the form of real property (the "Property"),
the condition, value and other quality of which shall be
satisfactory to the Lender in its sole discretion,
(ii) the Property shall be mortgaged to the Lender under
mortgages satisfactory in form, scope, and substance to Lender in
its sole discretion,
(iii) Lender shall have received a true and correct copy
of payoff letters or releases of liens for all of the existing debt
encumbering the Property,
(iv) Lender shall have received (X) executed
counterparts of amended and restated Loan Documents, and (Y) such
title insurance, reports, assignments of leases, and such other
documents, as Lender may require, all in such form, scope, and
substance satisfactory to Lender in its sole discretion,
(v) Lender shall have received opinions of Borrower's
and Malibu's counsel with respect to such matters as Lender may
require, all such
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opinions to be in form, scope and substance satisfactory to Lender
and Lender's counsel in their sole discretion, and
(vi) Borrower shall have paid Lender a non-refundable
fee for debt structure advice of $650,000 (in addition to the fee
referenced in Section 3.1).
2.1.2 The Note. The Loan shall be evidenced by the Note of Borrower.
The Loan shall bear interest as provided in the Note and in Section 2.4 hereof
and shall be subject to repayment as provided in the Note and in Section 2.3
hereof. The holder of the Note shall be entitled to the benefits of this
Agreement.
Section 2.2 Use of Proceeds.
Borrower shall use the proceeds of the Loan solely to fund a loan to
Malibu (the proceeds of which shall be used by Malibu solely to fund its working
capital requirements) and to repay the indebtedness described on Schedule 2.2
(or of the same type described on Schedule 2.2) not to exceed in the aggregate
$10,000,000, which indebtedness Borrower represents and warrants was used by
Malibu solely to fund its working capital requirements.
Section 2.3 Loan Repayment.
2.3.1 Repayment and Prepayment. Borrower shall repay any outstanding
principal indebtedness of the Loan in full on the Maturity Date of the Loan,
together with interest thereon to (but excluding) the date of repayment.
Borrower may, at its option and upon three (3) Business Days' prior written
notice from Borrower to Lender, prepay in whole or in part the Debt without
payment of any other premium or penalty. No amount so paid or prepaid may be
reborrowed.
2.3.2 Recourse. The Obligations are full recourse obligations of the
Borrower. Anything contained herein, or in any other Loan Document to the
contrary notwithstanding, no recourse shall be had for the Obligations against
any partner, agent, director, officer, or employee of the Borrower. It is
understood that the preceding sentence shall not (A) in the event of any
malfeasance, such as fraud, misappropriation of funds or intentional
misrepresentation, estop the Lender from instituting or prosecuting a legal
action or proceeding or otherwise making a claim against the person or persons
committing such malfeasance, and (B) constitute a waiver, release or discharge
of any Obligation, and the same shall continue until paid or discharged in full.
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Section 2.4 Interest and Principal.
2.4.1 Generally. Borrower shall pay interest, in arrears, on July 1,
1997 and, thereafter, for each one month interest period (or portion thereof)
from and including the first Business Day of each calendar month to but
excluding the first Business Day of the immediately succeeding calendar month,
on the unpaid principal balance from time to time outstanding at the Applicable
Interest Rate for such interest period, on the first day of each calendar month
during the term hereof (or if such day is not a Business Day, the next day which
is a Business Day). The balance of the principal sum together with all accrued
and unpaid interest thereon shall be paid on the Maturity Date, all in
accordance with the terms and provisions set forth in the Note.
2.4.2 Default Rate. Borrower agrees that upon the occurrence of an
Event of Default, Lender shall be entitled to receive and Borrower shall pay to
Lender interest on the entire unpaid principal sum of the Loan and any other
amounts (including interest to the extent permitted by applicable law) due at
the Default Rate. Interest at the Default Rate, to the extent not paid, shall be
added to the Debt. This Section, however, shall not be construed as an agreement
or privilege to extend the date of payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any
Event of Default. Lender retains its rights under the Loan Documents to
accelerate and to continue to demand payment of the Debt upon the happening of
any Event of Default.
Section 2.5 Payments and Computations.
2.5.1 Making of Payments. Each payment by Borrower hereunder or
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 11:00 a.m., New York City time, on the date such payment is due, to Lender by
deposit to the following account:
Mellon Bank Pittsburgh
ABA# 043 000 261
Account Name: NACC Clearance Account
Account # 109-2525
Attn: Lance W. Haberin/Ref: Malibu Entertainment/MEI Holdings
Whenever any payment hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the first
Business Day thereafter.
2.5.2 Computations. Interest payable hereunder or under the Note
shall be computed on the basis of the actual number of days elapsed and a
360-day year.
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III. CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Closing.
The obligation of Lender to make the Loan hereunder is subject to
the fulfillment by Borrower or waiver by Lender of the following conditions
precedent no later than the Closing Date:
(a) Representations and Warranties; Compliance with Conditions. The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Default or Event of Default shall have occurred and be continuing; and
Borrower shall be in compliance in all material respects with all terms and
conditions set forth in this Agreement and in each other Loan Document on its
part to be observed or performed.
(b) Loan Agreement and Note. Lender shall have received a copy of
this Agreement and the Note, in each case, duly executed and delivered on behalf
of Borrower.
(c) Security Agreement. Lender shall have received a copy of the
Security Agreement duly executed and delivered on behalf of Borrower.
(d) Related Documents. Each additional document not specifically
referenced herein, but requested by Lender and relating to the transactions
contemplated herein, shall have been duly authorized, executed and delivered by
all parties thereto and Lender shall have received and approved originals
thereof.
(e) Delivery of Organizational Documents. On or before the Closing
Date, Borrower shall have delivered or caused to be delivered to Lender
certified copies of all organizational documentation related to Borrower as
Lender may request in its sole discretion, including, without limitation, such
good standing certificates, qualifications to do business in the appropriate
jurisdictions, resolutions authorizing the entering into of the Loan and
incumbency certificates as may be requested by Lender.
(f) Opinions of Borrower's Counsel. Lender shall have received
opinions of Jones, Day, Reavis & Pogue, Borrower's counsel, with respect to due
execution, authority, enforceability of the Loan Documents and such other
matters as Lender may require, all such opinions to be in form, scope and
substance satisfactory to Lender and Lender's counsel in their sole discretion.
(g) Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and the
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other Loan Documents and all documents incidental thereto shall be satisfactory
in form and substance to Lender, and Lender shall have received all such
counterpart originals or certified copies of such documents as Lender may
reasonably request.
(h) Financial Statements. Lender shall have received a certified
copy of the Borrower's certified financial statements for the 12 month period
ended December 31, 1996.
(i) Structure Fee. Borrower shall have paid Lender a non-refundable
fee of $650,000.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower Representations.
Borrower represents and warrants as of the date hereof and as of the
Closing Date that:
(a) Organization. Borrower has been duly organized and is validly
existing and in good standing under the laws of the State of Delaware, with
requisite power and authority to own its properties and to transact the
businesses in which it is now engaged. Borrower is duly qualified to do business
and is in good standing in each jurisdiction, where it is required to be so
qualified in connection with its properties, businesses and operations. Borrower
possesses all rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own its properties and to transact the
businesses in which it is now engaged.
(b) Proceedings. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization and similar laws affecting rights of creditors
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement, partnership agreement, operating
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agreement or other agreement or instrument to which Borrower (or Malibu) is a
party or by which any of Borrower's or Malibu's property or assets is subject,
nor will such action result in any violation of the provisions of any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower or any of Borrower's properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental agency or
body required for the execution, delivery and performance by Borrower of this
Agreement or any other Loan Documents has been obtained and is in full force and
effect.
(d) Litigation. There are no actions, suits or proceedings at law or
in equity by or before any Governmental Authority or other agency now pending or
threatened against or affecting Borrower, which actions, suits or proceedings,
if determined against Borrower, might materially adversely affect the condition
(financial or otherwise) or business of Borrower.
(e) Agreements. Neither Borrower nor any Affiliate of Borrower is a
party to any agreement or instrument or subject to any restriction which might
materially and adversely affect Borrower, or Borrower's business, properties or
assets, operations or condition (financial or otherwise). Borrower is not in
default in any material respect in the performance, observance or fulfillment of
any obligations, covenants or conditions contained in any agreement or
instrument, material to Borrower, to which Borrower is a party or by which
Borrower is bound.
(f) Full and Accurate Disclosure. No statement of fact made by
Borrower (x) in this Agreement or in any of the other Loan Documents, (y) in any
Disclosure Document, or (z) in any written materials relating to the business,
operations or condition (financial or otherwise) of Borrower (or Malibu) that
were supplied to Lender in connection with Lender's due diligence investigation
(other than financial projections in respect of which no representation is made)
contains (or, in the case of such written material, at the time supplied
contained) any untrue statement of a material fact or omits (or omitted, as the
case may be) to state any material fact necessary to make the statements
contained herein or therein not misleading.
(g) No Plan Assets. Borrower is not an "employee benefit plan" (as
defined in Section 3(3) of ERISA), subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (i)
Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (ii) transactions by or with Borrower are not subject to state
statutes regulating investments of, and fiduciary obligations with respect to,
governmental plans.
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(h) Financial Information.
(i) All financial data, including, without limitation, the
statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of the Borrower, (A) are true, complete and
correct in all material respects, (B) accurately present the financial
condition of the Borrower as of the date of such reports, and (C) have
been prepared in accordance with GAAP consistently applied throughout the
periods covered, except as disclosed therein. Borrower does not have any
material contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any
unfavorable commitments that are known to Borrower and reasonably likely
to have a materially adverse effect on the Borrower. Since the date of
such financial statements, there has been no materially adverse change in
the financial condition, operations or business of Borrower from that set
forth in said financial statements.
(ii) All federal and state income tax returns have been filed
by Borrower and there are no income taxes due and owing by Borrower.
(i) Federal Reserve Regulations. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by applicable laws or by the terms and conditions of this
Agreement or the other Loan Documents.
Section 4.2 Survival of Representations.
Borrower agrees that all of the representations and warranties of
Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
V. AFFIRMATIVE COVENANTS
Section 5.1 Borrower Covenants.
From the date hereof and until payment and performance in full of
all obligations of Borrower under the Loan Documents, Borrower hereby covenants
and agrees with Lender that:
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(a) Existence; Compliance with Law. Borrower shall do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its existence and its material, rights, licenses, permits and franchises and
comply with all laws applicable to it. Borrower shall at all times maintain,
preserve and protect all franchises and trade names and preserve all the
remainder of its property used or useful in, and material to, the conduct of its
business, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto.
(b) Litigation. Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened against
Borrower which might materially adversely affect Borrower's condition (financial
or otherwise) or business.
(c) Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower's condition, financial or otherwise, or of
the occurrence of any Default or Event of Default of which Borrower has
knowledge.
