<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Definitive Proxy Statement Filed by the Registrant
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Malibu Entertainment Worldwide, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
<PAGE> 2
MALIBU ENTERTAINMENT WORLDWIDE, INC.
717 NORTH HARWOOD, SUITE 1650
DALLAS, TEXAS 75201
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
QUESTIONS AND ANSWERS
WHEN AND WHERE IS THE MEETING?
The annual meeting of shareholders of Malibu Entertainment Worldwide, Inc.
will be held at the Dallas SpeedZone, 11130 Malibu Drive, Dallas, Texas, on
Tuesday, June 15, 1999, at 11:00 a.m. local time.
WHO CAN VOTE?
Record holders of shares of Malibu common stock (the "Malibu Common
Shares") as of the close of business on April 30, 1999 are entitled to vote at
the meeting. On that date, 46,508,625 Malibu Common Shares were outstanding and
each Share is entitled to one vote.
WHAT IS BEING VOTED ON?
- Election of ten directors for terms ending at the 2000 annual meeting of
shareholders.
- Any other business properly brought before the meeting.
MEI Holdings, L.P., the holder of 84.55% of the Malibu Common Shares ("MEI
Holdings"), has informed the Company that it intends to vote its shares in favor
of each of the nominees and any other matter that properly comes before the
meeting. Accordingly, each of the director nominees will be elected and any
other matter properly brought before the meeting will be approved as a result of
MEI Holdings' vote, regardless of how other Malibu shareholders vote. As of the
date of this proxy statement, the directors do not know of any other matters
that are to be presented at the meeting. If any other matter requiring a vote
properly comes before the meeting, the holders of the proxies will vote your
Malibu Common Shares on any such matter in their sole discretion.
HOW DO I VOTE?
Mark, sign and date your proxy card and return it in the postage-paid
envelope provided. If you do not indicate your voting preferences on your proxy
card, your Malibu Common Shares will be voted in favor of the proposal.
MAY I CHANGE MY VOTE?
You may revoke your proxy at any time before your proxy is voted at the
annual meeting in any one of the following three ways:
(1) by sending a written notice to the Secretary of the Company,
stating that you want to revoke your proxy;
(2) by completing a properly signed proxy with a later date; or
(3) by voting in person at the annual meeting.
WHEN IS THIS PROXY STATEMENT BEING MAILED TO SHAREHOLDERS?
This Proxy Statement is being mailed to Shareholders on or about April 30,
1999.
<PAGE> 3
WHO IS SOLICITING PROXIES?
The Company has retained McKenzie Partners, Inc. to aid in the solicitation
of proxies in the enclosed form and related duties and will pay such firm a
customary fee plus reasonable expenses for so acting (estimated at $3,500 in the
aggregate). The cost of solicitation of proxies will be borne by the Company. It
is expected that solicitation of proxies will be primarily by mail. Proxies may,
however, be solicited by the Company's directors, officers and employees
(without additional compensation), in person, by telephone or otherwise.
Arrangements may be made with brokerage firms and other custodians, nominees and
fiduciaries to forward the solicitation material to the beneficial owners of
Malibu Common Shares held of record by such persons. The Company may, upon
request, reimburse such brokers, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection therewith.
WHAT IS THE EFFECT OF ABSTENTIONS AND BROKER NON-VOTES?
Abstentions and broker non-votes will be treated as shares not voted for
purposes of determining whether the requisite vote has been obtained as to the
proposals and therefore will have no effect on the outcome of the vote on any
matter being considered at the Annual Meeting that requires the affirmative vote
of a majority of votes cast at the Annual Meeting of Malibu Common Shares
entitled to vote.
ARE DISSENTER'S RIGHTS OR APPRAISAL RIGHTS AVAILABLE TO SHAREHOLDERS?
The shareholders of Malibu have no dissenter's or appraisal rights under
Article 13 of the Georgia Business Corporation Code or under Malibu's Articles
of Incorporation with respect to the items set forth in this Proxy Statement.
WHOM SHOULD I CALL WITH QUESTIONS?
