<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Malibu Entertainment Worldwide, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
MALIBU ENTERTAINMENT WORLDWIDE, INC.
717 NORTH HARWOOD, SUITE 1650
DALLAS, TEXAS 75201
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
QUESTIONS AND ANSWERS
WHEN AND WHERE IS THE MEETING?
The annual meeting of shareholders of Malibu Entertainment Worldwide, Inc.
will be held at the Dallas SpeedZone, 11130 Malibu Drive, Dallas, Texas, on
Tuesday, December 15, 1998, at 11:00 a.m. local time. The 1998 annual
shareholders meeting had been deferred pending the possible combination of
Malibu with Houlihan's Restaurant Group. The Company determined not to proceed
with that transaction in November 1998 and, accordingly, scheduled the
shareholders meeting for December 15th.
WHO CAN VOTE?
Record holders of shares of Malibu common stock (the "Malibu Common
Shares") as of the close of business on November 20, 1998 are entitled to vote
at the meeting. On that date, 48,455,258 Malibu Common Shares were outstanding
and each Share is entitled to one vote.
WHAT IS BEING VOTED ON?
- Election of ten directors for terms ending at the 1999 annual meeting of
shareholders.
- Any other business properly brought before the meeting.
MEI Holdings, L.P., the holder of 81.1% of the Malibu Common Shares ("MEI
Holdings"), has informed the Company that it intends to vote its shares in favor
of each of the nominees and any other matter that properly comes before the
meeting. Accordingly, each of the director nominees will be elected and any
other matter properly brought before the meeting will be approved as a result of
MEI Holdings' vote, regardless of how other Malibu shareholders vote. As of the
date of this proxy statement, the directors do not know of any other matters
that are to be presented at the meeting. If any other matter requiring a vote
properly comes before the meeting, the holders of the proxies will vote your
Shares on any such matter in their sole discretion.
HOW DO I VOTE?
Mark, sign and date your proxy card and return it in the postage-paid
envelope provided. If you do not indicate your voting preferences on your proxy
card, your Shares will be voted in favor of the two proposals.
MAY I CHANGE MY VOTE?
You may revoke your proxy at any time before your proxy is voted at the
annual meeting in any one of the following three ways:
(1) by sending a written notice to Continental Stock Transfer & Trust
Company, 2 Broadway, New York, NY 10004, Attention: Gail Konsker,
stating that you want to revoke your proxy;
(2) by completing a properly signed proxy with a later date; or
(3) by voting in person at the annual meeting.
WHEN IS THIS PROXY STATEMENT BEING MAILED TO SHAREHOLDERS?
This Proxy Statement is being mailed to Shareholders on or about November
24, 1998.
<PAGE> 3
WHO IS SOLICITING PROXIES?
The Company has retained Continental Stock Transfer and Trust Company to
aid in the tabulation of proxies in the enclosed form and related duties and
will pay such firm a customary fee plus reasonable expenses for so acting
(estimated at $2,500 in the aggregate). The cost of solicitation of proxies will
be borne by the Company. It is expected that solicitation of proxies will be
primarily by mail. In addition, proxies may be solicited by the Company's
directors, officers and employees (without additional compensation), by personal
interview, by telephone or otherwise. Arrangements may be made with brokerage
firms and other custodians, nominees and fiduciaries to forward the solicitation
material to the beneficial owners of Malibu Common Shares held of record by such
persons. The Company may, upon request, reimburse such brokers, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
WHAT IS THE EFFECT OF ABSTENTIONS AND BROKER NON-VOTES?
Abstentions and broker non-votes will be treated as shares not voted for
purposes of determining whether the requisite vote has been obtained as to the
proposals and therefore will have no effect on the outcome of the vote on any
matter being considered at the Annual Meeting that requires the affirmative vote
of a majority of votes cast at the Annual Meeting of Malibu Common Shares
entitled to vote.
WHOM SHOULD I CALL WITH QUESTIONS?
If you have questions regarding the matters referred to in this document,
you should contact Richard N. Beckert, Malibu's Chief Executive Officer, at
(214) 210-8701.