(d) Cooperate in Legal Proceedings. Borrower shall cooperate fully
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
(e) Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
(i) furnish to Lender each and every document, certificate,
agreement and instrument required to be furnished by Borrower pursuant to
the terms of the Loan Documents or reasonably requested by Lender in
connection therewith;
(ii) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such
other acts necessary or desirable, to evidence, preserve and/or protect
the collateral at any time securing or intended to secure the obligations
of Borrower under the Loan Documents, as Lender may reasonably require;
and
(iii) do and execute all and such further lawful and
reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and
the other Loan Documents, as Lender shall reasonably require from time to
time.
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(f) Financial Reporting.
(i) Borrower will furnish to Lender annually, within 90 days
following the end of each Fiscal Year, financial statements of Borrower
for each such fiscal year, certified, by the chief financial officer of
the Borrower, to have been prepared in accordance with GAAP, together with
a certificate of such officer, addressed to Lender, stating that, to such
officer's knowledge, no Event of Default is in existence. Such certified
financial statements shall include a balance sheet, profit and loss
statement, and statement of cash flow.
(ii) Together with the foregoing, Borrower also shall deliver
to Lender Malibu's Form 10-Q Quarterly Reports, Form 10-K Annual Reports,
and Form 8-K Current Reports as filed under the Exchange Act, and any
other filings made by Borrower or Malibu with the U.S. Securities and
Exchange Commission, as soon as the same are filed, and all other
information, including financial reports, that is provided by Borrower to
its partners or by Malibu to its shareholders, and any other report
reasonably requested by Lender relating to the financial condition of
Borrower or Malibu.
(g) Estoppel Statements.
Within ten (10) days after request by Lender, Borrower shall
furnish Lender with an Officer's Certificate, setting forth (A) the amount
of the original principal amount of the Note, (B) the unpaid principal
amount of the Note, (C) the Applicable Interest Rate of the Note, (D) the
date installments of interest and principal were last paid, (E) any
offsets or defenses to the payment of the Debt, if any, and (F) that the
Note, this Agreement and the other Loan Documents are valid, legal and
binding obligations of Borrower and have not been modified or, if
modified, giving particulars of such modification.
(h) Loan Proceeds. Borrower shall use the proceeds of the Loan only
for the purposes set forth in Section 2.2 hereof.
(i) Principal Place of Business. Borrower shall not change its
principal place of business set forth on the first page of this Agreement
without first giving Lender thirty (30) days prior written notice.
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VI. NEGATIVE COVENANTS
Section 6.1 Borrower's Negative Covenants.
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents, Borrower covenants and agrees
with Lender that it will not do, directly or indirectly, any of the following:
(a) Dissolution. Borrower shall not dissolve, terminate, liquidate,
merge with, consolidate into another Person.
(b) Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with any non-subsidiary Affiliate of Borrower except
in the ordinary course of business and on terms which are fully disclosed to and
approved by Lender in advance and are no less favorable to Borrower or such any
non-subsidiary Affiliate than would be obtained in a comparable arm's-length
transaction with an unrelated third party.
VII. DEFAULTS
Section 7.1 Event of Default.
(a) Each of the following events shall constitute an event of
default hereunder (an "Event of Default"):
(i) any portion of the Debt is not paid when due;
(ii) any representation or warranty made by Borrower herein or
in any other Loan Document, or in any certificate or other agreement
furnished by it to Lender, shall have been false or misleading in any
material respect as of the date the representation or warranty was made;
(iii) Borrower shall make an assignment for the benefit of
creditors;
(iv) a receiver, liquidator or trustee shall be appointed for
Borrower, or Borrower shall be adjudicated a bankrupt or insolvent, or any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to or acquiesced in by Borrower, or any proceeding for
the dissolution or liquidation of Borrower shall be instituted; provided,
however, that if such appointment, adjudication, petition or proceeding
was involuntary and not consented to by Borrower, then the same shall be
an Event of Default hereunder only if the same is not discharged, stayed
or dismissed
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within sixty (60) days after the date of such appointment or adjudication,
the date such petition is first filed or the date such proceeding is
instituted, as the case may be;
(v) Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(vi) Borrower breaches any of its negative covenants contained
in Section 6.1 hereof;
(vii) Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement not specified
in subsections (i) to (vi) above, for five (5) days after notice to
Borrower from Lender, in the case of any Default which can be cured by the
payment of a sum of money, or for five (5) days after notice to Borrower
from Lender in the case of any other Default; provided, however, that if
such non-monetary Default is susceptible of cure but cannot reasonably be
cured within such 5-day period and provided further that Borrower shall
have commenced to cure such Default within such 5-day period and
thereafter diligently and expeditiously proceeds to cure the same, such
5-day period shall be extended for such time as is reasonably necessary
for Borrower in the exercise of due diligence to cure such Default, such
additional period not to exceed ten (10) days; or
(viii) there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
or any other such event shall occur or condition shall exist, if the
effect of such event or condition is to accelerate the maturity of any
portion of the Debt or to permit Lender to accelerate the maturity of all
or any portion of the Debt.
(ix) Borrower shall be in default with respect to indebtedness
in excess of $500,000 or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such
indebtedness of such person, if the effect of such event is to cause, or
(with the giving of any notice or the lapse of time or both) to permit the
holder or holders of such indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause such indebtedness to become due, or to be
prepaid in full (whether by redemption, purchase or other otherwise),
prior to its stated maturity.
(b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (iii), (iv) or (v) above) and at any time
thereafter, Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrower, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender may
enforce or
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<PAGE>
avail itself of any or all rights or remedies provided in the Loan Documents
against Borrower, including, without limitation, all rights or remedies
available at law or in equity; and upon any Event of Default described in
clauses (iii), (iv) or (v) above, the Debt and all other obligations of Borrower
hereunder and under the other Loan Documents shall immediately and automatically
become due and payable, without notice or demand, and Borrower hereby expressly
waives any such notice or demand, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
Section 7.2 Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to the Property. Any such actions taken by Lender shall be cumulative
and concurrent and may be pursued independently, singly, successively, together
or otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
(b) Lender shall have the right from time to time to sever the Note
and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the "Severed Loan Documents"), in such denominations
as Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, that Lender shall
not make or execute any such documents under such power until three (3) days
after notice has been given to Borrower by Lender of Lender's intent to exercise
its rights under such power.
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Section 7.3 Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon. Any and all amounts collected or
retained by Lender while an Event of Default has occurred and is continuing,
including, but not limited to, interest at the Default Rate, late charges or any
escrowed amount, may be applied by Lender to payment of the Debt in any order or
priority that Lender in its sole discretion may elect.
Section 7.4 Indemnification Against Tax.
Borrower indemnifies and agrees to defend and hold Lender harmless
against all real estate transfer, mortgage recording, documentary stamp and
intangible taxes and other amounts imposed on Lender by virtue of its execution
of any of the Loan Documents or by reason of the Loan (other than Lender's
income tax or franchise taxes of Lender based on or imposed in lieu of income
tax), including any penalties, interest and attorneys' fees incurred by Lender
in connection therewith, and all such charges shall be secured by the Security
Agreement and bear interest at the Default Rate until paid.
VIII. MISCELLANEOUS
Section 8.1 Survival.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party. All covenants, promises and agreements
in this Agreement, by or on behalf of Borrower, shall inure to the benefit of
the legal representatives, successors and assigns of Lender.
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Section 8.2 Lender's Discretion.
Whenever pursuant to this Agreement, Lender exercises any right
given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove or to
decide whether arrangements or terms are satisfactory or not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive.
Section 8.3 Governing Law.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE
BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT
REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR
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STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, AND BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT JONES DAY REAVIS & POGUE
(ATTN: ROBERT PROFUSEK), 599 LEXINGTON AVE., NEW YORK, N. Y. 10022, AS ITS
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL
PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS
UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 8.4 Modification; Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
Section 8.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor
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shall a single or partial exercise thereof preclude any other future exercise,
or the exercise of any other right, power, remedy or privilege. In particular,
and not by way of limitation, by accepting payment after the due date of any
amount payable under this Agreement, the Note or any other Loan Document, Lender
shall not be deemed to have waived any right either to require prompt payment
when due of all other amounts due under this Agreement, the Note or the other
Loan Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
Section 8.6 Notices.
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing (including
by facsimile) and shall be effective for all purposes if hand delivered or sent
by (a) certified or registered United States mail, postage prepaid, or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with receipt of delivery, or (c) facsimile (with acknowledged
transmission), addressed as follows:
If to Borrower: MEI HOLDINGS, L.P.
c/o The Hampstead Group
Texas Commerce Tower
2200 Ross Ave., Suite 4200-W
Dallas, Texas 75201
Attention: Daniel A. Decker
Telephone: 214-220-4565
Facsimile: 214-220-4949
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Robert A. Profusek, Esq.
Telephone: 212-326-3800
Facsimile: 212-755-7306
If to Lender: Nomura Asset Capital Corporation
Two World Financial Center, Building B
New York, New York 10281
Attention: Raymond Anthony
Telephone: (212) 667-1850
Facsimile: (212) 667-1666
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with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: J. Philip Rosen, Esq.
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
or at such other address and person as shall be designated from time to time by
any party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section. A notice shall be deemed to
have been given: in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day; or in the case of expedited prepaid delivery and
facsimile, upon the first attempted delivery or acknowledged transmission, as
applicable, on a Business Day.
Section 8.7 Trial by Jury.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 8.8 Headings.
The Article and/or Section headings and the Table of Contents in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
Section 8.9 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such 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 provision shall be
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ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Section 8.10 Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 8.11 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
or the other Loan Documents specifically and expressly provide for the giving of
notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable law, permitted to waive the giving of
notice. To the fullest extent permitted by applicable law, Borrower hereby
expressly waives the right to receive any notice from Lender with respect to any
matter for which this Agreement or the other Loan Documents do not specifically
and expressly provide for the giving of notice by Lender to Borrower.
Section 8.12 Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
Section 8.13 Expenses.
Borrower covenants and agrees to pay, or if Borrower fails to pay to
reimburse, Lender upon receipt of written notice from Lender for all reasonable
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by Lender in connection with
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(i) the preparation, negotiation, execution and delivery of this Agreement and
the other Loan Documents and the consummation of the transactions contemplated
hereby and thereby and all the costs of furnishing all opinions by counsel for
Borrower (including, without limitation, any opinions requested by Lender as to
any legal matters arising under this Agreement or the other Loan Documents);
(ii) Borrower's ongoing performance of and compliance with Borrower's respective
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and
insurance requirements; (iii) Lender's ongoing performance and compliance with
all agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iv) the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Lender; (v)
the filing and recording of the Loan Documents, and reasonable fees and expenses
of counsel for providing to Lender all required legal opinions, and other
similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vi) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents
or any other security given for the Loan; and (vii) enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.
Section 8.14 Exhibits and Schedules Incorporated.
The exhibits and schedules annexed hereto are hereby incorporated
herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
Section 8.15 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
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Section 8.16 No Joint Venture or Partnership; No Third Party
Beneficiaries.
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in any collateral other than that of
secured party or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 8.17 Publicity.