If you have questions regarding the matters referred to in this document,
you should contact Richard N. Beckert, Malibu's Chief Executive Officer, at
(214) 210-8701.
ELECTION OF DIRECTORS
INFORMATION ABOUT BOARD NOMINEES
The Malibu Board currently consists of ten directors, each of whom has been
nominated, and agreed to stand, for re-election. We have provided information
regarding each of the existing Malibu directors and nominees below. If any of
the nominees is unable to stand for election, we may provide for a lesser number
of nominees or designate a substitute for such nominee. In the latter event,
Malibu Common Shares represented by proxies may be voted for the substitute. If
elected, each director nominee will serve for a term expiring at Malibu's 2000
annual meeting of stockholders or until the earlier of the election of his or
her successor or his or her resignation or removal from office.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- ---- --- --------
<S> <C> <C>
Robert A. Whitman........................................... 45 1996
Richard N. Beckert.......................................... 42 1998
Daniel A. Decker............................................ 46 1996
Julia E. Demerau............................................ 39 1991
L. Scott Demerau............................................ 37 1991
James T. Hands.............................................. 38 1996
Richard M. FitzPatrick...................................... 45 1996
William M. Kearns, Jr. ..................................... 63 1995
Steven D. Scheetz........................................... 31 1998
Bert W. Wasserman........................................... 65 1995
</TABLE>
2
<PAGE> 4
Robert A. Whitman has been the Chairman of the Board of Malibu since August
1996 and President and Co-Chief Executive Officer of The Hampstead Group, LLC
("Hampstead") since 1991. Hampstead is an investment firm which sponsored the
formation of MEI Holdings, Malibu's majority shareholder. Mr. Whitman is a
director of Covey Leadership Center and Bristol Hotel Company, was a director of
Wyndham Hotel Corporation from 1996 until the sale of Wyndham to Patriot
American Hospitality, Inc. ("Patriot") in 1998 and served as Chairman of the
Board of Forum Group, Inc., a NASDAQ-traded operator of retirement communities,
from 1993 until the sale of that company to Mariott International, Inc. in 1996.
Richard N. Beckert has been a member of the Board since November 1998 and
Chief Executive Officer of Malibu since August 1998. Prior to joining Malibu,
Mr. Beckert was the Senior Vice President Administration, for Bristol Hotels and
Resorts ("Bristol") and served in various capacities for Bristol from 1983
through 1998. Mr. Beckert has been the Mayor of the Town of Addison, Texas since
May 1993 and his term will expire in May 1999. He is currently a member of the
Board of Directors of the Metrocrest Chamber of Commerce. He is also a member of
the Addison Business Association.
Daniel A. Decker has been a member of the Board since August 1996 and an
Executive Vice President of Hampstead since 1990. Mr. Decker served as a
director of Wyndham from 1996 until the sale of Wyndham to Patriot in 1998.
Prior to 1990, Mr. Decker was a partner in the Dallas law firm of Decker, Hardt,
Kopf, Harr, Munsch & Dinan, P.C. Mr. Decker was a director of Forum Group, Inc.
from June 1993 until March 1996.
Julia E. Demerau was a founder of Malibu and has been a member of the Board
since 1991. She served as Executive Vice President from Malibu's inception in
1991 until November 1996, and served in similar capacities with Malibu's
predecessors since 1986.
L. Scott Demerau was a founder of Malibu and was the Chief Executive
Officer and President of Malibu from its inception in 1991 until November 1996
and served as the Chairman of the Board from 1991 to August 1996. He served in
similar capacities with Malibu's predecessors since 1986. L. Scott Demerau and
Julia E. Demerau are husband and wife.
James T. Hands has been a member of the Board since 1996 and has been a
Vice President of Hampstead since 1993. Prior to 1993, Mr. Hands was a
consultant employed by Kenneth Leventhal & Co.
Richard M. FitzPatrick has been a member of the Board since August 1996 and
has been the Chief Financial Officer of Hampstead since 1989. He served as the
interim chief financial officer of Malibu from November 1996 through December
1998.