ELECTION OF DIRECTORS
INFORMATION ABOUT BOARD NOMINEES
The Malibu Board currently consists of ten directors, each of whom has been
nominated, and agreed to stand, for re-election. We have provided information
regarding each of the existing Malibu directors and nominees below. If any of
the nominees is unable to stand for election, we may provide for a lesser number
of nominees or designate a substitute for such nominee. In the latter event,
Malibu Common Shares represented by proxies may be voted for the substitute. If
elected, each director nominee will serve for a term expiring at Malibu's 1999
annual meeting of stockholders or until the earlier of the election of his or
her successor or his or her resignation or removal from office.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
<S> <C> <C>
Robert A. Whitman................ 45 1996
Richard N. Beckert............... 42 1998
Daniel A. Decker................. 46 1996
Julie E. Demerau................. 39 1991
L. Scott Demerau................. 37 1991
James T. Hands................... 37 1996
Richard M. FitzPatrick........... 45 1996
William M. Kearns, Jr. .......... 63 1995
Steven D. Scheetz................ 31 1998
Bert W. Wasserman................ 65 1995
</TABLE>
Robert A. Whitman has been the Chairman of the Board of Malibu since August
1996 and President and Co-Chief Executive Officer of The Hampstead Group, LLC
("Hampstead") since 1991. Hampstead is an investment firm which sponsored the
formation of MEI Holdings, Malibu's majority shareholder. Mr. Whitman is a
director of Covey Leadership Center and Bristol Hotel Company, was a director of
Wyndham Hotel Corporation from 1996 until the sale of Wyndham to Patriot
American Hospitality, Inc.
2
<PAGE> 4
("Patriot") in 1998 and served as Chairman of the Board of Forum Group, Inc., a
NASDAQ-traded operator of retirement communities, from 1993 until the sale of
that company to Mariott International, Inc. in 1996.
Richard N. Beckert has been a member of the Board since November 1998 and
Chief Executive Officer of Malibu since August 1998. Prior to joining Malibu,
Mr. Beckert was the Senior Vice President Administration, for Bristol Hotels and
Resorts ("Bristol") and served in various capacities for Bristol from 1983
through 1998. Mr. Beckert has been the Mayor of the Town of Addison since May
1993. He is currently a member of the Board of Directors of the Metrocrest
Chamber of Commerce and the Texas Hotel/Motel Association. He is also a member
of the Addison Business Association.
Daniel A. Decker has been a member of the Board since August 1996 and an
Executive Vice President of Hampstead since 1990. Mr. Decker served as a
director of Wyndham from 1996 until the sale of Wyndham to Patriot in 1998.
Prior to 1990, Mr. Decker was a partner in the Dallas law firm of Decker, Hardt,
Kopf, Harr, Munsch & Dinan, P.C. Mr. Decker was a director of Forum Group, Inc.
from June 1993 until March 1996.
Julia E. Demerau was a founder of Malibu and has been a member of the Board
since 1991. She served as Executive Vice President from Malibu's inception in
1991 until November 1996, and served in similar capacities with Malibu's
predecessors since 1986.
L. Scott Demerau was a founder of Malibu and was the Chief Executive
Officer and President of Malibu from its inception in 1991 until November 1996
and served as the Chairman of the Board from 1991 to August 1996. He served in
similar capacities with Malibu's predecessors since 1986. L. Scott Demerau and
Julia E. Demerau are husband and wife.
James T. Hands has been a member of the Board since 1996 and has been a
Vice President of Hampstead since 1993. Prior to 1993, Mr. Hands was a
consultant employed by Kenneth Leventhal & Co.
Richard M. FitzPatrick has been a member of the Board since August 1996 and
has been the Chief Financial Officer of Hampstead since 1989. He has served as
the interim chief financial officer of Malibu since November 1996.
William M. Kearns, Jr. has been a member of the Board since January 1995.
