<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
AMENDMENT NO. 18
Under the Securities Exchange Act of 1934
MALIBU ENTERTAINMENT WORLDWIDE, INC.
(Name of Issuer)
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class of Securities)
561182106
(CUSIP Number)
RICHARD M. FITZPATRICK
MEI HOLDINGS, L.P.
2200 ROSS AVENUE
SUITE 4200
DALLAS, TEXAS 75201
(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
February 22, 1999
(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 [ ].
<PAGE> 2
CUSIP NO. 561182106 13D-1 PAGE 2
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEI Holdings, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
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
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> 3
CUSIP NO. 561182106 13D-1 PAGE 3
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEI GenPar, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
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
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> 4
CUSIP NO. 561182106 13D-1 PAGE 4
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HH GenPar Partners
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF 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* [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
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> 5
CUSIP NO. 561182106 13D-1 PAGE 5
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hampstead Associates, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
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* [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
*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> 6
CUSIP NO. 561182106 13D-1 PAGE 6
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RAW Genpar, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF 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* [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
*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> 7
CUSIP NO. 561182106 13D-1 PAGE 7
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
InMed, Inc. d/b/a Incap, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF 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* [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
81.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*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> 8
CUSIP NO. 561182106 13D-1 PAGE 8
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Donald J. McNamara
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF 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> 9
CUSIP NO. 561182106 13D-1 PAGE 9
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert A. Whitman
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF 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> 10
CUSIP NO. 561182106 13D-1 PAGE 10
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Daniel A. Decker
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF 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> 11
CUSIP NO. 561182106 13D-1
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SZ Capital, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
8%
- --------------------------------------------------------------------------------
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> 12
CUSIP NO. 561182106 13D-1
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SZ GenPar, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
(1)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
8%
- --------------------------------------------------------------------------------
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> 13
This Amendment No. 18 amends the Statement on Schedule 13D first filed
on June 17, 1996, as amended by Amendments No. 1 through 17 (the "Schedule
13D"), by MEI Holdings, L.P., a Delaware limited partnership ("Holdings"), and
certain other persons.
ITEM 1. SECURITY ISSUER.
Item 1 is hereby amended and restated in its entirety as follows:
This Schedule 13D relates to the Common Stock of Malibu Entertainment
Worldwide, Inc., formerly known as Mountasia Entertainment International, Inc
(the "Company"). The principal executive offices of the Company are located at
717 North Harwood, Suite 1650, Dallas, Texas 75201 and its telephone number at
such address is (214) 210-8701.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2 is hereby amended and restated in its entirety as follows:
This Schedule 13D is filed by (i) MEI Holdings, L.P., a Delaware
limited partnership ("Holdings"); (ii) MEI GenPar, L.P., a Delaware limited
partnership ("MEI GP"); (iii) HH GenPar Partners, L.P., a Texas general
partnership ("HH GP"); (iv) Hampstead Associates, Inc., a Texas corporation
("Associates"); (v) RAW GenPar, Inc., a Texas corporation ("RAW GP"); (vi)
InMed, Inc. (d/b/a/ InCap, Inc.), a Texas corporation ("InMed"); (vii) SZ
Capital, L.P., a Delaware limited partnership ("SZ Capital"); (viii) SZ GenPar,
L.P. a Delaware limited partnership ("SZ GenPar"); (ix) Donald J. McNamara; (x)
Robert A. Whitman; and (xi) Daniel A. Decker. Messrs. McNamara, Whitman and
Decker are United States citizens. Holdings, MEI GP, HH GP, Associates, RAW GP,
InMed, SZ Capital and SZ GenPar and Decker are referred to herein collectively
as the "Reporting Persons".
Holdings is an entity that was formed to invest in the Company. MEI GP
is and its principal business is to act as, the sole general partner of
Holdings. SZ Capital is an entity that was formed to invest in the Company. SZ
GenPar is and its principal business is to act as, the sole general partner of
SZ Capital. HH GP is, and its principal business is to act as, the managing
general partner of MEI GP and SZ GenPar (and various other partnerships).
Associates is, and its principal business is to act as, the managing general
partner of HH GP. RAW GP and InMed are the only other general partners of HH GP.
The address of the principal executive office of Holdings, MEI GP, HH GP,
Associates, RAW GP, InMed, SZ Capital and SZ GenPar is 4200 Texas Commerce Tower
West, 2200 Ross Avenue, Dallas, Texas 75201.
Mr. McNamara is the Chairman, President and a director of Associates
and a director of the Company. Mr. Whitman is the President, Treasurer and a
director of RAW GP and the Chairman of the Board of Directors of the Company.
Mr. Decker is the Chairman and a director of InMed, the Executive Vice President
and the Assistant Secretary of Associates and a director of the Company.
<PAGE> 14
Each of Donald J. McNamara, Robert A. Whitman and Daniel A. Decker is
employed by The Hampstead Group, L.L.C. ("Hampstead"). Mr. McNamara is the
Chairman and Co-Chief Executive Officer of Hampstead, Mr. Whitman is the
President and Co-Chief Executive Officer of Hampstead and Mr. Decker is the
Executive Vice President and General Counsel of Hampstead. The principal
business of Hampstead is to provide management services in respect of
investments in site-based businesses. The business address of Hampstead and of
each such individual is 4200 Texas Commerce Tower West, 2200 Ross Avenue,
Dallas, Texas 75201.
Holdings and SZ Capital are jointly filing this Amendment No. 18 to Schedule 13D
pursuant to the rules and regulations of the Securities and Exchange Commission.
Holdings and SZ Capital are separate legal entities and they hereby expressly
disclaim any affiliation and relationship with each other and any beneficial
ownership of any Company securities owned by the other.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is hereby amended to add the following at the end thereof:
The source of funds for SZ Capital's loan to the Company which is
convertible into Common Shares was SZ Capital's working capital, which was
obtained from capital contributions from its partners.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended to add the following at the end thereof:
The SZ Note and SZ Loan Agreement were entered into as an investment in
the Company by SZ Capital.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby amended to add the following at the end thereof:
SZ Capital, has entered into a loan agreement between the Company and
SZ Capital (the "SZ Loan Agreement"). The Company executed a $30,000,000
promissory note in favor of SZ Capital (the "SZ Note"). Pursuant to the SZ Loan
Agreement, the promissory note is convertible into Series E Preferred Stock of
the Company, which Series E Preferred Stock is convertible into common stock of
the Company. As of March 1, 1999, $5.7 million had been advanced to the Company
from SZ Capital under the SZ Note. The SZ Note is convertible at the lesser of
$2.50 and 1.2 times the trailing 20-day average of closing prices for the
Company's common stock. Assuming a $1 3/16 per share price (the closing price as
of February 26, 1999), SZ Capital would be entitled upon exercise its conversion
rights to the issuance of 4 million shares of the Company's common stock (or 8%
of the total outstanding shares of Company common stock). Holdings expressly
disclaims beneficial ownership in such shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 6 is hereby amended to add the following at the end thereof:
The Company and Holdings have amended the terms of the $65,000,000 and
$10,000,000 notes of the Company payable to Holdings (the "Holdings Notes") to
provide specific terms on which the Holdings Notes are convertible into Company
preferred stock and, in connection therewith, have entered into an Agreement
Regarding Right to Convert Promissory Notes. The Holdings Notes are now
convertible into Series H Preferred Stock of the Company (in addition to
Holdings' existing right to convert the Holdings Notes into one or more
convertible subnotes) and the maturity date of the $10,000,000 Holdings Note
has been extended to July 20, 1999.
SZ Capital and the Company have also entered into a Subordination
Agreement which expressly subordinates the SZ Note to the Company's debt to
Foothill Capital Corporation, the Company's senior secured lender and SZ
Capital, Holdings and the Company entered into a Subordination Agreement
subordinating the Holdings Notes to the SZ Notes. In addition to the SZ Loan
Agreement and SZ Note described above under Item 5 (which description is
incorporated herein by this reference), SZ Capital and the Company entered into
a Registration Rights Agreement ("RRA") whereby the Company agreed to register
the SZ Note and any preferred or common stock into which the SZ Note are
convertible. The foregoing summary of the Holdings Notes amendments, Agreement
Regarding Right to Convert Promissory Notes, Subordination Agreements, SZ Loan
Agreement, SZ Note and RRA is qualified in its entirety by reference to the
documents attached hereto as Exhibits 99.10 through 99.17.
ITEM 7. EXHIBITS.
Item 7 is hereby amended to add the following at the end thereof:
99.10 Second Amended and Restated Subordination Agreement by and among MEI
Holdings, L.P., Malibu Entertainment Worldwide, Inc. and Foothill
Capital Corporation
99.11 Third Amended and Restated Subordinated Convertible Promissory Note by
Malibu Entertainment Worldwide, Inc., in favor of MEI Holdings, L.P.,
in the amount of $65,000,000
99.12 Second Amended and Restated Promissory Note by Malibu Entertainment
Worldwide, Inc. in favor of MEI Holdings, L.P., in the amount of
$10,000,000
99.13 Agreement Regarding Right to Convert Promissory Notes between MEI
Holdings, L.P. and Malibu Entertainment Worldwide, Inc.
99.14 Subordinated Convertible Promissory Note by Malibu Entertainment
Worldwide, Inc. in favor of SZ Capital, L.P., in the amount of
$30,000,000
99.15 Subordination Agreement by and among SZ Capital, L.P., Malibu
Entertainment Worldwide, Inc., and Foothill Capital Corporation
99.16 Registration Rights Agreement by and among Malibu Entertainment
Worldwide, Inc. and SZ Capital, L.P.
<PAGE> 15
SIGNATURES
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 the other signatories hereto.
Date: December 15, 1998
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
SZ CAPITAL, L.P.
By: SZ 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
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
SZ 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
HH GENPAR PARTNERS
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Daniel A. Decker
---------------------------------
Daniel A. Decker
Executive Vice President
HAMPSTEAD ASSOCIATES, INC.
By: /s/ Daniel A. Decker
---------------------------------
Daniel A. Decker
Executive Vice President
<PAGE> 16
RAW GENPAR, INC.
By: /s/ Robert A. Whitman
----------------------------
Robert A. Whitman
President
INMED, INC.
By: /s/ Daniel A. Decker
----------------------------
Daniel A. Decker
President
/s/ Donald J. McNamara
-------------------------------
Donald J. McNamara
/s/ Robert A. Whitman
-------------------------------
Robert A. Whitman
/s/ Daniel A. Decker
-------------------------------
Daniel A. Decker
<PAGE> 17
EXHIBIT INDEX
Exhibit Description
- ------- -----------
99.10 Second Amended and Restated Subordination Agreement by and among MEI
Holdings, L.P., Malibu Entertainment Worldwide, Inc. and Foothill
Capital Corporation
99.11 Third Amended and Restated Subordinated Convertible Promissory Note by
Malibu Entertainment Worldwide, Inc., in favor of MEI Holdings, L.P.,
in the amount of $65,000,000
99.12 Second Amended and Restated Promissory Note by Malibu Entertainment
Worldwide, Inc. in favor of MEI Holdings, L.P., in the amount of
$10,000,000
99.13 Agreement Regarding Right to Convert Promissory Notes between MEI
Holdings, L.P. and Malibu Entertainment Worldwide, Inc.
99.14 Subordinated Convertible Promissory Note by Malibu Entertainment
Worldwide, Inc. in favor of SZ Capital, L.P., in the amount of
$30,000,000
99.15 Subordination Agreement by and among SZ Capital, L.P., Malibu
Entertainment Worldwide, Inc., and Foothill Capital Corporation
99.16 Registration Rights Agreement by and among Malibu Entertainment
Worldwide, Inc. and SZ Capital, L.P.
<PAGE> 1
EXHIBIT 99.10
SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT
SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT, dated as
of January 20, 1999, 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 that the Amended and Restated
Subordination Agreement, dated as of June 27, 1997, among MEI, the Borrower and
Foothill, shall be amended and restated in its entirety 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 Second Amended and Restated 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 upon any property or asset of
the Borrower with respect
<PAGE> 2
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.
"Senior Loans": the loans made by the Senior Lender to the Borrower or
any Subsidiary of the Borrower pursuant to the Senior Credit Agreement.
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<PAGE> 3
"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 from time to time by the
Subordinated Lender to the Borrower evidenced by the Subordinated Note.
"Subordinated Note": the Third Amended and Restated Subordinated
Convertible Promissory Note of the Borrower to MEI, dated as of January 20,
1999, 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 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
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<PAGE> 4
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 or from the proceeds of
Future Subordinated Debt incurred by the Borrower and (z) at any time,
Subordinated Lender may exercise any rights it may have to convert all
or part of the Subordinated Obligations into preferred stock, common
stock or other equity securities of Borrower; and (B) no acceleration
of the maturity of the Subordinated Note will be effective until the
earlier to occur of (i) five days following notice by the
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<PAGE> 5
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
making such payment or distribution, directly to the Senior Lender, for
the account of the Senior Lender, to the
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<PAGE> 6
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
provisions of this Agreement shall be deemed, as between the Borrower and its
creditors other than the Senior Lender and the
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<PAGE> 7
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 Lender. (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:
(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
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<PAGE> 8
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
(c) this Agreement constitutes a legal, valid and binding obligation of
the Subordinated Lender.