William M. Kearns, Jr. has been a member of the Board since January 1995.
Since 1994, Mr. Kearns has served as President of W.M. Kearns & Co., Inc., a
private investment company. From 1992 to 1993, Mr. Kearns served as an Advisory
Director for Lehman Brothers. From 1969 to 1992, Mr. Kearns served as Managing
Director, Corporate Finance for Lehman Brothers and its predecessor firms. Mr.
Kearns also serves as a Senior Consultant to Furman Selz L.L.C. and Proudfoot,
P.L.C. He is a trustee of EQ Advisors Trust (Equitable Life Assurance Society of
the U.S.) and is a director of Kuhlman Corporation, Selective Insurance Group,
Inc., and Marine Transport Corporation, as well as a number of private and
venture-backed companies. Mr. Kearns is a member of the Executive Advisory Board
of the William E. Simon School of Business of the University of Rochester.
Steven D. Scheetz has been a member of the Board since 1998. Since 1992,
Mr. Scheetz has been a member of the mergers and acquisitions team at Hampstead
and is responsible for the financial underwriting and valuation efforts of
Hampstead and its investments. Prior to joining Hampstead, Mr. Scheetz was an
officer of Belcore & Associates, Inc., a regional real estate investment and
management firm. Previously, Mr. Scheetz served as a senior financial analyst to
Walden Residential Properties, Inc., a real estate investment trust.
Bert W. Wasserman has been a member of the Board since January 1995. Mr.
Wasserman served as Executive Vice President and Chief Financial Officer from
1990 to 1994 and as a director from 1990 to 1993 of Time Warner Inc. From 1981
to 1991, Mr. Wasserman served as a member of the Office of the President and
Board of Directors of Warner Communications, Inc. Mr. Wasserman served as a
member of the National
3
<PAGE> 5
Advisory Board of Chemical Bank until March 1996. Mr. Wasserman currently serves
as a member of the Board of the Baruch College Trust Fund, a director of various
registered investment companies for which The Dreyfus Corporation acts as
investment advisor, and a director of Winstar Communications, Inc. and Lillian
Vernon Corporation.
The ten candidates for director receiving the highest number of affirmative
votes cast at the Annual Meeting will be elected as directors of Malibu.
Shareholders do not have a right to cumulate their votes for directors. MEI
Holdings has informed us that it intends to vote its shares (which represent
84.55% of the Malibu Common Shares outstanding on the Record Date) for each of
the director nominees. Accordingly, each of the director nominees will be
elected as a result of MEI Holdings' vote, regardless of how other Malibu
shareholders vote.
MALIBU BOARD MEETINGS
Your directors met 19 times during 1998. Each director attended at least
three-fourths or more of the total number of meetings of directors and meetings
of committees on which he or she served.
MALIBU BOARD COMMITTEES
The Malibu Board has two committees: an Audit Committee and a Compensation
Committee. The Malibu Board does not have a nominating committee.
The Audit Committee is responsible for reviewing (i) the selection of our
independent auditors, (ii) the audits conducted by our independent and internal
auditors, (iii) our internal controls and practices, and (iv) our financial
statements as certified by our independent auditors. Messrs. Wasserman
(Chairman), FitzPatrick and Kearns are members of our Audit Committee. The Audit
Committee met twice in 1998.
The Compensation Committee is responsible for (i) determining the
compensation of our executive officers and (ii) overseeing the base pay or
salary, annual performance bonus and long-term compensation of our executive
officers. Messrs. Decker (Chairman), Kearns and Wasserman are members of our
Compensation Committee. The Compensation Committee met four times in 1998.
DIRECTOR COMPENSATION
Our directors, other than Mr. Beckert, Mr. Demerau and Ms. Demerau, are
paid the following for their services as directors: (i) an annual fee of
$25,000, payable in quarterly installments, (ii) fees of $1,000 for each special
meeting attended in person, (iii) fees of $750 for each telephonic special
meeting attended, (iv) an annual fee of $5,000 for serving on a Board committee,
(v) fees of $750 for each special committee meeting attended in person, and (vi)
fees of $500 for each telephonic special committee meeting attended.
