<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant
to Rule 13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a)
Malibu Entertainment Worldwide, Inc.
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(Name of Issuer)
Common Stock, without par value
(Title of Class of Securities)
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561182106
-----------------
(CUSIP Number)
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Peter D. Cripps
(215) 994-2758
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 30, 1999
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(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 that is the subject of this Schedule 13D, and is filing this
schedule because of (S)(S) 240.13d-1(e), 240.13d-l(f) or 240.13d-1(g), check the
following box. [_]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See (S) 240.13d-7 for other
parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP NO. 561182106 PAGE 2 OF 14 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Partnership Acquisition Trust V
51-6506881
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
oo
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [_]
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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SOLE VOTING POWER
7
NUMBER OF 6,000,000 shares of common stock
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
-0-
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 6,000,000 shares of common stock
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
6,000,000 shares of common stock
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximately 11.4% of common stock
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TYPE OF REPORTING PERSON*
14
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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<PAGE>
SCHEDULE 13D
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CUSIP NO. 561182106 PAGE 3 OF 14 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Nomura Asset Capital Corporation
13-3648580
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
oo
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [_]
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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SOLE VOTING POWER
7
NUMBER OF 6,000,000 shares of common stock
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
-0-
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 6,000,000 shares of common stock
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11 Partnership Acquisition Trust V beneficially and directly owns the
6,000,000 shares of common stock referred to herein. Nomura Asset Capital
Corporation is the sole beneficiary of Partnership Acquisition Trust V.
Nomura Asset Capital Corporation is the sole member of The Capital Company
of America LLC. Nomura Asset Capital Corporation has granted The Capital
Company of America LLC a power of attorney to act on behalf of Nomura
Asset Capital Corporation with respect to the securities described in this
Schedule 13D.
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximately 11.4% of common stock
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TYPE OF REPORTING PERSON*
14
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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<PAGE>
SCHEDULE 13D
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CUSIP NO. 561182106 PAGE 4 OF 14 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Capital Company of America LLC
13-3648580
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
oo
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [_]
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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SOLE VOTING POWER
7
NUMBER OF 6,000,000 shares of common stock
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
-0-
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 6,000,000 shares of common stock
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11 Partnership Acquisition Trust V beneficially and directly owns the
6,000,000 shares of common stock referred to herein. Nomura Asset Capital
Corporation is the sole beneficiary of Partnership Acquisition Trust V.
Nomura Asset Capital Corporation is the sole member of The Capital Company
of America LLC. Nomura Asset Capital Corporation has granted The Capital
Company of America LLC a power of attorney to act on behalf of Nomura
Asset Capital Corporation with respect to the securities described in this
Schedule 13D.
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximately 11.4% of common stock
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TYPE OF REPORTING PERSON*
14
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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<PAGE>
This Schedule 13D relates to the ownership of common stock, no par value
(the "Common Stock"), of Malibu Entertainment Worldwide, Inc., a Georgia
corporation (the "Company") by Partnership Acquisition Trust V, a Delaware
business trust ("PATV"). The sole beneficiary of PATV is Nomura Asset Capital
Corporation, a Delaware corporation ("NACC"). On July 20, 1999, the Company,
Malibu Centers, Inc., a Delaware corporation ("MCI"), MEI Holdings, L.P., a
Delaware limited partnership ("MEIH"), NACC, PATV and SZ Capital, L.P., a
Delaware limited partnership ("SZ") entered into that certain Second Amended and
Restated Capitalization Agreement attached hereto as Exhibit B (the
"Recapitalization Agreement") dated as of July 20, 1999 (the "Closing Date"),
pursuant to which the parties thereto agreed to enter into a series of
transactions, including, without limitation, the conversion of the outstanding
balances of a $21,390,375 loan from NACC to MCI (the "MCI Loan") and a
$20,000,000 loan from NACC to MEIH (the "MEIH Loan") into shares of the
Company's Series BB Preferred Stock, par value $0.01 per share, (the "Series BB
Preferred Stock") and the issuance by the Company to PATV of 6,000,000 shares of
the Company's Common Stock.
Item 1. Security and Issuer
This Schedule 13D relates to the shares of Common Stock, no par value, of
the Company. According to the Company's most recently filed Quarterly Report on
Form 10-Q, the address of the principal executive office of the Company is 717
North Harwood, Suite 1650, Dallas, Texas 75201.
Item 2. Identity and Background
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(a) This Schedule 13D is filed on behalf of:
(1) PATV;
(2) NACC, in its capacity as the sole beneficiary of PATV; and
(3) The Capital Company of America LLC, a Delaware limited liability
company ("CCA").
(b) The address of the principal business office for PATV is 2 World Financial
Center, Building B, New York, New York 10281.
The address of the principal business office for NACC is 2 World Financial
Center, Building B, New York, New York 10281.
The address of the principal business office for CCA is 2 World Financial
Center, Building B, New York, New York 10281.
The name and principal business address of the trustee of PATV is listed
below:
Name Position Address
- ---- -------- --------
Wilmington Trust Company Trustee Rodney Square North
1100 North Market Street
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<PAGE>
Wilmington, DE 19870-0001
The names and principal business addresses of the executive officers and
directors of NACC are listed below:
<TABLE>
<CAPTION>
Name Position Address
- ---- -------- -------
<S> <C> <C>
Atsushi Yoshikawa Director and Chairman of the 2 World Financial Center
Board of Directors Building B, 21st Floor
New York, NY 10281
Joseph R. Schmuckler Director, Co-President and 2 World Financial Center
Co-Chief Executive Officer Building B, 21st Floor
New York, NY 10281
Michael L. Hurdelbrink Director, Co-President and 2 World Financial Center
Co-Chief Executive Officer Building B, 21st Floor
New York, NY 10281
William T. Maitland Director and Secretary 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
John E. Toffolon, Jr. Director and Chief Financial 2 World Financial Center
Officer Building B, 21st Floor
New York, NY 10281
Shigeki Fujitani Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Robert Rottman Treasurer 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Raymond Knox Executive Managing Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
</TABLE>
The names and principal business addresses of the executive officers and
directors of CCA are listed below:
<TABLE>
<CAPTION>
Name Position Address
- ---- -------- -------
<S> <C> <C>
Atsushi Yoshikawa Manager 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Michael L. Hurdelbrink Manager, President and Chief 2 World Financial Center
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Executive Officer Building B, 21st Floor
New York, NY 10281
William T. Maitland Manager 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
John E. Toffolon, Jr. Manager 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Shigeki Fujitani Manager 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
William B. Aimetti Manager 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Richard G. Swanson Secretary and Managing Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Ken Duncan Managing Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
David P. Jacob Managing Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Stuart Simon Managing Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
</TABLE>
NACC is the sole beneficiary of PATV. CCA is NACC's attorney in fact with
respect to the securities described in this Schedule 13D. NACC is the sole
member of CCA. NACC is a wholly-owned subsidiary of Nomura Holdings America
Inc., a Delaware corporation ("NHA"). Further information regarding NHA
required to be disclosed in this Schedule 13D appears below.
(c) The principal business of PATV is the acquisition, ownership, holding,
selling, transferring and/or maintaining interests in equity interests of
entities (or affiliates of entities) that own real estate.
The principal business of NACC is the acquisition, origination, financing
and sale of various receivables and owning certain equity securities.
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<PAGE>
The principal business of CCA is the acquisition, origination, financing
and sale of various receivables and owning certain equity securities.
NACC is the sole beneficiary of PATV. Based on NACC's relationship with
PATV and NACC's status as sole beneficiary thereof, NACC may be deemed to
beneficially own the shares of Common Stock held by PATV.
NACC is the sole member of CCA. NACC has granted CCA a power of attorney to
act on behalf of NACC with respect to the securities described in this Schedule
13D. Based on CCA's relationship with NACC and PATV and CCA's status as NACC's
attorney in fact with respect to the securities described in this Schedule 13D,
CCA may be deemed to beneficially own the shares of Common Stock held by PATV.
CCA is a wholly-owned subsidiary of NACC. NACC is a wholly-owned subsidiary
of NHA. Based on NHA's relationship with CCA, NACC and PATV and NHA's status as
the parent corporation of CCA and NACC, NHA may be deemed to beneficially own
the shares of Common Stock held by PATV.
The address and principal business office for NHA is 2 World Financial
Center, Building B, New York, New York 10281.
The names and principal business addresses of the executive officers and
directors of NHA are listed below:
<TABLE>
<CAPTION>
Name Position Address
- ---- -------- -------
<S> <C> <C>
Atsushi Yoshikawa Director, Chairman of the Board 2 World Financial Center
of Directors, President and Building B, 21st Floor
Chief Executive Officer New York, NY 10281
William T. Maitland Director, Secretary, Chief 2 World Financial Center
Legal Officer, General Counsel Building B, 21st Floor
and Executive Managing Director New York, NY 10281
Joseph R. Schmuckler Director and Executive Managing 2 World Financial Center
Director Building B, 21st Floor
New York, NY 10281
John E. Toffolon, Jr. Director, Chief Financial 2 World Financial Center
Officer, Treasurer and Building B, 21st Floor
Executive Managing Director New York, NY 10281
Takashi Tsutsui Director 2 World Financial Center
Building B, 21st Floor
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C> <C>
New York, NY 10281
William B. Aimetti Executive Managing Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
Robert Levine Executive Managing Director 2 World Financial Center
Building B, 21st Floor
New York, NY 10281
</TABLE>
The principal business of NHA is: (i) to act as a holding company for a
wide array of entities directly involved in the financial services industry or
involved in the provision of services to entities in the financial services
industry, and (ii) to provide funding for the operations of its subsidiaries by,
among other things, issuing commercial paper and Eurobonds.
(d) During the last five years, none of PATV, NACC, CCA, or NHA nor, to
the best of their knowledge, any of their respective executive officers,
directors or trustees has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) During the last five years, none of PATV, NACC, CCA, or NHA nor, to
the best of their knowledge, any of their respective executive officers,
directors or trustees has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of such proceedings
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) PATV is a Delaware business trust.
NACC is a Delaware corporation.
CCA is a Delaware limited liability company.
NHA is a Delaware corporation.
Atsushi Yoshikawa is a citizen of Japan.
Joseph R. Schmuckler is a citizen of the United States.
Michael L. Hurdelbrink is a citizen of the United States and Great
Britain.
William T. Maitland is a citizen of the United States.
John E. Toffolon is a citizen of the United States.
Shigeki Fujitani is a citizen of Japan.
Robert Rottman is a citizen of the United States.
-9-
<PAGE>
Raymond Knox is a citizen of the United States.
William B. Aimetti is a citizen of the United States.
Richard G. Swanson is a citizen of the United States.
Ken Duncan is a citizen of the United States.
Stuart Simon is a citizen of the United States.
Wilmington Trust Company is a Delaware banking corporation.
Takashi Tsutsui is a citizen of Japan.
Robert Levine is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
No funds were involved in the acquisition of the shares of Common Stock.
The Company delivered the 6,000,000 shares of Common Stock to PATV as
consideration for NACC's entering into the Recapitalization Agreement.
Item 4. Purpose of Transaction
----------------------
The shares of Common Stock described herein were acquired by PATV for
investment purposes, subject to the matters set forth below. Notwithstanding
the foregoing, upon the occurrence of certain events, including the non-payment
of dividends, PATV may be entitled to elect a number of persons to the Company's
Board of Directors, as provided below, by virtue of PATV's ownership of 327.12
shares of the Company's Series BB Preferred Stock. PATV may, but is not
required to, exercise such rights and the existence of such rights and any
exercise of such rights may affect the Company's dividend policy or may impede
the acquisition of control of the Company of another person.
NACC had previously made the MCI Loan to MCI, and NACC had previously made
the MEIH Loan to MEIH.
Pursuant to the Recapitalization Agreement, NACC, PATV, MEIH, MCI, SZ and
the Company agreed to enter into a series of transactions which included,
without limitation, the conversion of the outstanding balances of loans NACC,
MEIH and SZ made to the Company and/or MCI and the loan NACC made to MEIH into
327.12 shares of Series BB Preferred Stock of the Company, the Company's sale of
additional preferred stock to SZ for cash, a partial cash prepayment of the MCI
Loan and the grant by the Company of 6,000,000 shares of its Common Stock to
PATV.
On the Closing Date, MCI paid to NACC approximately $9,125,549 in cash and
the Company paid to NACC approximately $2,274,451 in cash. In addition, the
Company issued to PATV 108.41 shares of Series BB Preferred Stock. The
foregoing transactions resulted in the discharge of the MCI Loan and the release
of the collateral securing it.
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<PAGE>
On the Closing Date, MEIH also delivered to PATV 218.71 shares of Series BB
Preferred Stock. The foregoing transaction resulted in the discharge of the
MEIH Loan and the release of the collateral securing it.