Since 1994, Mr. Kearns has served as President of W.M. Kearns & Co., Inc., a
private investment company. From 1992 to 1993, Mr. Kearns served as an Advisory
Director for Lehman Brothers. From 1969 to 1992, Mr. Kearns served as Managing
Director, Corporate Finance for Lehman Brothers and its predecessor firms. Mr.
Kearns also serves as a Senior Consultant to Furman Selz L.L.C. and Proudfoot,
P.L.C. He is a trustee of EQ Advisors Trust (Equitable Life Assurance Society of
the U.S.) and is a director of Kuhlman Corporation, Selective Insurance Group,
Inc., and Marine Transport Corporation, as well as a number of private and
venture-backed companies. Mr. Kearns is a member of the Executive Advisory Board
of the William E. Simon School of Business of the University of Rochester.
Steven D. Scheetz has been a member of the Board since 1998. Since 1992,
Mr. Scheetz has been a member of the mergers and acquisitions team at Hampstead
and is responsible for the financial underwriting and valuation efforts of
Hampstead and its investments. Prior to joining Hampstead, Mr. Scheetz was an
officer of Belcore & Associates, Inc., a regional real estate investment and
management firm. Previously, Mr. Scheetz served as a senior financial analyst to
Walden Residential Properties, Inc., a real estate investment trust.
Bert W. Wasserman has been a member of the Board since January 1995. Mr.
Wasserman served as Executive Vice President and Chief Financial Officer from
1990 to 1994 and as a director from 1990 to 1993 of Time Warner Inc. From 1981
to 1991, Mr. Wasserman served as a member of the Office of the President and
Board of Directors of Warner Communications, Inc. Mr. Wasserman served as a
member of the National Advisory Board of Chemical Bank until March 1996. Mr.
Wasserman currently serves as a member of the Board of the Baruch College Trust
Fund, a director of various registered investment companies for which The
Dreyfus Corporation acts as investment advisor, and a director of Winstar
Communications, Inc. and Lillian Vernon Corporation.
3
<PAGE> 5
The ten candidates for director receiving the highest number of affirmative
votes cast at the Annual Meeting will be elected as directors of Malibu.
Shareholders do not have a right to cumulate their votes for directors. MEI
Holdings has informed us that it intends to vote its shares (which represent
81.1% of the Malibu Common Shares outstanding on the Record Date) for each of
the director nominees. Accordingly, each of the director nominees will be
elected as a result of MEI Holdings' vote, regardless of how other Malibu
shareholders vote.
MALIBU BOARD MEETINGS
Your directors met four times during 1997. Each director attended 75% or
more of the total number of meetings of directors and meetings of committees on
which he or she served.
MALIBU BOARD COMMITTEES
The Malibu Board has two committees: an Audit Committee and a Compensation
Committee.
The Audit Committee is responsible for reviewing (i) the selection of our
independent auditors, (ii) the audits conducted by our independent and internal
auditors, (iii) our internal controls and practices, and (iv) our financial
statements as certified by our independent auditors. Messrs. Wasserman
(Chairman), FitzPatrick and Kearns are members of our Audit Committee. The Audit
Committee met two times in 1997.
The Compensation Committee is responsible for (i) determining the
compensation of our executive officers and (ii) overseeing the base pay or
salary, annual performance bonus and long-term compensation of our executive
officers. Messrs. Decker (Chairman), Kearns and Wasserman are members of our
Compensation Committee. The Compensation Committee met two times in 1997.
DIRECTOR COMPENSATION
Our directors, other than Mr. Beckert, Mr. Demerau and Ms. Demerau, are
paid the following for their services as directors: (i) an annual fee of
$25,000, payable in quarterly installments, (ii) fees of $1,000 for each special
meeting attended in person, (iii) fees of $750 for each telephonic special
meeting attended, (iv) an annual fee of $5,000 for serving on a Board committee,
(v) fees of $750 for each special committee meeting attended in person, and (vi)
fees of $500 for each telephonic special committee meeting attended.
Each of Messrs. Whitman, FitzPatrick, Decker, Hands and Scheetz waived his
rights to such fees for 1996, 1997 and 1998.