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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 disbursements that a court of competent jurisdiction finally
determines to have resulted from the gross negligence or willful misconduct of
the Senior Lender.
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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 SECOND AMENDED AND RESTATED
SUBORDINATED CONVERTIBLE PROMISSORY NOTE IS SUBORDINATED TO OTHER
INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS
OTHERWISE SUBJECT TO THE TERMS OF, THE SECOND AMENDED AND RESTATED
SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1999, 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
Attn: Daniel A. Decker
Fax No.: (214) 220-4949
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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, but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability and binding effect of this Agreement.
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.
(c) Upon the exercise of any rights that Subordinated Lender or any
successor or assign of Subordinated Lender may have to convert all or part of
the Subordinated Obligations into preferred stock, common stock, or other equity
securities of Borrower, each of the provisions of this Agreement shall be
applicable, mutatis mutandis (to the extent applicable thereto), to any such
preferred stock, common stock, or other equity securities held by Subordinated
Lender or any successor or assign of Subordinated Lender. Notwithstanding the
foregoing, this Subordination Agreement is not intended to and shall not impair,
restrict or encumber the voting rights granted to Subordinated Lender pursuant
to the Subordinated Loan Documents and the Certificate of Designations of Series
H Preferred Stock contained therein or the ability of Subordinated Lender to
exercise such voting rights.
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).
[REMAINDER OF PAGE THIS INTENTIONALLY LEFT BLANK]
12
<PAGE> 13
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: /s/ Philip S. Migicovsky
------------------------------
Name: Philip S. Migicovsky
Title: Vice President
MALIBU ENTERTAINMENT WORLDWIDE, INC.
/s/ Richard N. Beckert
-----------------------------------------
Richard N. Beckert
Chief Executive Officer
FOOTHILL CAPITAL CORPORATION
/s/ Thomas Sigurdson
-----------------------------------------
Name: Thomas Sigurdson
-----------------------------------
Title: Vice President
----------------------------------
13
<PAGE> 1
EXHIBIT 99.11
ALL INDEBTEDNESS EVIDENCED BY THIS THIRD AMENDED AND RESTATED 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
SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT DATED AS OF JANUARY 20,
1999, 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.
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREUNDER, IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS.
THIRD AMENDED AND RESTATED
SUBORDINATED CONVERTIBLE PROMISSORY NOTE
$65,000,000 Dallas, Texas
January 20, 1999
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 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 unpaid
principal sum of all advances made by Holder to Maker from time to time in an
aggregate principal amount of up to Sixty-Five Million United States Dollars
($65,000,000), 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.
Interest shall accrue on the unpaid principal balance of this Note at
the rate of ten percent (10%) per annum. Accrued but unpaid interest shall be
compounded annually. 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.
The unpaid principal amount of this Note and all accrued and unpaid
interest thereon shall become due and payable, and shall be paid on, August 31,
2001 (the "Maturity Date"). Maker may, at its option and upon ten (10) 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.
<PAGE> 2
Holder shall maintain an account or accounts evidencing the
indebtedness of Maker to Holder resulting from each advance made by Holder,
including the amount of principal and interest payable and paid to Holder from
time to time hereunder. The entries made in such account or accounts shall be
prima facie evidence of the existence and the amounts of the obligations
recorded therein, provided that any failure of Holder to maintain such account
or accounts or any error therein shall not in any manner affect the obligation
of Maker to repay the advances made by Holder to Maker in accordance with the
terms of this Note.
Maker agrees and acknowledges that Holder has no commitment of any kind
to advance funds to Maker and that all advances previously made by Holder to
Maker and all advances, if any, that may be made by Holder to Maker in the
future have been made and will be made at the sole and absolute discretion of
Holder.
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 shall bear interest until paid
at the rate per annum equal to the lesser of eighteen percent (18%) per annum
and the maximum rate of interest permitted by applicable law (the "Maximum
Amount"). Interest at the Default Rate, to the extent not paid, shall be added
to the Debt. Maker shall also pay to Holder, in addition to the amount due, all
reasonable costs and expenses incurred by Holder in collecting or enforcing, or
attempting to collect or enforce, this Note, including without limitation court
costs and reasonable attorneys' fees and expenses (including reasonable
attorneys' fees and expenses on any appeal by either Maker or Holder and in any
bankruptcy proceeding).
The whole of the principal sum of this Note, together with all interest
accrued and unpaid thereon and all other sums due hereunder and under any other
instruments or documents representing, evidencing, securing and/or relating to
or executed in connection with this Note (the "Loan Documents"), or any portion
thereof, shall without notice become immediately due and payable at the option
of Holder if any payment required in this Note or any other Loan Document is not
paid on the date on which it is due (after giving effect to any applicable grace
periods), or upon the happening of any other event of default under any other
Loan Document.
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 exceed the Maximum Amount, and in the event such payment is
inadvertently made 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.
That certain Agreement Regarding Right to Convert Promissory Notes of
even date herewith by and between Maker and Holder grants Holder the right at
any time to convert the outstanding balance of principal, interest and other
charges due or accrued under this Note (including any extensions of the term
hereof) into Series H Preferred Stock of Maker.
- 2 -
<PAGE> 3
In addition, at any time during the term of this Note (including any
extensions of the term hereof) prior to such conversion, Holder may, by written
notice to Maker, convert this Note into one or more subordinated convertible
notes (the "Convertible SubNotes") having terms that the Investment Banker (as
defined below) advises Maker and Holder (which advice will be in the form of a
written term sheet but need not be given in the form of a formal opinion) would
be required to ensure that the proceeds to Holder of an immediate sale of the
Convertible SubNote would be sufficient to repay the sum of (i) the
then-outstanding principal and interest on this Note and (ii) all third party
costs incurred by the Maker and the Holder in an assumed secondary public
offering by Holder of the Convertible SubNote, including without limitation any
SEC or other filing fees, printing expenses, underwriting discounts and fees and
other fees and expenses (including attorneys' and accountants' fees and
expenses). Within 20 calendar days of Maker's receipt of the foregoing notice,
Merrill Lynch, Pierce Fenner & Smith Incorporated ("ML") or, if such firm is
unwilling or unable to serve, another nationally recognized investment banking
firm will be selected by Holder and the members of the Board of Directors of
Maker not affiliated with Holder or employed by Maker (ML or such other firm,
the "Investment Banker"). In its engagement of the Investment Banker, Maker will
obtain the Investment Banker's agreement to render such advise as promptly as is
practicable. If Holder is advised by legal counsel that shareholder approval of
the issuance of the Convertible SubNote or the issuance of Common Stock upon
conversion of the Convertible SubNote is required by law or stock exchange rule,
Maker will seek shareholder approval of the issuance of the Convertible SubNotes
at the earlier of the next annual or special meeting of shareholders after the
date hereof. The Convertible SubNote and any Shares issued to the holder thereof
upon conversion of the Convertible SubNote will be "Registrable Securities"
under the Registration Rights Agreement, dated as of August 28, 1996, by and
between Maker and Holder. Maker will be responsible for all of its and Holder's
fees and expenses (including the Investment Banker's and any attorneys' fees and
expenses) in connection with the execution and delivery of the amendment and
reinstatement of this Note and any other matters contemplated by this Note.
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 Texas, and made by Holder and accepted by
Maker in the State of Texas, 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 laws of the State of Texas
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 govern this Note.
- 3 -
<PAGE> 4
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
BARGAINED-FOR AGREEMENT TO IRREVOCABLY WAIVE ITS RIGHTS TO TRIAL BY JURY, AND
ITS AGREEMENT THAT, TO THE FULLEST EXTENT LAWFULLY PERMISSIBLE, 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 this Note or any of its rights or obligations
hereunder, nor delegate the same, without the prior written consent of Holder
(which consent may be given or withheld in the sole discretion of Holder).
Holder may assign this Note or any of its rights or obligations hereunder,
and/or delegate the same, without prior consent of or notice to Maker.
This Note amends and restates the Second Amended and Restated
Subordinated Promissory Note dated March 27, 1998, from Maker payable to the
order of Holder in the principal sum of $65,000,000, and is being issued in
replacement of and is substitution for such promissory note.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 4 -
<PAGE> 5
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: /s/ Richard N. Beckert
-----------------------------------
Richard N. Beckert
Chief Executive Officer
<PAGE> 1
EXHIBIT 99.12
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREUNDER, IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS.
SECOND AMENDED AND RESTATED
PROMISSORY NOTE
$10,000,000 Dallas, Texas
January 20, 1999
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 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 unpaid
principal sum of all advances made by Holder to Maker from time to time in an
aggregate principal amount of up to 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 unpaid principal amount of this Note and all accrued and unpaid
interest thereon shall become due and be paid on July 20, 1999 ("Maturity
Date").
Maker may, at its option and upon ten (10) 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;
provided, however, that in the event that Maker makes any prepayment of such
principal balance on a day other than the last day of an interest period, Maker
shall reimburse Holder for any costs, fees or expenses incurred by Holder in
connection with such prepayment including, without limitation, costs, fees and
expenses associated with the unwinding of any LIBOR contract.
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 for each one-month interest period shall be determined monthly on the
Determination Date immediately preceding such interest period; (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 percentage per
<PAGE> 2
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 mean 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.
Holder shall maintain an account or accounts evidencing the
indebtedness of Maker to Holder resulting from each advance made by Holder,
including the amount of principal and interest payable and paid to Holder from
time to time hereunder. The entries made in such account or accounts shall be
prima facie evidence of the existence and the amounts of the obligations
recorded therein, provided that any failure of Holder to maintain such account
or accounts or any error therein shall not in any manner affect the obligation
of Maker to repay the advances made by Holder to Maker in accordance with the
terms of this Note.
Maker agrees and acknowledges that Holder has no commitment of any kind
to advance funds to Maker and that all advances previously made by Holder to
Maker and all advances, if any, that may be made by Holder to Maker in the
future have been made and will be made at the sole and absolute discretion of
Holder.
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 until
paid at a rate per annum equal to the lesser of the Default Rate and the maximum
rate of interest permitted by applicable law (the "Maximum Amount"). Maker shall
also pay to Holder,
- 2 -
<PAGE> 3
in addition to the amount due, all reasonable costs and expenses incurred by
Holder in collecting or enforcing, or attempting to collect or enforce this
Note, including without limitation court costs and reasonable attorneys' fees
and expenses (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 exceed 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 (other than interest) 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.
The whole of the principal sum of this Note, together with all interest
accrued and unpaid thereon and all other sums due hereunder and under any other
instruments or documents representing, evidencing, securing and/or relating to
or executed in connection with this Note (the "Loan Documents"), or any portion
thereof, shall without notice become immediately due and payable at the option
of Holder if any payment required in this Note or any other Loan Document is not
paid on the date on which it is due (after giving effect to any applicable grace
periods), or upon the happening of any other event of default under any other
Loan Document, or should Maker or any subsidiary thereof be in default with
respect to indebtedness in excess of $100,000, or should any event occur which
is specified in any note, agreement, indenture or other document evidencing or
relating to any such indebtedness of Maker or any subsidiary thereof, 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
otherwise) prior to its stated maturity.
That certain Agreement Regarding Right to Convert Promissory Notes of
even date herewith by and between Maker and Holder grants Holder the right at
any time to convert the outstanding balance of principal, interest and other
charges due or accrued under this Note (including any extensions of the term
hereof) into Series H Preferred Stock of Maker.
In addition, at any time during the term of this Note (including any
extensions of the term hereof) prior to such conversion, Holder may, by written
notice to Maker, convert this Note into one or more subordinated convertible
notes (the "Convertible SubNotes") having terms that the Investment Banker (as
defined below) advises Maker and Holder (which advice will be in the form of a
written term sheet but need not be given in the form of a formal opinion) would
be required to ensure that the proceeds to Holder of an immediate sale of the
Convertible SubNote would be sufficient to repay the sum of (i) the
then-outstanding principal and interest on this Note and (ii) all third party
costs incurred by Maker and Holder in an assumed secondary public offering by
Holder of the Convertible SubNote, including without limitation any SEC or other
filing fees, printing expenses, underwriting discounts and fees and other fees
and expenses (including attorneys' and accountants' fees and expenses). Within
20 calendar days of Maker's receipt of the foregoing notice, Merrill Lynch,
Pierce Fenner & Smith Incorporated ("ML") (or any successor thereto) or, if such
firm is unwilling or unable to serve, another nationally recognized investment
banking firm will be selected by Holder and the members of the Board of
Directors of Maker not affiliated with Holder or employed by Maker (ML or such
other firm, the "Investment Banker"). In its engagement of the
- 3 -
<PAGE> 4
Investment Banker, Maker will obtain the Investment Banker's agreement to render
such advice as promptly as is practicable. If Holder is advised by legal counsel
that shareholder approval of the issuance of the Convertible SubNote or the
issuance of Common Stock upon conversion of the Convertible SubNote is required
by law or stock exchange rule, Maker will seek shareholder approval of the
issuance of the Convertible SubNotes at the earlier of the next annual or
special meeting of shareholders after the date hereof. The Convertible SubNote
and any Shares issued to the holder thereof upon conversion of the Convertible
SubNote will be "Registrable Securities" under the Registration Rights
Agreement, dated as of August 28, 1996, by and between Maker and Holder. Maker
will be responsible for all of its and Holder's fees and expenses (including the
Investment Bankers' and any attorneys' fees and expenses) in connection with the
execution and delivery of the amendment and restatement of this Note and any
other matters contemplated by this Note.