On the Closing Date, the Company also delivered to PATV, as a fee in
consideration of NACC's entering into the Recapitalization Agreement, 6,000,000
shares of Common Stock.
Pursuant to the terms of Series BB Certificate of Designation attached
hereto as Exhibit C, the outstanding shares of Series BB Preferred Stock may be
called for redemption by the Company at any time. If all of the shares of
Series BB Preferred Stock have not been redeemed by the Company or purchased by
MEIH on or before December 31, 2000, (i) the Company (or in certain
circumstances, MEIH) will issue to PATV, as a fee in consideration of NACC's
entering into the Recapitalization Agreement, 2,000,000 shares of Common Stock;
and (ii) as additional consideration for NACC's accepting the shares of Series
BB Preferred Stock as payment in full of the MEIH Loan, MEIH (or its designee)
will transfer to PATV 4,000,000 shares of Common Stock (such shares of Common
Stock referred to in clauses (i) and (ii) are sometimes referred to herein as
the "Additional Shares").
Under certain circumstances, if the Company fails to declare and pay
accrued dividends on outstanding shares of Series BB Preferred Stock, the
holders of such shares of Series BB Preferred Stock shall be entitled to elect a
number of directors as provided in the terms of the Series BB Certificate of
Designation.
The foregoing description is qualified by reference to the terms of the
Recapitalization Agreement and the Certificate of Designation of Series BB
Preferred Stock attached hereto as Exhibits B and C respectively, which exhibits
are incorporated herein by reference.
The foregoing description is also qualified by reference to Item 6 hereof,
the text of which is incorporated herein by reference.
Item 5. Interest and Securities of the Issuer
(a) According to the Company's representations in the Recapitalization
Agreement, as of the Closing Date, the Company has 52,508,625 shares of Common
Stock issued and outstanding after giving effect to the transactions
contemplated by the Recapitalization Agreement.
As of the date of this Schedule 13D, PATV is the beneficial owner of
6,000,000 shares of Common Stock, or approximately 11.4% of the issued and
outstanding Common Stock.
As of the date of this Schedule 13D, NACC, in its capacity as the sole
beneficiary of PATV, may be deemed to beneficially own 6,000,000 shares of
Common Stock, or approximately 11.4% of the issued and outstanding Common Stock.
As of the date of this Schedule 13D, CCA, in its capacity as NACC's
attorney in fact with respect to the securities described in this Schedule 13D,
may be deemed to beneficially own 6,000,000 shares of Common Stock, or
approximately 11.4% of the issued and outstanding Common Stock.
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<PAGE>
As of the date of this Schedule 13D, NHA, in its capacity as the parent
corporation of CCA and NACC, may be deemed to beneficially own 6,000,000 shares
of Common Stock, or approximately 11.4% of the issued and outstanding Common
Stock.
Such amounts do not include the Additional Shares which may be issued in
the circumstances set forth in the Recapitalization Agreement and described in
Item 4 above.
(b) PATV has sole power to vote and dispose of 6,000,000 shares of Common
Stock, or approximately 11.4% of the issued and outstanding Common Stock.
NHA and each of the individuals listed in Item 2 disclaims ownership of the
shares of the Company's Common Stock held by PATV and the filing of this
Schedule 13D shall not be construed as an admission that any such person is the
beneficial owner of any securities covered by this Schedule 13D.
(c) Except for the transactions pursuant to the Recapitalization Agreement,
none of PATV, NACC, CCA, and NHA and, to the best of their knowledge, none of
their respective executive officers, directors, or trustees has effected any
transaction involving the Company's Common Stock during the last sixty (60)
days.
(d) See Item 6 below.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer
---------------------------
On the Closing Date, the Company, MCI, NACC, PATV, MEIH and SZ entered into
the Recapitalization Agreement described in Item 4 above, which Item is hereby
incorporated by reference.
The Recapitalization Agreement provides that PATV shall have the right to
review in good faith and approve annual budgets for the Company and that the
Company may not enter into transactions with affiliates without the consent of
NACC.
Under the Recapitalization Agreement, MEIH and SZ have granted PATV "tag-
along" rights to participate in any sales of Company securities by MEIH or SZ to
other persons. PATV has also agreed with the other parties to the
Recapitalization Agreement to consent to certain sales of the Company which have
been approved by holders of a majority of the then outstanding shares of Common
Stock of the Company.
The Company and PATV have entered into a certain Registration Rights
Agreement dated as of July 20, 1999 (the "Registration Rights Agreement")
attached hereto as Exhibit D and incorporated herein by reference, pursuant to
which PATV has certain rights to register the securities issued by the Company
and held by PATV.
-12-
<PAGE>
NACC and Wilmington Trust Company have entered into a certain Trust
Agreement dated as of December 12, 1996 (the "Trust Agreement") which governs
PATV. Pursuant to the Trust Agreement, NACC has the power to direct Wilmington
Trust Company, as trustee of PATV, to vote and dispose of the securities covered
by this Schedule 13D.
NACC has granted CCA a power of attorney to act on NACC's behalf with
respect to the securities described in this Schedule 13D.
Item 7. Material to be filed as Exhibits
--------------------------------
The following are filed herewith as Exhibits to this Schedule 13D:
Exhibit A- A written agreement relating to the filing of the joint acquisition
statement as required by Rule 13d-1(k)(1) under the Securities
Exchange Act of 1934, as amended.
Exhibit B- Second Amended and Restated Recapitalization Agreement by and among
Malibu Entertainment Worldwide, Inc., Malibu Centers, Inc., Nomura
Asset Capital Corporation, Partnership Acquisition Trust V, MEI
Holdings, L.P. and SZ Capital, L.P.
Exhibit C- Certificate of Designations of Series BB Preferred Stock of Malibu
Entertainment Worldwide, Inc.
Exhibit D- Registration Rights Agreement by and between Malibu Entertainment
Worldwide, Inc. and Partnership Acquisition Trust V.
-13-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this Schedule 13D is
true, complete and correct.
Dated as of this 30th day of July, 1999.
PARTNERSHIP ACQUISITION TRUST V
By: Wilmington Trust Company,
its Trustee
By: /s/ LANCE W. HABERIN
_________________________________
Name: Lance W. Haberin
Title: Attorney In Fact
NOMURA ASSET CAPITAL CORPORATION
By: /s/ LANCE W. HABERIN
_____________________________
Name: Lance W. Haberin
Title: Vice President
THE CAPITAL COMPANY OF AMERICA LLC
By: /s/ STUART SIMON
_________________________________
Name: Stuart Simon
Title: Managing Director
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<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
Each of the undersigned acknowledges and agrees that the foregoing
statement on Schedule 13D is filed on behalf of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of the undersigned without the necessity of filing additional joint acquisition
statements. Each of the undersigned acknowledges that it shall be responsible
for the timely filing of such amendments, and for the completeness and accuracy
of the information concerning it contained therein, but shall not be responsible
for the completeness and accuracy of the information concerning the other,
except to the extent that he or it knows or has reason to believe that such
information is inaccurate.
Dated as of this 30th day of July, 1999.
PARTNERSHIP ACQUISITION TRUST V
By: Wilmington Trust Company,
its Trustee
By: /s/ LANCE W. HABERIN
_________________________________
Name: Lance W. Haberin
Title: Attorney In Fact
NOMURA ASSET CAPITAL CORPORATION
By: /s/ LANCE W. HABERIN
_____________________________
Name: Lance W. Haberin
Title: Vice President
THE CAPITAL COMPANY OF AMERICA LLC
By: /s/ STUART SIMON
_________________________________
Name: Stuart Simon
Title: Managing Director
<PAGE>
SECOND AMENDED AND RESTATED RECAPITALIZATION AGREEMENT
by and among
MALIBU ENTERTAINMENT WORLDWIDE, INC.,
MALIBU CENTERS, INC.,
NOMURA ASSET CAPITAL CORPORATION,
PARTNERSHIP ACQUISITION TRUST V,
MEI HOLDINGS, L.P.,
and
SZ CAPITAL, L.P.
dated as of July 20, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS........................................................................................... 1
Section 1.1 Definitions...................................................................................... 1
ARTICLE 2 SALES OF SERIES A PREFERRED STOCK TO SZ; CONVERSION OF BALANCE OF MALIBU-SZ LOAN INTO SERIES AA
PREFERRED STOCK................................................................................................. 10
Section 2.1 Initial Sale and Purchase of Series AA Preferred Stock........................................... 10
Section 2.2 Subsequent Sales and Purchases of Shares of Series AA Preferred Stock............................ 10
Section 2.3 Conversion of Balance of Malibu-SZ Loan into Series AA Preferred Stock........................... 12
Section 2.4 Legends.......................................................................................... 12
ARTICLE 3 PREPAYMENT OF PORTION OF MCI-NOMURA LOAN; RELEASE OF COLLATERAL FOR MCI-NOMURA LOAN AND
MEIH-NOMURA LOAN; CONVERSION OF REMAINING BALANCE OF MCI-NOMURA LOAN AND BALANCE OF MEIH-NOMURA
LOAN INTO SERIES BB PREFERRED STOCK; ISSUANCE OF COMMON STOCK TO NOMURA......................................... 13
Section 3.1 Prepayment of MCI-Nomura Loan by the Nomura Prepayment Amount and Release of Collateral.......... 13
Section 3.2 Purchase of MCI-Nomura Loan by Company's Conversion of Remaining Balance of MCI-Nomura Loan into
Series BB Preferred Stock and Cancellation of MCI-Nomura Loan.................................................. 13
Section 3.3 Conversion of Balance of MEIH-Nomura Loan into Series BB Preferred Stock......................... 14
Section 3.4 Issuance and Transfer of Common Stock to Nomura.................................................. 15
Section 3.5 Legends.......................................................................................... 19
ARTICLE 4 CONVERSION OF REMAINING BALANCE OF MALIBU-MEIH LOANS INTO SERIES CC PREFERRED STOCK................... 19
Section 4.1 Conversion of Balance of Malibu-MEIH Loan into Series CC Preferred Stock......................... 19
Section 4.2 Legends.......................................................................................... 20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES........................................................................ 20
Section 5.1 Representations and Warranties of the Company and MCI............................................ 20
Section 5.2. Representations and Warranties of Lenders........................................................ 25
Section 5.3. Representations and Warranties of MEIH........................................................... 27
ARTICLE 6 [INTENTIONALLY OMITTED]............................................................................... 27
ARTICLE 7 [INTENTIONALLY OMITTED]............................................................................... 27
ARTICLE 8 CLOSING............................................................................................... 27
Section 8.1 Closing.......................................................................................... 27
ARTICLE 9 POST-CLOSING COVENANTS AND AGREEMENTS................................................................. 28
Section 9.1 Working Capital Statements and Budgets........................................................... 28
Section 9.2 Use of Proceeds.................................................................................. 29
Section 9.3 Securities Laws Limitations on Dispositions of the Lender Stock.................................. 29
Section 9.4 [Intentionally Omitted].......................................................................... 29
Section 9.5 Public Announcements............................................................................. 29
Section 9.6 Securities Filings............................................................................... 30
Section 9.7 [Intentionally Omitted].......................................................................... 30
</TABLE>
i
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<TABLE>
<S> <C>
Section 9.9 Affiliate Transactions........................................................................... 30
Section 9.10 Nomura's Right to Receive Board of Directors' Materials.......................................... 30
ARTICLE 10 DEFAULT, TERMINATION, REMEDIES AND INDEMNIFICATION................................................... 34
Section 10.3 Remedies upon Event of Default................................................................... 34
Section 10.4 Waiver........................................................................................... 34
Section 10.5 Indemnification.................................................................................. 34
ARTICLE 11 MISCELLANEOUS........................................................................................ 36
Section 11.1 Survival......................................................................................... 36
Section 11.2 Successors and Assigns........................................................................... 36
Section 11.3 Governing Law.................................................................................... 37
Section 11.4 Counterparts..................................................................................... 37
Section 11.5 Titles and Subtitles............................................................................. 37
Section 11.6 Notices.......................................................................................... 37
Section 11.7 Finder's Fee and Commissions..................................................................... 38
Section 11.8 Transaction Costs and Other Expenses............................................................. 39
Section 11.9 Amendments and Waivers........................................................................... 39
Section 11.10 Severability..................................................................................... 39
Section 11.11 Aggregation of Stock............................................................................. 39
Section 11.12 Entire Agreement................................................................................. 39
Section 11.13 Consents and Approvals........................................................................... 39
</TABLE>
EXHIBITS AND SCHEDULES
- ----------------------
EXHIBIT "A-1" Form of Certificate of Designations for Series AA Preferred
Stock
EXHIBIT "A-2" Form of Registration Rights Agreement for Series AA
Preferred Stock
EXHIBIT "B-1" Form of Certificate of Designations for Series BB Preferred
Stock
EXHIBIT "B-2" Form of Registration Rights Agreement for Series BB
Preferred Stock
EXHIBIT "C-1" Form of Certificate of Designations for Series CC Preferred
Stock
EXHIBIT "C-2" Form of Registration Rights Agreement for Series CC
Preferred Stock
EXHIBIT "D" Form of Mutual Release.