Each of Messrs. Whitman, FitzPatrick, Decker, Hands and Scheetz waived his
rights to such fees for 1996, 1997 and 1998.
Ms. Demerau served as a consultant through December 31, 1998 to assist us
with tasks consistent with her business experience. We paid Ms. Demerau $30,000
per year for such services. In addition, Mr. and Ms. Demerau have received and
are entitled to receive certain payments under the Separation Agreement
described under "Certain Relationships and Transactions -- Demerau Separation
Agreement."
4
<PAGE> 6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the rules
promulgated under it require that certain of our officers, directors and
stockholders report transactions effected in Malibu Common Shares with the SEC.
During 1998, each Malibu director filed on a timely basis the forms required
under Section 16(a) relating to transactions in Malibu Common Shares.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard N. Beckert...................................... 42 Chief Executive Officer
R. Scott Wheeler........................................ 42 Chief Financial Officer
</TABLE>
See the biography of Richard N. Beckert under "Information about Board
Nominees." R. Scott Wheeler has been chief financial officer of Malibu since
December 1998. Prior to joining Malibu, Mr. Wheeler was a vice president of The
Beltway Companies from 1985 to 1998. Mr. Wheeler is currently the Mayor Pro
Tempore of the Town of Addison, Texas, will serve as the Mayor of the Town of
Addison beginning May 1999 and is a member of the Addison Business Association.
Mr. Wheeler currently serves as Chairman of the Communities Foundation of Texas
Metrocrest Area Fund Advisory Council and is a member of the Board of Directors
of Compass Bank Dallas.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------------------
------------------- RESTRICTED STOCK SECURITIES UNDERLYING
NAME & PRINCIPAL POSITION(1) YEAR SALARY BONUS(2) AWARDS(3) OPTIONS SALES(#)
- ---------------------------- ---- -------- -------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C>
Richard N. Beckert, CEO.......... 1998 $100,481 $114,725 $687,500 1,000,000
</TABLE>
- ---------------
(1) Mr. Wheeler's total 1998 annual salary and bonus do not exceed $100,000.
(2) The amount listed includes an $11,600 signing bonus and a year-end bonus for
1998 of $103,125.
(3) This amount represents 500,000 restricted Malibu Common Shares with a value
of $593,750 as of December 31, 1998. Dividends are payable on such
restricted shares.
Robert A. Whitman, currently our Chairman and formerly our Chief Executive
Officer, did not receive any compensation for his services during 1996, 1997 and
1998. Mr. Whitman served as Chief Executive Officer of the Company during 1996,
1997 and a portion of 1998. Certain Hampstead employees including Messrs.
FitzPatrick and Hands, have devoted a substantial portion of their time to
Malibu's business since mid-1996. Malibu paid Hampstead $468,445 to reimburse it
for salaries and other costs of Messrs. FitzPatrick's and Hands' services during
1997 and $410,647 in 1998, $173,858 and $219,299 of which was in reimbursement
of Mr. FitzPatrick's compensation for 1997 and 1998, respectively. These
payments were approved by directors not employed by Malibu or Hampstead.
5
<PAGE> 7
STOCK OPTIONS
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
# OF SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED GRANT DATE VALUE
OPTIONS TO EMPLOYEES IN EXERCISE OF TO GRANT DATE
NAME GRANTED FISCAL YEAR BASE PRICE EXPIR. DATE PRESENT VALUE(a)
- ---- --------------- --------------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Richard N. Beckert, CEO... 1,000,000 52% $ 2.00 9/4/08 $2,160,000
R. Scott Wheeler.......... 200,000 10% $1.1875 12/28/08 $ 432,000
</TABLE>
- ---------------
(a) Based on a Black-Scholes option pricing model assuming a risk free interest
rate of 5.32%, a zero dividend yield, expected lives of 10 years and
expected volatility of 57.89%.