All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public (other than
the filing of a Disclosure Document) which refers to the Loan Documents or the
financing evidenced by the Loan Documents or to Lender or any of its Affiliates
shall be subject to the prior written approval of Lender.
Section 8.18 Waiver of Counterclaim.
Borrower hereby waives the right to assert a counterclaim, other
than a compulsory counterclaim, in any action or proceeding brought against it
by Lender or its agents.
Section 8.19 Conflict; Construction of Documents; Reliance.
In the event of any conflict between the provisions of this Loan
Agreement and any of the other Loan Documents, the provisions of this Loan
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted
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same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely
solely on its own judgment and advisors in entering into the Loan without
relying in any manner on any statements, representations or recommendations of
Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be
subject to any limitation whatsoever in the exercise of any rights or remedies
available to it under any of the Loan Documents or any other agreements or
instruments which govern the Loan by virtue of the ownership by it or any
parent, subsidiary or Affiliate of Lender of any equity interest any of them may
acquire in Borrower, and Borrower hereby irrevocably waives the right to raise
any defense or take any action on the basis of the foregoing with respect to
Lender's exercise of any such rights or remedies. Borrower acknowledges that
Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.
Section 8.20 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower hereby
agrees to indemnify and hold Lender harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way relating to or
arising from a claim by any Person that such Person acted on behalf of Borrower
in connection with the transactions contemplated herein. The provisions of this
Section 8.20 shall survive the expiration and termination of this Agreement and
the payment of the Debt.
Section 8.21 Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
MEI HOLDINGS, L.P., a Delaware limited partnership
By: MEI GENPAR, L.P.
its general partner
By: HH GenPar Partners, its general partner
By: Hampstead Associates, Inc., a managing
general partner
By:
---------------------------------------
Name:
Title:
NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation
By:
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 99.2
**************************************************************
PLEDGE AND SECURITY AGREEMENT
between
MEI HOLDINGS, L.P.
as Debtor
and
NOMURA ASSET CAPITAL CORPORATION
Dated June 5, 1997
***************************************************************
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.............................. 1
Section 1.1 Definitions.................................. 1
Section 1.2 Principles of Construction................... 1
ARTICLE II
OBLIGATIONS SECURED.......................... 2
Section 2.1 Obligations Secured.......................... 2
ARTICLE III
GRANT OF SECURITY INTEREST, ETC..................... 2
Section 3.1 Collateral Assignment, Pledge and Grant
of Security Interest....................... 2
Section 3.2 Delivery of Collateral and
Related Evidence........................... 3
Section 3.3 Distributions................................ 4
Section 3.4 Voting Power, Etc............................ 4
Section 3.5 No Assumption................................ 4
Section 3.6 Securities Laws.............................. 4
ARTICLE IV
EVENTS OF DEFAULT........................... 5
Section 4.1 Events of Default............................ 5
ARTICLE V
REMEDIES................................ 5
Section 5.1 Remedies..................................... 5
Section 5.2 Purchasers of Collateral..................... 6
Section 5.3 Sale......................................... 6
Section 5.4 Appointment of Attorney-in-Fact.............. 6
Section 5.5 Limitation of Secured Party's Liability...... 7
Section 5.6 Waiver of Rights............................. 7
Section 5.7 Recourse..................................... 8
Section 5.8 Securities Restrictions...................... 8
Section 5.9 Application of Proceeds...................... 9
Section 5.10 Remedies Cumulative.......................... 9
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES..................... 10
Section 6.1 Representations and Warranties
of the Debtor.............................. 10
ARTICLE VII
COVENANTS............................... 11
Section 7.1 Covenants of the Debtor...................... 11
ARTICLE VIII
MISCELLANEOUS............................. 13
Section 8.1 Effective Date............................... 13
Section 8.2 Duties of the Secured Party.................. 13
Section 8.3 Notices...................................... 14
Section 8.4 Severability................................. 15
Section 8.5 Separate Counterparts........................ 15
Section 8.6 Successors and Assigns....................... 15
Section 8.7 Amendments, Waivers, Etc..................... 16
Section 8.8 Headings..................................... 16
Section 8.9 Governing Law: Forum Selection;
Submission to Jurisdiction................. 16
Section 8.10 References to Other Documents................ 16
Section 8.11 Indemnity.................................... 16
Section 8.12 Termination.................................. 16
ii
<PAGE>
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is made on June 5, 1997, between
MEI HOLDINGS, L.P., a Delaware limited partnership with its principal place of
business and chief executive office at c/o The Hampstead Group, Texas Commerce
Tower, 2200 Ross Ave., Suite 4200-W, Dallas, Texas 75201 ("the Debtor"), and
NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation with offices at Two
World Financial Center, Building B, New York, New York 10281, (the "Secured
Party").
W I T N E S S E T H:
WHEREAS, Debtor and the Secured Party are parties to that certain
Loan Agreement, dated as of the date hereof (as modified, supplemented, amended
or restated from time to time in accordance with the terms thereof, the "Loan
Agreement"), pursuant to which the Secured Party has agreed to provide a Loan to
Debtor in aggregate outstanding principal amount not to exceed $10,000,000;
WHEREAS, the Debtor owns approximately 81% of all of the outstanding
common stock of Malibu;
WHEREAS, it is a condition precedent to the Secured Party making the
Loan to Debtor under the Loan Agreement that the Loan be secured by the
collateral provided under this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used herein, and not
otherwise defined herein (including within Annex A hereof), shall have the
respective meanings specified in the Loan Agreement.
Section 1.2 Principles of Construction. All references to articles,
sections, schedules, and exhibits are to articles, sections, schedules and
exhibits in or to this Agreement unless otherwise specified. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this
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Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
OBLIGATIONS SECURED
Section 2.1 Obligations Secured. This Agreement is made by the
Debtor for the benefit of the Secured Party, to secure the following:
(i) any and all obligations of Debtor under the Loan
Agreement, including, without limitation, Debtor's obligation under the
Note and any and all other obligations of Debtor to make payments to the
Secured Party in accordance with the terms of the Loan Agreement;
(ii) the payment or reimbursement, as the case may be, of any
and all sums incurred or advanced by the Secured Party, pursuant to this
Agreement in order to preserve the Collateral or to preserve the Secured
Party's interest in the Collateral; and
(iii) the payment or reimbursement, as the case may be, of any
and all reasonable out-of-pocket costs and expenses actually incurred or
paid by the Secured Party, in connection with any proceeding for the
collection or enforcement of any indebtedness, obligations or liabilities
of the Debtor referred to in clauses (i) or (ii) of this Section 2.1, or
any exercise by the Secured Party of its rights hereunder or under any of
the other Loan Documents (including, without limitation, underwriting fees
or discounts and any other costs and expenses of re-taking, holding,
preparing for sale, selling or otherwise disposing of or realizing on the
Collateral), together with reasonable attorneys' fees and disbursements,
court costs and other expenses actually incurred.
All such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iii) of this Section 2.1 are hereinafter collectively referred to as
the "Obligations."
ARTICLE III
GRANT OF SECURITY INTEREST, ETC.
Section 3.1 Collateral Assignment, Pledge and Grant of Security
Interest. To secure the payment and performance of all the Obligations, the
Debtor does hereby collaterally assign, convey, mortgage, pledge, hypothecate
and transfer, and does
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hereby grant a continuing security interest in, all of the Debtor's right, title
and interest in the following, whether now existing or hereafter from time to
time acquired (collectively, the "Collateral") to the Secured Party:
(i) the Pledged Interest;
(ii) all right, title and interest of the Debtor, arising out of, as
a result of or in connection with the Pledged Interest;
(iii) all payments due or to become due to the Debtor after the date
hereof, arising out of, as a result of or in connection with the Pledged
Interest, whether as dividends or distributions of cash or property or otherwise
(collectively, the "Distributions") and all of the Debtor's rights arising out
of, as a result of or in connection with the Pledged Interest, whether now
existing or hereafter arising or acquired, to exercise all voting, consensual
and other powers of ownership pertaining to the Pledged Interest (including,
without limitation, to make determinations, to exercise any election (including,
without limitation, election of remedies) or option, or to give or receive any
notice, consent, amendment, waiver or approval), together with full power and
authority to demand, receive, enforce, collect or give receipt for any of the
foregoing, to enforce or execute any checks or other instruments or orders, to
file any claims and to take any action which, in the opinion of the Secured
Party, may be necessary or advisable in connection with any of the foregoing;
and
(iv) all proceeds of any and all of the foregoing and all increases,
substitutions, replacements, additions, and accessions thereto (including the
1,000,000 shares of common stock of Malibu owned by the Debtor on the date
hereof and pledged to another financial institution on the date hereof, upon the
release, if any, of such shares from such pledge).
Section 3.2 Delivery of Collateral and Related Evidence. On the
Closing Date, the Debtor shall deliver to the Secured Party (A) the Pledged
Interest, (B) the originals of all stock certificates representing the Pledged
Interest together with stock powers duly executed in blank, (C) such UCC
financing statements, executed by the Debtor and in a form ready for filing, as
may be necessary or desirable to perfect the first priority security interests
in the Collateral granted to the Secured Party pursuant to this Agreement, (D)
satisfactory evidence that all other filings, recordings, registrations and
other actions the Secured Party deems necessary or desirable to establish,
preserve and perfect the security interests granted to the Secured Party
pursuant to this Agreement shall have been made, and (E) such other documents,
including execution copies of the Loan Documents and incumbency certificates of
the Debtor, as
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the Secured Party may deem necessary or desirable in connection herewith.
Section 3.3 Distributions. All distributions that are paid on the
Pledged Interest shall be payable to the Secured Party and held by the Secured
Party, in accordance with the terms of this Agreement, as additional collateral
for the Obligations.
Section 3.4 Voting Power, Etc. Unless an Event of Default shall have
occurred and be continuing, the Debtor shall be entitled to exercise all voting,
consensual and other powers of ownership pertaining to the Pledged Interest
(including, without limitation, to make determinations, to exercise any election
or option, or to give or receive any notice, consent, amendment, waiver or
approval), provided that no vote shall be cast nor any approval, consent, waiver
or ratification given, nor any power pertaining to the Pledged Interest
exercised, nor any other action taken, which would violate or be inconsistent
with the terms of this Agreement or any of the other Loan Documents, or which
would have the effect of impairing the position or interests of the Secured
Party, or could reasonably be expected to have a material adverse effect on the
ability of the Debtor to perform its obligations hereunder or under any other
Loan Document.
Section 3.5 No Assumption. Notwithstanding any of the foregoing,
whether or not an Event of Default shall have occurred, and whether or not the
Secured Party elects to foreclose or otherwise realize on its security interest
in the Collateral as set forth herein or exercise any of its rights under this
Agreement or any of the other Loan Documents or otherwise, neither this
Agreement, receipt by the Secured Party of any Distributions, the foreclosure or
other realization by the Secured Party of the security interest in the
Collateral nor any exercise by the Secured Party of any of its rights under this
Agreement or the other Loan Documents or otherwise, shall in any way be deemed
to obligate the Secured Party to assume any of the Debtor's obligations, duties,
expenses or liabilities with respect to the Collateral or any agreement relating
thereto, and in the event of any such foreclosure, realization or other exercise
of rights, the Debtor shall remain bound and obligated to perform such
obligations and the Secured Party shall not be deemed to have assumed any of
such obligations.