EXHIBIT "E" Form of Stock Purchase Request
SCHEDULE 5.1 Schedule of Exceptions
SCHEDULE 9.9 Affiliate Transactions
ii
<PAGE>
SECOND AMENDED AND RESTATED RECAPITALIZATION AGREEMENT
THIS SECOND AMENDED AND RESTATED RECAPITALIZATION AGREEMENT (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement") is dated as of July 20, 1999 (the "Effective Date") by and among
MALIBU ENTERTAINMENT WORLDWIDE, INC., a Georgia corporation (the "Company"),
MALIBU CENTERS, INC., a Delaware corporation ("MCI"), NOMURA ASSET CAPITAL
CORPORATION, a Delaware corporation ("Nomura"), PARTNERSHIP ACQUISITION TRUST V,
a Delaware business trust ("Trust"), MEI HOLDINGS, L.P., a Delaware limited
partnership ("MEIH"), and SZ CAPITAL, L.P., a Delaware limited partnership
("SZ"). (The Company, MCI, Nomura, Trust, MEIH and SZ are sometimes
collectively referred to herein as the "Parties").
Recitals:
--------
A. Nomura, MEIH and SZ (collectively with Trust, the "Lenders") have made
loans to the Company and/or MCI and Nomura has made a loan to MEIH.
B. The Parties have agreed to enter into a series of transactions,
including, without limitation, the conversion of the outstanding balances of
such loans into preferred stock of the Company, the Company's sale of additional
preferred stock to SZ for cash, a partial prepayment of the MCI-Nomura Loan and
the issuance by the Company of shares of its common stock to Trust. Such
transactions are described in that certain First Amended and Restated
Recapitalization Agreement dated as of May 10, 1999 by and among all of the
Parties except Trust (the "Prior Agreement").
C. The Parties desire to enter into this Agreement to amend, restate and
supersede the Prior Agreement and to set forth certain terms and conditions
governing such conversions and other transactions.
Agreement:
---------
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, the Parties hereto
hereby amend, restate and supersede the Prior Agreement in its entirety and
covenant, agree, represent and warrant as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. The capitalized terms used in this Agreement
-----------
will have the meanings set forth in this Section 1.1. Any of the terms defined
in this Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural.
1
<PAGE>
"Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting Securities or
by contract or otherwise.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgements,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses.
"Applicable Rate" means a rate equal to eight percent (8%) per annum.
"Approved Sale" has the meaning given to such term in Subsection 9.11(a).
"Balance" means, with respect to any Loan, the outstanding principal amount
of such Loan together with all interest accrued and unpaid thereon and all other
sums due to the Lender thereof in respect of such Loan under the applicable Loan
Documents on the Closing Date.
"Board Information" has the meaning given to such term in Subsection 9.10.
"Budget" has the meaning given to such term in Subsection 9.1(b).
"Business Day" means any day other than a Saturday, Sunday or any other day
on which national banks in Dallas, Texas are not open for business.
"Certificates of Designation" means, collectively, the Certificates of
Designation relating to the Preferred Stock attached hereto as Exhibits A-1, B-1
and C-1.
"Closing" has the meaning given to such term in Section 8.1.
"Closing Date" has the meaning given to such term in Section 8.1.
"Common Stock" means the common stock, no par value, of the Company.
"Company" has the meaning given such term in the first paragraph of this
Agreement.
"Effective Date" has the meaning given such term in the first paragraph of
this Agreement.
"Encumbrances" means any liens, claims, charges, encumbrances, restrictions
on voting or alienation or otherwise, or adverse interests.
"Event of Default" means, with respect to any Party to this Agreement, (i)
any representation or warranty of such Party contained in this Agreement or in
any other Transaction
2
<PAGE>
Document shall not have been true and correct in all material respects when
made, (ii) such Party shall not have complied in all material respects with any
obligation, covenant or agreement contained in this Agreement or in any other
Transaction Document that is to be complied with by it, or (iii) such Party
makes a general assignment for the benefit of creditors, or any proceeding shall
be instituted by or against such Party seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up or reorganization, arrangement,
adjustment, protection, relief or composition of its debts under any law
relating to bankruptcy, insolvency or reorganization (and in the case of any
such proceeding instituted against such Party, such proceeding is not dismissed
within sixty (60) days thereafter); provided, however, that in the case of
-------- -------
events described in clause (i) or (ii) of this sentence, the non-defaulting
Party shall have notified the defaulting Party of such default and shall have
given the defaulting Party the opportunity to cure any breach of this Agreement
or any other Transaction Document (if and to the extent curable) during the
period commencing with the date of such notice and ending (a) ten (10) days
after the date of any notice delivered prior to or at the Closing, (b) three (3)
days after the date of any notices delivered after the Closing if the default
consists of any Party's failure to pay any monetary sum due to the other Party
under this Agreement or any other Transaction Document or (c) thirty (30) days
after the date of any notice delivered after the Closing in the case of all
other defaults.
"Exempted Issuance" has the meaning given such term in Subsection 3.5(c).
"Exit Date" means December 31, 2000.
"Fiscal Year" means each twelve (12) month period commencing on January 1
and ending on December 31 during the term of the Loan.
"Foothill Consent" means the written consent of Foothill Capital
Corporation to the transactions contemplated by this Agreement.
"Foothill Loan" means the indebtedness of the Company described in that
certain Consolidated, Amended and Restated Loan and Security Agreement dated as
of August 22, 1996 by and among the Company, various Subsidiaries of the Company
and Foothill Capital Corporation, as the same may be increased, amended,
restated, replaced, supplemented or otherwise modified from time to time.
"GAAP" means generally accepted accounting principles set forth in opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
in each case as the same are applicable to the circumstances as of the date of
determination.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Indemnifying Party" has the meaning given to such term in Subsection
10.5(c).
3
<PAGE>
"Initial Series AA Purchase Price" means the excess of (i) the Nomura
Prepayment Amount over (ii) the Sale-Leaseback Net Proceeds.
"Initial Series AA Shares" has the meaning given to such term in Section
2.2.
"Lenders" has the meaning given such term in the Recitals of this
Agreement.
"Lender Indemnified Parties" has the meaning given to such term in
Subsection 10.5(a).
"Lender Stock" means, collectively, all shares of Preferred Stock and/or
Common Stock that may be issued to one or more of the Lenders pursuant to this
Agreement, including, without limitation, the shares of Common Stock to be
issued upon conversion of the Series AA Preferred Stock and Series CC Preferred
Stock.
"Liquidation Preference" means the liquidation preference of $100,000 for
each series of Preferred Stock.
"Loans" means, collectively, the MEIH-Nomura Loan, the MCI-Nomura Loan, the
Malibu-MEIH Loans and the Malibu-SZ Loan, as evidenced by and described in the
Loan Documents.
"Loan Documents" means, collectively, the MEIH-Nomura Loan Documents, the
MCI-Nomura Loan Documents, the Malibu-MEIH Loan Documents and the Malibu-SZ Loan
Documents.
"Malibu-MEIH Loans" means the unsecured indebtedness of the Company
evidenced by the Malibu-MEIH Notes, as increased, amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Malibu-MEIH Loan Documents" means, collectively, all instruments and
documents representing, evidencing, securing or relating to the Malibu-MEIH
Loans, including, without limitation, the Malibu-MEIH Notes and any deeds of
trust, mortgages, security agreements or financing statements securing the
Malibu-MEIH Loans, all as increased, amended, restated, replaced, supplemented
or otherwise modified from time to time.
"Malibu-MEIH Notes" means, collectively, (i) that certain Third Amended and
Restated Subordinated Convertible Promissory Note dated as of January 20, 1999
executed by the Company and made payable to the order of MEIH in the original
principal sum of up to $65,000,000, and (ii) that certain Second Amended and
Restated Promissory Note dated as of January 20, 1999 executed by the Company
and made payable to the order of MEIH in the original principal sum of up to
$10,000,000, as each may be increased, amended, restated, replaced, supplemented
or otherwise modified from time to time.
"Malibu-SZ Loan" means the unsecured indebtedness of the Company to SZ
evidenced by the Malibu-SZ Note, as increased, amended, restated, replaced,
supplemented or otherwise modified from time to time.
4
<PAGE>
"Malibu-SZ Loan Documents" means, collectively, all instruments and
documents representing, evidencing, securing or relating to the Malibu-SZ Loan,
including, without limitation, the Malibu-SZ Note and any deeds of trust,
mortgages, security agreements or financing statements securing the Malibu-SZ
Loan, all as increased, amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Malibu-SZ Note" means that certain Subordinated Convertible Promissory
Note dated as of November 16, 1998 executed by the Company and made payable to
the order of SZ in the original principal sum of up to $30,000,000, as
increased, amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Material Adverse Change" means, as compared to the facts and circumstances
as of December 31, 1998, any material adverse change in the business (as
currently conducted or as proposed to be conducted), operations, assets, value,
financeability, marketability, condition, affairs or prospects), assets, or
financial condition of the Company and its Subsidiaries, taken as a whole,
financial or otherwise, or (ii) any actual or potential insolvency, bankruptcy
or other impairment in any material respect of the ability of the Company to
perform, or of any Party to enforce, the Company's obligations under this
Agreement and the other Transaction Documents.
"Material Adverse Effect" means (i) any material adverse effect on the
business (as currently conducted or as proposed to be conducted), operations,
assets, value, financeability, marketability, condition, affairs or prospects),
assets, or financial condition of the Company and its Subsidiaries, taken as a
whole, financial or otherwise, or (ii) any actual or potential insolvency,
bankruptcy or other impairment in any material respect of the ability of the
Company to perform, or of any Lender to enforce, the Company's obligations under
this Agreement and the other Transaction Documents.
"MCI" has the meaning given such term in the first paragraph of this
Agreement.
"MCI Guaranty" means that certain Guaranty dated as of June 27, 1997
executed by MCI for the benefit of Nomura to secure the MEIH-Nomura Loan, as
increased, amended, restated, replaced, supplemented or otherwise modified from
time to time.
"MCI-Nomura Loan" means the indebtedness of MCI to Nomura evidenced by the
MCI-Nomura Note, as increased, amended, restated, replaced, supplemented or
otherwise modified from time to time. The MCI-Nomura Loan is secured by the
Parks and other collateral and is guaranteed by MEIH pursuant to the MEIH
Guaranty.
"MCI-Nomura Loan Documents" means, collectively, all instruments and
documents representing, evidencing, securing or relating to the MCI-Nomura Loan,
including, without limitation, the MCI-Nomura Note, the MEIH Guaranty and any
deeds of trust, mortgages, security agreements or financing statements securing
the MCI-Nomura Loan, all as increased, amended, restated, replaced, supplemented
or otherwise modified from time to time.
"MCI-Nomura Note" means that certain Promissory Note dated as of June 27,
1997 executed by MCI and made payable to the order of Nomura in the original
principal sum of
5
<PAGE>
$21,390,375, as increased, amended, restated, replaced, supplemented or
otherwise modified from time to time.
"MEIH" has the meaning given such term in the first paragraph of this
Agreement.
"MEIH Guaranty" means that certain Guaranty dated as of June 27, 1997
executed by MEIH for the benefit of Nomura to secure the MCI-Nomura Loan, as
increased, amended, restated, replaced, supplemented or otherwise modified from
time to time.
"MEIH-Nomura Loan" means the indebtedness of MEIH to Nomura evidenced by
the MEIH-Nomura Note, as increased, amended, restated, replaced, supplemented or
otherwise modified from time to time. The MEIH-Nomura Loan is secured by the
MEIH Pledged Common Stock and is guaranteed by MCI pursuant to the MCI Guaranty.
"MEIH-Nomura Loan Documents" means, collectively, all instruments and
documents representing, evidencing, securing or relating to the MEIH-Nomura
Loan, including, without limitation, the MEIH-Nomura Note, the MCI Guaranty and
any deeds of trust, mortgages, security agreements or financing statements
securing the MEIH-Nomura Loan, all as increased, amended, restated, replaced,
supplemented or otherwise modified from time to time.
"MEIH-Nomura Note" means that certain Amended and Restated Promissory Note
dated as of May 8, 1998 executed by MEIH and made payable to the order of Nomura
in the original principal sum of $20,000,000, as increased, amended, restated,
replaced, supplemented or otherwise modified from time to time.