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 Note.
This Note was negotiated in Texas, and made by Holder and accepted by
Maker in the State of Texas, 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 Texas 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 govern this Note.
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 BARGAINED
FOR AGREEMENT IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY, AND ITS
AGREEMENT THAT, TO THE FULLEST EXTENT LAWFULLY PERMISSIBLE, 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 this Note or any of its rights or obligations
hereunder, nor delegate the same, without the prior written 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.
- 4 -
<PAGE> 5
This indebtedness evidenced by this Note constitutes "Current MEIH
Advances" under that certain Consolidated, Amended, and Restated Loan and
Security Agreement, dated as of August 22, 1996 and as amended, supplemented and
otherwise modified from time to time, by and among Foothill Capital Corporation,
Maker and various subsidiaries of Maker.
This Note amends and restates the Amended and Restated Promissory Note,
dated as of March 27, 1998, from Maker payable to the order of Holder in the
principal sum of $10,000,000, and is being issued in replacement of and is
substitution for such promissory note.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 5 -
<PAGE> 6
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: /s/ Richard N. Beckert
-----------------------------------
Richard N. Beckert
Chief Executive Officer
<PAGE> 1
EXHIBIT 99.13
AGREEMENT REGARDING RIGHT TO
CONVERT PROMISSORY NOTES
THIS AGREEMENT REGARDING RIGHT TO CONVERT PROMISSORY NOTES (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT") is dated as of January 20, 1999 by and between MEI HOLDINGS, L.P.,
a Delaware limited partnership ("LENDER"), and MALIBU ENTERTAINMENT WORLDWIDE,
INC., a Georgia corporation ("BORROWER").
RECITALS:
A. Borrower has executed that certain Third Amended and Restated
Subordinated Promissory Note dated as of January 20, 1999 made payable to the
order of Lender in the original principal sum of $65,000,000 (the "$65 MILLION
NOTE") and that certain Second Amended and Restated Promissory Note dated as of
January 20, 1999 made payable to the order of Lender in the original principal
sum of $10,000,000 (the "$10 MILLION NOTE" and together with the $65 Million
Note, as same may be increased, amended, restated, replaced, supplemented or
otherwise modified from time to time, and all notes issued upon transfer,
division or combination of, or in substitution therefor, collectively the
"NOTES" and individually, a "NOTE"). Capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Notes.
B. In consideration of, among other things, Lender's agreement to
subordinate the indebtedness evidenced by the Notes to certain other
indebtedness of Borrower, Borrower has agreed to grant to Lender the right to
convert the indebtedness evidenced by the Notes into preferred stock of the
Borrower.
C. Borrower and Lender desire to execute this Agreement to set forth
the terms and conditions of such conversion of such indebtedness.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby covenant, agree, represent and warrant
as follows:
1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
a. DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly
indicates a contrary intent:
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or any other day on which national banks in Dallas, Texas are not open
for business.
"CERTIFICATE OF DESIGNATIONS" shall mean that certain
Certificate of Designations relating to the Series H Preferred Stock that is
attached as Exhibit "A" hereto and is made a part hereof for all purposes.
<PAGE> 2
"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 Notes,
this Agreement, or any other Loan Documents.
"LOAN" shall mean, in the aggregate, the Advances made by
Lender to Borrower, as set forth in, and evidenced by, the Notes and the other
Loan Documents.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Notes and any other document executed and/or delivered by Borrower in connection
with the Loan.
"MATURITY DATE" shall mean the date on which the final payment
of principal of either of the Notes becomes due and payable as therein provided,
whether at the stated maturity, by declaration of acceleration, or otherwise.
"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.
"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.
"SERIES H PREFERRED STOCK" shall mean the preferred stock of
the Borrower having the terms set forth in the Certificate of Designations
attached as Exhibit "A" and made a part hereof for all purposes.
"STOCK EXCHANGE" shall mean the principal national securities
exchange on which the shares of common stock of Borrower are listed or admitted
to trading or, if the shares are not listed or admitted to trading on any
national securities exchange, the National Association of Securities Dealers,
Inc. Automated Quotation System or any similar national system on which the
common stock is quoted or traded.
2. CONVERSION OF THE DEBT.
a. CONVERSION OF THE DEBT INTO SERIES H PREFERRED STOCK. Lender
shall have the right (the "CONVERSION RIGHT"), at any time on
or prior to the Maturity Date (or within five (5) Business
Days thereafter in the case of (i) an acceleration of the
Debt, or (ii) Borrower's failure to repay the Debt and all
other Obligations in full on the Maturity Date), even if
Borrower has previously delivered a notice of prepayment of
the Notes, at its option, subject to the provisions of this
Section 2, to convert all or any part of the Debt into shares
of Series H Preferred Stock. The amount of Debt to be
converted must be an integral multiple of $100,000 unless the
entire Debt is being converted. The number of shares of Series
H Preferred Stock to be issued in such conversion will equal
the quotient obtained by dividing the amount of the Debt, or
such portion of the Debt to be converted, on the date of the
Conversion Notice (defined below) by $100,000. All shares of
Series H Preferred
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<PAGE> 3
Stock issuable upon the exercise of the Conversion Right shall
be validly issued, fully paid and nonassessable and without
any preemptive rights.
b. MANNER OF EXERCISE. Lender may exercise the Conversion Right
on any Business Day, prior to 5:00 p.m. Dallas, Texas time, on
or before the Maturity Date (or within five (5) Business Days
thereafter in the case of (i) an acceleration of the Debt, or
(ii) Borrower fails to repay the Debt and all other
Obligations in full on the Maturity Date). In order to
exercise the Conversion Right, Lender must (i) deliver to
Borrower written notice of its election to exercise the
Conversion Right (the "CONVERSION NOTICE," a copy in blank of
which is attached as Exhibit "B"), and (ii) notify Borrower
that it is ready, willing and able to surrender to Borrower
each Note being converted upon receipt of the certificates
and, if applicable, the new Note described in Subsection 2.c.
below. The date of delivery of the Conversion Notice is the
"CONVERSION DATE".
c. ISSUANCE OF CERTIFICATES. As soon as practicable, and in any
event within two (2) Business Days after the Conversion Date,
Borrower will file the Certificate of Designations with the
Secretary of State of Georgia (if not previously filed) and
will execute, issue and deliver to Lender, upon Lender's
tender to Borrower of the Note or Notes being converted, a
certificate or certificates representing the aggregate number
of shares of Series H Preferred Stock to be issuable upon such
conversion and, if the Conversion Right was exercised in part
and either Borrower or Lender so requests, a new Note
identical as to terms and conditions to each surrendered Note
on the Conversion Date except as to reflect the new reduced
principal amount thereof. The stock certificate or
certificates so delivered shall be, to the extent possible, in
such denominations as Lender shall request in the Conversion
Notice and shall be registered in the name of Lender or such
other name as Lender shall request in the Conversion Notice.
The applicable Note (or portion thereof for which the
Conversion Right was exercised) shall be deemed to have been
converted, and such certificate or certificates shall be
deemed to have been issued, and Lender or any other Person so
designated to be named therein shall be deemed to have become
a holder of record of such shares for all purposes, as of the
Conversion Date.
d. SHAREHOLDER APPROVAL. If Lender is advised by nationally
recognized or Lender's regular legal counsel that shareholder
approval of the issuance of a new Note or the issuance of the
Series H Preferred Stock upon conversion of any Note is
required by law or by the rules of the Stock Exchange,
Borrower will seek such shareholder approval at the earlier of
the next annual or special meeting of the shareholders of
Borrower after the date hereof, or if no such meeting is
scheduled to be held within 60 calendar days after the date of
the Conversion Notice, Borrower agrees to cause its secretary
to call such special meeting within 30 calendar days after the
date of the Conversion Notice at the place and upon the notice
provided by law and in the Bylaws of the Company for the
holding of meetings of shareholders. If any such special
meeting required to be called as above provided has not been
called by the secretary of Borrower within such 30 calendar
day period, then Lender may call such meeting to be held at
the place and upon the notice above provided, and
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<PAGE> 4
for that purpose will have access to the stock ledger of
Borrower. The foregoing remedy will not be deemed exclusive,
and shall be in addition to all other rights and remedies
available at law or equity to Lender.
e. CONVERSION EXPENSES AND TAXES. No fees will be charged by
Borrower to Lender with respect to any conversion hereunder.
Borrower will be responsible for all of its and Lender's fees
and expenses in connection with the conversion and any of the
other actions described in this Section 2. Borrower will also
be responsible for all taxes and other governmental charges
that may be imposed with respect to the issuance or delivery
of the shares, unless such tax or charge is imposed by law
upon Lender or transfer taxes are payable because the shares
are to be issued in the name of a Person other than Lender, in
which case such taxes or charges shall be paid by Lender.
f. REGISTRABLE SECURITIES. The Notes and the Series H Preferred
Stock will be "Registrable Securities" under the Registration
Rights Agreement dated August 28, 1996 by and between Borrower
and Lender.
g. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS; ANTI-DILUTION PROTECTION.
i. In case Borrower shall reorganize its capital,
reclassify its capital stock, consolidate or merge
with or into another corporation (where Borrower is
not the surviving corporation or where there is a
change in or distribution with respect to the
preferred stock of Borrower), or sell, transfer or
otherwise dispose of all or substantially all its
property, assets or business to another corporation
and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or
disposition of assets, shares of capital stock or
other securities or property of any nature whatsoever
(including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of
the successor or acquiring corporation ("OTHER
PROPERTY"), are to be received by or distributed to
the holders of capital stock of Borrower, then Lender
shall have the right thereafter to receive, upon
exercise of the Conversion Right, the number of
shares of preferred stock of the successor or
acquiring corporation or of Borrower, if it is the
surviving corporation, and Other Property that would
have been receivable upon or as a result of such
reorganization, reclassification, merger,
consolidation or disposition of assets by a holder of
the number of shares of Series H Preferred Stock had
the Notes been converted into Series H Preferred
Stock immediately prior to such event, it being
agreed that if such event occurs before the Lender
has exercised the Conversion Right, the Notes shall
be treated as being exercisable as of the date
immediately prior to such event as if such date were
the Conversion Date. In case of any such
reorganization, reclassification, merger,
consolidation, or disposition of assets, the
successor or acquiring corporation (if other than
Borrower) shall expressly assume the due and punctual
observance and performance of each and every covenant
and condition of the Notes to be performed and
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<PAGE> 5
observed by Borrower and all the obligations and
liabilities hereunder, and the Notes shall be
convertible, on the terms set forth herein, for
preferred stock of the successor or acquiring
corporation having substantially identical terms to
those set forth in the Certificate of Designations.
For purposes of this Subsection 2.g, "preferred stock
of the successor or acquiring corporation" shall mean
capital stock having terms no less favorable to the
holder thereof than the terms of the Series H
Preferred Stock. The foregoing provisions of this
Subsection 2.g. shall similarly apply to successive
reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
ii. In the event that any time and from time to time (i)
all or any part of the Debt is converted into shares
of Series H Preferred Stock in accordance with this
Section 2 and (ii) any event or circumstance occurs
after the date hereof but prior to the date of any
such conversion which, had it occurred after the
issuance of such shares of Series H Preferred Stock,
would have required an adjustment in the Conversion
Rate Cap (as such term is defined in the Certificate
of Designations) under Section 2.8.6 of the
Certificate of Designations (or any other adjustment
covered thereby), then in each such event the
Borrower shall concurrently with each such conversion
of Debt into shares of Series H Preferred Stock take
such action as is reasonably necessary to ensure that
the holder of such shares of Series H Preferred Stock
is entitled to receive upon or in connection with the
conversion of such shares of Series H Preferred Stock
that additional number of shares of the common stock
of Borrower (the "ADDITIONAL SHARES") that such
holder would have been entitled to receive under the
Certificate of Designations as a result of the
occurrence of such event or circumstance if such
holder had acquired such shares of Series H Preferred
Stock on the date hereof. Such actions may include,
among other things, the amendment by the Borrower of
the Certificate of Designations to provide for the
appropriate adjustment to the Conversion Rate Cap (or
to provide for any other appropriate adjustments) or,
in the event the Borrower does not reasonably believe
that it is practicable to amend the Certificate of
Designations, then such actions may include, in lieu
of such an amendment, (i) the written agreement of
the Borrower to issue to such holder such Additional
Shares upon the exercise by such holder of such
shares of Series H Preferred Stock, for a per share
consideration of the Additional Shares not to exceed
the then-current par value of such Additional Shares,
(ii) the establishment by the Borrower of another
series of convertible preferred stock and the
issuance by the Borrower to the holder of that number
of shares of such convertible preferred stock that
would be convertible into the Additional Shares, with
such shares of convertible preferred stock having a
per share consideration not to exceed the
then-current par value of such convertible preferred
stock and with such shares being convertible solely
in connection with the conversion of shares of Series
H Preferred Stock, or (iii) the issuance by the
Borrower to such holder, for no cash consideration,
of warrants to acquire the Additional Shares, with
such warrants having an exercise price not to
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<PAGE> 6
exceed the then-current par value of the Additional
Shares and with such warrants being exercisable
solely in connection with the conversion of shares of
Series H Preferred Stock.