Section 3.6 Securities Laws. Nothing herein is intended, or shall be
interpreted, to require or permit any sale of the Collateral in violation of any
rule or regulation of the United States Securities and Exchange Commission or
any state "blue sky" or real estate syndication laws.
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ARTICLE IV
EVENTS OF DEFAULT
Section 4.1 Events of Default. The occurrence of any of the events
described in Annex B hereto shall constitute an event of default hereunder
(individually an "Event of Default" and collectively the "Events of Default"),
whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
governmental authority.
ARTICLE V
REMEDIES
Section 5.1 Remedies. Upon the occurrence and during the continuance
of an Event of Default, the Secured Party may declare all Obligations to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice (except in the case of notice which is expressly
required to be given hereunder or under the other Loan Documents), all of which
are hereby waived by the Debtor, and the Secured Party may exercise all the
rights, powers and remedies vested in it (whether vested in it by this Agreement
or any other Loan Document or by law) for the protection and enforcement of its
rights in respect of the Collateral, including, without limitation, the
following rights, which the Debtor hereby agrees to be commercially reasonable:
(i) to receive directly all amounts payable in respect of the
Collateral;
(ii) to transfer all or any part of the Pledged Interest into
the Secured Party's name or the name of its nominee(s) or designee(s);
(iii) to vote all or any part of the Pledged Interest (whether
or not transferred into the name of the Secured Party) and give all
consents, waivers and ratifications in respect of the Collateral and
otherwise act with respect thereto as though it were the outright owner
thereof; and
(iv) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Collateral,
or any interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell (or of the time
or place of sale or adjournment thereof) or to redeem or
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otherwise (all of which are, to the extent permitted by law, hereby waived
by the Debtor), for cash or credit or for other property, for immediate or
future delivery without any assumption of credit risk, and for such price
or prices and on such terms as the Secured Party in its absolute
discretion may determine. The Debtor hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with
respect to the Collateral, whether before or after sale hereunder, and all
rights, if any, of marshalling the Collateral and any other security for
the Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Secured Party may bid for and purchase all or any part
of the Collateral so sold free from any such right or equity of
redemption. To the fullest extent permitted by law, the Secured Party
shall not be liable for failure to collect or realize upon any or all of
the Collateral or for any delay in so doing nor shall it be under any
obligation to take any action whatsoever with regard thereto.
Section 5.2 Purchasers of Collateral. Upon any sale of the
Collateral by the Secured Party hereunder (whether by virtue of the power of
sale herein granted, pursuant to judicial process or otherwise), the receipt of
the Secured Party or the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold, and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Secured Party or such officer or be answerable
in any way for the misapplication or nonapplication thereof.
Section 5.3 Sale. The Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time and such
sale may be made at the time' and place to which it was so adjourned. The Debtor
agrees that to the extent notice of any such sale or an adjournment thereof is
required by law (notwithstanding the waiver of such notice herein) and the
applicable statutes do not specify the minimum notice period required, the
Secured Party need not give more than 10 days' notice of the time and place of
any public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters.
Section 5.4 Appointment of Attorney-in-Fact. The Debtor hereby
appoints the Secured Party, effective upon an Event of Default (but only for so
long as such Event of Default is continuing), as the Debtor's attorney-in-fact,
with full power of substitution for the purposes specified in, or contemplated
by, this Agreement. Such appointment is irrevocable and coupled with an
interest. As attorney-in-fact, the Secured Party may (in
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addition to the actions specified in other provisions of this Agreement), in the
name, place and stead of the Debtor, make and execute all conveyances,
assignments and transfers of the Collateral sold pursuant hereto, and the Debtor
hereby ratifies and confirms all that the Secured Party, as attorney-in-fact,
shall do by virtue hereof. Nevertheless, the Debtor shall, if so requested by
the Secured Party, ratify and confirm any sale or sales by executing and
delivering to the Secured Party, or to such purchaser or purchasers, all such
instruments as may, in the reasonable judgment of the Secured Party, be
advisable for the purpose.
Section 5.5 Limitation of Secured Party's Liability. The Secured
Party shall incur no liability as a result of the manner or terms of sale of the
Collateral, or any part thereof, at any public or private sale conducted during
the continuance of an Event of Default in a manner and on terms that are
commercially reasonable. The Debtor hereby waives, to the fullest extent
permitted by applicable law, any claims against the Secured Party arising by
reason of the fact that the price at which the Collateral, or any part thereof,
may have been sold at a private sale was less than the price which might have
been obtained at public sale or was less than the aggregate amount of the
Obligations, even if the Secured Party accepts the first offer received which
the Secured Party in good faith deems to be commercially reasonable under the
circumstances and does not offer the Collateral to more than one offeree. To the
extent permitted by law, the Debtor shall have the burden of proving that any
such sale of the Collateral was conducted in a commercially unreasonable manner.
Section 5.6 Waiver of Rights. The Debtor hereby waives to the
fullest extent permitted by law: (i) presentment, demand, protest or any notice
(except in the case of notice which is expressly required to be given under this
Agreement or the other Loan Documents) of any kind in connection with this
Agreement, the other Loan Documents and the Collateral; (ii) trial by jury;
(iii) notice in connection with the Secured Party's retention, taking possession
or disposition of any of the Collateral, including, without limitation, any and
all prior notice for any prejudgment remedy or remedies; (iv) all claims,
damages and demands occasioned by such retention, taking of possession or
disposition; (v) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Secured Party's
rights hereunder; and (vi) all rights, if any, of redemption, appraisement,
valuation, marshalling, stay, extension or moratorium now or hereafter in force
under any applicable law in order to prevent or delay the enforcement of this
Agreement or any of the other Loan Documents or the absolute sale of the
Collateral or any portion thereof. In furtherance of the foregoing, the Debtor
agrees upon request of the Secured Party to either waive or exercise within ten
(10)
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days following written request from the Secured Party, any right of redemption
the Debtor may have at law or in equity with respect to the Collateral that may
not lawfully be waived and if the Debtor shall elect to exercise such right of
redemption, the Debtor shall, within three (3) days following the exercise of
such right of redemption, deliver to the Secured Party any and all amounts of
principal and any accrued interest in respect of the Loan and the Note and all
other Obligations due and payable with respect to the Guaranty. If the Debtor
fails to waive or exercise such right of redemption within ten (10) days
following such written request from the Secured Party, the Debtor shall be
deemed to have waived its right of redemption and the Secured Party shall have
the right in its sole and absolute discretion to execute, as attorney-in-fact
for the Debtor, an instrument on the Debtor's behalf waiving any such right of
redemption.
Any sale of, or any other realization upon, any Collateral shall
operate to divest all right, title, interest, claim and demand, either at law or
in equity, of the Debtor therein and thereto, and shall be a perpetual bar both
at law and in equity against the Debtor and against any and all Persons claiming
or attempting to claim the Collateral so sold or realized upon, or any part
thereof, from, through or under the Debtor. Any grant of an option to purchase
any Collateral during the continuance of an Event of Default shall be binding on
the Debtor notwithstanding any right of redemption of the Debtor.
Section 5.7 Recourse. (i) The Obligations are full recourse
obligations of the Debtor. If the sale or other disposition of the Collateral
fails to satisfy all of the Obligations in full, the Debtor shall be liable for
the deficiency.
(ii) Anything contained herein, or in any other Loan Document to the
contrary notwithstanding, no recourse shall be had for the Obligations against
any partner, agent, director, officer, or employee of the Debtor. It is
understood that the preceding sentence shall not (A) in the event of any
malfeasance, such as fraud, misappropriation of funds or intentional
misrepresentation, estop the Secured Party from instituting or prosecuting a
legal action or proceeding or otherwise making a claim against the person or
persons committing such malfeasance, and (B) constitute a waiver, release or
discharge of any Obligation, and the same shall continue until paid or
discharged in full.
Section 5.8 Securities Restrictions. The Debtor understands that
compliance with the Federal Securities Laws may very strictly limit the course
of the Secured Party's conduct if the Secured Party were to attempt to dispose
of all or any part of the Collateral and may also limit the extent to which or
the manner in which any subsequent transferee of any Collateral may
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dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Secured Party in any attempt to dispose of all or any
part of the Collateral under applicable "blue sky" or other state securities
laws or similar laws analogous in purpose or effect. Accordingly, the Debtor
agrees that if the Secured Party is entitled hereunder to sell Collateral and at
the time of such sale the Secured Party, in its sole discretion, deems any of
the Collateral restricted securities, (i) the Secured Party shall be entitled to
place all or any part of such Collateral for private placement by an investment
banking firm or other financial institution, that any such investment banking
firm or other financial institution may purchase all or any part of such
Collateral for its own account, and that the Secured Party shall be entitled to
place all or any part of such Collateral privately with a purchaser or
purchasers who shall represent and agree that such Collateral is being purchased
for its or their own account and not with a view to the distribution thereof
within the meaning of the Federal Securities Laws, and (ii) the Secured Party
shall have the right, but not the obligation, to cause the Pledged Interest to
be sold or placed in a public or private sale.
Section 5.9 Application of Proceeds. Except as provided in Section
3.3 hereof, the proceeds of any Distributions received by the Secured Party
during the continuation of an Event of Default, and the proceeds of any
collection, recovery, receipt, appropriation, realization or sale pursuant to
this Agreement shall be applied, as follows, without duplication:
First, to the costs and expenses actually incurred in connection
therewith (including, without limitation, reasonable attorneys' fees and
disbursements, court costs and other expenses);
Second, to any sums advanced hereunder;
Third, to the payment of any and all amounts payable to the Secured
Party under the Loan Agreement;
Fourth, to the payment of any other Obligations then due and owing;
and
Fifth, if no other Obligation is then outstanding, any surplus then
remaining shall be paid to the Debtor.
Section 5.10 Remedies Cumulative. No right, power or remedy herein
or in the other Loan Documents conferred upon or reserved to the Secured Party
is intended to be exclusive of any other right, power or remedy; every such
right, power and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right, power and remedy given hereunder, under the
other Loan Documents or now or hereafter existing at
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law or in equity or otherwise; and the assertion or employment of any such
right, power or remedy shall not prevent the concurrent assertion or employment
of any other such right, power or remedy. No delay by or failure of the Secured
Party, to exercise any such right, power or remedy following the occurrence of
an Event of Default shall impair any such right, power or remedy or be construed
to be a waiver of such Event of Default or an acquiescence therein, and every
such right, power and remedy may be exercised from time to time, and as often as
shall be deemed expedient, by the Secured Party. In case the Secured Party shall
have instituted any action or proceeding to enforce any such right, power or
remedy by foreclosure, sale, entry or otherwise, and such proceeding shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Secured Party, then and in every such case the Debtor and the
Secured Party shall be restored to their former positions and rights hereunder
with respect to the Collateral and all rights, powers and remedies of the
Secured Party shall continue as if no such action or proceeding had been
instituted. If the Debtor fails to perform any other of the Obligations, the
Secured Party may perform, or cause performance of, the same and the reasonable
expenses of the Secured Party incurred in connection therewith shall be payable
by the Debtor on demand and secured hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of the Debtor. In order
to induce the Secured Party to enter into this Agreement, the Debtor represents
and warrants to the Secured Party as follows:
(i) the Debtor is the legal, record and beneficial owner of,
and has good title to, the Pledged Interest and the other Collateral
related thereto, subject to no Lien (other than the Liens created by this
Agreement);
(ii) all instruments and stock or other certificates
representing the Pledged Interest have been delivered to the Secured Party
simultaneously herewith, including, stock powers duly executed in blank.