"MEIH Pledged Common Stock" means the 38,323,513 shares of Common Stock
pledged by MEIH to Nomura as collateral for the MEIH-Nomura Loan and the MEIH
Guaranty.
"MEIH Subordination Agreement" means that certain Second Amended and
Restated Subordination Agreement dated as of January 20, 1999 by and between the
Company and MEIH, as amended, restated, replaced, supplemented or otherwise
modified from time to time.
"MEIH Warrant" means that certain Warrant issued to MEIH for shares of
Common Stock of Mountasia Entertainment International, Inc. dated August 28,
1996 and as amended by Section 4.4 of this Agreement.
"Mutual Release" means that certain Mutual Release to be dated as of the
Closing Date by and among the Parties (except Trust) having the terms and in the
form set forth in Exhibit "D" and made a part hereof for all purposes.
-----------
"Newly Issued Stock" has the meaning given such term in Subsection 3.5(a).
"Nomura" has the meaning given such term in the first paragraph of this
Agreement.
"Nomura Prepayment Amount" means the sum of (i) $11,400,000 plus (ii) all
costs and expenses reasonably incurred by Nomura and the Trust in connection
with the Transactions.
6
<PAGE>
"Notes" means, collectively, the MEIH-Nomura Note, the MCI-Nomura Note, the
Malibu-MEIH Notes, and the Malibu-SZ Note, as evidenced by and described in the
Loan Documents.
"Parks" means, collectively, (i) the SpeedZone park located in Puente
Hills, California and owned by MCI, and (ii) the Mountasia of Willowbrook park
located in Willowbrook (Houston), Texas, which parks are more particularly
described in the MCI-Nomura Loan Documents.
"Parties" has the meaning given such term in the first paragraph of this
Agreement.
"Person" means 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.
"Potential Event of Default" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default.
"Preemptive Issuance" has the meaning given such term in Subsection 3.5(a).
"Preemptive Notice" has the meaning given such term in Subsection 3.5(b).
"Preemptive Reply" has the meaning given such term in Subsection 3.5(b).
"Preferred Stock" means, collectively, all capital stock of the Company
that at any time is senior in right of dividends to the Common Stock, including,
without limitation, to the extent then outstanding, the Series AA Preferred
Stock, the Series BB Preferred Stock and the Series CC Preferred Stock.
"Prior Agreement" has the meaning given such term in the Recitals of this
Agreement.
"Proposed Purchaser" has the meaning given such term in Subsection 9.12(b).
"Registration Rights Agreements" means, collectively, the Series AA
Registration Rights Agreement, the Series BB Registration Rights Agreement and
the Series CC Registration Rights Agreement.
"Sale-Leaseback Agreements" means, collectively, those certain Purchase
Agreements and Escrow Instructions dated as of May 5, 1999 by and between MCI
and the Krausz Companies, Inc. pursuant to which, among other things, MCI has
agreed to sell and lease back the Parks, as amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Sale-Leaseback Net Proceeds" means the net proceeds realized by MCI from
the Sale-Leaseback Transaction following the payment of all closing costs and
other costs and expenses incurred by MCI in connection with the Sale-Leaseback
Transaction.
7
<PAGE>
"Sale-Leaseback Transaction" means MCI's sale and lease back of the Parks
and the other transactions contemplated by the Sale-Leaseback Agreement.
"SEC" means the U.S. Securities and Exchange Commission.
"SEC Documents" means all forms, reports and documents filed or to have
been filed by the Company with the SEC.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Series AA Approval" has the meaning given to such term in the Certificate
of Designation for Series AA Preferred Stock.
"Series AA Preferred Stock" means the preferred stock of the Company having
the designations, voting power, preferences and relative, participating,
optional and other special rights, qualifications, limitations and restrictions
thereof as are set forth in the Certificate of Designation attached as Exhibit
-------
"A-1" and made a part hereof for all purposes.
- -----
"Series AA Registration Rights Agreement" means a registration rights
agreement to be dated as of the Closing Date by and among the Company and SZ
having the terms and in the form set forth in Exhibit "A-2" and made a part
-------------
hereof for all purposes.
"Series BB Approval" has the meaning given to such term in the Certificate
of Designation for Series BB Preferred Stock.
"Series BB Preferred Stock" means the preferred stock of the Company having
the designations, voting power, preferences and relative, participating,
optional and other special rights, qualifications, limitations and restrictions
thereof as are set forth in the Certificate of Designation attached as Exhibit
-------
"B-1" and made a part hereof for all purposes.
- -----
"Series BB Registration Rights Agreement" means a registration rights
agreement to be dated as of the Closing Date by and among the Company and Trust
having the terms and in the form set forth in Exhibit "B-2" and made a part
-------------
hereof for all purposes.
"Series CC Preferred Stock" means the preferred stock of the Company having
the designations, voting power, preferences and relative, participating,
optional and other special rights, qualifications, limitations and restrictions
thereof as are set forth in the Certificate of Designation attached as Exhibit
-------
"C-1" and made a part hereof for all purposes.
- -----
"Series CC Registration Rights Agreement" means a registration rights
agreement to be dated as of the Closing Date by and among the Company and MEIH
having the terms and in the form set forth in Exhibit "C-2" and made a part
-------------
hereof for all purposes.
"Significant Transfer" has the meaning given such term in Subsection
9.12(a).
8
<PAGE>
"Standstill Agreement" means that certain Standstill Agreement, dated as of
August 28, 1996, between Mountasia Entertainment International, Inc. and MEIH.
"Stock Purchase Request" means a notice delivered by the Company to SZ in
the form attached as Exhibit "E" hereto, requesting SZ to purchase shares of
-----------
Series AA Preferred Stock. Stock Purchase Requests may be delivered prior to
the Closing Date.
"Subsidiaries" means any corporation, limited liability company,
partnership or other entity whose outstanding equity interests are owned 50% or
more by the Company, by the Company and one or more Subsidiaries or by one or
more Subsidiaries or which is otherwise controlled directly or indirectly by the
Company to the extent necessary to require consolidation of its annual
statements with those of the Company for financial reporting purposes in
accordance with GAAP.
"SZ" has the meaning given such term in the first paragraph of this
Agreement.
"Tag-Along Acceptance Notice" has the meaning given in Subsection 9.12(b).
"Tag-Along Right" has the meaning given in Subsection 9.12(a).
"Tag-Along Rightholder" has the meaning given in Subsection 9.12(a).
"Tag-Along Sale Notice" has the meaning given in Subsection 9.12(b).
"Tag-Along Seller" has the meaning given in Subsection 9.12(b).
"Third Party Claim" has the meaning given to such term in Subsection
10.5(c).
"Transaction Costs" means all reasonable costs and expenses paid or payable
(including reasonable attorney fees) by the Company or any other Party with
respect to the negotiation, execution, delivery, Closing and performance of this
Agreement.
"Transaction Documents" means, collectively, this Agreement, the
Certificates of Designation, the Registration Rights Agreements, the Mutual
Release and the other instruments and documents executed by the Parties in
connection with the Transactions, all as same may thereafter be amended,
supplemented or otherwise modified from time to time.
"Transactions" means the transactions contemplated by this Agreement.
"Transfer" means a transfer, sale, assignment, pledge, hypothecation or
other disposition, by any Person, whether directly or indirectly pursuant to the
creation of a derivative security, the grant of an option or other right, the
imposition of a restriction on disposition or voting or transfer by operation of
law; provided, however, "Transfer" does not include any change in control of, or
transfer of the equity interests of, such Person.
"Trust" has the meaning given to such term in the first paragraph of this
Agreement.
9
<PAGE>
"Trust Common Stock" has the meaning given such term in Subsection 3.4(c).
"Unredeemed Series BB Preferred Stock" has the meaning given to such term
in Subsection 3.4(b).
"Working Capital Report" has the meaning given to such term in Subsection
9.1(a).
"Working Capital Requirements" means all Transaction Costs and, without
duplication, all other amounts reasonably required by the Company to fund
operational expenses incurred by it in the ordinary course of business,
including, without limitation, payables (including payables that are past due on
the Closing Date), costs of deferred maintenance (even if such costs are
required to be capitalized under GAAP) and other capital expenditures relating
to park improvements.
ARTICLE 2
SALES OF SERIES AA PREFERRED STOCK TO SZ;
CONVERSION OF BALANCE OF MALIBU-SZ LOAN
INTO SERIES AA PREFERRED STOCK
Section 2.1. Initial Sale and Purchase of Series AA Preferred Stock .
------------------------------------------------------
(a) Calculation of Initial Series AA Purchase Price. The Company will
-----------------------------------------------
give SZ and Nomura its best estimate of the Initial Series AA Purchase
Price at least one (1) Business Day prior to the Closing Date.
(b) Sale and Purchase of Initial Series AA Shares. On the Closing Date,
---------------------------------------------
the Company will sell to SZ, and SZ will purchase from the Company,
the number of shares of Series AA Preferred Stock (the "Initial Series
AA Shares") that equals the quotient of (i) the Initial Series AA
Purchase Price divided by (ii) the Liquidation Preference.
----------
(c) Issuance of Shares. At Closing,
------------------
(i) the Company will deliver to SZ validly issued stock certificates
evidencing the Initial Series AA Shares that are to be delivered
to SZ pursuant to this Section 2.1 (in such denominations as SZ
may request at least five (5) days prior to the Closing Date);
and
(ii) SZ will deliver to the Company the Initial Series AA Purchase
Price by immediately available or next day funds.
Section 2.2. Subsequent Sales and Purchases of Shares of Series AA
-----------------------------------------------------
Preferred Stock. From time to time during the period beginning on the
- ---------------
Closing Date and ending on the third anniversary of the Closing Date, SZ agrees
to purchase from the Company, subject to the terms and conditions of this
Agreement, additional shares of Series AA Preferred Stock at the Liquidation
Preference thereof as set forth in this Section 2.2.
10
<PAGE>
(a) Purchase Obligation. On or before the later of the Closing Date or
-------------------
the first Business Day that is at least thirty (30) days after (y) the
Company's delivery to SZ of a Stock Purchase Request with a copy to
Trust or (z) Trust's delivery to SZ of a Stock Purchase Request with a
copy to the Company (but only if (A) Trust has consulted or attempted
to consult with the Company regarding the Company's Working Capital
Requirements and reasonably believes that the Company requires
additional funds and (B) at least ten (10) days prior to sending the
Stock Purchase Request, Trust requested, by written notice to the
Company, that the Company deliver a Stock Purchase Request to SZ and
the Company failed to deliver such Stock Purchase Request), SZ will
purchase up to $2,425,000 of Series AA Preferred Stock to fund the
Company's Working Capital Requirements if the Company lacks (or within
the next 60 days will lack) the necessary funds therefor as specified
in the Stock Purchase Request and as reflected in the most recent
Working Capital Report.
(b) SZ Discretionary Purchase. At any time after SZ has purchased the
-------------------------
maximum allowable amount of shares under Section 2.2(a), SZ, in its
sole discretion, may purchase up to an additional $4,500,000 of Series
AA Preferred Stock at the Liquidation Preference thereof as set forth
in this Section 2.2 to fund the Company's Working Capital
Requirements.
(c) Issuance of Shares. At the closing for any sale of additional shares
------------------
pursuant to this Section 2.2,
(i) the Company will deliver to SZ validly issued stock certificates
evidencing the shares of Series AA Preferred Stock that are to be
delivered to SZ pursuant to this Section 2.2 (in such
denominations as SZ may request at least five (5) days prior to
the closing date); and
(ii) SZ will deliver to the Company the purchase price for such shares
by immediately available or next day funds.
(d) Limitation on Purchases of Series AA Preferred Stock. Notwithstanding
----------------------------------------------------
anything to the contrary in Subsection 2.2(a), the Company may not
require SZ to purchase in excess of $14,000,000 in Series AA Preferred
Stock pursuant to Subsection 2.2(a) without Series AA Approval and, in
any event, the Company may not issue whether to SZ, MEIH or any other
Person, in the aggregate, in excess of $18,500,000 in Series AA
Preferred Stock pursuant to Subsections 2.2(a) and 2.2(b) without
Series BB Approval.
(e) Adjustments to Purchase Price and Shares. The purchase prices per
----------------------------------------
share for all shares of Series AA Preferred Stock purchased after the
Closing Date pursuant to Subsections 2.2(a) and 2.2(b), and the number
of shares of Series AA Preferred Stock to be purchased, will be
subject to appropriate adjustments for stock splits, stock dividends,
combinations and other recapitalizations and dilution events involving
the Company.