h. NOTICES TO LENDER.
i. NOTICE OF ADJUSTMENTS. Whenever an event specified in
Subsection 2.g shall occur, Borrower shall forthwith
prepare a certificate to be executed by the chief
financial officer of Borrower describing, in
reasonable detail, the event requiring the giving of
such notice and describing the number and kind of any
other shares of stock or Other Property for which the
Notes are exercisable. Borrower shall promptly cause
a signed copy of such certificate to be delivered to
Lender. Borrower shall keep at its principal office
or the copies of all such certificates and cause the
same to be available for inspection at said office
during normal business hours by any Lender or any
prospective purchaser of a Note designated by a
Lender thereof.
ii. NOTICE OF CORPORATE ACTIONS. If at any time:
(1) Borrower shall take a record of the holders
of its Series H Preferred Stock for the
purpose of entitling them to receive a
dividend (other than a cash dividend payable
out of earnings or earned surplus legally
available for the payment of dividends under
the laws of the jurisdiction of
incorporation of Borrower) or other
distribution, or any right to subscribe for
or purchase any evidences of its
indebtedness, any shares of stock of any
class or any other securities or property,
or to receive any other right, or
(2) there shall be any capital reorganization of
Borrower, any reclassification or
recapitalization of the capital stock of
Borrower or any consolidation or merger of
Borrower with, or any sale, transfer or
other disposition of all or substantially
all the property, assets or business of
Borrower to, another corporation, or
(3) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of
Borrower;
then, in any one or more of such cases, Borrower
shall give to Lender at least 30 days' prior written
notice of the date on which a record date shall be
selected for such dividend, distribution or right or
for determining rights to vote in respect of any such
reorganization, reclassification, merger,
consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Such notice
in accordance with the foregoing clause also shall
specify (i) the date on which any such record is to
be taken for the purpose of such dividend,
distribution or right, the date on which the holders
of Series H Preferred Stock shall be entitled to any
such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any
such
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<PAGE> 7
reorganization, reclassification, merger,
consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take
place and the time, if any such time is to be fixed,
as of which the holders of Series H Preferred Stock
shall be entitled to exchange their shares of Series
H Preferred Stock for securities or other property
deliverable upon such reorganization,
reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or
winding up. Each such written notice shall be
sufficiently given if addressed to Lender at the last
address of Lender appearing on the books of Borrower
and delivered in accordance with Subsection 3.e.
hereof
i. NO IMPAIRMENT. Borrower shall not by any action, including,
without limitation, amending its certificate of incorporation
or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, seek to avoid the
observance or performance of any of the terms of this
Agreement, and will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the
rights of Lender against impairment. Without limiting the
generality of the foregoing, Borrower will (a) not take any of
the actions specified in Section 2.8.2 of the Certificate of
Designations attached hereto as Exhibit "A", (b) take all such
action as may be necessary or appropriate in order that
Borrower may validly and legally issue fully paid and
nonassessable shares of Series H Preferred Stock upon exercise
of the Conversion Right and fully paid and nonassessable
shares of common stock upon the conversion of the shares of
Series H Preferred Stock, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction thereof as may
be necessary to enable Borrower to perform its obligations
under the Notes.
j. RESERVATION AND AUTHORIZATION OF SERIES H PREFERRED STOCK AND
COMMON STOCK. Borrower shall at all times reserve and keep
available for issue upon the exercise of the Conversion Right
such number of its authorized but unissued shares of Series H
Preferred Stock as will be sufficient to permit the exercise
in full of the Conversion Right and shall at all times reserve
and keep available for issue upon the conversion of Series H
Preferred Stock such number of its authorized but unissued
shares of common stock as would be sufficient to permit the
conversion in full of the Series H Preferred Stock (assuming
conversion in full of the Debt into Series H Preferred Stock).
k. TAKING OF RECORD; STOCK AND NOTE TRANSFER BOOKS. In the case
of all dividends or other distributions by Borrower to the
holders of its Series H Preferred Stock with respect to which
any provision hereof refers to the taking of a record of such
holders, Borrower will not at any time, except upon
dissolution, liquidation or winding up of Borrower, close its
stock transfer books or Note transfer books so as to result in
preventing or delaying the exercise of any Conversion Right or
the transfer of any Note.
l. LIMITATION OF LIABILITY. No provision hereof, in the absence
of affirmative action by Lender to purchase shares of Series H
Preferred Stock, and no enumeration herein of the rights or
privileges of Borrower hereof, shall give rise to any
liability of Lender for the purchase price of any Series H
Preferred Stock or as a stockholder of Borrower, whether such
liability is asserted by Borrower or by creditors of Borrower.
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3. MISCELLANEOUS
a. 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 Notes, and shall continue in full force and
effect so long as all or any of the Debt is outstanding and
unpaid or any other Obligations or other amounts remain owing
under the Loan Documents 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.
b. GOVERNING LAW. This Agreement was negotiated in the State of
Texas, and made by Lender and accepted by Borrower in the
State of Texas, and the proceeds of the Notes delivered in
connection herewith were or are to be disbursed from the State
of Texas, 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 Texas
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. 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 Notes, and
this Agreement and the Notes shall be governed by and
construed in accordance with the laws of the State of Texas.
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 State court in
the City of Dallas, County of Dallas, Texas, 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 agree that service of process
upon an officer of Borrower at Borrower's address set forth
herein and written notice of such 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 Texas.
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 Dallas, Texas (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
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<PAGE> 9
if its authorized agent ceases to have an office in Dallas,
Texas or is dissolved without leaving a successor.
c. WAIVER OF JURY TRIAL. BORROWER, 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 AGREEMENT. LENDER MAY FILE A COPY
OF THIS WAIVER WITH ANY COURT AS WRITTEN EVIDENCE OF
BORROWER'S KNOWING. VOLUNTARY, AND BARGAINED-FOR 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 BORROWER AND LENDER SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE SITTING WITHOUT A JURY.
d. MODIFICATION; WAIVER IN WRITING. No modification, amendment,
extension, discharge, termination or waiver of any provision
of this Agreement, or of the Notes, 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.
e. 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: Malibu Entertainment Worldwide, Inc.
717 North Harwood, Suite 1650,
Dallas, Texas 75201
Attn: Chief Financial Officer
Facsimile: (214) 210-8702
If to Lender: MEI HOLDINGS, L.P.
Texas Commerce Tower,
2200 Ross Ave., Suite 4200-W,
Dallas, Texas 75201
Attn: Secretary/Treasurer
Facsimile: (214) 220-4948
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<PAGE> 10
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;
in the case of expedited prepaid delivery, upon the first
attempted delivery on a Business Day; and in the case of
facsimile, upon acknowledged transmission (if a copy thereof
is also sent by another method authorized hereunder) on a
Business Day.
f. HEADINGS. The Section headings in this Agreement are included
herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
g. 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 ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Agreement.
h. EXHIBITS AND SCHEDULES INCORPORATED. Any 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.
i. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE. In the event of
any conflict between the provisions of this Agreement and any
of the other Loan Documents, the provisions of this 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
same.
j. LOSS OR MUTILATION. Upon receipt by Borrower from Lender of
evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note and
indemnity reasonably satisfactory to it, and in case of
mutilation upon surrender and cancellation hereof, Borrower
will execute and deliver in lieu hereof a new Note of like
tenor to Lender; provided, in the case of mutilation, no
indemnity shall be required if the Note in identifiable form
is surrendered to Borrower for cancellation.
k. PRIOR AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR
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ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES
THERETO.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all 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: /s/ Philip S. Migicovsky
-------------------------
Name: Philip S. Migicovsky
-----------------------
Title: Vice President
----------------------
MALIBU ENTERTAINMENT WORLDWIDE, INC.
a Georgia corporation
By: /s/ Richard N. Beckert
-----------------------------------------
Richard N. Beckert
Chief Executive Officer
<PAGE> 12
EXHIBIT "A"
CERTIFICATE OF DESIGNATIONS OF SERIES H PREFERRED STOCK
[SEE ATTACHED]
<PAGE> 13
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
OF
MALIBU ENTERTAINMENT WORLDWIDE, INC.
In accordance with Section 14-2-1006 of the Georgia Business
Corporation Code (the "Code"), Malibu Entertainment Worldwide, Inc., a Georgia
corporation (the "Company"), hereby certifies as follows:
1. The name of the corporation is Malibu Entertainment Worldwide, Inc.
2. In accordance with the authority of the Company's Board of Directors
(the "Board") pursuant to Section 14-2-602 of the Code and the Articles of
Incorporation of the Company (the "Charter"), the Board hereby designates the
powers, designations, preferences and relative, participating, optional and
other special rights and the qualifications, limitations or restrictions of
Series H Preferred Stock of the Company as follows:
2.8 Series H Preferred Stock. Five thousand shares of
Preferred Stock, no par value, of the Company are designated as "Series
H Preferred Stock" having the voting powers, preferences and relative
participating, optional and other special rights, and the
qualifications, limitations or restrictions thereof, are as set forth
below (the "Series H Preferred").
2.8.1 Dividends and Distributions. (a) The holders of
shares of Series H Preferred, in preference to the holders of Common
Stock (the "Common Stock") and of any other class or series of
preferred or other capital stock of the Company other than the Series E
Preferred (as defined below) ("Junior Stock"), will be entitled to
receive dividends at an annual rate of $9,000 per share, payable
quarterly in arrears on the 15th day of each of January, April, July
and October of each year (except that if any such date is a Saturday,
Sunday or legal holiday, then such dividend will be payable on the next
day that is not a legal holiday) (the "Dividend Payment Date"),
commencing with the date of the first issuance of any shares of the
Series H Preferred (the "Initial Issuance Date"), prior and in
preference to any declaration or payment of any dividend on Junior
Stock (other than a dividend or distribution solely in shares of Common
Stock and then only with Class E approval prior thereto as provided in
Section 2.8.2(b)(ii)). Such dividends will be cumulative and accrue
with respect to each share of Series H Preferred from date of issuance
of such share of Series H Preferred (the "Dividend Commencement Date"),
whether or not declared by the Board and whether or not there are funds
of the Company legally available for payment of such dividends. No
accrued or accumulated dividends on the Series H
<PAGE> 14
Preferred will bear interest. Except as set forth in Sections
2.8.1(b)(i), 2.8.5 and 2.8.6 hereof, the Company will have no
obligation to pay such dividends unless so declared by the Board and
unless funds are legally available therefor. As used herein, the term
"Series E Preferred" means shares of preferred stock of the Company
issued pursuant to the Loan Agreement, dated as of November 16, 1998,
between the Company and SZ Capital, L.P., as amended from time to time.
(b) Any dividends accruing prior to January 1, 2004
may at the election of the Board in its sole discretion be paid (i) by
the issuance as of the Dividend Payment Date of additional shares of
fully paid, nonassessable Series H Preferred having an aggregate
liquidation preference equal to the amount of such accrued dividends or
(ii) in cash. In the event that dividends are declared and paid by the
issuance of additional shares of Series H Preferred as provided in the
previous sentence, such dividends will be deemed paid in full and will
not accumulate. The Company will deliver certificates representing
shares of Series H Preferred issued pursuant to Section 2.8.1(a)(i)
promptly after the Dividend Payment Date.
(c) From and after January 1, 2004, dividends accrued
and payable pursuant to Section 2.8.1(a) will be payable in cash only
and will be cumulative from and after such date.
(d) Each dividend will be payable to holders of
record as they appear on the stock books of the Company on the last day
of each fiscal quarter of the Company.
2.8.2 Voting Rights. Holders of Series H Preferred
will have no voting rights and their consent will not be required for
taking any corporate action except (a) as otherwise required by law or
provided elsewhere herein and (b) that, if any share of Series H
Preferred is then outstanding, the affirmative vote or consent of the
holders of a majority of the then-outstanding shares of Series H
Preferred, voting together as a single class (a "Class H Approval"),
will be required in order for the Company to:
(i) Except with respect to the powers, designations,
preferences and relating participating, optional and other
special rights and the qualifications, limitations or
restrictions of the Series E Preferred, amend the Charter in
any way, whether by amending the terms of this Section 2.8 or
any other provision of the Charter, that adversely affects any
of the powers, designations, preferences and relative,
participating, optional and other special rights of the Series
H Preferred, and the qualifications, limitations or
restrictions thereof, whether by direct amendment or in
connection with or pursuant to a merger, consolidation or any
other transaction involving any change in the Charter;
(ii) Declare or pay any dividends on, or make any
other distributions in respect of, any shares of Junior Stock;
(iii) Redeem or purchase or otherwise acquire for
consideration any shares of any Junior Stock (except for
Series E Preferred or in connection with the exercise of
employee stock options);
<PAGE> 15
(iv) Issue any shares of capital stock ranking prior
or superior to, or on parity with, the Series H Preferred with
respect to dividends or other distributions or upon
liquidation, dissolution or winding up of the Company (except
for shares of Series E Preferred and except to employees of
the Company under the Company's stock option or long term
incentive plans);
(v) Effect any merger, consolidation, combination,
recapitalization, reorganization or other transaction in which
the powers, designations, preferences and relative,
participating, optional or other special rights of the Series
H Preferred, or the qualifications, limitations or
restrictions thereof would be materially adversely affected;
(vi) Subdivide or otherwise change shares of Series H
Preferred into a different number of shares whether in a
merger, consolidation, combinations, recapitalization,
reorganization or otherwise (whether or not any provision of
Section 2.8.6 is applicable to such transaction); or
(vii) Issue any shares of Series H Preferred other
than pursuant to the Agreement Regarding Right to Convert to
Promissory Notes, dated as of January 20, 1999, between the
Company and MEI Holdings, L.P.