In August of 1998, Malibu entered into a four-year employment agreement
with Mr. Beckert which provides that he will serve as the Chief Executive
Officer and as a member of the Board of Directors. Mr. Beckert will receive an
initial annual base salary of $275,000, and is entitled to annual bonus payments
in an amount up to 100% of his annual base salary. If Mr. Beckert's employment
is terminated other than for cause when no other severance is due within six
months of a change of control, he is terminated when cause does not exist or he
terminates his employment for good reason after a change in control, Mr. Beckert
will continue to receive his annual base salary through the date his employment
is terminated, and generally, will receive the equivalent of two years of his
annual base salary.
In connection with entering into his employment agreement, Mr. Beckert was
granted non-qualified stock options described above to purchase 1,000,000 Malibu
Common Shares and we issued to him 500,000 Malibu Common Shares which are
subject to restrictions on resale and a repurchase right of Malibu. The options
vest at a rate of 1/48 per month for four years and the restrictions of the
restricted stock lapse in August of 2002. The option vesting is accelerated
generally in circumstances which entitle Mr. Beckert to a severance payment
under his employment agreement.
In December of 1998, Malibu entered into a three-year employment agreement
with Mr. Wheeler which provides that he will serve as the Chief Financial
Officer and Secretary of Malibu. Mr. Wheeler will receive an initial base salary
of $120,000, and is entitled to annual bonus payments of up to 50% of his annual
base salary. Mr. Wheeler received a bonus of $7,000 in 1998. In connection with
entering into his employment agreement, Mr. Wheeler was simultaneously granted
non-qualified stock options to purchase 200,000 Malibu Common Shares. The
options vest at a rate of 1/48 per month for four years. The option vesting is
accelerated generally in circumstances which entitle Mr. Wheeler to a severance
payment under his employment agreement. If Mr. Wheeler's employment is
terminated other than for cause when no other severance is due within six months
of a change in control, he is terminated when cause does not exist or he
terminates his employment for good reason, Mr. Wheeler will continue to receive
his annual base salary through the date his employment is terminated and
generally, will receive the equivalent of one year of his annual base salary.
STOCK OPTION PLANS
Employee Stock Option Plans. In September 1993, Malibu adopted the
Mountasia 1993 Incentive Stock Option Plan (the "Plan"), which was amended in
1995. The Plan provides for the issuance of options covering up to 1,250,000
Malibu Common Shares. Options may be granted under the Plan to our employees,
officers, directors, consultants and advisors. All options are issued at fair
market value at the date of grant. The options expire four to five years from
the date of grant and they vest immediately. As of December 31, 1998, there were
no options outstanding under this plan.
In April 1997, Malibu adopted our 1997 Long-Term Incentive Plan which was
implemented to attract and retain qualified officers and other key employees and
to provide such employees with appropriate incentives. The plan provides for the
issuance of up to 4,000,000 Malibu Common Shares. During 1998, Malibu granted
options to purchase 918,100 Malibu Common Shares at prices ranging from $1.19 to
$3.00,
6
<PAGE> 8
the market price at the time of grant. The options vest over four years and
expire ten years from the date of grant.
In August 1998, an option to purchase 1,000,000 Malibu Common Shares was
issued to Mr. Beckert. See "Executive Compensation -- Executive Officer
Compensation."
Nonemployee Director Stock Option Plan. In September 1993, Malibu adopted
the 1993 Nonemployee Director Stock Option Plan (the "Director Plan") which was
amended during 1995 and for which 250,000 Malibu Common Shares are reserved for
issuance. The Director Plan provides for the grant of nonqualified stock options
to purchase Malibu Common Shares to directors who are not our employees. All
options are issued at fair market value at the date of grant and vest
immediately and expire 10 years from the date of grant. Each of Messrs. Whitman,
FitzPatrick, Decker, Hands and Scheetz waived his rights to such options for
1996, 1997 and 1998. Mr. and Ms. Demerau have waived their rights to options
under the Director Plan for 1997 and 1998 and each year thereafter.