11
<PAGE>
(f) HSR Act Approval. Notwithstanding anything to the contrary in this
----------------
Section 2.2 or otherwise herein, the obligation of SZ to purchase
additional shares of Series AA Preferred Stock pursuant to Subsection
2.2(a) and the option of SZ to purchase additional shares of Series AA
Preferred Stock pursuant to Subsection 2.2(b) are each specifically
subject to (i) the making of any necessary filings pursuant to the HSR
Act which filings SZ and the Company shall make promptly when and if
required and (ii) the subsequent receipt of approval of the purchase
by the applicable regulatory authorities.
Section 2.3. Conversion of Balance of Malibu-SZ Loan into Series AA
------------------------------------------------------
Preferred Stock. On the Closing Date, the Company will repay the Malibu-SZ
- ---------------
Loan by issuing to SZ the number of shares of Series AA Preferred Stock that
equals the quotient of (i) the Balance of the Malibu-SZ Loan divided by (ii) the
----------
Liquidation Preference. To effect such repayment, at Closing:
(a) the Company will deliver to SZ validly issued stock certificates
evidencing the shares of Series AA Preferred Stock that are to be
delivered to SZ pursuant to this Section 2.3 (in such denominations as
SZ may request at least five (5) days prior to the Closing Date); and
(b) SZ will deliver to the Company the original Malibu-SZ Note marked
"paid"; and
(c) the Malibu-SZ Loan will be deemed repaid in full, SZ will have no
further duty or obligation to advance funds to the Company under the
Malibu-SZ Loan Documents and the Parties will have no other duties and
obligations under the Malibu-SZ Loan Documents, except for such duties
and obligations that expressly survive the repayment in full of the
Malibu-SZ Loan pursuant to the terms of the Malibu-SZ Loan Documents.
Section 2.4. Legends. The certificates evidencing the Series AA Preferred
-------
Stock issued to SZ pursuant to this Article will bear appropriate legends
regarding this Agreement, the other Transaction Documents and the transfer
restrictions imposed by the federal securities laws.
12
<PAGE>
ARTICLE 3
PREPAYMENT OF PORTION OF MCI-NOMURA LOAN;
RELEASE OF COLLATERAL FOR MCI-NOMURA LOAN
AND MEIH-NOMURA LOAN;
CONVERSION OF REMAINING BALANCE OF MCI-NOMURA LOAN
AND BALANCE OF MEIH-NOMURA LOAN INTO
SERIES BB PREFERRED STOCK;
ISSUANCE OF COMMON STOCK TO TRUST; PREEMPTIVE RIGHTS
Section 3.1. Prepayment of MCI-Nomura Loan by the Nomura Prepayment Amount
-------------------------------------------------------------
and Release of Collateral.
- -------------------------
(a) Calculation of Nomura Prepayment Amount. Nomura will give MCI its
---------------------------------------
best estimate of the Nomura Prepayment Amount at least one (1)
Business Day prior to the Closing Date and will specify to MCI the
exact Nomura Prepayment Amount at least one Business Day prior to the
Closing Date.
(b) Prepayment of Nomura Prepayment Amount. On the Closing Date, MCI
--------------------------------------
will pay to Nomura the Sale-Leaseback Net Proceeds by bank wire
transfer to an account of Nomura designated by Nomura at least one
Business Day prior to the Closing Date.
(c) Release of Collateral. On the Closing Date, Nomura will execute and
---------------------
deliver to MCI releases of all deeds of trust, mortgages, security
interests, financing statements and other instruments and documents
securing the MCI-Nomura Loan, which releases will be in such form as
MCI may reasonably request.
Section 3.2. Purchase of MCI-Nomura Loan by Company, Conversion of
-----------------------------------------------------
Remaining Balance of MCI-Nomura Loan into Series BB Preferred Stock and
- -----------------------------------------------------------------------
Cancellation of MCI-Nomura Loan.
- -------------------------------
(a) Purchase of MCI-Nomura Loan by Company, Conversion of Remaining
---------------------------------------------------------------
Balance of MCI-Nomura Loan into Series BB Preferred Stock. On the
---------------------------------------------------------
Closing Date, the Company shall purchase from Nomura the Balance of
the MCI-Nomura Loan remaining after the prepayment described in
Subsection 3.1(b). In consideration for such remaining Balance, the
Company will (i) pay to Nomura the remainder of (A) the Nomura
Prepayment Amount minus (B) the Sale-Leaseback Net Proceeds, by bank
-----
wire transfer to an account of Nomura designated by Nomura at least
one Business Day prior to the Closing Date and (ii) issue to Trust
validly issued stock certificates evidencing the number of shares of
Series BB Preferred Stock that equals the quotient of (A) the Balance
of the MCI-Nomura Loan remaining after the payment of the Nomura
Prepayment Amount divided by (B) the Liquidation Preference. Nomura
----------
will deliver to the Company the original MCI-Nomura Note, duly
endorsed to the order of the Company, with an assignment of all
guaranties thereof.
13
<PAGE>
(b) Cancellation of MCI-Nomura Note. To effect the repayment described in
-------------------------------
Subsection 3.2(a), at Closing:
(i) the Company will deliver to MCI the original MCI-Nomura Note
marked "paid";
(ii) the Company will deliver to MEIH a letter confirming the
original MEIH Guaranty is canceled; and
(iii) the MCI-Nomura Loan will be deemed repaid in full, neither the
Company nor Nomura will have any further duty or obligation to
advance funds to MCI under the MCI-Nomura Loan Documents and the
Parties will have no other duties and obligations under the MCI-
Nomura Loan Documents, except for such duties and obligations
that expressly survive the repayment in full of the MCI-Nomura
Loan pursuant to the terms of the MCI-Nomura Loan Documents.
Section 3.3. Conversion of Balance of MEIH-Nomura Loan into Series BB
--------------------------------------------------------
Preferred Stock.
- ---------------
(a) Prepayment of Portion of Balance of Malibu-MEIH Loans through
--------------------------------------------------------------
Issuance of Series BB Preferred Stock. On the Closing Date, the
--------------------------------------
Company will partially prepay the Malibu-MEIH Loans by an amount equal
to the Balance of the MEIH-Nomura Loan by issuing to MEIH validly
issued stock certificates evidencing the number of shares of Series BB
Preferred Stock that equals the quotient of (i) the Balance of the
MEIH-Nomura Loan divided by (ii) the Liquidation Preference.
----------
(b) Conversion of Balance of MEIH-Nomura Loan into Series BB Preferred
------------------------------------------------------------------
Stock. On the Closing Date, MEIH will repay the Balance of the
-----
MEIH-Nomura Loan by delivering to Trust the shares of Series BB
Preferred Stock that MEIH received from the Company pursuant to
Subsection 3.3(a) and by making the covenant set forth in Subsection
3.4(b)(ii). To effect such repayment, at Closing:
(i) MEIH will deliver to Trust the stock certificates evidencing the
shares of Series BB Preferred Stock that were issued to MEIH
pursuant to Subsection 3.3(a), together with a stock power duly
endorsed to Trust;
(ii) the Company will deliver to Trust, upon surrender of the stock
certificate or certificates received by Nomura from MEIH
pursuant to Subsection 3.3(b)(i)(1), a new replacement stock
certificate or certificates evidencing the same number of shares
of Series BB Preferred Stock as the surrendered certificate (in
such denominations as Trust may request at least five (5) days
prior to the Closing Date);
(iii) Nomura will deliver to MEIH:
14
<PAGE>
(A) the original MEIH-Nomura Note marked "paid"; and
(B) all stock certificates evidencing the MEIH Pledged Common
Stock, together with a letter confirming that all stock
powers executed in blank for all such MEIH Pledged Common
Stock are canceled (and from and after receipt by MEIH of
such letter, all such stock powers shall, without the
necessity of any further action, be deemed canceled and of
no force or effect).
Furthermore, Nomura shall take all other acts reasonably
requested by MEIH to evidence the release and extinguishment of
all liens and security interest in the MEIH Pledged Common
Stock, such release and extinguishment to occur
contemporaneously with MEIH's delivery of shares of Series BB
Preferred Stock to Trust without any further act on the part of
either MEIH or Nomura.
(c) Nomura will deliver to MCI a letter confirming the original MCI
Guaranty is canceled;
(d) the MEIH-Nomura Loan will be deemed repaid in full, Nomura will have
no further duty or obligation to advance funds to MEIH under the MEIH-
Nomura Loan Documents and the Parties will have no other duties and
obligations under the MEIH-Nomura Loan Documents, except for such
duties and obligations that expressly survive the repayment in full of
the MEIH-Nomura Loan pursuant to the terms of the MEIH-Nomura Loan
Documents; and
(e) the Standstill Agreement will be deemed terminated as of the Closing
Date.
Section 3.4. Issuance and Transfer of Common Stock to Trust.
----------------------------------------------
(a) Initial Issuance of Common Stock by the Company. On the Closing
-----------------------------------------------
Date, the Company will deliver to Trust, as a fee in consideration of
Nomura's entering into this Agreement, validly issued stock
certificates for 6,000,000 shares of Common Stock (in such
denominations as Trust may request at least five (5) days prior to the
Closing Date).
(b) Subsequent Issuance and Transfer of Common Stock by the Company and
-------------------------------------------------------------------
MEIH. If on the Exit Date, there are any outstanding shares of
----
Series BB Preferred Stock that have not been redeemed by the Company
in accordance with the terms of the Series BB Certificate of
Designation (the "Unredeemed Series BB Preferred") and MEIH has not
purchased from any holder of Series BB Preferred Stock, each of whom
shall be obligated to sell such shares of Series BB Preferred Stock
upon receipt of MEIH's offer to purchase such shares, all of such
shares of Unredeemed Series BB Preferred for the amount that would
have been paid by the Company had such stock been redeemed, then:
15
<PAGE>
(i) the Company will issue to Trust, as a fee in consideration of
Nomura's entering into this Agreement, validly issued stock
certificates for 2,000,000 shares of Common Stock; provided,
however, that in the event that the American Stock Exchange
requires the Company to obtain Shareholder Approval (as
hereinafter defined) prior to the issuance of such shares of
Common Stock by the Company, then MEIH will transfer, free and
clear of any Encumbrances, to Trust 2,000,000 shares of Common
Stock (as a fee in consideration of Nomura's entering into this
Agreement) together with a stock power duly endorsed to Trust
and, upon receipt of any required regulatory approvals
(including Shareholder Approval, if required), the Company shall
(as described below) issue 2,000,000 shares of Common Stock to
MEIH as consideration for MEIH's agreement to issue shares to
Nomura under this Subsection 3.4(b)(i); and
(ii) as additional consideration for Nomura's accepting the Series BB
Preferred Stock as payment in full of the MEIH-Nomura Note, MEIH
(or another Person or other Persons designated by MEIH) will
transfer, free and clear of any Encumbrances, to Trust 4,000,000
shares of Common Stock together with a stock power duly endorsed
to Trust.
If the American Stock Exchange has required the Company to obtain
Shareholder Approval prior to the issuance of such shares of Common
Stock pursuant to this Subsection 3.4(b), and the Company has not
previously obtained Shareholder Approval, and MEIH (or another Person
or other Persons designated by MEIH) shall have transferred to Trust,
free and clear of any Encumbrances, 2,000,000 shares of Common Stock
in exchange for the assignment by Nomura to MEIH (or such other Person
or Persons designated by MEIH) of Trust's right to receive shares
issued by the Company pursuant to Section 3.4(b)(i), the Company shall
then issue to MEIH (or such other Person or Persons designated by
MEIH) 2,000,000 shares of Common Stock, provided that if any shares of
Common Stock may be not issued without Shareholder Approval, then the
Company will issue those shares that may be issued without Shareholder
Approval and, with respect to the other shares, MEIH (or such other
Person or Persons designated by MEIH) shall have the option to require
the Company, as promptly as possible, but in no event later than 60
days after such Exit Date, to convene a meeting of the holders of the
Common Stock and obtain the Shareholder Approval, upon the receipt of
which, the Company shall issue to MEIH (or such other Person or
Persons designated by MEIH) such remaining shares of Common Stock that
would be issuable to MEIH (or such other Person or Persons designated
by MEIH) hereunder. "Shareholder Approval" means the approval by a
majority of the total votes cast on the proposal, in person or by
proxy, at a meeting of the shareholders of the Common or such other
procedure as shall be permissible under the Georgia Business
Corporation Code, all held in accordance with the Company's Articles
of Incorporation, as amended and as in effect from time to time, and
by-laws, of the issuance by the Company of shares of Common Stock to
16
<PAGE>
Trust (or MEIH, as the case may be) pursuant to this Section 3.4(b) as
and to the extent required pursuant to Section 713 of the American
Stock Exchange Guide (or any successor or replacement provision
thereof).