The Company will not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the
Company unless the Company could purchase or otherwise acquire such
shares at such time and in such manner in accordance with the foregoing
restrictions.
2.8.3 Reacquired Shares. If permitted by law, any
shares of Series H Preferred that are issued and thereafter cease to be
issued and outstanding for any reason, whether because they are
converted into Junior Stock as provided herein or are purchased or
otherwise acquired by the Company in any manner whatsoever, will be
restored to the status of authorized but unissued shares of preferred
stock of the Company, including shares of Series H Preferred, and may
be reissued as part of a new series of preferred stock of the Company
subject to the conditions and restrictions on issuance set forth herein
or in any other certificate of designations creating a series of
preferred or any similar stock of the Company.
2.8.4 Liquidation, Dissolution or Winding Up. Upon
any liquidation, dissolution or winding up of the Company, no
distribution will be made to the holders of shares of Junior Stock
unless, prior thereto, the holders of shares of Series H Preferred
shall have received $100,000 per share plus accrued and unpaid
dividends. Neither a consolidation or merger of the Company with
another corporation, nor a sale or transfer of all or part of the
Company's assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of the Company.
<PAGE> 16
2.8.5 Redemption. (a) Redemption Price. Shares of
Series H Preferred (i) will not be redeemable prior to January 1, 2002
and (ii) will be redeemable (to the extent not previously redeemed or
converted and as to which no Conversion Notice has been delivered to
the Company on or before the date fixed for redemption) at any time
(A) after January 1, 2002 and prior to or on January
1, 2003, at a price per share of $104,000 plus accrued and
unpaid dividends through the date such redemption price is
paid ("Accrued Dividends");
(B) after January 1, 2003 and prior to or on January
1, 2004, at a price per share of $103,000 plus Accrued
Dividends;
(C) after January 1, 2004 and prior to or on January
1, 2005, at a price per share of $102,000 plus Accrued
Dividends;
(D) after January 1, 2005 and prior to or on January
1, 2006, at a price per share of $101,000 plus Accrued
Dividends; and
(E) after January 1, 2006, at a price per share of
$100,000 plus Accrued Dividends.
(b) Redemption Procedures. At least 30 calendar days
and not more than 60 calendar days prior to the date fixed for any
redemption of Series H Preferred, written notice ("Redemption Notice")
will be given by the Company by first class mail, postage prepaid, to
each holder of record of Series H Preferred on the record date fixed
for such redemption by the Board at such holder's address as it appears
on the stock books of the Company, provided that no failure to give
such notice nor any deficiency therein will affect the validity of the
procedure for redemption of any shares of Series H Preferred except as
to the holder or holders to whom the Company has failed to give such
notice or whose notice was defective. The Redemption Notice will state:
(i) the redemption price;
(ii) whether all or fewer than all of the outstanding
shares of Series H Preferred are to be redeemed and the total
number of shares of Series H Preferred being redeemed;
(iii) the date fixed for redemption by the Board,
which date will occur within the applicable redemption period
specified in clause (a) above (the "Redemption Date");
(iv) the place or places and manner in which the
holder is to surrender his or her certificate(s) to the
Company; and
<PAGE> 17
(v) that dividends on the shares of Series H
Preferred to be redeemed will cease to accumulate on the
Redemption Date unless the Company defaults on the redemption
price.
Upon surrender of the certificate(s) representing shares of Series H
Preferred that are the subject of redemption pursuant to Section
2.8.5(a), duly endorsed (or otherwise in proper form for transfer, as
determined by the Company), in the manner and at the place designated
in the Redemption Notice and on the Redemption Date, the full
redemption price for such shares will be paid in cash to the person or
entity whose name appears on such certificate(s) as the owner thereof,
and each surrendered certificate will be canceled and retired. In the
event that fewer than all of the shares represented by any one
certificate are redeemed, a new certificate will be issued representing
the unredeemed shares.
(c) On and after the Redemption Date, unless the
Company defaults in the payment in full of the applicable redemption
price, dividends on the Series H Preferred to be redeemed will cease to
accumulate, and all rights of the holders thereof will terminate with
respect thereto on the Redemption Date, other than the right to receive
the redemption price, provided, however, that if a Redemption Notice
has been given as provided in Section 2.8.5(b) and the funds necessary
for redemption (including an amount in cash in respect of all dividends
that will accumulate to the Redemption Date) have been irrevocably
deposited in trust with a bank having an aggregate shareholders' equity
of at least $5.0 billion for the equal and ratable benefit of all
holders of shares of Series H Preferred that are to be redeemed, then,
at the close of business on the day on which such funds are deposited
in trust, dividends on the Series H Preferred to be redeemed will cease
to accumulate and the holders thereof will cease to be shareholders of
the Company and be entitled only to receive the redemption price.
(d) If the funds of the Company legally available for
redemption of shares of Series H Preferred on the date scheduled for a
redemption are insufficient to redeem the total number of shares of
Series H Preferred to be redeemed on such date, those funds that are
legally available will be used to redeem the maximum possible number of
such shares ratably among the holders of such shares to be redeemed
based on their holdings of Series H Preferred. The shares of Series H
Preferred not redeemed will remain outstanding and entitled to all the
rights and preferences provided herein. At any time thereafter when
additional funds of the Company are legally available for the
redemption of shares of Series H Preferred, such funds will immediately
be used to redeem the balance of the shares that the Company has become
obligated to redeem on any scheduled redemption date that it has not
redeemed.
2.8.6 Conversion. (a) Conversion Rate. At any time on
or after January 1, 2000, each share of the Series H Preferred will be
convertible, at the option of the holder thereof, into the number of
fully paid and nonassessable shares of Common Stock determined, subject
to adjustment as described below, by dividing $100,000 plus the total
accrued and unpaid dividends through the date of conversion by the
Conversion Price. As
<PAGE> 18
used herein, "Conversion Price" means $2.50 and "Conversion Rate" means
the number of shares of Common Stock into which each share of Series H
Preferred may be converted.
(b) No Fractional Shares. No fractional shares of
Common Stock will be issued upon conversion of Series H Preferred and,
if any shares of Series H Preferred surrendered by a holder, in the
aggregate, for conversion would otherwise result in a fractional share
of Common Stock, then such fractional share will be redeemed at the
then-effective Conversion Price per share, payable as promptly as
possible when funds are legally available therefor.
(c) Mechanics of Conversion. Before any holder of
shares of Series H Preferred will be entitled to convert the same into
shares of Common Stock, such holder must deliver a written notice (a
"Conversion Notice") to the attention of the Secretary or Treasurer of
the Company at the Company's principal place of business of its desire
to exercise its rights to convert, specifying the number of shares of
Series H Preferred to be converted and the holder's calculation of the
Conversion Rate. Such computation will be deemed correct for all
purposes hereof absent manifest error. In the event of any disagreement
between the Company and the holder as to the correct Conversion Price,
the Conversion Price will be finally determined by an investment
banking or brokerage firm selected by the holder, the fees and expenses
of which will be paid by the Company. Such conversion will be deemed to
have been made as of the close of business on the fifth business day
after such notice has been so delivered or such other date as the
holder exercising such conversion right and the Company agree. The
Company will, promptly upon receipt of all certificates representing
Series H Preferred as have been issued to such holder that are to be
converted, issue the appropriate number of shares of Common Stock to
such holder. All certificates issued upon the exercise of the
conversion will contain a legend governing restrictions upon the
disposition of such shares imposed by applicable securities laws. Such
legend will be removed by the Company by delivery of substitute
certificates without such legend in the event that such legend is no
longer required for purposes of applicable securities laws upon receipt
by the Company of an opinion of counsel to the effect that such legend
is no longer so required.
(d) Adjustment for Subdivisions or Combinations of
Common Stock. In the event that the Company at any time or from time to
time after the Initial Issuance Date effects a subdivision or
combination of its outstanding Common Stock into a greater or lesser
number of shares, then and in each such event the Conversion Rate will
be increased or decreased proportionately.
(e) Adjustments for Dividends, Distributions on
Common Stock. In the event the Company at any time or from time to time
after the Initial Issuance Date makes or issues, or fixes a record date
for the determination of holders of Common Stock entitled to receive a
dividend or other distribution (a "Common Stock Distribution") payable
in additional shares of Common Stock or other securities or rights
(other than the rights, options or warrants offered to Series H
Preferred pursuant to Section 2.8.6(g)) that are convertible into or
entitling the holder thereof to receive additional shares of Common
Stock
<PAGE> 19
(such other securities or rights, "Common Stock Equivalents") without
payment of any consideration by such holder of such Common Stock
Equivalents for the additional shares of Common Stock, without a
proportionate and corresponding dividend or other distribution to
holders of Series H Preferred calculated as if all of the Series H
Preferred had been converted in accordance with the terms hereof as of
the record date for such dividend or other distribution, then and in
each such event, the Conversion Rate will be decreased as of the time
of such issuance or, in the event such a record date will have been
fixed, as of the close of business on such record date, by multiplying
the Conversion Rate by a fraction,
(i) the numerator of which will be the total number
of (A) shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date, plus (B) the maximum number of
shares of Common Stock (not including any shares described in
clause (ii)(B) immediately below) issuable upon conversion or
exercise of all outstanding Common Stock Equivalents as of
immediately prior to the time of such issuance or the close of
business on such record date (the sum of the shares described
in clauses (A) and (B) immediately above, the "Outstanding
Shares"); and
(ii) the denominator of which will be the total
number of (A) Outstanding Shares, plus (B) the number of
shares of Common Stock issuable in payment of such dividend or
distribution or upon conversion or exercise of such Common
Stock Equivalents;
provided, however, (i) if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Rate will be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Rate will be adjusted pursuant to this
Section 2.8.6(e) as of the time of actual payment of such dividends or
distributions; (ii) if such Common Stock Equivalents provide, with the
passage of time or otherwise, for any decrease or increase in the
number of shares of Common Stock issuable upon conversion or exercise
thereof, the Conversion Rate computed upon the original issue thereof,
and any subsequent adjustments based thereon, will, upon any such
decrease or increase becoming effective, be recomputed to reflect such
decrease or increase insofar as it affects the rights of conversion or
exercise of the Common Stock Equivalents then outstanding; (iii) upon
the expiration of any rights of conversion or exercise under any
unexercised Common Stock Equivalents, the Conversion Rate computed upon
the original issue thereof (or upon the occurrence of a record date
with respect thereto), and any subsequent adjustments based thereon,
will, upon such expiration, be recomputed as if the only additional
shares of Common Stock issued were the shares of such stock, if any,
actually issued upon the conversion or exercise of such Common Stock
Equivalents; or (iv) in the event of issuance of Common Stock
Equivalents which expire by their terms not more than 60 calendar days
after the date of issuance thereof, no adjustments of the Conversion
Rate will be made until the expiration or exercise of all such Common
Stock Equivalents, whereupon such adjustment will be made in the manner
provided in this Section 2.8.6(e). The adjustments
<PAGE> 20
provided for in this Section 2.8.6(e) will be made successively
whenever any such dividend or distribution is made.
(f) Reorganization, Merger, Consolidation or Sale of
Assets. If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision,
combination, reclassification or exchange of shares provided for
elsewhere in this Section 2.8.6) or a merger or consolidation of the
Company with or into another corporation, or the sale of all or
substantially all of the Company's properties and assets to any other
person which is effected so that holders of Common Stock are entitled
to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock,
then, as a part of such capital reorganization, merger, consolidation
or sale, proper provision will be made so that the holders of the
Series H Preferred will thereafter be entitled to receive upon
conversion of the Series H Preferred the number of shares of stock,
securities or assets of the Company, or of the successor corporation
resulting from such merger or consolidation or sale, to which a holder
of the Common Stock deliverable upon conversion of Series H Preferred
would have been entitled on such capital reorganization, merger,
consolidation or sale (regardless of whether the Series H Preferred is
then-convertible and assuming a Conversion Price of $2.50). In any
such case, appropriate adjustment will be made in the application of
the provisions of this Section 2.8.6 with respect to the rights of the
holders of the Series H Preferred after the reorganization, merger,
consolidation or sale to the end that the provisions of this Section
2.8.6 (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of the Series H
Preferred) will be applicable after that event as nearly equivalent as
may be practicable. This provision will apply to successive capital
reorganizations, mergers, consolidations or sales.
(g) Rights Offering. If at any time or from time to
time the Company shall offer to any of the holders of Common Stock any
right, option or warrant to acquire additional shares of capital stock
of the Company, then each holder of a share of then-outstanding Series
H Preferred will be entitled to receive rights, options or warrants to
acquire such number of additional shares of capital stock of the
Company as such holder would have been entitled to receive had such
holders of Series H Preferred been converted immediately prior to the
record date for the offering of such rights, options or warrants, at
the Conversion Rate then in effect or, if prior to January 1, 2000, at
a Conversion Rate using a deemed Conversion Price of $2.50.