(iii) the Debtor has full power, authority and legal right to
execute and deliver this Agreement and the other Loan Documents to which
it is a party and to pledge the Collateral to the Secured Party pursuant
to this Agreement;
(iv) this Agreement creates, in favor of the Secured Party and
as security for the Obligations, a valid
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and enforceable first-priority perfected Lien on all of the Collateral,
subject to no Lien in favor of any other Person;
(v) no consent, filing, recording or registration is required
to perfect the Lien purported to be created by this Agreement except such
as are contemplated by this Agreement;
(vi) each of this Agreement and the other Loan Documents to
which the Debtor is party constitutes its legal, valid and binding
obligation enforceable in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles;
(vii) the Debtor's principal place of business and chief
executive office is at the address as set forth in the introductory
paragraph of this Agreement.
ARTICLE VII
COVENANTS
Section 7.1 Covenants of the Debtor. In order to induce the Secured
Party to enter into this Agreement, the Debtor covenants and agrees as follows:
(i) the Debtor will defend the Secured Party's right, title,
claim of possession and Lien in and to the Collateral against the claims
and demands of all Persons, except as permitted in clause (iii) below; and
the Debtor covenants and agrees that it will have like title to and right
to pledge any other property at any time hereafter pledged to the Secured
Party as Collateral hereunder;
(ii) the Debtor shall promptly deliver to the Secured Party
share certificates or other documents representing the Pledged Interest,
together with stock powers duly executed; if at any time the Secured Party
notifies the Debtor that it requires additional stock powers with respect
to the Pledged Interest endorsed in blank, the Debtor shall promptly
execute in blank and deliver such stock powers to the Secured Party;
(iii) the Debtor will pay and discharge all Liens, charges,
claims, taxes and other governmental charges, and all contractual
obligations requiring the payment of money, before such become overdue,
that may affect the Collateral or any portion thereof, unless (but
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only to the extent that) (a) such payment is being contested in good faith
and in accordance with law, and (b) the failure to make such payment
cannot result in the loss of the Collateral or any portion thereof;
(iv) upon demand by the Secured Party, the Debtor shall pay,
or cause to be paid, all reasonable fees and expenses actually incurred by
the Secured Party in connection with the preparation and negotiation of
the Loan Documents, the amendment or modification of the Loan Documents
and the prosecution or defense of any action or proceeding or other
litigation affecting or relating to the Loan Documents (including, without
limitation, reasonable attorneys' fees and disbursements); and the Secured
Party may pay any of such fees and expenses and any amounts so paid shall
be secured by this Agreement;
(v) the Debtor agrees that it will join with the Secured Party
in executing and, at its own expense, file and refile under the UCC such
financing statements, continuation statements and other documents in such
offices as the Secured Party may reasonably deem necessary or desirable
and wherever required or permitted by law in order to perfect and preserve
the Secured Party's security interest in the Collateral and hereby
authorizes the Secured Party to file financing statements and amendments
thereto relative to all or any part of the Collateral without the
signature of the Debtor where permitted by law, and agree to do such
further acts and things and to make, execute and deliver to the Secured
Party such additional conveyances, assignments, agreements, instruments
and financing statements as the Secured Party may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or to
further assure and confirm unto the Secured Party its rights, powers and
remedies hereunder, and if the Debtor shall fail to execute any such
additional conveyances, assignments, agreements, instruments or financing
statements, the Secured Party, as attorney-in-fact for the Debtor, may in
the name, place and stead of the Debtor, make, execute and deliver any of
the foregoing, provided, however, that none of the foregoing shall relieve
the Debtor of its responsibility for such filings and perfection;
(vi) upon demand by the Secured Party, the Debtor shall
furnish to the Secured Party such proof or evidence as the Secured Party
may reasonably request from time to time with respect to (a) the
continuing correctness of the representations and warranties set forth
herein as of the date made, (b) compliance with and performance by the
Debtor of the covenants contained herein, and (c) such other matters with
respect to the transactions contemplated hereby as the Secured Party shall
reasonably request;
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(vii) the Debtor shall promptly, upon becoming aware thereof,
notify the Secured Party in writing of any condition or event that
constitutes a Default or an Event of Default;
(viii) the Debtor shall notify the Secured Party in writing at
least twenty (20) Business Days prior to the date the Debtor changes its
principal place of business or chief executive office, which notice shall
set forth the full and complete new address of the principal place of
business or chief executive office of the Debtor; and
(ix) the Debtor will not, directly or indirectly, sell,
convey, transfer, assign, encumber or otherwise dispose of, grant rights
with respect to, or mortgage or create a security interest in any of the
Collateral (or any associated options, rights or interests).
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Effective Date. Prior to the initial borrowing under the
Loan Agreement, all of the following conditions shall be satisfied:
(i) the Secured Party shall have received each of the items
specified in Section 3.2 hereof;
(ii) the Secured Party shall have received all of the
instruments, documents, certificates and agreements required to be
delivered to the Secured Party hereunder on or before the Closing Date,
including, without limitation, UCC financing statements, and the Debtor
shall have performed all other actions required to be performed by the
Debtor on or before the Closing Date.
Section 8.2 Duties of the Secured Party. (a) The Secured Party shall
be obliged to perform such duties and only such duties as specifically are set
forth in this Agreement and no implied covenants or obligations shall be read
into this Agreement against the Secured Party.
(b) Any corporation into which the Secured Party may be merged
or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which it shall be a party, or any corporation
succeeding to its business, shall succeed to all rights, obligations and
immunities hereunder without the execution or filing of any document or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
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(c) No provision of this Agreement shall require the Secured
Party to advance, expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights and powers hereunder.
(d) The Secured Party makes no representation as to the
validity, value, genuineness or the collectability of any Collateral, security
or other document or instrument held by or delivered to it.
(e) The Secured Party shall not be called upon to advise any
party as to the selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(f) The Secured Party shall not be deemed to be a fiduciary in
performing its duties under this Agreement.
Section 8.3 Notices. All notices, approvals, demands, requests,
consents and other communications provided for hereunder shall be in writing,
shall refer to this Agreement, and shall be delivered by hand or by facsimile
transmission or sent by registered or certified mail, return receipt requested,
or by overnight courier service to the recipient at the address set forth below:
If to the Debtor to:
MEI HOLDINGS, L.P.
c/o The Hampstead Group
Texas Commerce Tower
2200 Ross Ave., Suite 4200-W
Dallas, Texas 75201
Attn: Daniel A. Decker
Fax #: 214-220-4949
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Robert A. Profusek, Esq.
Fax #: 212-755-7306
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If to the Secured Party to:
Nomura Asset Capital Corporation
Two World Financial Center
Building B
New York, New York 10281
Attn: Raymond Anthony
Fax #: 212-667-1666
with a copy to Secured Party's Counsel:
Weil Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153-0119
Attn: J. Philip Rosen, Esq.
Fax #: 212-310-8007
or, at such other address or facsimile number as shall be designated by a party
in a written notice to the other party. All such notices and other
communications shall be deemed given and effective: (a) when sent by mail, on
the second Business Day after the date deposited in the United States mail, (b)
when sent by overnight courier, on the next Business Day after delivery to the
courier service, and (c) when delivered by hand or transmitted by facsimile, on
the date of delivery or transmission, as the case may be.
Section 8.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction or invalidate any other
provision of this Agreement in such or any other jurisdiction.
Section 8.5 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 8.6 Successors and Assigns. The Debtor may not assign its
rights or obligations hereunder without the prior written consent of the Secured
Party. The Secured Party shall have the right to assign or transfer its rights
under this Agreement without limitation. Any assignee or transferee of the
Secured Party shall be entitled to all the benefits afforded the Secured Party
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
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<PAGE>
Section 8.7 Amendments, Waivers, Etc. This Agreement may be amended,
and compliance with any provision hereof may be waived, but only in a written
instrument signed by the Debtor and the Secured Party.
Section 8.8 Headings. The headings of the various Sections herein
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
Section 8.9 Governing Law: Forum Selection; Submission to
Jurisdiction. (i) This Agreement, and the rights and obligations of the parties
hereunder, shall be construed in accordance with and governed by the law of the
State of New York without regard to choice of law or principles of conflicts of
law.
(ii) Each of the Debtor and the Secured Party hereby submits
to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State Court sitting
in the Borough of Manhattan in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each of the Debtor and the Secured Party
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
Section 8.10 References to Other Documents. All defined terms used
in this Agreement which refer to other documents shall be deemed to refer to
such other documents as they may be amended from time to time, provided such
documents were not amended in breach of a covenant contained in this Agreement
or any of the other Loan Documents.
Section 8.11 Indemnity. (a) The Debtor shall indemnify the Secured
Party (including its directors, officers, employees and agents) and hold it (and
them) harmless from and against any and all losses, liability, penalties,
actions, suits, judgments, demands, damages, costs and expenses, including
reasonable attorneys' fees and expenses, arising out of or in connection with
the failure by the Debtor to perform its obligations under this Agreement,
unless arising solely from the gross negligence or willful misconduct of the
Secured Party or the person seeking indemnification. This indemnity shall
survive the termination of this Agreement and the assignment of the Secured
Party's interest hereunder.
Section 8.12 Termination. Upon payment in full of the Obligations
(as defined in the Loan Agreement), this
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Agreement shall terminate, and the Secured Party, at the request and expense of
the Debtor, will execute and deliver to the Debtor instruments prepared by the
Debtor (including UCC-3 termination statements) acknowledging the termination of
this Agreement, and will duly assign, transfer and deliver to the Debtor
(without recourse and without any representation or warranty, other than a
representation that the Collateral is free from any Liens attributable to the
Secured Party) such of the Collateral as may be in possession of the Secured
Party and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, this Pledge and Security Agreement has been duly
signed and delivered as of the day and year first above written.
MEI HOLDINGS, L.P., a Delaware limited
partnership
By: MEI GENPAR, L.P.
its general partner
By: HH GenPar Partners, its
general partner
By: Hampstead Associates,
Inc., a managing general
partner
By:
-----------------------------------
Name:
Title:
NOMURA ASSET CAPITAL CORPORATION,
as the Secured Party
By:
-----------------------------------------
Name:
Title:
<PAGE>
ANNEX A
"Agreement" shall mean this Pledge and Security Agreement, as
modified, supplemented or amended from time to time.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions are
authorized or permitted by law or other government action to be closed in the
State of New York.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
"Collateral" shall have the meaning assigned to such term in Section
3.1 of this Agreement.