(c) Trust Common Stock. All shares of Common Stock issued to Trust
------------------
pursuant to Subsection 3.4(b) are sometimes collectively referred to
herein as the "Trust Common Stock".
(d) Adjustments to Shares. The number of shares of Trust Common Stock to
---------------------
be issued or transferred to Trust pursuant to Subsection 3.4(b) and
the number of shares of Common Stock to be issued to MEIH pursuant to
Subsection 3.4(b) will be subject to appropriate adjustments for stock
splits, stock dividends, combinations and other recapitalizations and
dilution events involving the Company.
(e) Additional Filings. The Parties will make such filings as may be
------------------
required to effect the transfers provided for in Section 3.4(b)
including, but not limited to, filings pursuant to the HSR Act.
(f) Gross-up of Shares. The Parties understand and agree that the number
------------------
of shares of Common Stock issuable to Trust under this Section 3.4 has
been calculated based upon the accuracy of the representation and
warranty set forth in Subsection 5.1(b) and that, in the event the
number of shares of Common Stock issued upon the exercise of options,
warrants or other convertible securities (except for the shares of
Series AA Preferred Stock and Series CC Preferred Stock) that are
issued and outstanding as of the Closing Date exceeds the amounts
specifically set forth in Subsection 5.1(b) by more than 1,000,000
shares of Common Stock, the number of shares of Common Stock issuable
to Trust under this Section 3.4 shall be appropriately adjusted upward
to eliminate the dilutive effect of the issuance of shares of Common
Stock upon the exercise of or conversion of options, warrants or other
convertible securities (except for the shares of Series AA Preferred
Stock and Series CC Preferred Stock issued pursuant to this Agreement)
that are issued and outstanding as of the Closing Date. The
provisions of this Subsection 3.4(f) shall not, however, affect the
representation set forth in Subsection 5.1(b).
Section 3.5. Preemptive Rights.
-----------------
(a) If the Company proposes to issue and sell, other than in an Exempted
Issuance (as defined below), any of its shares of Common Stock or any
securities containing options or rights to acquire any shares of
Common Stock or any securities convertible into shares of Common Stock
(such shares and other securities are hereinafter collectively
referred to as "Newly Issued Stock") (hereinafter, a "Preemptive
Issuance"), the Company will first offer to each Lender a portion of
the number or amount of such securities proposed to be sold in any
such transaction or series of related transactions equal to such
Lender's pro rata share
17
<PAGE>
of the proposed issue of Common Stock (or securities convertible into
or exchangeable for Common Stock), all for the same price and on the
same terms at which the Company has authorized the issuance of such
securities. For purposes of this Section 3.5, a Lender's "pro rata
share" of an issue of Common Stock (or securities convertible into or
exchangeable for Common Stock) shall be that number which is equal to
the product of (i) the number of shares of Common Stock which are to
be issued by the Company in the transaction which is the subject of
this Section 3.5, times (ii) a fraction, the numerator of which is the
number of outstanding shares of Common Stock held by such Lender, and
the denominator of which is the aggregate number of outstanding shares
of Common Stock calculated on a fully diluted basis.
(b) The Company will cause to be given to the Lenders a written notice
setting forth the terms and conditions upon which the Lenders may
purchase such Common Stock or other securities (the "Preemptive
Notice"). After receiving a Preemptive Notice, the Lenders must
reply, in writing, before the date specified in the Preemptive Notice,
which shall be a date no earlier than 15 days after the date of such
Preemptive Notice, that such persons agree to purchase all of such
Lender's allotted portion of such Common Stock or other securities
offered pursuant to this Section 3.5 on the date of sale (the
"Preemptive Reply"). If any Lender fails to make a Preemptive Reply
in accordance with this Section 3.5(b), the Common Stock or other
securities offered to such Lender in accordance with this Section 3.5
may thereafter, for a period not exceeding six months following the
expiration of such 15-day period, be issued, sold or subjected to
rights or options at a price not less than that at which they were
offered to the Lender. Any such Common Stock or other securities not
so issued, sold or subjected to rights or options during such six-
month period will thereafter again be subject to the preemptive rights
provided for in this Section 3.5.
(c) For purposes of Section 3.5 hereof, the term "Exempted Issuance" shall
mean the issuance by the Company of any equity security (including,
without limitation, any option, call, warrant or conversion right):
(i) upon the conversion or exercise of any securities of the Company
or any options, warrants or convertible securities issued by the
Company outstanding on the Closing Date, (ii) as a dividend paid on
the outstanding Common Stock or Preferred Stock by issuance of shares
of the same class or series of Common Stock or Preferred Stock as the
class or series of Common Stock or Preferred Stock to which such
dividend relates, (iii) in consideration, whether in whole or in part,
for the extension of any credit or the making of any loan to the
Company or the issuance by the Company of any debt security to any
Person who is not a Lender (or an Affiliate of a Lender), (iv) in
connection with any merger, consolidation, recapitalization or other
business combination which has been approved by the board of directors
of the Company, (v) to any officer, director or employee of the
Company as compensation, (vi) in any transaction in respect of a
security that is available to all holders of such
18
<PAGE>
security on a pro rata basis or (vii) in a public offering pursuant to
a registration statement filed pursuant to the Securities Act.
(d) Notwithstanding anything to the contrary in this Section 3.5, the
preemptive rights granted to the Lenders pursuant to this Section 3.5
shall inure solely to the benefit of the Lenders and may not be
assigned to any party other than an Affiliate of such assigning
Lender.
Section 3.6. Legends. The certificates evidencing the Series BB Preferred
-------
Stock and Trust Common Stock issued to Trust pursuant to this Article will bear
appropriate legends regarding this Agreement, the other Transaction Documents
and the transfer restrictions imposed by the federal securities laws.
ARTICLE 4
CONVERSION OF REMAINING BALANCE OF MALIBU-MEIH LOANS
INTO SERIES CC PREFERRED STOCK; SUBSEQUENT ISSUANCE OF SERIES CC PREFERRED STOCK
Section 4.1. Conversion of Balance of Malibu-MEIH Loans into Series CC
---------------------------------------------------------
Preferred Stock. On the Closing Date, the Company will repay the Balance of
- ---------------
the Malibu-MEIH Loans remaining after the prepayment described in Subsection
3.3(a) by issuing to MEIH the number of shares of Series CC Preferred Stock that
equals the quotient of (i) the Balance of the Malibu-MEIH Loans remaining after
the prepayment described in Subsection 3.3(a) divided by (ii) the Liquidation
----------
Preference. To effect such repayment, at Closing:
(a) the Company will deliver to MEIH validly issued stock certificates
evidencing the shares of Series CC Preferred Stock that are to be
delivered to MEIH pursuant to this Section 4.1 (in such denominations
as MEIH may request at least five (5) days prior to the Closing Date);
and
(b) MEIH will deliver to the Company the original Malibu-MEIH Notes marked
"paid"; and
(c) the Malibu-MEIH Loans will be deemed repaid in full, MEIH will have no
further duty or obligation to advance funds to the Company under the
Malibu-MEIH Loans Documents and the Parties will have no other duties
and obligations under the Malibu-MEIH Loan Documents, except for such
duties and obligations that expressly survive the repayment in full of
the Malibu-MEIH Loans pursuant to the terms of the Malibu-MEIH Loan
Documents.
Section 4.2. MEIH Discretionary Purchase. At any time after SZ has
---------------------------
purchased the maximum allowable amount of shares under Section 2.2(d), MEIH, in
its sole discretion, may (but shall not be required to) purchase up to an
additional $2,500,000 of Series CC Preferred Stock at the Liquidation Preference
thereof during each fiscal year to fund the Company's Working Capital
Requirements. No consent of any other Party to this Agreement shall be
19
<PAGE>
required for any such purchase; provided, however, that at no time may the
aggregate Liquidation Preference of outstanding shares of Series CC Preferred
Stock purchased by MEIH pursuant to this Section 4.2 exceed $2,500,000.
Section 4.3. Legends. The certificates evidencing the Series CC
-------
Preferred Stock issued to MEIH pursuant to this Article will bear appropriate
legends regarding this Agreement, the other Transaction Documents and the
transfer restrictions imposed by the federal securities laws.
Section 4.4. MEIH Warrant. The MEIH Warrant is hereby amended to limit
------------
the maximum number of shares issuable pursuant thereto to 1,187,780 shares of
Common Stock (except as such number may be increased or decreased pursuant to
Section 5 of the MEIH Warrant).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.1. Representations and Warranties of the Company and MCI.
-----------------------------------------------------
Each of the Company and MCI hereby jointly and severally represents and warrants
to Nomura and each of the other Parties, as of the Effective Date, as follows
except as set forth under the appropriate caption in the Schedule of Exceptions
(the "Schedule of Exceptions") attached as Schedule 5.1 hereto (which exceptions
------------
will be deemed to be representations and warranties as if made hereunder):
(a) Organization. Each of the Company and MCI: (i) is a corporation duly
------------
organized or formed, validly existing and in good standing or
otherwise authorized to transact business under the laws of the
jurisdiction of its organization, (ii) has the requisite power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, and (iii) is duly qualified or
licensed and in good standing or otherwise authorized to transact
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes
such qualification or license necessary, except in each case to the
extent that (1) any Subsidiary's failure to be so organized, existing,
in good standing or otherwise authorized or qualified or (2) the
Company's or any Subsidiary's failure to be so licensed is not
reasonably expected to have a Material Adverse Effect.
(b) Capitalization.
--------------
(i) The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock and 6,000,000 shares of
Preferred Stock. As of the Effective Date, (1) 46,508,625 shares
of Common Stock are issued and outstanding, (2) no shares of
Preferred Stock are issued and outstanding, (3) 0 shares of
Common Stock are held by the Company in treasury, (4) 1,250,000
shares of Common Stock are reserved for issuance under the
Mountasia 1993 Incentive Stock Option Plan, (5) options for the
purchase
20
<PAGE>
of 0 shares of Common Stock are issued and outstanding under the
Mountasia 1993 Incentive Stock Option Plan, (6) 250,000 shares of
Common Stock are reserved for issuance under the 1993 Nonemployee
Director Stock Option Plan, (7) options for the purchase of
65,000 shares of Common Stock are issued and outstanding under
the 1993 Nonemployee Director Stock Option Plan, (8) 4,000,000
shares of Common Stock were reserved for issuance under the 1993
Nonemployee Director Stock Option Plan, (9) options for the
purchase of 1,123,100 shares of Common Stock are issued and
outstanding under the 1993 Nonemployee Director Stock Option
Plan, (10) an option for the purchase of 1,000,000 shares of
Common Stock by Richard N. Beckert is issued and outstanding,
(11) an unvested stock grant to Richard N. Beckert for 500,000
shares is outstanding, (12) warrants for the purchase of 773,153
shares of Common Stock are issued and outstanding and (13) the
MEIH Warrant for the issuance of up to 1,187,780 shares of Common
Stock to MEIH. Except as set forth in the preceding sentences of
this Section 5.1(b)(i), there are no shares of capital stock of
the Company authorized, issued or outstanding. As of the Closing
Date after giving effect to the Transactions, (1) 52,508,625
shares of Common Stock will be issued and outstanding, (2) 115.75
shares of Series AA Preferred Stock will be issued and
outstanding, (3) 327.12 shares of Series BB Preferred Stock will
be issued and outstanding, (4) 500.58 shares of Series CC
Preferred Stock will be issued and outstanding, (5) 0 shares of
Common Stock will be held by the Company in treasury, (6)
1,250,000 shares of Common Stock will be reserved for issuance
under the Mountasia 1993 Incentive Stock Option Plan, (7) options
for the purchase of 0 shares of Common Stock will be issued and
outstanding under the Mountasia 1993 Incentive Stock Option Plan,
(8) 250,000 shares of Common Stock will be reserved for issuance
under the 1993 Nonemployee Director Stock Option Plan, (9)
options for the purchase of 65,000 shares of Common Stock will be
issued and outstanding under the 1993 Nonemployee Director Stock
Option Plan, (10) 4,000,000 shares of Common Stock will be
reserved for issuance under the 1993 Nonemployee Director Stock
Option Plan, (11) options for the purchase of 1,123,100 shares of
Common Stock will be issued and outstanding under the 1993
Nonemployee Director Stock Option Plan, (12) an option for the
purchase of 1,000,000 shares of Common Stock by Richard N.
Beckert will be issued and outstanding, (13) an unvested stock
grant to Richard N. Beckert for 500,000 shares will be
outstanding, (14) warrants for the purchase of 773,153 shares of
Common Stock will be issued and outstanding, and (15) the MEIH
Warrant for the issuance of up to 1,187,780 shares of Common
Stock to MEIH.