Ms. Demerau has agreed to serve as a part-time consultant through December
31, 1998 to assist us with any tasks that are consistent with her business
experience. We have agreed to pay Ms. Demerau $30,000 per year for such
services. In addition, Mr. and Ms. Demerau have received and are entitled to
receive certain payments under the Separation Agreement described under "Certain
Relationships and Transactions -- Demerau Separation Agreement."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the rules
promulgated under it require that certain of our officers, directors and
stockholders report transactions effected in Malibu Common Shares with the SEC.
During 1997, each Malibu director filed on a timely basis the forms required
under Section 16(a) relating to transactions in Malibu Common Shares, except for
Mr. Demerau with respect to the sale of shares to Malibu and for Messrs. Kearns
and Wasserman with respect to option awards. Malibu believes that the failures
to make these filings on a timely basis were inadvertant. The required filings
have since been made.
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<PAGE> 6
EXECUTIVE COMPENSATION
EXECUTIVE OFFICER COMPENSATION
In August of 1998, Malibu entered into a four-year employment agreement
with Mr. Beckert which provides that he will serve as the Chief Executive
Officer and that Malibu will use its best efforts to elect Mr. Beckert as a
member of the Board of Directors. Mr. Beckert will receive an initial annual
base salary of $275,000, and is entitled to annual bonus payments in an amount
up to 100% of his annual base salary.
In connection with entering into his employment agreement, Mr. Beckert was
subsequently granted non-qualified stock options to purchase 1,000,000 Malibu
Common Shares and we expect to issue to him 500,000 Malibu Common Shares which
will be subject to restrictions on resale and a repurchase right of Malibu. The
options vest at a rate of 1/48 per month for four years and the restrictions of
the restricted stock will lapse in August of 2002. The option vesting is
accelerated generally in circumstances which entitle Mr. Beckert to a severance
payment under the Employment Agreement.
If Mr. Beckert's employment is terminated other than for cause when no
other severance is due within six months of a change of control, he is
terminated when cause does not exist or he terminates his employment for good
reason, Mr. Beckert will continue to receive his annual base salary through the
date his employment is terminated, and generally, will receive the equivalent of
two years of his annual base salary.
Robert A. Whitman, currently our Chairman and formerly our Chief Executive
Officer, did not receive any compensation for his services during 1996 and 1997
and has agreed not to accept any compensation for the continuation of his
services through December 31, 1998.
Certain Hampstead employees including Messrs. FitzPatrick and Hands, have
devoted a substantial portion of their time to Malibu's business since mid-1996.
We paid Hampstead $179,070 to reimburse it for salaries and other costs of
Messrs. FitzPatrick's and Hands' services during 1996 and $468,445 in 1997,
$123,856 and $173,858 of which was in reimbursement of Mr. FitzPatrick's
compensation for 1996 and 1997, respectively. These payments were approved by
directors not employed by Malibu or Hampstead. Except for Mr. FitzPatrick,
Malibu did not have any executive officer whose salary and bonus exceeded
$100,000 in 1997.
STOCK OPTION PLANS
Employee Stock Option Plans. In September 1993, we adopted the Mountasia
1993 Incentive Stock Option Plan (the "Plan"), which was amended in 1995. The
Plan provides for the issuance of options covering up to 1,250,000 Malibu Common
Shares. Options may be granted under the Plan to our employees, officers,
directors, consultants and advisors. All options are issued at fair market value
at the date of grant. The options expire four to five years from the date of
grant. No options have been issued under this Plan since 1995.
In April 1997, we adopted our 1997 Long-Term Incentive Plan which provides
for the issuance of up to 4,000,000 Malibu Common Shares as equity based
incentives, including options, appreciation rights, restricted shares, deferred
shares and performance shares or units. In June 1998, we granted to employees
options to purchase 513,900 Malibu Common Shares at the market price at the time
of grant. In November 1998, we granted another employee an option to purchase
200,000 Malibu Common Shares at the market price at the time of grant.