(h) No Adjustment. No adjustment to the Conversion
Rate will be made if such adjustment would result in a change in the
Conversion Rate of less than 0.001%. Any adjustment of less than 0.001%
which is not made will be carried forward and will be made at the time
of and together with any subsequent adjustment which, on a cumulative
basis, amounts to an adjustment of 0.001% or more in the Conversion
Rate.
(i) Certificate as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion Rate
pursuant to this Section 2.8.6, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the
<PAGE> 21
terms hereof and cause independent public accountants selected by the
Company to verify such computation and prepare and furnish to each
holder of Series H Preferred a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company will, upon the
written request at any time of any holder of Series H Preferred,
furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the
Conversion Rate at that time in effect, and (iii) the number of shares
of Common Stock and the amount, if any, of other property which at that
time would be received upon the conversion of Series H Preferred.
(j) Reservation of Stock Issuable Upon Conversion.
The Company will at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of the shares of the Series H Preferred
such number of its shares of Common Stock as will from time to time be
sufficient to effect the conversion of all then-outstanding shares of
the Series H Preferred; and if at any time the number of authorized but
unissued shares of Common Stock will not be sufficient to effect the
conversion of all then-outstanding shares of the Series H Preferred,
the Company will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as will be sufficient
for such purpose.
2.8.7 Fractional Shares. Series H Preferred may be
issued in fractions of a share which will entitle the holder, in
proportion to such holder's fractional shares, to receive dividends,
participate in distributions and to have the benefit of all other
rights of holders of Series H Preferred.
2.8.8 Rank. The Series H Preferred will rank senior
as to all capital stock of the Company other than the Series E
Preferred of the Company, including all Junior Stock, in each case as
to the payment of dividends or other distributions or upon liquidation,
dissolution or winding up.
2.8.9 Notice to Holders. Any notice given by the
Company to holders of record of Series H Preferred will be effective if
addressed to such holders at their last addresses as shown on the stock
books of the Company and deposited in the U.S. mail, sent first-class,
and will be conclusively presumed to have been duly given, whether or
not the holder of the Series H Preferred receives such notice.
2.8.10 Amendment of Terms of Series H Preferred. Upon
request of the holders of a majority of the then-outstanding shares of
Series H Preferred, the Company will amend the terms of the Series H
Preferred as set forth herein, or issue a new series of preferred stock
in exchange for such Series H Preferred, in order to make the terms of
the Series H Preferred, in the opinion (which need not be written) of a
nationally recognized financial advisor selected by the holders of a
majority of the then-outstanding shares of Series H Preferred,
consistent with terms applicable generally to preferred stock being
issued in the public securities markets by companies with comparable
credit characteristics to the Company, provided, however, that no
amendment or other change will be made
<PAGE> 22
under this Section 2.8.10 to the dividend rate, Conversion Rate or
Conversion Price applicable to the Series H Preferred.
2.8.11 Certain Limitations. Notwithstanding any other
provision in the Charter or applicable law to the contrary, (a) the
vote of any holder of Series H Preferred will not be affected by any
direct or indirect interest of the holder or any affiliate or associate
or other person or entity in the matter under consideration or any
other matter, (b) holders of Series H Preferred will have only the
rights set forth herein and will have no fiduciary or similar rights,
and (c) no holder of Series H Preferred or any affiliate or associate
thereof will have any liabilities or obligations to any other person or
entity, including without limitation any other holder of Series H
Preferred or any other class or series of capital stock of the Company,
by reason of the giving or withholding of any vote or consent hereunder
or otherwise, it being the expectation and intention that such vote or
consent will be so given or withheld in the sole discretion of such
holder regardless of the effect thereof on any other person or entity.
2.8.12 Contractual Rights of Holders. The various
provisions set forth herein for the benefit of the holders of the
Series H Preferred will be deemed contract rights enforceable by them,
including without limitation, by one or more actions for specific
performance.
IN WITNESS WHEREOF, this amendment to the Certificate of
Designations is executed on behalf of the Company as of this __th day of
____________, ___.
--------------------------------
Title:
<PAGE> 1
EXHIBIT 99.14
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 NOVEMBER 16, 1998, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG MALIBU ENTERTAINMENT
WORLDWIDE, INC., AS BORROWER, SZ CAPITAL, L.P., AS SUBORDINATED LENDER, AND
FOOTHILL CAPITAL CORPORATION, AS SENIOR LENDER.
ALL INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED PROMISSORY NOTE IS SENIOR
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
NOVEMBER 16, 1998, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE
MODIFIED FROM TIME TO TIME, BY AND BETWEEN MALIBU ENTERTAINMENT WORLDWIDE,
INC., AS BORROWER, AND MEI HOLDINGS, L.P., AS SUBORDINATED LENDER.
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREUNDER, IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE
$30,000,000 Dallas, Texas
November 16, 1998
FOR VALUE RECEIVED, the undersigned, Malibu Entertainment Worldwide,
Inc., a Georgia corporation ("Maker"), promises to pay to the order of SZ
Capital, L.P., a Delaware limited partnership (together with any subsequent
holder of this Note, "Holder"), at its offices located at 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 unpaid
principal sum of all advances made by Holder to Maker from time to time in an
aggregate principal amount of up to Thirty Million United States Dollars
($30,000,000), 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.
Interest shall accrue on the unpaid principal balance of this Note at
the rate of ten percent (10%) per annum. Accrued but unpaid interest shall be
compounded annually. Interest on the unpaid principal balance of this Note shall
be computed on the actual number of days elapsed, based on a year of 360 days.
<PAGE> 2
The unpaid principal amount of this Note and all accrued and unpaid
interest thereon shall become due and payable, and shall be paid on, August 31,
2001 (the "Maturity Date"). Maker may, at its option and upon ten (10) 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.
Holder shall maintain an account or accounts evidencing the
indebtedness of Maker to Holder resulting from each advance made by Holder,
including the amount of principal and interest payable and paid to Holder from
time to time hereunder. The entries made in such account or accounts shall be
prima facie evidence of the existence and the amounts of the obligations
recorded therein, provided that any failure of Holder to maintain such account
or accounts or any error therein shall not in any manner affect the obligation
of Maker to repay the advances made by Holder to Maker in accordance with the
terms of this Note.
This Note is evidence of that certain loan made by Holder to Maker
contemporaneously herewith and is executed pursuant to, and is subject to the
terms and conditions of, that certain Loan Agreement of even date herewith
between Holder and Maker (as amended, supplemented or otherwise modified from
time to time, the "Loan Agreement"). Maker agrees and acknowledges that Holder
has made no commitment of any kind, whether in the Loan Agreement or otherwise,
to advance funds to Maker and that all advances previously made by Holder to
Maker and all advances, if any, that may be made by Holder to Maker in the
future have been made and will be made at the sole and absolute discretion of
Holder.
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, all as set forth in the Loan Agreement.
If Maker fails to make any payment of principal, accrued and unpaid
interest or any other amount due hereunder on or before five (5) days after the
respective due date therefor, whether at stated maturity or otherwise, the
unpaid amount shall bear interest until paid at the rate per annum equal to the
lesser of eighteen percent (18%) per annum and the maximum rate of interest
permitted by applicable law (the "Maximum Amount"). Interest at the Default
Rate, to the extent not paid, shall be added to the Debt. Maker shall also pay
to Holder, in addition to the amount due, all reasonable costs and expenses
incurred by Holder in collecting or enforcing, or attempting to collect or
enforce, this Note, including without limitation court costs and reasonable
attorneys' fees and expenses (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 exceed the Maximum Amount, and in the event such payment is
inadvertently made 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.
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<PAGE> 3
The Loan Agreement grants Holder the right at any time to convert the
outstanding balance of principal, interest and other charges due or accrued
under this Note (including any extensions of the term hereof) into Series E
Preferred Stock of Maker.
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 Texas, and made by Holder and accepted by
Maker in the State of Texas, 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 laws of the State of Texas
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 govern this Note.
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
BARGAINED-FOR AGREEMENT TO IRREVOCABLY WAIVE ITS RIGHTS TO TRIAL BY JURY, AND
ITS AGREEMENT THAT, TO THE FULLEST EXTENT LAWFULLY PERMISSIBLE, 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 this Note or any of its rights or obligations
hereunder, nor delegate the same, without the prior written consent of Holder
(which consent may be given or withheld in the sole discretion of Holder).
Holder may assign this Note or any of its rights or obligations hereunder,
and/or delegate the same, without prior consent of or notice to Maker.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 4
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: /s/ Richard N. Beckert
----------------------------------
Richard N. Beckert
Chief Executive Officer
<PAGE> 1
EXHIBIT 99.15
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is dated as of November 16, 1998, by
and among SZ Capital, L.P., a Delaware limited partnership ("SZ"), 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 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,
<PAGE> 2
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.
"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,
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<PAGE> 3
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": SZ 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 from time to time by the
Subordinated Lender to the Borrower evidenced by the Subordinated Note.
"Subordinated Note": the Subordinated Promissory Note of the Borrower
to SZ, dated as of November 16, 1998, 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 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 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.
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<PAGE> 4
(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, (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 or from the proceeds of
Future Subordinated Debt incurred by the Borrower; and (z) at any time,
Subordinated Lender may exercise any rights it may have to convert all
or part of the Subordinated Obligations into preferred stock, common
stock or other equity securities of Borrower, and (B) no acceleration
of 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.
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<PAGE> 5
(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
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
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<PAGE> 6
(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
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 Lender. (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
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<PAGE> 7
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:
(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.
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<PAGE> 8
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
(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
8
<PAGE> 9
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 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 AMENDED AND RESTATED 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 NOVEMBER 16, 1998, AS THE SAME
MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME,
BY AND AMONG MALIBU ENTERTAINMENT WORLDWIDE, INC., AS BORROWER, SZ
CAPITAL, 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
9
<PAGE> 10
If to the Subordinated Lender:
SZ Capital, L.P.
Texas Commerce Tower
2200 Ross Avenue, Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
Fax No.: (214) 220-4949
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, but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability and binding effect of this Agreement.
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.
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.
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<PAGE> 11
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.
(c) Upon the exercise of any rights that Subordinated Lender or any
successor or assign of Subordinated Lender may have to convert all or part of
the Subordinated Obligations into preferred stock, common stock, or other equity
securities of Borrower, each of the provisions of this Agreement shall be
applicable, mutatis mutandis (to the extent applicable thereto), to any such
preferred stock, common stock, or other equity securities held by Subordinated
Lender or any successor or assign of Subordinated Lender. Notwithstanding the
foregoing, this Subordination Agreement is not intended to and shall not impair,
restrict or encumber the voting rights granted to Subordinated Lender pursuant
to the Subordinated Loan Documents and the Certificate of Designations of Series
E Preferred Stock contained therein or the ability of Subordinated Lender to
exercise such voting rights.
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).
[Remainder of page intentionally left blank]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Subordination
Agreement to be duly executed and delivered as of the day and year
first above written.
SZ CAPITAL, L.P.
By: SZ GenPar, L.P.
Its General Partner
By: HH GenPar Partners
Its General Partner
By: Hampstead Associates, Inc.
Its Managing General Partner
By: /s/ Kurt Read
-------------------------------
Name: /s/ Kurt Read
-----------------------------
Title: Vice President
----------------------------
MALIBU ENTERTAINMENT WORLDWIDE, INC.
By: /s/ Richard N. Beckert
-------------------------------------
Richard N. Beckert
Chief Executive Officer
FOOTHILL CAPITAL CORPORATION
/s/ Thomas Sigurdson
---------------------------------------
Name: Thomas Sigurdson
---------------------------------
Title: Vice President
--------------------------------
<PAGE> 1
EXHIBIT 99.16
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made
and entered into as of November 16, 1998, by and among MALIBU ENTERTAINMENT
WORLDWIDE, INC., a Georgia corporation (the "Company"), and SZ CAPITAL, L.P. a
Delaware limited partnership (the "Purchaser").
RECITALS
The parties hereto have entered into, or are equity owners in
entities that have entered into, other agreements which contemplate, among other
things, the execution and delivery of this Agreement by the parties hereto.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
have the following meanings when used herein with initial capital letters:
(a) Advice: As defined in Section 6 hereof.
(b) Common Stock: The Common Stock, without par value, of the Company.
(c) Demand Notice: As defined in Section 3 hereof.
(d) Demand Registration: As defined in Section 3 hereof.
(e) Losses: As defined in Section 8 hereof.
(f) Other Equity Securities: Any shares of capital stock of the Company
and any other securities issued by the Company that are exercisable to purchase,
convertible into, or exchangeable for shares of capital stock of the Company
that are owned by any party hereto (other than the Company) or any affiliate of
any party hereto (other than the Company), whether acquired prior to, on or
after the date hereof.
(g) Piggyback Registration: As defined in Section 4 hereof.
(h) Prospectus: The prospectus included in any Registration Statement
(including without limitation a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
(i) Registrable Securities: The Securities and all Other Equity
Securities, upon the respective original issuance thereof, and at all times
subsequent thereto, until, in the case of any
<PAGE> 2
such security, (i) it is effectively registered under the Securities Act and
disposed of in accordance with the Registration Statement covering it, (ii) it
is saleable by the holder thereof pursuant to Rule 144(k), or (iii) it is
distributed to the public pursuant to Rule 144.
(j) Registration Expenses: As defined in Section 7 hereof.