(ii) Except for the obligations of the Company described in Subsection
5.1(b)(i) and under this Agreement and the other Transaction
Documents, there are no outstanding subscriptions, options,
warrants, rights,
21
<PAGE>
convertible securities or any other agreements, arrangements or
commitments of any character relating to the issued or unissued
capital stock or other securities of the Company or any
Subsidiary obligating the Company or any Subsidiary to (1) issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the Company or any
Subsidiary, (2) grant, extend or enter into any subscription,
option, warrant, right, convertible security or other similar
agreement or commitment, or (3) make payment of money or
incurrence of indebtedness based upon market prices of the
Company's securities or changes in the Company's capitalization.
(c) Validity of Lender Stock. Each of the shares of Lender Stock have been
------------------------
duly authorized for issuance and, when issued to Lenders for the
consideration set forth herein and as otherwise provided herein, will
be duly and validly issued, fully paid, non-assessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. At the Closing and from time to time thereafter
upon purchase or conversion, as the case may be, the Lenders will
acquire good and valid title to the Lender Stock free and clear of any
and all Encumbrances.
(d) Authority; Binding Effect; Etc. Each of the Company and MCI has the
-------------------------------
requisite corporate power and authority to execute and deliver this
Agreement and the other Transaction Documents, to perform its
obligations and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the
Company and MCI of the Transaction Documents, the performance by each
of the Company and MCI of its obligations thereunder and the
consummation by each of the Company and MCI of the transactions
contemplated thereby have been duly and validly authorized by the
board of directors of the Company and MCI, and no other corporate
authorizations, approvals or proceedings are required in connection
with such execution, delivery, performance or consummation under the
Company's or MCI's articles of incorporation, bylaws, any agreement or
instrument to which the Company or MCI is a party or any law, rule,
regulation or requirement to which the Company or MCI is subject. The
Transaction Documents have been or will be duly and validly executed
and delivered by the Company and MCI, and each of the Transaction
Documents constitutes or will constitute valid and binding agreement
of the Company and MCI, enforceable against the Company and MCI in
accordance with its respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors'
rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other
equitable remedies. Except as may be required by the American Stock
Exchange as a prerequisite to listing Common Stock issuable by the
Company pursuant to Section 3.4 or Common Stock issuable by the
Company upon conversion of shares of Series AA Preferred Stock and
Series CC Preferred Stock,
22
<PAGE>
no vote of stockholders of the Company is required under any law,
rule, regulation or requirement of the SEC, any national securities
exchange or any other governmental agency or instrumentality in
connection with the authorization, execution, delivery or performance
of this Agreement by the Company and MCI.
(e) SEC Filings.
-----------
(i) The Company has timely filed all required SEC Documents with the
SEC since January 1, 1998, each of which complied in all
material respects with all applicable requirements of the
Securities Act and the Securities Exchange Act as in effect on
the dates so filed. None of the SEC Documents (as of their
respective filing dates) contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were
made, not misleading.
(ii) The audited and unaudited consolidated financial statements,
together with notes thereto, of the Company and its Subsidiaries
included (or incorporated by reference) in the SEC Documents
filed by the Company with the SEC presented fairly, in all
material aspects, the financial position of the Company and its
consolidated Subsidiaries as of the respective dates thereof and
the results of their operations for the periods then ended. All
audited financial statements referred to above have been
prepared in accordance with GAAP for year-end financial
information and in accordance with the instructions to Form 10-K
and Regulation S-X, and all unaudited financial statements
referred to above have been prepared in accordance with GAAP for
interim financial information and with the instructions to Form
10-Q and Regulation S-X. Accordingly, while such unaudited
financial statements do not include all the information and
footnotes required by GAAP for complete financial statements,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Neither the Company nor any of its Subsidiaries has any
liabilities or obligations, fixed or contingent, not reflected
in such financial statements, except for (1) liabilities and
obligations which in the aggregate are not material and have
been incurred in the ordinary course of business since January
1, 1999 and (2) liabilities and obligations not in excess of
$1,000,000 in the aggregate.
(iii) No representation or warranty made by the Company or MCI in
this Agreement or to be made in the other documents contemplated
hereby contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact
necessary to make the statements herein
23
<PAGE>
or therein, in light of the circumstances under which they were
or will be made, not misleading.
(f) Absence of Certain Changes, Etc. Except as expressly set forth in the
--------------------------------
SEC Documents filed by the Company prior to the Effective Date, since
December 31, 1998 neither the Company nor any of its Subsidiaries has
entered into any binding oral or written contract, agreement,
arrangement or understanding that is material to its business (other
than the Transaction Documents and the Sale-Leaseback Agreements) or
any material transaction, or conducted its business and operations
other than in the ordinary course of business consistent with past
practice, and no Material Adverse Effect or Material Adverse Change
has occurred or been suffered since such date.
(g) No Violation; Consents. Neither the negotiation, execution or
----------------------
delivery by each of the Company and MCI of the Transaction Documents,
the performance by each of the Company and MCI of its obligations
thereunder, nor the consummation by each of the Company and MCI of the
transactions contemplated thereby (i) has constituted or will
constitute a breach or violation under the articles of incorporation
or bylaws of the Company, the governing documents of any of its
Subsidiaries or a violation of law or rules of any national securities
exchange, or (ii) has constituted or will constitute a breach,
violation or default (or be an event which, with notice or lapse of
time or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, or result in
the creation of any Encumbrances upon any of the properties or assets
of the Company or any of its Subsidiaries under, any material contract
(including, without limitation, the Foothill Loan documents) or any
other note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument to which the Company or any of its
Subsidiaries is a party or by which they or any of their respective
properties or assets are bound or otherwise, or (iii) has constituted
or will constitute a violation of any order, writ, injunction, decree,
statute, rule or regulation of any court or governmental authority
applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, except in the case of clauses (ii)
and (iii) above, such breaches, violations, defaults, terminations,
accelerations or creation of Encumbrances which, singly or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. No authorization, consent or approval of, or filing with, any
court or any public body or authority and no consent or approval of
any third party or parties is necessary for the execution, performance
and consummation by the Company or MCI of the Transactions.
(h) Offering. Subject in part to the truth and accuracy of the Lenders'
--------
representations set forth in Section 5.2, the offer, sale and/or
issuance, as applicable, of the Lender Stock as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act, and neither the Company nor any authorized
24
<PAGE>
agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
(i) Litigation. There are no actions, suits or proceedings at law or in
----------
equity now pending, or to the knowledge of the Company and MCI
threatened against the Company, which, if determined adversely to the
Company, would be reasonably likely to have a Material Adverse Effect.
(j) Sale-Leaseback Transactions. The Sale-Leaseback Transactions will be
---------------------------
closed and fully consummated prior to or on the Closing Date.
(k) Foothill Consent. The Company and MCI have obtained the Foothill
----------------
Consent.
(l) Listing. The shares of Common Stock issued or issuable to Lenders in
-------
connection with the Transactions have been accepted for listing on the
American Stock Exchange.
Section 5.2. Representations and Warranties of Lenders. Each Lender
-----------------------------------------
hereby severally, and not jointly, represents and warrants to each of the other
Parties, as of the Effective Date, as follows:
(a) Organization. Such Lender is a corporation, business trust or limited
------------
partnership, as applicable, duly organized or formed, validly existing
and in good standing or otherwise authorized to transact business
under the laws of the jurisdiction of its organization.
(b) Authority; Binding Effect; Etc. Such Lender has the requisite
-------------------------------
corporate, trust or partnership, as applicable, power and authority to
execute and deliver the Transaction Documents, to perform its
obligations thereunder and to consummate the Transactions. The
execution and delivery of the Transaction Documents by such Lender,
the performance by it of its obligations thereunder and the
consummation by it of the Transactions have been duly and validly
authorized. This Agreement has been duly and validly executed and
delivered by it and constitutes the valid and binding agreement of it,
enforceable against it in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by
laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
(c) No Violation. Neither the negotiation, execution or delivery of the
------------
Transaction Documents by such Lender nor the performance by such
Lender of its obligations thereunder nor the consummation by such
entity of the Transactions has or will (i) constitute a breach or
violation under such entity's constituent documents, (ii) constitute a
breach, violation or default (or be an event which, with notice or
lapse of time or both, would constitute a default) under, or result in
the termination of,
25
<PAGE>
or result in the creation of any Encumbrance upon any of such Lender's
properties or assets under, any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument to which such Lender is a party or by which entity of any
of its properties or assets are bound, or (iii) constitute a violation
of any order, writ, injunction, decree, statute, rule or regulation of
any court or governmental authority applicable to it or any of its
properties or assets, in each case except for such breaches,
violations, defaults, terminations or Encumbrances that could not
reasonably be expected to have a material adverse effect on the
ability of such Lender to perform its obligations hereunder and under
the other Transaction Documents.
(d) Consents and Approvals. No authorization, consent or approval of, or
----------------------
filing with, any court or any public body or authority and no consent
or approval of any third party or parties is necessary by such entity
for the consummation by it of the transactions contemplated by this
agreement except for such authorizations, consents, approvals and
filings made or obtained prior to the Closing Date, or those not
required to be made or obtained until on or after the Closing Date.
(e) Investor Sophistication. Such Lender has such knowledge and
-----------------------
experience in financial business matters that it is capable of
evaluating the merits and risks of an investment in the Lender Stock.
The Lender is able to bear the economic risk of an investment in the
Lender Stock to be acquired hereunder.
(f) Investment Intent. Such Lender is acquiring the Lender Stock for its
-----------------
own account and for investment purposes only and not with a view to
distributing such shares (except as contemplated herein or in a
transaction or transactions exempt from registration under the federal
and state securities laws or pursuant to an effective registration
statement under such laws).
(g) Restricted Securities. Such Lender understands that the Lender Stock
---------------------
it is acquiring constitutes "restricted securities" under the federal
securities laws inasmuch as the Lender Stock is being acquired from
the Company in a transaction not involving a public offering and that
under such laws and applicable regulations such Lender Stock may be
resold without registration under the Securities Act only in a
transaction or transactions exempt from registration under the federal
and state securities laws.
(h) [Intentionally Omitted]
(i) Investment Company. The Lender is not an "investment company" within
------------------
the meaning of the Investment Company Act of 1940, as amended.
(j) Access to Information. Such Lender acknowledges that it has been
---------------------
afforded (i) the opportunity to ask such questions as the Lender has
deemed necessary of, and to receive answers from, representatives of
the Company concerning the terms and conditions of the securities
offered hereunder and the merits and risks of
26
<PAGE>
investing in such securities; and (ii) access to information about the
Company and the Company's financial condition, results of operations,
business, properties, management and prospects sufficient to enable it
to evaluate its investment in such securities.
(k) [Intentionally Omitted]
Section 5.3. Representations and Warranties of MEIH. MEIH hereby
--------------------------------------
represents and warrants to Trust, as of the Effective Date, the Closing Date and
as of the date of transfer pursuant to Section 3.4(b), that at the Closing (or
the closing of the transactions contemplated by Section 3.4(b), as the case may
be), Trust will acquire good and valid title to the shares of Series BB
Preferred Stock that it receives from MEIH pursuant to Section 3.3 and any
Common Stock it may receive from MEIH pursuant to Section 3.4(b), free and clear
of any and all Encumbrances.
ARTICLE 6
[INTENTIONALLY OMITTED]
ARTICLE 7
[INTENTIONALLY OMITTED]
ARTICLE 8
CLOSING
Section 8.1. Closing. The closing (the "Closing") of the Transactions
-------
will take place at the offices of Munsch Hardt Kopf & Harr, P.C., 1445 Ross
Avenue, Suite 4000, Dallas, Texas 75202 at 10:00 a.m., local time on July 20,
1999, or at such other time and place as the Company and the Lenders mutually
agree upon orally or in writing (the "Closing Date"). At the Closing:
(a) the Company will file the Certificates of Designation with the
Secretary of State of Georgia;
(b) the Company and SZ will execute and deliver to each other the Series
AA Registration Rights Agreement;
(c) the Company and Trust will execute and deliver to each other the
Series BB Registration Rights Agreement;
(d) the Company and MEIH will execute and deliver to each other the Series
CC Registration Rights Agreement;
27
<PAGE>
(e) each Party (except for Trust) will execute and deliver to each other
Party the Mutual Release;
(f) the Parties will deliver to each other such other documents and
instruments required to be delivered by them pursuant to Articles 2, 3
and 4;
(g) to the extent not set forth in this Section, the Parties will execute
and deliver such other such other documents and instruments required
as any other Party may reasonably request to accomplish the purpose of
this Agreement;
(h) each Party will deliver a true and complete copy, certified by the
secretary or an assistant secretary of such Party, of the resolutions
duly and validly adopted by the board of directors of such Party (or
the ultimate general partner of such Party) dated at least one
Business Day prior to Closing evidencing its authorization of the
execution and delivery of the Transaction Documents and the
consummation of the Transactions;
(i) counsel to the Company, MEIH and MCI will deliver to Nomura an
opinion, dated as of the Closing Date, reasonably satisfactory in form
and substance to Nomura;
(j) Lenders' counsel will receive all such counterpart original and
certified or other copies of such documents as they may reasonably
request; and
(k) An officer's certificate from each of an authorized signatory of the
Company, an authorized signatory of MEIH and an authorized signatory
of MCI that the representations and warranties herein are true and
correct and all covenants and obligations have been performed.