In August 1998, an option to purchase 1,000,000 Malibu Common Shares was
issued to Mr. Beckert. See "Executive Compensation -- Executive Officer
Compensation."
As of December 31, 1997, none of our executive officers had any outstanding
options to purchase Malibu Common Shares and, during the year ended December 31,
1997, none of our executive officers received a grant of stock options or
exercised any stock options. As of November 20, 1998, the only executive officer
to have received a grant of stock options during 1998 was Mr. Beckert.
Nonemployee Director Stock Option Plan. In September 1993, we adopted the
1993 Nonemployee Director Stock Option Plan (the "Director Plan") which was
amended during 1995 and for which 250,000 Malibu Common Shares are reserved for
issuance. The Director Plan provides for the grant of nonqualified
5
<PAGE> 7
stock options to purchase Malibu Common Shares to directors who are not our
employees. All options are issued at fair market value at the date of grant and
vest immediately. Each of Messrs. Whitman, FitzPatrick, Decker, Hands and
Scheetz waived his rights to such options for 1996, 1997 and 1998. Mr. and Ms.
Demerau have waived their rights to options under the Director Plan for 1997 and
1998 and each year thereafter.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Principles. The Compensation Committee of the Board seeks to provide a
competitive compensation package that enables us (i) to attract and retain key
executives, (ii) to integrate pay programs with our business objectives, (iii)
to reward executive officers for achievement of short-term operating goals and
for long-term stockholder value, and (iv) to link individual executive
compensation with our overall performance.
Factors Considered in Determining Compensation. The Committee targets
salaries for its key executives that are competitive with related industry
companies of similar size, taking into account the experience of individual
officers. Generally, the Committee attempts to fix base salaries at lower levels
to emphasize result-oriented factors reflected in a bonus potential and the
value of stock options. The Committee periodically reviews salaries and pay
ranges for its executives, and salaries are increased based on the Committee's
evaluation of an individual's performance and their contribution to our goals.
All amounts paid to reimburse Hampstead for services previously provided by
its employees are reviewed and approved by directors not employed by Malibu or
Hampstead.
The terms of the agreements entered into with Scott and Julia Demerau,
Malibu's founders and former principal executive officers and continuing
directors, were negotiated on an arms-length basis. See "Demerau Separation
Agreement" for a description of this.
COMPENSATION COMMITTEE
Daniel A. Decker, Chairman
William M. Kearns, Jr.
Bert W. Wasserman
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Acquisition of Shares by MEI Holdings. In 1997, MEI Holdings closed on a
tender offer for any and all outstanding Malibu Common Shares it did not own at
$3.50 per share and for any and all of our 9% Debentures and 9.1% Debentures at
par plus accrued and unpaid interest for the purchased debentures. Pursuant to
the tender offer, MEI Holdings acquired 7,802,435 Malibu Common Shares,
$4,249,000 aggregate principal amount of 9% Debentures and $11,422,322 aggregate
principal amount of 9.1% Debentures. The debentures purchased by MEI Holdings
have been converted into 4,477,521 Malibu Common Shares in accordance with a
prior agreement.
MEI Holdings Promissory Notes. During 1997 and 1998, we borrowed funds from
MEI Holdings on terms which we believed to be at least as favorable to us as
terms obtainable from third parties. The outstanding balance of such
indebtedness (including accrued and unpaid interest) was $63.8 million as of
September 30, 1998. The notes are each convertible at MEI Holdings' option into
subordinated notes that are convertible into Malibu Common Shares. MEI Holdings
has the right, but not the obligation, to advance a total of $75 million under
these notes.
Reimbursement of MEI Holdings. During 1997, we paid loan costs of $685,000
to MEI Holdings in connection with one of the promissory notes. Additionally, we
reimbursed MEI Holdings for certain costs incurred by MEI Holdings for our
benefit. The total amount charged to us for overhead costs was $558,321
(including $468,445 for Messrs. Hands' and FitzPatrick's salaries and other
costs) for the year ended December 31, 1997. $156,002.42 of such costs were
reimbursed in the first nine months of 1998.