(k) Registration Statement: Any registration statement of the Company
under the Securities Act that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
(l) Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
(m) SEC: The Securities and Exchange Commission.
(n) Securities: The Subordinated Convertible Promissory Note, dated
November 16, 1998, payable by the Company to the Purchaser (the "Note"), all
shares of Series E Preferred Shares acquired by the Purchaser or its designee
upon conversion of the Note and all shares of Common Stock acquired by the
Purchaser or its designee upon conversion of any Series E Preferred Shares.
(o) Securities Act: The Securities Act of 1933, as amended.
(p) Series E Preferred Shares: Shares of Series E Preferred Stock, no
par value, of the Company having the terms set forth in Exhibit A to the Loan
Agreement, dated as of November 16, 1998, between the Purchaser and the Company.
(q) Special Counsel: As defined in Section 7(b) hereof.
(r) Underwritten registration or underwritten offering: A distribution,
registered pursuant to the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
2. Holders of Registrable Securities. Whenever a number or percentage
of Registrable Securities is to be determined hereunder, each then-outstanding
Other Equity Security that is exercisable to purchase, convertible into, or
exchangeable for shares of capital stock of the Company will be deemed to be
equal to the number of shares of Common Stock for which such Other Equity
Security (or the security into which such Other Equity Security is then
convertible) is then convertible.
3. Demand Registration. (a) Requests for Registration. At any time and
from time to time after the date hereof, the holders of Registrable Securities
constituting at least 10% of the total number of Registrable Securities then
outstanding will have the right by written notice delivered to the Company (a
"Demand Notice"), to require the Company to register (a "Demand Registration")
under and in accordance with the provisions of the Securities Act the number of
Registrable
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<PAGE> 3
Securities requested to be so registered (but not less than 5% of the total
number of Registrable Securities then outstanding); provided, however, that no
Demand Notice may be given prior to four months after the effective date of the
immediately preceding Demand Registration.
The number of Demand Registrations pursuant to this Section
3(a) shall not exceed five; provided, however, that in determining the number of
Demand Registrations to which the holders of Registrable Securities are entitled
there shall be excluded (1) any Demand Registration that is an underwritten
registration if the managing underwriter or underwriters have advised the
holders of Registrable Securities that the total number of Registrable
Securities requested to be included therein exceeds the number of Registrable
Securities that can be sold in such offering in accordance with the provisions
of this Agreement without materially and adversely affecting the success of such
offering, (2) any Demand Registration that does not become effective or is not
maintained effective for the period required pursuant to Section 3(b) hereof,
unless in the case of this clause (2) such Demand Registration does not become
effective after being filed by the Company solely by reason of the refusal to
proceed by the holders of Registrable Securities unless (i) the refusal to
proceed is based upon the advice of counsel relating to a matter with respect to
the Company, or (ii) the holders of the Registrable Securities elect to pay all
Registration Expenses in connection with such Demand Registration and (3) any
Demand Registration in connection with which any other stockholder of the
Company exercises a right of first refusal which it may otherwise have and
purchases all the stock registered and to be sold pursuant to the Demand
Registration.
(b) Filing and Effectiveness. The Company will file a Registration
Statement relating to any Demand Registration within 60 calendar days, and will
use its best efforts to cause the same to be declared effective by the SEC
within 120 calendar days, of the date on which the holders of Registrable
Securities first give the Demand Notice required by Section 3(a) hereof with
respect to such Demand Registration.
All requests made pursuant to this Section 3 will specify the
number of Registrable Securities to be registered and will also specify the
intended methods of disposition thereof; provided, that if the holder demanding
such registration specifies one particular type of underwritten offering, such
method of disposition shall be such type of underwritten offering or a series of
such underwritten offerings (as such demanding holders of Registrable Securities
may elect) during the period during which the Registration Statement is
effective.
If any Demand Registration is requested to be effected as a
"shelf" registration by the holders of Registrable Securities demanding such
Demand Registration, the Company will keep the Registration Statement filed in
respect thereof effective for a period of up to 12 months from the date on which
the SEC declares such Registration Statement effective (subject to extension
pursuant to Sections 5 and 6 hereof) or such shorter period that will terminate
when all Registrable Securities covered by such Registration Statement have been
sold pursuant to such Registration Statement.
Within ten calendar days after receipt of such Demand Notice,
the Company will serve written notice thereof (the "Notice") to all other
holders of Registrable Securities and will, subject to the provisions of Section
3(c) hereof, include in such registration all Registrable Securities with
respect to which the Company receives written requests for inclusion therein
within 20 calendar days after the receipt of the Notice by the applicable
holder.
3
<PAGE> 4
The holders of Registrable Securities will be permitted to
withdraw Registrable Securities from a Registration at any time prior to the
effective date of such Registration provided the remaining number of Registrable
Securities subject to a Demand Notice is at least 5% of the total number of
Registrable Securities then outstanding.
(c) Priority on Demand Registration. If any of the Registrable
Securities registered pursuant to a Demand Registration are to be sold in one or
more firm commitment underwritten offerings, the Company may also provide
written notice to holders of its equity securities (other than Registrable
Securities), if any, who have piggyback registration rights with respect thereto
and will permit all such holders who request to be included in the Demand
Registration to include any or all equity securities held by such holders in
such Demand Registration on the same terms and conditions as the Registrable
Securities. Notwithstanding the foregoing, if the managing underwriter or
underwriters of the offering to which such Demand Registration relates advises
the holders of Registrable Securities that the total amount of Registrable
Securities and securities that such equity security holders intend to include in
such Demand Registration is in the aggregate such as to materially and adversely
affect the success of such offering, then (i) first, the amount of securities to
be offered for the account of the holders of such other equity securities will
be reduced, to zero if necessary (pro rata among such holders on the basis of
the amount of such other securities to be included therein by each such holder),
and (ii) second, the number of Registrable Securities included in such Demand
Registration will, if necessary, be reduced and there will be included in such
firm commitment underwritten offering only the number of Registrable Securities
that, in the opinion of such managing underwriter or underwriters, can be sold
without materially and adversely affecting the success of such offering,
allocated pro rata among the holders of Registrable Securities on the basis of
the amount of Registrable Securities to be included therein by each such holder.
(d) Postponement of Demand Registration. The Company will be entitled
to postpone the filing period (or suspend the effectiveness) of any Demand
Registration for a reasonable period of time not in excess of 90 calendar days,
if the Company determines, in the good faith exercise of its reasonable business
judgment, that such registration and offering could materially interfere with
bona fide financing plans of the Company or would require disclosure of
information, the premature disclosure of which could materially and adversely
affect the Company. If the Company postpones the filing of a Registration
Statement, it will promptly notify the holders of Registrable Securities in
writing when the events or circumstances permitting such postponement have
ended.
4. Piggyback Registration. (a) Right to Piggyback. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to an offering of any class of equity securities (other than a
registration statement (i) on Form S-4, S-8 or any successor form thereto or
(ii) filed solely in connection with an offering made solely to employees of the
Company), whether or not for its own account, then the Company will give written
notice of such proposed filing to the holders of Registrable Securities at least
10 calendar days before the anticipated filing date. Such notice will offer such
holders the opportunity to register such amount of Registrable Securities as
each such holder may request (a "Piggyback Registration"). Subject to Section
4(b) hereof, the Company will include in each such Piggyback Registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein. The holders of Registrable Securities will be
permitted to withdraw all or part of the Registrable Securities from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration.
4
<PAGE> 5
(b) Priority on Piggyback Registrations. The Company will cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit holders of Registrable Securities requested to be included in the
registration for such offering to include therein all such Registrable
Securities requested to be so included on the same terms and conditions as any
similar securities, if any, of the Company included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such offering deliver
an opinion to the holders of Registrable Securities to the effect that the total
amount of securities which such holders, the Company and any other persons
having rights to participate in such registration propose to include in such
offering is such as to materially and adversely affect the success of such
offering, then:
(i) if such registration is a primary registration on behalf
of the Company, the amount of securities to be included therein (x) for the
account of holders of Registrable Securities on the one hand (allocated pro rata
among such holders on the basis of the Registrable Securities requested to be
included therein by each such holder), and (y) for the account of all such other
persons (exclusive of the Company), on the other hand, will be reduced (to zero
if necessary) pro rata in proportion to the respective amounts of securities
requested to be included therein to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters; and
(ii) if such registration is an underwritten secondary
registration on behalf of holders of securities of the Company other than
Registrable Securities, the Company will include therein: (x) first, up to the
full number of securities of such persons exercising "demand" registration
rights that in the opinion of such managing underwriter or underwriters can be
sold or allocated among such holders as they may otherwise so determine, and (y)
second, the amount of Registrable Securities and securities proposed to be sold
by any other person in excess of the amount of securities such persons
exercising "demand" registration rights propose to sell that, in the opinion of
such managing underwriter or underwriters, can be sold (allocated pro rata among
the holders of such Registrable Securities and such other persons on the basis
of the dollar amount of securities requested to be included therein).
(c) Registration of Securities Other than Registrable Securities.
Without the written consent of the holders of a majority of the then-outstanding
Registrable Securities, the Company will not grant to any person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject to the prior rights of
the holders of Registrable Securities set forth herein, and, if exercised, would
not otherwise conflict or be inconsistent with the provisions of, this
Agreement.
5. Restrictions on Sale by Holders of Registrable Securities. Each
holder of Registrable Securities whose Registrable Securities are covered by a
Registration Statement filed pursuant to Section 3 or Section 4 hereof, agrees
and will confirm such agreement in writing, if such holder is so requested
(pursuant to a timely written notice) by the managing underwriter or
underwriters in an underwritten offering, not to effect any public sale or
distribution of any of the Company's equity securities (except as part of such
underwritten offering), including a sale pursuant to Rule 144, during the
10-calendar day period prior to, and during the 90-calendar day period (or such
longer period as any managing underwriter or underwriters may reasonably request
in connection with any underwritten public offering) beginning on, the closing
date of each underwritten offering made pursuant to such Registration Statement.
If a request is made pursuant to this Section 5, the time
5
<PAGE> 6
period during which a Demand Registration (if a shelf registration) is required
to remain continuously effective pursuant to Section 3(b) will be extended by
100 calendar days or such shorter period that will terminate when all such
Registrable Securities not so included have been sold pursuant to such
Registration Statement.
6. Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 3 and 4 hereof, the Company will
effect such registrations to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the holders thereof in
accordance with the intended method or methods of distribution thereof, and
cause each such Registration Statement to become effective and remain effective
as provided herein; provided, however, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto (including
documents that would be incorporated or deemed to be incorporated therein by
reference) the Company will furnish to the holders of the Registrable Securities
covered by such Registration Statement, the Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of such holders, the Special Counsel and
such underwriters, and the Company will not file any such Registration Statement
or amendment thereto or any Prospectus or any supplement thereto (including such
documents which, upon filing, would or would be incorporated or deemed to be
incorporated by reference therein) to which the holders of a majority of the
Registrable Securities covered by such Registration Statement, the Special
Counsel or the managing underwriter, if any, shall reasonably object on a timely
basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 3; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or to such
Prospectus as so supplemented.
(c) Notify the selling holders of Registrable Securities, the Special
Counsel and the managing underwriters, if any, promptly, and (if requested by
any such person) confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other federal
or state governmental authority for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if at any time the
representations and warranties of the Company contained in any agreement
contemplated by Section 6(n) hereof (including any underwriting agreement) cease
to be true and correct, (v) of the
6
<PAGE> 7
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the occurrence of any event which makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in a
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, in the case of the
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated or is necessary to make the
statements therein, in light of the circumstances under which they wee made, not
misleading, and (vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable securities for sale in any jurisdiction, at the earliest possible
moment.
(e) If requested by the managing underwriters, if any, or the holders
of a majority of the Registrable Securities being registered, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such holder agree should
be included therein as may be required by applicable law and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company will not be required to take any
actions under this Section 6(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law.
(f) Furnish to each selling holder of Registrable Securities, the
Special Counsel and each managing underwriter, if any, without charge, at least
one conformed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements (but excluding schedules, all
documents incorporated or deemed incorporated therein by reference and all
exhibits, unless requested in writing by such holder, counsel or underwriter).
(g) Deliver to each selling holder of Registrable Securities, the
Special Counsel and the underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses relating to such Registrable Securities
(including each preliminary prospectus) and any amendment or supplement thereto
as such persons may request; and the Company hereby consents to the use of such
Prospectus or each amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to register
or qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws
7
<PAGE> 8
of such jurisdictions within the United States as any seller or underwriter
reasonably requests in writing; keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdiction of the Registrable
Securities covered by the applicable Registration Statement; provided, however
that the Company will not be required to (i) qualify generally to do business in
any jurisdiction in which it is not then so qualified or (ii) take any action
that would subject it to general service of process in any such jurisdiction in
which it is not then so subject.
(i) Cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold, which
certificates will not bear any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, shall request at least two business days prior to
any sale of Registrable securities to the underwriters.
(j) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States except as may be
required solely as a consequence of the nature of such selling holder's
business, in which case the Company will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of such
approvals as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities.