"Default" shall mean any event, act or condition which, with notice
or expiration of any applicable grace period, or both, would constitute an Event
of Default.
"Distributions" shall have the meaning assigned to such term in
Section 3.l(iii) of this Agreement.
"Event of Default" shall have the meaning assigned to such term in
Section 4.1 of this Agreement.
"Federal Securities Laws" shall have the meaning ascribed to such
term in Section 5.8 of this Agreement.
"Lien" shall mean with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
"Malibu" shall mean Malibu Entertainment Worldwide,
Inc., a Georgia corporation.
"Obligations" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
<PAGE>
"Pledged Interest" shall mean the 38,323,513 shares of common stock,
without par value, of Malibu, owned by the Debtor and pledged to the Secured
Party on the date hereof.
"UCC" shall mean the Uniform Commercial Code as the same may from
time to time be in effect in the State of New York or any other applicable
jurisdiction.
<PAGE>
ANNEX B
(i) The Debtor shall default in the performance of any of its
obligations in this Agreement and such default shall continue unremedied
for a period of five (5) days after notice thereof to the Debtor by the
Secured Party; or
(ii) An Event of Default under the Loan Agreement shall occur;
or
(iii) Except for expiration in accordance with its terms, any
of the Loan Documents shall be terminated or shall cease to be in full
force and effect, for whatever reason (other than due to the action or
inaction of the Secured Party).
<PAGE>
EXHIBIT 99.3
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT, dated as of June 5, 1997, by and among MEI
Holdings, L.P., a Delaware limited partnership ("MEI"), Malibu Entertainment
Worldwide, Inc., a Georgia Corporation (the "Borrower"), and Foothill Capital
Corporation, a California corporation ("Foothill").
The parties hereto hereby agree as follows:
1. Definitions. (a) Unless otherwise defined herein, terms defined in the
Senior Credit Agreement (defined below) and used herein shall have the meanings
given to them in the Senior Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Subordination Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Blockage Notice": a written notice from the Senior Lender to the Borrower
given as provided in the Senior Credit Agreement that (a) a Non-Payment Event of
Default has occurred and is continuing or (b) an Event of Default would occur if
a scheduled interest or principal payment were made under the Subordinated Note
in accordance with the terms thereof, which written notice identifies itself as
a Blockage Notice or refers to this Subordination Agreement.
"Blockage Period": any period commencing on the date a Blockage Notice is
given and ending on the earlier to occur of:
(a) the date when (1) the Event of Default that was the basis for such
notice has been cured or waived or (2) the conditions shall have ceased to exist
which would cause an Event of Default to occur if a scheduled interest or
principal payment were made under the Subordinated Note in accordance with the
terms thereof; and
(b) 180 days after the date such Blockage Notice is given.
"Enforcement Action": with respect to any Subordinated Obligation or any
part thereof, any action by any Subordinated Lender, acting as a creditor of the
Borrower, to: accelerate the maturity thereof; give notice of the acceleration
of the maturity thereof; demand payment thereof from the Borrower; commence or
prosecute a legal action or proceeding to enforce same or obtain a judgment with
respect thereto; compel, commence, or prosecute arbitration or other alternative
dispute resolution proceedings with respect thereto for the purpose of obtaining
or attempting to obtain payment or recovery thereof; enforce any writ or
judgment with respect thereto; obtain any injunction or restraining order with
respect thereto; seize, attach, garnish, foreclose upon, levy upon, or obtain a
lien or security interest
<PAGE>
upon any property or asset of the Borrower with respect thereto; or join in,
commence, or prosecute any involuntary bankruptcy or insolvency proceeding
against the Borrower.
"Insolvency Event": (a) The Borrower or any of its Subsidiaries commencing
any case, proceeding or other action (1) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts or (2) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Subsidiaries making a general assignment
for the benefit of its creditors; or (b) there being commenced against the
Borrower or any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (a) above which (1) results in the entry of an
order for relief or any such adjudication or appointment or (2) remains
undismissed, undischarged or unbonded for a period of 60 days; or (c) the
Borrower or any of its Subsidiaries taking any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (a) or (b) above; or (d) the Borrower or any of its Subsidiaries
generally not paying, or being generally unable to pay, or admitting in writing
its general inability to pay, its debts as they become due.
"Non-Payment Event of Default": any event (other than a Payment Event of
Default) the occurrence of which entitles the Senior Lender to accelerate the
maturity of any of the Senior Obligations.
"Payment Event of Default": any default in the payment of the Senior
Obligations (whether upon maturity, mandatory prepayment, acceleration or
otherwise) beyond any applicable grace period with respect thereto.
"Senior Credit Agreement": the Consolidated, Amended, and Restated Loan
and Security Agreement, dated as of August 22, 1996, by and among the Borrower,
Forty-Five of Its Direct and Indirect Subsidiaries Identified therein, and
Foothill, as such agreement may be amended, supplemented or otherwise modified
from time to time, including, without limitation, amendments, modifications,
supplements and restatements thereof giving effect to increases, renewals,
extensions, refundings, deferrals, restructurings, replacements or refinancings
of, or additions to, the arrangements provided in such agreement (whether
provided by Foothill or a successor lender or lenders).
"Senior Lender": Foothill or any other holder from time to time of Senior
Obligations.
"Senior Loan Documents": the collective reference to the Senior Credit
Agreement, the Senior Notes, the Senior Security Documents and all other
documents that from time to time evidence the Senior Obligations or secure or
support payment or performance thereof.
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<PAGE>
"Senior Loans": the loans made by the Senior Lender to the Borrower or any
Subsidiary of the Borrower pursuant to the Senior Credit Agreement.
"Senior Notes": the promissory note or notes of the Borrower outstanding
from time to time under the Senior Credit Agreement.
"Senior Obligations": the collective reference to the unpaid principal of
and interest on the Senior Notes and all other obligations and liabilities of
the Borrower to the Senior Lender (including, without limitation, interest
accruing at the then applicable rate provided in the Senior Credit Agreement
after the maturity of the Senior Loans and interest accruing at the then
applicable rate provided in the Senior Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Senior Credit Agreement, the Senior Notes, this Agreement, the other
Senior Loan Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Senior Lender that are required to be paid by the Borrower pursuant to the terms
of the Senior Credit Agreement or this Agreement or any other Senior Loan
Document).
"Senior Security Documents": the collective reference to all documents and
instruments, now existing or hereafter arising, which create or purport to
create a lien or security interest in property to secure payment or performance
of the Senior Obligations.
"Subordinated Lender": MEI or any other holder from time to time of the
Subordinated Obligations.
"Subordinated Loan Documents": the collective reference to the
Subordinated Note and any other documents or instruments that from time to time
evidence the Subordinated Obligations or secure or support payment or
performance thereof.
"Subordinated Loans": the loans made by the Subordinated Lender to the
Borrower evidenced by the Subordinated Note.
"Subordinated Note": the Subordinated Promissory Note of the Borrower to
MEI, dated June __, 1997, as the same may be amended, supplemented or otherwise
modified from time to time.
"Subordinated Obligations": the collective reference to the unpaid
principal of and interest on the Subordinated Note and all other obligations and
liabilities of the Borrower to the Subordinated Lender (including, without
limitation, interest accruing at the then applicable rate provided in the
Subordinated Note after the maturity of the Subordinated Loans and interest
accruing at the then applicable rate provided in the Subordinated Note
3
<PAGE>
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to-the the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Subordinated Note, this Agreement, or any other
Subordinated Loan Document, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Subordinated Lender that are required to be paid by the Borrower pursuant
to the terms of this Agreement or any other Subordinated Loan Document).
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Subordination. (a) Each of the Borrower and the Subordinated Lender
agrees, for itself and each future holder of the Subordinated Obligations, that
the Subordinated Obligations are expressly "subordinate and junior in right of
payment" (as that phrase is defined in paragraph 2(b)) to all Senior
Obligations.
(b) "Subordinate and junior in right of payment" means that:
(1) no part of the Subordinated Obligations shall have any
claim to the assets of the Borrower on a parity with or prior to the claim
of the Senior Obligations; and
(2) unless and until the Senior Obligations have been paid in
full and any commitment to make Advances under the Senior Credit Agreement
has been terminated, without the express prior written consent of the
Senior Lender, (A) the Subordinated Lender will not take, demand or
receive from the Borrower, and the Borrower will not make, give or permit,
directly or indirectly, by set-off, redemption, purchase or in any other
manner, any payment of or security for the whole or any part of the
Subordinated Obligations, including, without limitation, any letter of
credit or similar credit support facility to support payment of the
Subordinated Obligations; provided, however, that (x) at any time, except
during a Blockage Period or when a Payment Event of Default has occurred
and is continuing, the Borrower may make, and the Subordinated Lender may
receive, scheduled payments on account of principal and interest on the
Subordinated Note in accordance with the terms thereof and (y) at any
time, the Borrower may make, and the Subordinated Lender may receive,
payments on account of the principal and interest on the Subordinated Note
in accordance with the terms thereof to the extent that such payments are
made with the proceeds of new equity capital obtained by the Borrower; and
(B) no acceleration of
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<PAGE>
the maturity of the Subordinated Note will be effective until the earlier
to occur of (i) five days following notice by the Subordinated Lender to
the Senior Lender of such acceleration and (ii) the occurrence of an
Insolvency Event.
(c) Upon the termination of any Blockage Period or if any Payment Event of
Default has been cured or waived or shall have ceased to exist, the Subordinated
Lender's right to receive payments as provided in clause 2(b)(2)(A) shall be
reinstated, and the Borrower may resume making such payments to the Subordinated
Lender.
(d) No Event of Default which existed on the date any Blockage Notice was
given shall be the basis for giving any subsequent Blockage Notice, unless such
Event of Default shall have been cured or waived or otherwise ceased to exist
for a period of not less than 90 consecutive days after the date such Blockage
Notice was given.
(e) No more than one Blockage Notice may be given within any consecutive
360- day period.
(f) The expressions "prior payment in full," "payment in full," "paid in
full" and any other similar terms or phrases when used herein with respect to
the Senior Obligations shall mean the payment in full, in immediately available
funds, of all of the Senior Obligations.
(g) No Subordinated Lender shall take any Enforcement Action against the
Borrower or any property or asset of the Borrower at any time that such
Subordinated Lender is prohibited under Section 2(b)(2) above from taking,
demanding, or receiving payment of the Subordinated Obligations, except that the
provisions of this paragraph shall not be applicable for more than 180 days
(which need not be consecutive) during any 360- day period, and provided that
this paragraph shall not limit the operation of any other provision hereof (for
example, without limitation of the foregoing, if any Subordinated Lender should,
as a result of any Enforcement Action not prohibited by this paragraph, receive
a payment with respect to the Subordinated Obligations that it was prohibited
from receiving or retaining under another provision of this Subordination
Agreement, or that it was required to turn over to the Senior Lender under
another provision of this Subordination Agreement, nothing in this paragraph
shall limit the operation of such other provision hereof).