Demerau Separation Agreement. In December 1997, in connection with the
relocation of our headquarters from Atlanta to Dallas, we entered into a
separation agreement (the "Separation Agreement") with L. Scott Demerau and
Julia Demerau, each of whom is a director and former executive officer of
Malibu. The
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<PAGE> 8
Separation Agreement terminated Mr. Demerau's employment with us and requires us
to pay Mr. Demerau $262,500 in each of 1997 and the following three years, as
adjusted by inflation. We must also pay Ms. Demerau $30,000 in each of 1997 and
1998. Ms. Demerau will continue to serve as a part-time consultant to us
consistent with her past business dealings with Malibu through December 31,
1998. Additionally, we paid $50,000 to Mr. and Ms. Demerau jointly. The
Separation Agreement includes the Demeraus' agreement not to compete with us,
solicit our employees or disclose our proprietary information.
Pursuant to the Separation Agreement, we purchased from Mr. and Ms. Demerau
171,875 and 116,667 shares, respectively (the "Repurchased Shares"), of the
750,000 and 225,000, Malibu Common Shares issued in 1996 to Mr. Demerau and Ms.
Demerau, respectively (the "Original Shares"), under the share purchase
agreements that provided for the issuance of such shares, subject to Malibu
repurchase rights, in exchange for a promissory note from each of Mr. and Ms.
Demerau for the purchase price of the shares. The Repurchased Shares were
repurchased at Mr. and Ms. Demerau's original purchase price plus interest
(computed at 7% per annum during the first two years and 7 1/2% thereafter) from
the date of their purchase through the date of our repurchase. The purchase
price paid to Mr. and Ms. Demerau for the Repurchased Shares was $457,617 and
$310,625, respectively. These amounts were offset against the amounts owed to us
by Mr. and Ms. Demerau under promissory notes issued at the time the Original
Shares were purchased from us. The promissory notes were amended and restated in
connection with the Separation Agreement to provide, among other things, for the
reduced face amounts (now $1,539,258 and $288,436, respectively) and to extend
the maturity dates to November 1, 1999 and November 17, 2000, respectively.
In lieu of the restrictions on transfer and our repurchase option that were
contained in the share purchase agreements, the Separation Agreement gives us a
right of first refusal at a maximum price of $9.50 per share and an option at
$9.50 per share, to purchase the remaining Original Shares. (203,125 of the
remaining Original Shares are not subject to the option or the maximum price
limitation on the right of first refusal.) The remaining Original Shares are not
transferrable except to us or to a third party in connection with our right of
first refusal. The Separation Agreement provides that if either Mr. or Ms.
Demerau reduces his or her current ownership of Malibu Common Shares by more
than 20%, he or she will resign from the Malibu Board.
Other Related Transactions. In May 1997, we sold 11 family entertainment
centers to Mountasia, Inc. ("MI"), an entity controlled by a person who had been
a member of Malibu's Board until February, 1997. The purchase price for the 11
centers was $2.5 million, plus the assumption of our obligations under related
leases and contracts, including ground leases applicable to six of the centers.
Mr. and Ms. Demerau, each of whom is a director and nominee for director, and
Mr. Demerau's mother, together owned 42% of the common stock of MI until
immediately prior to the sale, at which time all of such stock was purchased by
MI for $121,000. Also prior to the sale, MI and its controlling person purchased
the limited and general partnership interests of Mr. and Ms. Demerau and Mr.
Demerau's mother in certain related limited partnerships for $489,000 and
transferred the Malibu Common Shares held by such partnerships to MI. Out of the
$610,000 total purchase price paid to the Demeraus in these transactions,
$80,000 was paid by MI during 1997 and $530,000 is payable over 10 years. The
$610,000 total purchase price was approximately equal to the market value of the
Malibu Common Shares owned by MI and such limited partnerships, respectively,
multiplied by the Demeraus' equity interest in MI and such limited partnerships,
respectively. Prior to MI's purchase of the 11 centers, the Malibu Common Shares
were the principal assets of MI and the limited partnerships. In connection with
the foregoing transactions, the Demeraus were released from liabilities arising
out of the general and limited partnerships purchased by MI and its controlling
person.