Management Incentive Plan. In September 1996, Malibu sold 2,093,333 Malibu
Common Shares (the "Management Shares") at a per share price equal to $2.6625
per share, for an aggregate note receivable of $5,568,266, which price was the
average of the closing prices of Malibu Common Shares for the 10 trading days
immediately preceding the sale to the participants in the Management Incentive
Plan (the "Incentive Plan"). Those persons eligible to participate in the
Incentive Plan were key employees designated by the Compensation Committee of
the Board of Directors. In order to participate in the Incentive Plan the
participants surrendered all options to acquire Malibu Common Shares. During
1997, the Company purchased 291,875 Management Shares and issued 200,000 Malibu
Common Shares. On December 31, 1998, Malibu redeemed substantially all of the
outstanding stock issued under the Management Incentive Plan in exchange for the
cancellation of the notes receivable from participants and any accrued interest
thereon. Notes receivable having a balance of approximately $5,865,000,
including accrued interest were canceled in exchange for the redemption of
1,974,761 outstanding shares. 26,697 Common Shares purchased under the
Management Incentive Plan are vested and held by former employees.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Principles. The Compensation Committee of the Board seeks to provide a
competitive compensation package that enables us (i) to attract and retain key
executives, (ii) to integrate pay programs with our business objectives, (iii)
to reward executive officers for achievement of short-term operating goals and
for long-term stockholder value, and (iv) to link individual executive
compensation with our overall performance.
Factors Considered in Determining Compensation. The Committee targets
salaries for its key executives that are competitive with related industry
companies of similar size, taking into account the experience of individual
officers. Generally, the Committee attempts to fix base salaries at lower levels
to emphasize result-oriented factors reflected in a bonus potential and the
value of stock options. The Committee periodically reviews salaries and pay
ranges for its executives, and salaries are increased based on the Committee's
evaluation of an individual's performance and their contribution to our goals.
All amounts paid to reimburse Hampstead for services previously provided by
its employees are reviewed and approved by directors not employed by Malibu or
Hampstead.
The terms of the agreements entered into with Scott and Julia Demerau,
Malibu's founders and former principal executive officers and continuing
directors, were negotiated on an arms-length basis. See "Demerau Separation
Agreement" for a description of this.
COMPENSATION COMMITTEE
Daniel A. Decker, Chairman
William M. Kearns, Jr.
Bert W. Wasserman
7
<PAGE> 9
CERTAIN RELATIONSHIPS AND TRANSACTIONS
During 1998, Malibu and MEI Holdings amended the terms of the $65,000,000
and $10,000,000 notes we have payable to MEI Holdings to provide specific terms
on which those notes are convertible into Malibu preferred stock and entered
into an agreement regarding right to convert the notes. The notes are each
convertible at MEI Holdings' option into either Malibu preferred stock or
subordinated notes that are convertible into Malibu Common Shares. The maturity
date of the $10,000,000 was extended to July 20, 1999. The outstanding balance
of such indebtedness (including accrued and unpaid interest) was $68.3 million
as of December 31, 1998. MEI Holdings has the right, but not the obligation, to
advance a total of $75 million under these notes.
During 1998, Malibu paid loan costs of $2,641,270 to MEI Holdings in
connection with one of the promissory notes. Additionally, Malibu reimbursed MEI
Holdings for certain costs incurred by MEI Holdings for our benefit. The total
amount charged to us for overhead costs was $443,337 (including $410,647 for
Messrs. Hands' and FitzPatrick's salaries and other costs) for the year ended
December 31, 1998. $156,000 of such costs were reimbursed in fiscal year 1998.
During 1998, Malibu borrowed funds from SZ Capital, L.P. ("SZ Capital"), an
entity related to MEI Holdings, on terms which we believed to be at least as
favorable to us as terms obtainable from third parties. The outstanding balance
of such indebtedness (including accrued and unpaid interest) was $2.9 million as
of December 31, 1998. The promissory note evidencing this indebtedness is
convertible into preferred stock of the Company, which preferred stock is
convertible into Malibu Common Shares. The Company and SZ Capital also entered
into a registration rights agreement pursuant to which Malibu agreed to register
the note held by SZ Capital and any preferred stock or Malibu Common Shares into
which such note is convertible. Malibu, SZ Capital and MEI Holdings entered into
a subordination agreement subordinating the notes held by MEI Holdings to the
note held by SZ Capital. SZ Capital has the right, but not the obligation, to
advance a total of $30 million under the note.