3. Additional Provisions Concerning Subordination. (a) The Subordinated
Lender and the Borrower agree that upon the occurrence of any Insolvency Event:
(1) all Senior Obligations shall be paid in full before any
payment or distribution is made with respect to the Subordinated
Obligations; and
(2) any payment or distribution of assets of the Borrower,
whether in cash, property or securities, to which the Subordinated Lender
would be entitled except for the provisions hereof, shall be paid or
delivered by the Borrower, or any receiver, trustee in bankruptcy,
liquidating trustee, disbursing agent or other Person
5
<PAGE>
making such payment or distribution, directly to the Senior Lender, for
the account of the Senior Lender, to the extent necessary to pay in full
all Senior Obligations, before any payment or distribution shall be made
to the Subordinated Lender.
(b) Upon the occurrence of any event or proceeding described in clause (a)
of the definition of "Insolvency Event" commenced by or against the Borrower:
(1) the Subordinated Lender irrevocably authorizes and
empowers the Senior Lender (A) to demand, sue for, collect and receive
every payment or distribution on account of the Subordinated Obligations
payable or deliverable in connection with such event or proceeding and
give acquittance therefor, and (B) to file claims and proofs of claim in
any statutory or non-statutory proceeding and take such other actions, in
its own name as Senior Lender or in the name of the Subordinated Lender or
otherwise, as the Senior Lender may deem necessary or advisable for the
enforcement of the provisions of this Agreement; provided, however, that
the foregoing authorization and empowerment imposes no obligation on the
Senior Lender to take any such action;
(2) the Subordinated Lender shall take such action, duly and
promptly, as the Senior Lender may request from time to time (A) to
collect the Subordinated Obligations for the account of the Senior Lender
and (B) to file appropriate proofs of claim in respect of the Subordinated
Obligations; and
(3) the Subordinated Lender shall execute and deliver such
powers of attorney, assignments or proofs of claim or other instruments as
the Senior Lender may request to enable the Senior Lender to enforce any
and all claims in respect of the Subordinated Obligations and to collect
and receive any and all payments and distributions which may be payable or
deliverable at any time upon or in respect of the Subordinated
Obligations.
(c) If any payment or distribution, whether consisting of money, property
or securities, be collected or received by the Subordinated Lender in respect of
the Subordinated Obligations, except payments permitted to be made at the time
of payment as provided in paragraph 2(b), the Subordinated Lender forthwith
shall deliver the same to the Senior Lender for the account of the Senior
Lender, in the form received, duly indorsed to the Senior Lender, if required,
to be applied to the payment or prepayment of the Senior Obligations until the
Senior Obligations are paid in full. Until so delivered, such payment or
distribution shall be held in trust by the Subordinated Lender as the property
of the Senior Lender, segregated from other funds and property held by the
Subordinated Lender.
4. Subrogation. Subject to the payment in full of the Senior Obligations,
the Subordinated Lender shall be subrogated to the rights of the Senior Lender
to receive payments or distributions of assets of the Borrower in respect of the
Senior Obligations until the Senior Obligations shall be paid in full. For the
purposes of such subrogation, payments or distributions to the Senior Lender,
for the account of the Senior Lender, of any money, property or securities to
which the Subordinated Lender would be entitled except for the
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<PAGE>
provisions of this Agreement shall be deemed, as between the Borrower and its
creditors other than the Senior Lender and the Subordinated Lender, to be a
payment by the Borrower to or on account of Subordinated Obligations, it being
understood that the provisions of this Agreement are, and are intended solely,
for the purpose of defining the relative rights of the Subordinated Lender, on
the one hand, and the Senior Lender, on the other hand.
5. Consent of Subordinated Lenders. (a) The Subordinated Lender consents
that, without the necessity of any reservation of rights against the
Subordinated Lender, and without notice to or further assent by the Subordinated
Lender:
(1) any demand for payment of any Senior Obligations made by
the Senior Lender may be rescinded in whole or in part by the Senior
Lender, and any Senior Obligation may be continued, and the Senior
Obligations, or the liability of the Borrower or any guarantor or any
other party upon or for any part thereof, or any collateral security or
guarantee thereof or right of offset with respect thereto, or any
obligation or liability of the Borrower or any other party under the
Senior Credit Agreement or any other agreement, may, from time to time, in
whole or in part, be renewed, extended, modified, accelerated,
compromised, waived, surrendered, or released by the Senior Lender; and
(2) the Senior Credit Agreement, the Senior Notes and any
other Senior Loan Document may be amended, modified, supplemented or
terminated, in whole or in part, as the Senior Lender may deem advisable
from time to time, and any collateral security at any time held by the
Senior Lender for the payment of any of the Senior Obligations may be
sold, exchanged, waived, surrendered or released,
in each case all without notice to or further assent by the Subordinated Lender,
which will remain bound under this Agreement, and all without impairing,
abridging, releasing or affecting the subordination provided for herein.
(b) The Subordinated Lender waives any and all notice of the creation,
renewal, extension or accrual of any of the Senior Obligations and notice of or
proof of reliance by the Senior Lender upon this Agreement. The Senior
Obligations, and any of them, shall be deemed conclusively to have been created,
contracted or incurred in reliance upon this Agreement, and all dealings between
the Borrower and the Senior Lender shall be deemed to have been consummated in
reliance upon this Agreement. The Subordinated Lender acknowledges and agrees
that the Senior Lender has relied upon the subordination provided for herein in
connection with the Senior Credit Agreement and in continuing to make funds
available to the Borrower thereunder. The Subordinated Lender waives notice of
or proof of reliance on this Agreement and protest, demand for payment and
notice of default.
6. Negative Covenants of the Subordinated Lender. So long as any of the
Senior Obligations shall remain outstanding, the Subordinated Lender shall not,
without the prior written consent of the Senior Lender:
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<PAGE>
(a) sell, assign, or otherwise transfer, in whole or in part, the
Subordinated Obligations or any interest therein to any other Person (a
"Transferee") or create, incur or suffer to exist any security interest, lien,
charge or other encumbrance whatsoever upon the Subordinated Obligations in
favor of any Transferee unless (1) such action is made expressly subject to this
Agreement and (2) the Transferee expressly acknowledges to the Senior Lender, by
a writing in form and substance satisfactory to the Senior Lender, the
subordination provided for herein and agrees to be bound by all of the terms
hereof; or
(b) permit any of the Subordinated Loan Documents to be amended, modified
or otherwise supplemented.
7. Senior Obligations Unconditional. All rights and interests of the
Senior Lender hereunder, and all agreements and obligations of the Subordinated
Lender and the Borrower hereunder, shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of any Senior Loan Documents;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Senior Obligations, or any amendment or waiver or
other modification, whether by course of conduct or otherwise, of the terms of
the Senior Credit Agreement or any other Senior Loan Document;
(c) any exchange, release or nonperfection of any security interest in any
Collateral, or any release, amendment, waiver or other modification, whether in
writing or by course of conduct or otherwise, of all or any of the Senior
Obligations or any guarantee thereof; or
(d) any other circumstances which otherwise might constitute a defense
available to, or a discharge of, the Borrower in respect of the Senior
Obligations, or of either the Subordinated Lender or the Borrower in respect of
this Agreement.
8. Representations and Warranties. The Subordinated Lender represents and
warrants to the Senior Lender that:
(a) its Subordinated Note (1) has been issued to it for good and valuable
consideration, (2) is owned by the Subordinated Lender free and clear of any
security interests, liens, charges or encumbrances whatsoever arising from,
through or under such Subordinated Lender, other than the interest of the Senior
Lender under this Agreement, (3) is payable solely and exclusively to such
Subordinated Lender and to no other Person and (4) constitutes the only evidence
of the obligations evidenced thereby;
(b) the Subordinated Lender has the limited partnership power and
authority and the legal right to execute and deliver and to perform its
obligations under this Agreement and has taken all necessary limited partnership
action to authorize its execution, delivery and performance of this Agreement;
and
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(c) this Agreement constitutes a legal, valid and binding obligation of
the Subordinated Lender.
9. No Representation by Senior Lender. The Senior Lender has made no
representations or warranties, express, or implied, nor does the Senior Lender
assume any liability to the Subordinated Lender with respect to: (a) the
financial or other condition of obligors under any instruments of guarantee with
respect to the Senior Obligations, (b) the enforceability, validity, value or
collectibility of the Senior Obligations or the Subordinated Obligations, any
collateral therefor, or any guarantee or security which may have been granted in
connection with any of the Senior Obligations or the Subordinated Obligations or
(c) the Borrower's title or right to transfer any collateral or security.
10. Provisions Applicable After Bankruptcy; No Turnover.
(a) The provisions of this Agreement shall continue in full force
and effect notwithstanding the occurrence of any event contemplated under clause
(a) of the definition of "Insolvency Event."
(b) To the extent that the Subordinated Lender has or acquires any
rights under Section 363 or Section 364 of the Bankruptcy Code with respect to
the Collateral, such Subordinated Lender hereby agrees not to assert such rights
without the prior written consent of the Senior Lender; provided that, if
requested by the Senior Lender, the Subordinated Lender shall seek to exercise
such rights in the manner requested by the Senior Lender, including the rights
in payments in respect of such rights.
11. Further Assurances. The Subordinated Lender and the Borrower, at
their own expense and at any time from time to time, upon the written request of
the Senior Lender will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Senior Lender
reasonably may request for the purposes of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.
12. Expenses. (a) The Borrower will pay or reimburse the Senior
Lender, upon demand, for all its costs and expenses in connection with the
enforcement or preservation of any rights under this Agreement, including,
without limitation, fees and disbursements of counsel to the Senior Lender.
(b) The Borrower will pay, indemnify, and hold the Senior Lender
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions (whether sounding in contract, tort or on any other
ground), judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of, or in any other way arising out of or
relating to this Agreement or any action taken or omitted to be taken by the
Senior Lender with respect to any of the foregoing, except for any such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or
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disbursements that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of the Senior Lender.
13. Provisions Define Relative Rights. This Agreement is intended solely
for the purpose of defining the relative rights of the Senior Lender on the one
hand and the Subordinated Lender on the other, and no other Person shall have
any right, benefit or other interest under this Agreement.
14. Legend. The Subordinated Lender and the Borrower will cause the
Subordinated Note to bear upon its face the following legend:
ALL INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED PROMISSORY NOTE IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED
IN, AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE SUBORDINATION AGREEMENT,
DATED AS OF JUNE ___, 1997, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG MALIBU ENTERTAINMENT
WORLDWIDE, INC., AS BORROWER, MEI HOLDINGS, L.P., AS SUBORDINATED LENDER,
AND FOOTHILL CAPITAL CORPORATION, AS SENIOR LENDER.
15. Powers Coupled With An Interest. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until the Senior Obligations are paid in full and any commitment to
make Advances under the Senior Credit Agreement has been terminated.