7
<PAGE> 9
STOCK PERFORMANCE GRAPH
The chart below compares the five-year cumulative total return on Malibu
Common Shares with that of the S&P 500 Index and a peer industry group. This
graph assumes $100 was invested on December 31, 1993 in each of Malibu Common
Shares, the S&P 500 companies and a peer group of companies represented by the
Entertainment Industry Segment. Cumulative total return assumes the reinvestment
of dividends.
<TABLE>
<CAPTION>
Malibu
Entmt.
Measurement Period Worldwide Entertainment S&P 500
(Fiscal Year Covered) Inc. 500 Index
<S> <C> <C> <C>
3-Nov-93 100 100 100
Sep-94 134.38 92.61 102.29
Sep-95 103.12 122.41 132.71
Dec-96 42.19 123.28 173.00
Dec-97 39.84 179.88 230.72
</TABLE>
8
<PAGE> 10
SECURITY OWNERSHIP INFORMATION
OWNERSHIP OF SHARES
The following table sets forth certain information regarding the beneficial
ownership of Malibu Common Shares as of November 20, 1998 by (i) each person who
we know beneficially owns more than 5% of Malibu Common Shares, (ii) each
director and executive officer of Malibu, and (iii) all directors and executive
officers of Malibu as a group. Unless otherwise stated below, the address of
each person is the principal offices of Malibu located at 717 North Harwood,
Suite 1650, Dallas, Texas 75201. For purposes of the table, a person or group of
persons is deemed to have "beneficial ownership" of any shares as of a given
date if that person has the right to acquire the shares within 60 calendar days
after such date.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
---------------------------
NUMBER OF % OF MALIBU
MALIBU COMMON
NAME COMMON SHARES SHARES
---- ------------- -----------
<S> <C> <C>
MEI Holdings, L.P.(1)....................................... 39,323,513 81.1%
4200 Texas Commerce Tower
Dallas, Texas 75201
Richard N. Beckert.......................................... 2,500 *
Daniel A. Decker(2)......................................... 39,323,513 81.1%
L. Scott Demerau(3)......................................... 1,552,515 3.3%
Julia E. Demerau(4)......................................... 1,552,515 3.3%
Richard M. FitzPatrick...................................... -- --
James T. Hands.............................................. -- --
William M. Kearns, Jr.(5)................................... 125,000 *
Steven D. Scheetz........................................... -- --
Bert W. Wasserman(5)........................................ 100,000 *
Robert A. Whitman(2)........................................ 39,323,513 81.1%
All directors and executive officers as a group (10
persons)(2)............................................... 41,105,528 84.8%
</TABLE>
- ---------------
* Less than one percent
(1) MEI Holdings may be entitled to the issuance of additional Malibu Common
Shares under post-closing adjustment provisions and other terms of the
Recapitalization Agreement, dated as of June 5, 1996, as amended and
restated, between MEI Holdings and Malibu, the Warrant issued by Malibu to
MEI Holdings in connection therewith and certain convertible notes issuable
upon conversion by MEI Holdings of existing promissory notes of Malibu of
which the principal amount outstanding was $63.8 million as of September 30,
1998. MEI Holdings has the right, but not the obligation, to advance a total
of $75 million under these notes.
(2) Messrs. Decker and Whitman disclaim beneficial ownership of the 39,323,513
Malibu Common Shares held by MEI Holdings.