8
<PAGE> 10
STOCK PERFORMANCE GRAPH
The chart below compares the five-year cumulative total return on Malibu
Common Shares with that of the S&P 500 Index and a peer industry group. This
graph assumes $100 was invested on December 31, 1994 in each of Malibu Common
Shares, the S&P 500 companies and a peer group of companies represented by the
Entertainment-500 Industry Segment. Cumulative total return assumes the
reinvestment of dividends.
PERFORMANCE GRAPH TOTAL SHAREHOLDER RETURNS
<TABLE>
<CAPTION>
MALIBU
ENTERTAINMENT
MEASUREMENT PERIOD WORLDWIDE S&P 500 ENTERTAINMENT-
(FISCAL YEAR COVERED) INC. INDEX 500
<S> <C> <C> <C>
3-NOV-93 100 100 100
SEP94 135 105 90
SEP95 105 135 120
DEC96 42 170 123
DEC97 38 230 180
DEC98 15 295 240
</TABLE>
9
<PAGE> 11
SECURITY OWNERSHIP INFORMATION
The following table sets forth certain information regarding the beneficial
ownership of Malibu Common Shares as of April 30, 1999 by (i) each person who we
know beneficially owns more than 5% of Malibu Common Shares, (ii) each director
and executive officer of Malibu, and (iii) all directors and executive officers
of Malibu as a group. Unless otherwise stated below, the address of each person
is the principal offices of Malibu located at 717 North Harwood, Suite 1650,
Dallas, Texas 75201. For purposes of the table, a person or group of persons is
deemed to have "beneficial ownership" of any shares as of a given date if that
person has the right to acquire the shares within 60 calendar days after such
date.
BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
NUMBER OF
MALIBU % OF MALIBU
NAME COMMON SHARES COMMON SHARES
- ---- ------------- -------------
<S> <C> <C>
MEI Holdings, L.P.(1)(2).................................... 39,323,513 84.55%
4200 Texas Commerce Tower
Dallas, Texas 75201
Richard N. Beckert(3)....................................... 231,663 *
Daniel A. Decker(4)......................................... 39,323,513 84.55%
L. Scott Demerau(5)......................................... 862,479 1.85%
Julia E. Demerau(5)......................................... 862,479 1.85%
Richard M. FitzPatrick...................................... -- --
James T. Hands.............................................. -- --
William M. Kearns, Jr.(6)................................... 125,000 *
Steven D. Scheetz........................................... -- --
Bert W. Wasserman(6)........................................ 100,000 *
R. Scott Wheeler(7)......................................... 25,000 *
Robert A. Whitman(4)........................................ 39,323,513 84.55%
All directors and executive officers as a group (11 40,413,492 86.89%
persons)(4)...............................................
</TABLE>
- ---------------
* Less than one percent
(1) MEI Holdings may be entitled to the issuance of additional Malibu Common
Shares under post-closing adjustment provisions and other terms of the
Recapitalization Agreement, dated as of June 5, 1996, as amended and
restated, between MEI Holdings and Malibu, the Warrant issued by Malibu to
MEI Holdings in connection therewith and certain promissory notes of Malibu
described under the heading "Certain Relationships and Transactions -- MEI
Holdings Promissory Notes."
(2) An entity related to MEI Holdings, SZ Capital, may also be entitled to the
issuance of Malibu Common Shares under the promissory notes described under
the heading "Certain Relationships and Transactions -- SZ Capital Note."
(3) Includes options to purchase 187,500 Malibu Common Shares which are vested
but have not been exercised and 41,663 options which will become vested
within 60 calendar days of the Record Date.
(4) Messrs. Decker and Whitman disclaim beneficial ownership of the 39,323,513
Malibu Common Shares held by MEI Holdings.