16. Notices. All notices, requests and demands to or upon the Senior
Lender or the Borrower or the Subordinated Lender to be effective shall be in
writing (or by fax or similar electronic transfer confirmed in writing) and
shall be deemed to have been duly given or made (1) when delivered by hand or
(2) if given by mail, three days following deposit in the mails by certified
mail, return receipt requested, or (3) if by fax or similar electronic transfer,
when transmission has been electronically confirmed, or (4) if given by
overnight courier, on the business day following delivery to such courier, in
each case addressed as follows:
If to the Senior Lender: at the address specified in the Senior Credit Agreement
If to the Borrower: at the address specified in the Senior Credit Agreement
If to the Subordinated Lender:
MEI Holdings, L.P.
c/o The Hampstead Group
Texas Commerce Tower
2200 Ross Avenue, Suite 4200 West
Dallas, Texas 75201
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Attn: Daniel A. Decker
Fax No.: (214) 220-4949
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Robert A. Profusek, Esq.
Fax No.: (212) 755-7306
The Senior Lender, the Borrower and the Subordinated Lender may change their
addresses and transmission numbers for notices by notice in the manner provided
in this Section.
17. Counterparts. This Agreement may be executed by one or more of the
parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the counterparts of this Agreement signed by all the parties shall be lodged
with the Senior Lender. Delivery of executed counterparts may occur by
facsimile, provided that any party delivering a signature by facsimile promptly
thereafter shall deliver an original signed counterpart.
18. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
19. Integration. This Agreement represents the agreement of the Senior
Lender and the Subordinated Lender with respect to the subject matter hereof and
there are no promises or representations by the Senior Lender or the
Subordinated Lender relative to the subject matter hereof not reflected herein.
20. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Senior Lender,
the Borrower and the Subordinated Lender; provided that any provision of this
Agreement may be waived by the Senior Lender in a letter or agreement executed
by the Senior Lender or by facsimile transmission from the Senior Lender.
(b) No failure to exercise, nor any delay in exercising, on the part of
the Senior Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
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21. Section Headings. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
22. Successors and Assigns. (a) This Agreement shall be binding upon the
successors and assigns of the Borrower and the Subordinated Lender and shall
inure to the benefit of the Senior Lender and its successors and assigns.
(b) Upon a successor Senior Lender becoming the Senior Lender under the
Senior Credit Agreement, such successor Senior Lender automatically shall become
the Senior Lender hereunder with all the rights and powers of the Senior Lender
hereunder without the need for any further action on the part of any party
hereto.
23. Governing Law. This Agreement shall be governed by,and construed and
interpreted in accordance with, the law of the State of New York (without giving
effect to principles of conflict of laws other than Section 5-1401 of the New
York General Obligations Law).
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
MEI HOLDINGS, L.P.
By: MEI GenPar, L.P.
Its General Partner
By: HH GenPar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By:
--------------------------------------
Daniel A. Decker
Executive Vice President
MALIBU ENTERTAINMENT WORLDWIDE, INC.
--------------------------------------------------
Richard M. FitzPatrick
Chief Financial Officer
FOOTHILL CAPITAL CORPORATION
--------------------------------------------------
Name:
Title:
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EXHIBIT 99.4
ALL INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED PROMISSORY NOTE IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED
IN, AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE SUBORDINATION AGREEMENT,
DATED AS OF JUNE 5, 1997, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG MALIBU ENTERTAINMENT
WORLDWIDE, INC., AS BORROWER, MEI HOLDINGS, L.P., AS SUBORDINATED LENDER,
AND FOOTHILL CAPITAL CORPORATION, AS SENIOR LENDER.
SUBORDINATED PROMISSORY NOTE
$10,000,000 New York, N.Y.
June 5, 1997
FOR VALUE RECEIVED, the undersigned, Malibu Entertainment Worldwide,
Inc., a Georgia corporation ("Maker"), promises to pay to the order of MEI
Holdings, L.P., a Delaware limited partnership (together with any subsequent
holder of this Note, "Holder"), at its offices located at c/o The Hampstead
Group, 2200 Ross Avenue., Suite 4200 West, Dallas, Texas 75201, or at such other
address or to such account as Holder may from time to time designate in writing,
the principal sum of Ten Million United States Dollars ($10,000,000), together
with interest thereon from the date hereof on the unpaid principal balance at
the rate and otherwise as herein provided. Unless otherwise specified by Holder
in writing, all payments on this Note shall be made in lawful money of the
United States of America and in immediately available funds.
The principal amount of this Note and all accrued and unpaid
interest thereon shall become due and be paid on July 15, 1997 (the "Maturity
Date"). Maker may, at its option and upon three (3) Business Days' prior written
notice from Maker to Holder, prepay in whole or in part the outstanding
principal balance of this Note without payment of any premium or penalty.
For purposes of this Note: (i) "Applicable Interest Rate" shall mean
a rate per annum equal to LIBOR plus 350 basis points, which Applicable Interest
Rate shall be adjusted monthly on the Determination Date; (ii) "Business Day"
shall mean any day other than a Saturday, Sunday or any other day on which
national banks in New York, New York are not open for business; (iii) "Default
Rate" shall mean a rate per annum (adjusted monthly on each Determination Date)
equal to the Applicable Interest Rate plus 500 basis points; provided, however,
in no event shall such rate exceed the maximum rate permitted by applicable law;
(iv) "Determination Date" shall mean the date which is two Eurodollar Business
Days prior to the first day of a calendar month; (v) "Eurodollar Business Day"
shall mean a Business Day on which banks in the City of London, England, are
open for interbank or foreign exchange transactions; and (vi) "LIBOR" shall mean
the rate (expressed as a
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percentage per annum) for deposits in U.S. dollars, for a one-month period, that
appears on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m.,
London, England time, on the related Determination Date. If such rate does not
appear on Telerate Page 3750 as of 11:00 a.m., London, England time, on the
related Determination Date, LIBOR shall be the arithmetic mean of the offered
rates (expressed as a percentage per annum) for deposits in U.S. dollars for a
one-month period that appear on the Reuters Screen LIBOR Page as of 11:00 a.m.,
London, England time, on such Determination Date, if at least two such offered
rates so appear. If fewer than two such offered rates appear on the Reuters
Screen LIBOR Page as of 11:00 a.m., London, England time, on such Determination
Date, Holder shall request the principal London, England office of any four
major reference banks in the London interbank market selected by Holder to
provide such bank's offered quotation (expressed as a percentage per annum) to
prime banks in the London interbank market for deposits in U.S. dollars for a
one-month period as of 11:00 a.m., London, England time, on such Determination
Date for amounts of not less than U.S. $1,000,000. If at least two such offered
quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such offered quotations are so provided, Holder
shall request any three major banks in New York City selected by Holder to
provide such bank's rate (expressed as a percentage per annum) for loans in U.S.
dollars to leading European banks for a one-month period as of approximately
11:00 a.m., New York City time, on the applicable Determination Date for amounts
of not less than U.S. $1,000,000. If at least two such rates are so provided,
LIBOR shall be the arithmetic mean of such rates. If fewer than two such rates
are so provided, then LIBOR shall be LIBOR as in effect on the Eurodollar
Business Day immediately preceding the applicable Determination Date. LIBOR
shall be determined in accordance with this paragraph by Holder or its agent.
Maker shall pay interest, in arrears for each one-month LIBOR
interest period (or portion thereof) from and including the first Business Day
of each calendar month (or from the date hereof in the case of the initial
interest period) to but excluding the first Business Day of the immediately
succeeding calendar month, on the unpaid principal balance of this Note from
time to time outstanding at the Applicable Interest Rate determined for each
such one-month interest period on the immediately preceding Determination Date,
on the first Business Day of each calendar month during the term of this Note.
The balance of the unpaid principal of this Note together with all accrued and
unpaid interest thereon shall be paid on the Maturity Date, all in accordance
with the terms and provisions set forth herein. Interest on the unpaid principal
balance of this Note shall be computed on the actual number of days elapsed, and
a year of 360 days.
Maker shall use the proceeds of the loan evidenced by this Note
solely to fund its working capital requirements and to repay indebtedness of the
Maker the proceeds of which were used by Maker solely to fund its working
capital requirements.
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 or otherwise, the unpaid amount (including, to the extent
enforceable at law, any unpaid amount of interest) shall bear interest at the
Default Rate until paid. Maker shall also pay to Holder, in addition to the
amount due, all reasonable costs and expenses incurred by Holder in
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collecting or enforcing, or attempting to collect or enforce this Note,
including without limitation court costs and reasonable attorneys' fees and
expenses (including reasonable attorneys' fees and expenses on any appeal by
either Maker or Holder and in any bankruptcy proceeding).
With respect to the amounts due pursuant to this Note, Maker waives
demand, presentment, protest, notice of dishonor, notice of nonpayment, suit
against any party, diligence in collection of this Note, and all other
requirements necessary to enforce this Note.
In no event shall any amount deemed to constitute interest due or
payable hereunder (including interest calculated at the Default Rate) exceed the
maximum rate of interest permitted by applicable law (the "Maximum Amount"), and
in the event such payment is inadvertently paid by Maker or inadvertently
received by Holder, then such sum shall be credited as a payment of principal or
other amounts (other than interest) outstanding hereunder, and, if in excess of
the outstanding amount of principal or other amounts outstanding hereunder,
shall be immediately returned to Maker upon such determination. It is the
express intent hereof that Maker not pay and Holder not receive, directly or
indirectly, interest in excess of the Maximum Amount.
Holder shall 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 shall 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 shall 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 shall be binding upon and enforceable against
Maker and its successors and assigns and shall inure to the benefit of Holder
and its successors and assigns.
Wherever possible, each provision of this Note shall 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 shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note.
This Note was negotiated in New York, and made by Holder and
accepted by Maker in the State of New York, which State the parties agree has a
substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects, including without limitation matters of
construction, validity, and performance, this Note and the obligations arising
hereunder shall be governed by, and construed in accordance with, the internal
laws of the State of New York and any applicable law of the United States of
America. To the fullest extent permitted by law, Maker hereby unconditionally
and irrevocably waives any claim to assert that the laws of any other
jurisdiction governs this
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Note, and this Note shall be governed by and construed in accordance with the
laws of the State of New York pursuant to ss. 5-1401 of the New York General
Obligations Law.
MAKER, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING WITHOUT LIMITATION ANY TORT
ACTION, BROUGHT WITH RESPECT TO THIS NOTE. HOLDER MAY FILE A COPY OF THIS WAIVER
WITH ANY COURT AS WRITTEN EVIDENCE OF MAKER'S KNOWING, VOLUNTARY, AND
BARGAINEDFOR AGREEMENT IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY, AND
THAT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN MAKER AND HOLDER SHALL INSTEAD BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
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.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed
on its behalf as of the day and year first above written.
MALIBU ENTERTAINMENT WORLDWIDE, INC.
By:
--------------------------------------------
Name:
Title:
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