(3) Mr. Demerau disclaims beneficial ownership of the 544,495 Malibu Common
Shares held of record by Julia E. Demerau, Mr. Demerau's spouse. In February
1997, Mr. and Ms. Demerau borrowed $1.0 million from a financial
institution. The loan matures in February 1999. The loan is secured by a
pledge of all of the 1,552,515 shares owned by Mr. and Ms. Demerau. At the
request of the lender, MEI Holdings has guaranteed such indebtedness. Under
the terms of the guarantee, among other things, the lender has the right to
require MEI Holdings to purchase the pledged shares for the outstanding loan
amount or repay the loan if the closing price of Malibu's Common Shares is
$1.50 or less for three or more consecutive trading days. As of November 23,
1998, the closing price of Malibu Common Shares
9
<PAGE> 11
had been $1.50 or less for three consecutive trading days. To our knowledge, MEI
Holdings has not received notice from the lender that it intends to exercise its
right.
(4) Ms. Demerau disclaims beneficial ownership of the 1,008,020 Malibu Common
Shares held of record by L. Scott Demerau, Ms. Demerau's spouse. In February
1997, Mr. and Ms. Demerau borrowed $1.0 million from a financial
institution. The loan is secured by a pledge of all of the 1,552,515 shares
owned by Mr. and Ms. Demerau. At the request of the lender, MEI Holdings has
guaranteed such indebtedness.
(5) Includes options to purchase 25,000 Malibu Common Shares which are
exercisable within 60 calendar days of the Record Date.
ADDITIONAL INFORMATION
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 and Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, each as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")
are being distributed to the shareholders together with this Proxy Statement.
FUTURE STOCKHOLDER PROPOSALS
Any Malibu shareholder who wishes to submit a proposal for inclusion in the
proxy materials for the 1999 Annual Meeting of Shareholders must submit such
proposal to the Secretary of Malibu by March 1, 1999. The Securities and
Exchange Commission recently amended Rule 14a-4 of the Exchange Act, to provide
that a proxy may confer discretionary authority to vote on a proposal for an
annual meeting of stockholders if the proponent fails to notify the Company at
least 45 days prior to the month and day of mailing the prior year's proxy
statement. For purposes of the Company's 1999 annual meeting of stockholders,
management may use its discretionary voting authority to vote on any proposal
with respect to which the Company receives notice after March 31, 1999, even if
such proposal is not discussed in the proxy statement for the 1999 annual
meeting of stockholders.
ACCOUNTANTS
The Company has selected Arthur Andersen LLP to serve as the Company's
independent accountants for 1998. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting, where they will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
November 23, 1998
10
<PAGE> 12
PROXY
MALIBU ENTERTAINMENT WORLDWIDE, INC.
717 NORTH HARWOOD, SUITE 1650
DALLAS, TEXAS 75201
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 15, 1998
This Proxy is solicited on behalf of the Board of Directors. The
undersigned, having received the Notice of Annual Meeting of Shareholders and
the Proxy Statement hereby appoints Richard N. Beckert with full power of
substitution and resubstitution, as proxies of the undersigned, to represent and
to vote as designated below and in accordance with their judgment all of the
shares of Common Stock of MALIBU ENTERTAINMENT WORLDWIDE, INC. ("MALIBU") held
of record by the undersigned on November 20, 1998, at the Annual Meeting of
Shareholders to be held on December 15, 1998 and at any adjournment or
postponement thereof.
The Malibu Board of Directors recommends a vote FOR the election of the ten
nominees for director named below.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR ALL nominees listed below [ ] WITHHOLD AUTHORITY
except as marked to the contrary below to vote for all nominees listed below
</TABLE>
Robert A. Whitman, Richard N. Beckert, Daniel A. Decker, Julia E. Demerau,
L. Scott Demerau, Richard M. FitzPatrick, James T. Hands, William M. Kearns,
Jr., Steven D. Scheetz and Bert W. Wasserman.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE ON ANY INDIVIDUAL NOMINEE, DRAW A
LINE THROUGH THAT NOMINEE'S NAME ABOVE.
If not otherwise marked, this Proxy will be voted for the election of all
nominees.
2. In his discretion, the Proxy is authorized to vote upon such other business
as may properly come before the meeting, or any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. Please sign exactly as name appears
below. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
-------------------------------
Signature
-------------------------------
Signature
If Held Jointly
-------------------------------
Dated
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