(5) Mr. Demerau holds the 862,479 Common Shares jointly with Julia E. Demerau,
Mr. Demerau's spouse. In 1998, the Company redeemed 171,875 Malibu Common
Shares issued to Mr. Demerau in connection with the Management Incentive
Plan. See "Stock Option Plans -- Management Incentive Plan". In February
1997, Mr. and Ms. Demerau borrowed $1.0 million from a financial
institution. The loan became due in February 1999. The current balance under
the loan is $368,000. The Demeraus have informed the Company that they
anticipate repayment in full of the loan by May 7, 1999. The loan is
10
<PAGE> 12
secured by a pledge of all of the Common Shares owned by Mr. and Ms.
Demerau. At the request of the lender, MEI Holdings guaranteed such
indebtedness and has secured such guarantees.
(6) Includes options to purchase 15,000 Malibu Common Shares which are
exercisable within 60 calendar days of the Record Date.
(7) Represents 12,498 vested options not yet exercised and 12,502 options which
will become vested within 60 calendar days of the Record Date.
ADDITIONAL INFORMATION
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, as filed with the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
being distributed to the shareholders together with this Proxy Statement.
FUTURE STOCKHOLDER PROPOSALS
Any Malibu shareholder who wishes to submit a proposal for inclusion in the
proxy materials for the 2000 Annual Meeting of Shareholders must submit such
proposal to the Secretary of Malibu by March 1, 2000. The Securities and
Exchange Commission recently amended Rule 14a-4 under the Exchange Act to
provide that a proxy may confer discretionary authority to vote on a proposal
for an annual meeting of stockholders if the proponent fails to notify the
Company at least 45 days prior to the month and day of mailing the prior year's
proxy statement. For purposes of the Company's 2000 annual meeting of
stockholders, management may use its discretionary voting authority to vote on
any proposal with respect to which the Company receives notice after March 31,
2000, even if such proposal is not discussed in the proxy statement for the 2000
annual meeting of stockholders.
ACCOUNTANTS
The Company has selected Arthur Andersen LLP to serve as the Company's
independent accountants for 1999. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting, where they will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
April 30, 1999
11
<PAGE> 13
PROXY
MALIBU ENTERTAINMENT WORLDWIDE, INC.
717 NORTH HARWOOD, SUITE 1650
DALLAS, TEXAS 75201
ANNUAL MEETING OF SHAREHOLDERS
JUNE 15, 1999
This Proxy is solicited on behalf of the Board of Directors. The
undersigned, having received the Notice of Annual Meeting of Shareholders and
the Proxy Statement hereby appoints each of Richard N. Beckert and R. Scott
Wheeler, with full power of substitution and resubstitution, as proxies of the
undersigned, to represent and to vote as designated below and in accordance with
their judgment all of the shares of Common Stock of Malibu Entertainment
Worldwide, Inc. ("Malibu") held of record by the undersigned on April 30, 1999,
at the Annual Meeting of Shareholders to be held on June 15, 1999 and at any
adjournment or postponement thereof.
The Malibu Board of Directors recommends a vote FOR the election of the ten
nominees for director named below.
1. ELECTION OF DIRECTORS
[ ] FOR ALL nominees listed below [ ] WITHHOLD AUTHORITY
except as marked to the to vote for all nominees
contrary below listed below
Richard N. Beckert, Daniel A. Decker, Julia E. Demerau, L. Scott Demerau,
Richard M. FitzPatrick, James T. Hands, William M. Kearns, Jr., Steven D.
Scheetz, Bert W. Wasserman and Robert A. Whitman.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE ON ANY INDIVIDUAL NOMINEE, DRAW
A LINE THROUGH THAT NOMINEE'S NAME ABOVE.
If not otherwise marked, this Proxy will be voted for the election of all
nominees.
2. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting, or any adjournment
thereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. Please sign exactly as name appears
below. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
-------------------------------
Signature
-------------------------------
Signature
If Held Jointly
-------------------------------
Dated
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