(k) Upon the occurrence of any event contemplated by Section 6(c)(vi)
or 6(c)(vii) hereof, prepare a supplement or post-effective amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Use its best efforts to cause all Registrable Securities covered by
such Registration Statement to be, at the Company's option (i) listed on each
securities exchange, if any, on which similar securities issued by the Company
are then listed or, if no similar securities issued by the Company are then so
listed, on the New York Stock Exchange or another national securities exchange
if the securities qualify to be so listed or (ii) authorized to be quoted on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or the National Market System of NASDAQ if the securities qualify to be so
quoted; in each case, if requested by the holders of a majority of the
Registrable Securities covered by such Registration statement or the managing
underwriters, if any.
(m) Prior to the effective date of the first Demand Registration or the
first Piggyback Registration, whichever shall occur first, (i) engage an
appropriate transfer agent and provide the transfer agent with printed
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Securities.
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<PAGE> 9
(n) Enter into such agreements (including, in the event of an
underwritten offering, an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other actions in
connection therewith (including those requested by the holders of a majority of
the Registrable Securities being sold or, in the event of an underwritten
offering, those requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, (i) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority of the Registrable
Securities being sold) addressed to such selling holder of Registrable
Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such holders and underwriters,
including without limitation the matters referred to in Section 6(n)(i) hereof;
(iii) use its best efforts to obtain "comfort" letters and updates thereof from
the independent certified public accountants of the Company (and, if necessary,
any other certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data is, or is required to be, included in the Registration
Statement), addressed to each selling holder of Registrable Securities and each
of the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "comfort" letters in connection with
underwritten offerings; and (iv) deliver such documents and certificates as may
be requested by the holders of a majority of the Registrable Securities being
sold, the Special Counsel and the managing underwriters, if any, to evidence the
continued validity of the representations and warranties of the Company and its
subsidiaries made pursuant to clause (i) above and to evidence compliance with
any customary conditions contained in the underwriting agreement or similar
agreement entered into by the Company. The foregoing actions will be taken in
connection with each closing under such underwriting or similar agreement as and
to the extent required thereunder.
(o) Make available for inspection by a representative of the holders of
Registrable Securities being sold, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant retained
by such selling holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any records, information or
documents that are designated by the Company in writing as confidential at the
time of delivery of such records, information or documents will be kept
confidential by such persons unless (i) such records, information or documents
are in the public domain or otherwise publicly available, (ii) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquires of regulatory authorities, or (iii)
disclosure of such records, information or documents, in the opinion of counsel
to such person, is otherwise required by law (including, without limitation,
pursuant to the requirements of the Securities Act).
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<PAGE> 10
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45
calendar days after the end of any 12-month period (or 90 calendar days after
the end of any 12-month period if such period is a fiscal year) (i) commencing
at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering, and
(ii) if not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company, after the effective date of a
Registration Statement, which statements shall cover said 12-month period.
(q) Cooperate with any reasonable request by holders of a majority of
the Registrable Securities offered for sale, including by ensuring participation
by the executive management of the Company in road shows, so long as such
participation does not materially interfere with the operation of the Company's
business.
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing and the Company
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each holder of Registrable Securities will be deemed to have
agreed by virtue of its acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the occurrence of any event of the
kind described in Section 6(c)(ii), 6(c)(iii), 6(c)(v), 6(c)(vi) or 6(c)(vii)
hereof, such holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(k) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus.
In the event the Company shall give any such notice, the time period prescribed
in Section 3(a) hereof will be extended by the number of days during the time
period from and including the date of the giving of such notice to and including
the date when each seller of Registrable Securities covered by such Registration
Statement shall have received (x) the copies of the supplemented or amended
Prospectus contemplated by Section 6(k) hereof or (y) the Advice.
7. Registration Expenses. (a) All Registration Expenses will be borne
by the Company whether or not any of the Registration Statements become
effective. "Registration Expenses" will mean all fees and expenses incident to
the performance of or compliance with this Agreement by the Company, including,
without limitation, (i) all registration and filing fees (including without
limitation fees and expenses (x) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (y) of compliance
with securities or "blue sky" laws (including without limitation fees and
disbursements of counsel for the underwriters or selling holders in connection
with "blue sky" qualifications of the Registrable Securities and determination
of the eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or holders of a
majority of the Registrable Securities being sold
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<PAGE> 11
may designate)), (ii) printing expenses (including without limitation expenses
of printing certificates for Registrable Securities in a form eligible for
deposit with The Depository Trust Company and of printing prospectuses if the
printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in any Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, the Special Counsel for the sellers of the Registrable Securities, and
counsel for the underwriters (v) fees and disbursements of all independent
certified public accountants referred to in Section 6(n)(iii) hereof (including
the expenses of any special audit and "comfort" letters required by or incident
to such performance), (vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the Bylaws of the National Association of
Securities Dealers, Inc., (vii) Securities Act liability insurance if the
Company so desires such insurance, and (viii) fees and expenses of all other
persons retained by the Company, provided, however, that Registration Expenses
will not include fees and expenses of counsel for the holders of Registrable
Securities other than as provided below nor shall it include underwriting
discounts and commissions relating to the offer and sale of Registrable
Securities, all of which shall be borne by such holders. In addition, the
Company will pay its internal expenses (including without limitation all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange on which similar securities issued by the Company are
then listed and the fees and expenses of any person, including special experts,
retained by the Company.
(b) In connection with any Demand Registration or Piggyback
Registration hereunder, the Company will reimburse the holders of the
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel (the "Special Counsel"),
together with appropriate local counsel, chosen by the holders of a majority of
the Registrable Securities being registered.
8. Indemnification. (a) Indemnification by the Company. The Company
will, without limitation as to time, indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities registered
pursuant to this Agreement, the officers, directors and agents and employees of
each of them, each person who controls such holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of any such controlling person, from
and against all losses, claims, damages, liabilities, costs (including without
limitation the costs of investigation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based solely upon information furnished in
writing to the Company by such holder expressly for use therein; provided,
however, that the Company will not be liable to any holder of Registrable
Securities to the extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if either (A) (i) such holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such holder of a Registrable Security to the person
asserting the claim from which such Losses arise and (ii) the Prospectus
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<PAGE> 12
would have completely corrected such untrue statement or alleged untrue
statement or such omission or alleged omission; or (B) such untrue statement or
alleged untrue statement, omission or alleged omission is completely corrected
in an amendment or supplement to the Prospectus previously furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, and such holder thereafter fails to deliver such Prospectus as so
amended or supplemented prior to or concurrently with the sale of a Registrable
Security to the person asserting the claim from which such Losses arise.
The rights of any holder of Registrable Securities hereunder
will not be exclusive of the rights of any holder of Registrable Securities
under any other agreement or instrument of any holder of Registrable Securities
to which the Company is a party. Nothing in such other agreement or instrument
will be interpreted as limiting or otherwise adversely affecting a holder of
Registrable Securities hereunder and nothing in this Agreement will be
interpreted as limiting or otherwise adversely affecting the holder of
Registrable Securities' rights under any such other agreement or instrument,
provided, however, that no Indemnified Party will be entitled hereunder to
recover more than its indemnified Losses.
(b) Indemnification by Holders of Registrable Securities. In connection
with any Registration Statement in which a holder of Registrable Securities is
participating, such holder of Registrable Securities will furnish to the Company
in writing such information as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus and will severally
indemnify, to the fullest extent permitted by law, the Company, its directors
and officers, agents and employees, each person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
persons, from and against all Losses arising out of or based upon any untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or arising out of or based upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such holder to the Company expressly for use in such Registration Statement or
Prospectus and was relied upon by the Company in the preparation of such
Registration Statement, Prospectus or preliminary prospectus. In no event will
the liability of any selling holder of Registrable Securities hereunder be
greater in amount than the dollar amount of the proceeds (net of payment of all
expenses and underwriter's discounts and commissions) received by such holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any person shall become
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) will be paid to the indemnified party, as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is
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<PAGE> 13
ultimately determined that an indemnified party is not entitled to
indemnification hereunder). The indemnifying party will not consent to entry of
any judgment or enter into any settlement or otherwise seek to terminate any
action or proceeding in which any indemnified party is or could be a party and
as to which indemnification or contribution could be sought by such indemnified
party under this Section 8, unless such judgment, settlement or other
termination includes as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release, in form and substance
satisfactory to the indemnified party, from all liability in respect of such
claim or litigation for which such indemnified party would be entitled to
indemnification hereunder.
(d) Contribution. If the indemnification provided for in this Section 8
is unavailable to an indemnified party under Section 8(a) or 8(b) hereof in
respect of any Losses or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, will, jointly and severally, contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party or indemnifying parties, on the one hand, and
such indemnified party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses will be deemed to include any legal or other fees or expenses
incurred by such party in connection with any action or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Section 8(d), an indemnifying
party that is a selling holder of Registrable Securities will not be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities sold by such indemnifying party and distributed to
the public exceeds the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement
obligations of the Company hereunder will be in addition to any liability the
Company may otherwise have hereunder, under the Loan Agreement or otherwise. The
provisions of this Section 8 will survive so long as Registrable Securities
remain outstanding, notwithstanding any transfer of the Registrable Securities
by any holder thereof or any termination of this Agreement.
9. Rules 144 and 144A. The Company will file the reports required to be
filed by it under the Securities Act and the Exchange Act in a timely manner,
and will cooperate with any holder of
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<PAGE> 14
Registrable Securities (including without limitation by making such
representations as any such holder may reasonably request), all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitations of the
exemptions provided by Rules 144 and 144A (including, without limitation, the
requirements of Rule 144A(d)(4)). Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such filing requirements. Notwithstanding the
foregoing, nothing in this Section 9 will be deemed to require the Company to
register any of its securities under any section of the Exchange Act.
10. Underwritten Registrations. If any of the Registrable Securities
covered by any Demand Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the holder of Registrable Securities
that gave the Demand Notice with respect to such offering; provided, that such
investment banker or manager shall be reasonably satisfactory to the Company. If
any Piggyback Registration is an underwritten offering, the Company will have
the right to select the investment banker or investment bankers and managers to
administer the offering.
11. Miscellaneous. (a) Remedies. In the event of a breach by the
Company of its obligations under this Agreement, each holder of Registrable
Securities, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it will
waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Except for the Registration Rights
Agreement, dated August 28, 1996, between the Company and MEI Holdings, L.P.
(the "MEI Agreement"), the Company has not, as of the date hereof, and will not,
on or after the date hereof, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. This Agreement and the MEI Agreement will be deemed to be
independent agreements and no limitation or restriction contained in this
Agreement will be deemed to conflict with, limit or restrict the rights of MEI
Holdings, L.P. under the MEI Agreement and no limitation or restriction
contained in this Agreement will be deemed to conflict with, limit or restrict
the rights of the Purchaser under this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of holders of a
majority of the then-outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least 51% of the
Registrable Securities being sold by such holders; provided, however, that the
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<PAGE> 15
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and will be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by fax, or (iii)
one business day after being deposited with a reputable next-day courier,
postage prepaid, to the parties as follows:
(x) if to the Company, initially at 717 North Harwood, Suite
1640, Dallas, Texas, Fax Number (214) 210-8702, Attention: Chief
Executive Officer, and thereafter at such other address, notice of
which is given to the holders of Registrable Securities in accordance
with the provisions of this Section 11(d);
(y) if to Purchaser, initially at 4200 Texas Commerce Tower
West, 2200 Ross Avenue, Dallas, Texas 75201, Telecopier number (214)
220-4949, Attention: Secretary/Treasurer, and thereafter at such other
address, notice of which is given in accordance with the provisions of
Section 11(d); and
(z) if to any other holder of Registrable Securities, at the
most current address given by such holder to the Company in accordance
with the provisions of this Section 11(d).
(e) Owner of Registrable Securities. The Company will maintain, or will
cause its registrar and transfer agent to maintain, a stock book with respect to
the Common Stock, in which all transfers of Registrable Securities of which the
Company has received notice will be recorded. The Company may deem and treat the
person in whose name Registrable Securities are registered in the stock book of
the Company as the owner thereof for all purposes, including without limitation
the giving of notices under this Agreement.
(f) Successors and Assigns. This Agreement will inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and will inure to the benefit of each holder of any Registrable Securities. The
Company may not assign its rights or obligations hereunder without the prior
written consent of each holder of any Registrable Securities. The holders of the
shares may assign the rights and obligations under this Agreement to any
subsequent holder of such shares. Notwithstanding the foregoing, no transferee
will have any of the rights granted under this Agreement (i) until such
transferee shall have acknowledged its rights and obligations hereunder by a
signed written statement of such transferee's acceptance of such rights and
obligations or (ii) if the transferor notifies the Company in writing on or
prior to such transfer that the transferee shall not have such rights.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same instrument.
(h) Headings. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
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(i) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
(j) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein will remain in full force and effect and will in
no way be affected, impaired or invalidated, and the parties hereto will use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the registration rights granted by the Company with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such registration rights.
(l) Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, will be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
MALIBU ENTERTAINMENT WORLDWIDE,
INC.
By: /s/ Richard N. Beckert
------------------------------------
Richard N. Beckert,
Chief Executive Officer
SZ CAPITAL, L.P.
a Delaware limited partnership
By: SZ GENPAR, L.P., its general partner
By: HH GenPar Partners, its general partner
By: Hampstead Associates, Inc.
a managing general partner
By: /s/ Kurt C. Read
--------------------------------------
Name: Kurt C. Read
------------------------------------
Title: Vice President
-----------------------------------