ARTICLE 9
POST-CLOSING COVENANTS AND AGREEMENTS
Section 9.1. Working Capital Statements and Budgets.
--------------------------------------
(a) Working Capital Statements. For so long as SZ is required to
--------------------------
purchase any Series AA Preferred Stock hereunder, the Company, within
ten (10) Business Days of receipt of SZ's or Trust's request, but not
more often than monthly, will deliver to SZ and Trust a report (a
"Working Capital Report") in form reasonably acceptable to SZ and
Trust showing (i) the amount of the Company's cash reserves available
to satisfy its Working Capital Requirements, and (ii) the amount of
such Working Capital Requirements (including a schedule of anticipated
expenditures).
(b) Budgets. At least thirty (30) days prior to the end of each Fiscal
-------
Year, the Company shall deliver to SZ, as long as SZ is required to
purchase any Series AA
28
<PAGE>
Preferred Stock hereunder, and/or to Trust, as long as Trust or its
Affiliates owns any shares of Series BB Preferred Stock, a budget (the
"Budget") for the next Fiscal Year, prepared on a monthly basis,
including income statements, balance sheets, and statements of cash
flows for such months, and, as soon as prepared, any other budgets or
revised budgets prepared by the Company.
SZ and/or Trust, as the case may be, will each have the right to
review in good faith and approve each Budget, which approval will not
be unreasonably withheld, conditioned or delayed. SZ and/or Trust,
as the case may be, shall be deemed to approve of the Budget in the
event that SZ and/or Trust, as the case may be, has not responded
within thirty (30) Business Days of receipt of the Budget.
Section 9.2. Use of Proceeds. Except as provided in Section 3.2, the
---------------
Company agrees to use all proceeds received from SZ pursuant to Article 2 for
Working Capital Requirements and for no other purpose.
Section 9.3. Securities Laws Limitations on Dispositions of the Lender
---------------------------------------------------------
Stock. Without in any way limiting the representations set forth in Section
- -----
5.2, each Lender agrees not to Transfer all or any portion of the Lender Stock
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by this Agreement and the applicable Registration Rights
Agreement (provided and to the extent this Agreement and such agreement are then
applicable), and (i) such Lender has notified the Company of the proposed
disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Lender has furnished the Company with an opinion
of counsel or other assurance reasonably satisfactory to the Company that such
disposition will not require registration of such shares under the Securities
Act (it being agreed that the Company will not require opinions of counsel or
other assurance for transactions made pursuant to Rule 144 except in unusual
circumstances); provided that this Section 9.3 shall not be applicable to
Transfers (i) pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 under the Securities Act, (ii) by a
Lender to an affiliate of such Lender or (iii) pursuant to an Approved Sale.
Notwithstanding the provisions of the preceding sentence, no such registration
statement, opinion of counsel or other assurance will be necessary for a
Transfer by such Lender of any Lender Stock to an Affiliate of such Lender if
such Affiliate transferee agrees in writing to be subject to the terms hereof to
the same extent as if such Affiliate were an original Party hereto instead of
such Lender.
Section 9.4. [Intentionally Omitted]
Section 9.5. Public Announcements. The Parties will agree as to the
--------------------
form and content of any press releases or public statements with respect to this
Agreement and the Transactions before issuing, or permitting any agent or
Affiliate to issue any such release or statement; provided, however, that
nothing contained herein will prevent any Party from making any such public
disclosure or announcement as it shall determine in good faith to be required to
comply with law; provided, further however, that such Party will use reasonable
efforts to assure that, if
29
<PAGE>
reasonable in the circumstances, the other Parties will have the opportunity to
review any disclosure or announcement prior to release.
Section 9.6. Securities Filings. As promptly as practicable but not
------------------
later than 45 calendar days after the Closing Date, the Company and, if
applicable, the officers and directors of the Company will make such filings
with the SEC and the American Stock Exchange, or make amendments to existing
filings, as may be required by law or American Stock Exchange rule.
Section 9.7. HSR Filings. Each Party will (i) promptly take all actions
-----------
necessary to make the filings required of it or any of its Affiliates under the
HSR Act, which filings shall comply in all material respects with the
requirements of the HSR Act, (ii) comply at the earliest practicable date with
any request for additional information received by such Party or its Affiliates
from the Federal Trade Commission or Antitrust Division of the Department of
Justice pursuant to the HSR Act, (iii) cooperate with any other Party in
connection with such other Party's filings under the HSR Act and (iv) request
early termination of the applicable waiting period.
Section 9.8. Further Assurances. The Parties shall execute, acknowledge
------------------
and deliver, from time to time, such further instruments as any other Party may
reasonably request to accomplish the purpose of this Agreement.
Section 9.9. Affiliate Transactions. Except for the transactions and
----------------------
agreements disclosed on Schedule 9.9, the Company shall not enter into, or be a
party to, any transaction with an Affiliate of the Company, except in the
ordinary course of business and on terms which are no less favorable to the
Company or such Affiliate than would be obtained in a comparable arm's length
transaction with an unrelated third party, and, if the amount to be paid to the
Affiliate pursuant to the transaction or series of related transactions is
greater than $250,000, consented to in writing by Nomura in advance.
Section 9.10. Trust's Right to Receive Board of Directors' Materials.
------------------------------------------------------
So long as Trust or its Affiliates own any of the Company's stock, if no
employee or designee of Trust or its Affiliates is a member of the Company's
Board of Directors, Trust shall have the right to receive all written materials
and other information given to the directors in connection with (a) meetings of
the Board of Directors and committees thereof and (b) written consents in lieu
of a meeting (collectively (a) and (b) shall be referred to as "Board
Information"), provided that "Board Information" shall not include, and the
Company shall not be required to provide Trust with, any information that
involves the Company's relationship with Trust or its Affiliates. Trust shall
be entitled to receive all Board Information at the same time such Board
Information is given to the members of the Board of Directors. Trust and its
Affiliates shall keep and shall cause all of their officers, directors,
employees and independent contractors who receive or come in contact with the
Board Information to keep such Board Information confidential, except to the
extent disclosure is required by law or legal process or such information is or
becomes publicly available other than as a result of a breach by Trust of its
obligation to keep such information confidential. If any Board Information is
material non-public information about the Company, then (a) Trust shall refrain
from trading in the securities of the Company or in the securities of
30
<PAGE>
any appropriate and relevant third party until such time as no violation of the
applicable securities laws would result from such securities trading and (b)
Trust and its Affiliates shall cause all of their officers, directors, employees
and independent contractors who obtain knowledge of material non-public Board
Information as a result of the Company's obligations pursuant to this Section
9.10 to refrain from trading in the securities of the Company or in the
securities of any appropriate and relevant third party until such time as no
violation of the applicable securities laws would result from such securities
trading.
Section 9.11. Sale of the Company.
-------------------
(a) If Lenders holding at least a majority of the then outstanding shares
of the Company's Common Stock approve in writing the sale of the
Company to any Person (other than transactions with an Affiliate of
the Company, any Lender or any Affiliate of any Lender), whether by
merger, consolidation, sale of all or substantially all of its assets
or sale of all of the outstanding capital stock (such a transaction
being an "Approved Sale"), each Lender will consent to, vote for, and
raise no objections against, and waive dissenters and appraisal rights
with respect to, the Approved Sale, and if the Approved Sale is
structured as a sale of stock, each Lender will agree to sell and
shall sell all of such Lender's Preferred Stock or Common Stock or
other Securities, as the case may be, in the Approved Sale.
(b) The obligations of each of the Lenders with respect to an Approved
Sale are subject to the satisfaction of the following conditions: (i)
each Lender shall receive an amount of consideration in respect of
each share of Preferred Stock held by it that is (A) at least equal to
the sum of the Liquidation Preference of such share of Preferred Stock
plus accrued and unpaid dividends on such share of Preferred Stock and
(B) the same form and amount of consideration received by any other
holder in respect of each share of the same series of Preferred Stock
and if any holder of such series is given an option as to the form and
amount of consideration to be received, all Lenders holding the shares
of the same series will be given the same option, (ii) each Lender
shall receive an amount of consideration in respect of each share of
Common Stock held by it that is in the same form and amount of
consideration received by any other holder in respect of each share of
Common Stock and if any holder of Common Stock is given an option as
to the form and amount of consideration to be received, all Lenders
holding shares of Common Stock will be given the same option, and
(iii) nothing in this Section 9.11 shall obligate any designee of a
Lender serving on the Board of Directors of the Company to vote in
favor of any transaction which such person reasonably believes in good
faith, upon advice of counsel, would breach such director's fiduciary
duties as a director of the Company in a manner which could reasonably
be expected to give rise to personal liability on the part of such
director.
(c) Each Lender shall, in connection with a sale of its shares of capital
stock of the Company pursuant to this Section 9.11, at the request of
the Company and
31
<PAGE>
without further cost and expense to the Company, execute and deliver
such other instruments of conveyance and transfer and take such other
actions as may reasonably be requested in order to consummate the
Approved Sale. All Lenders will bear their pro rata share (based upon
the number of shares sold to the total number of shares outstanding)
of the reasonable costs and expenses of any Approved Sale to the
extent such costs and expenses are incurred for the benefit of all
selling Lenders and are not otherwise paid by the Company or the
acquiring party. Costs incurred by any Lender on its own behalf will
not be considered costs of the Approved Sale hereunder.
Section 9.12. Tag-Along Rights.
----------------
(a) Each Lender agrees that in connection with the consummation of any
transaction or series of related transactions involving the transfer
of shares of Preferred Stock or Common Stock that constitute a
"Significant Transfer" (as hereinafter defined), Nomura, Trust and
their permitted transferees (collectively, the "Tag-Along
Rightholders") will be offered an equal opportunity (the "Tag-Along
Right") to participate in such transaction or transactions on a pro
rata basis (based upon their respective ownership of the shares of
Preferred Stock and Common Stock acquired by the Lenders pursuant to
this Agreement) and, subject to paragraph (b) below, on identical
terms. As used herein, "Significant Transfer" means a Transfer by a
Lender to any Person or Persons (including repurchases (but not
redemptions) by the Company) of shares of Preferred Stock or Common
Stock, as the case may be, which are beneficially owned by such Lender
and which represent more than 4% of the then-outstanding shares of any
series of Preferred Stock or Common Stock, as the case may be, other
than Transfers (i) in a bona fide public offering pursuant to an
effective registration statement under the Securities Act or pursuant
to Rule 144 under the Securities Act, (ii) by a Lender to an Affiliate
of such Lender or (iii) pursuant to an Approved Sale.
(b) Prior to any Significant Transfer subject to these provisions, the
seller (the "Tag-Along Seller") shall notify the Company in writing of
the proposed sale. Such notice (the "Tag-Along Sale Notice") shall
set forth the number of shares of Preferred Stock or Common Stock
subject to the proposed sale, the proposed amount of consideration and
terms and conditions of payment which are part of the proposed sale
and the name, address and phone number of the Person proposing to
purchase such shares (the "Proposed Purchaser"). The Company shall
promptly, and in any event within 15 days, mail or cause to be mailed
the Tag-Along Sale Notice to the Tag-Along Rightholders. Each Tag-
Along Rightholder may exercise the Tag-Along Right by delivery of a
written notice (the "Tag-Along Acceptance Notice") to the Tag-Along
Seller within 15 days of the date the Company mailed or caused to be
mailed the Tag-Along Sale Notice. The Tag-Along Acceptance Notice
shall state that the Tag-Along Rightholder proposes to include its pro
rata portion of Preferred Stock or Common Stock, as the case may be,
in the proposed sale. If no Tag-Along Acceptance Notice is
32
<PAGE>
received during the 15 day period referred to above, the Tag-Along
Seller shall have the right during the subsequent 90 day period to
effect the proposed sale of shares of Preferred Stock or Common Stock
on terms and conditions no more favorable than those stated in the
Tag-Along Sale Notice.
(c) In the event that a Significant Transfer by a Lender involves a sale
of shares of Preferred Stock by the Tag-Along Seller to a Proposed
Purchaser and such Proposed Purchaser does not initially desire to
purchase shares of Series BB Preferred Stock from the Tag-Along
Rightholders, then the Tag-Along Seller shall use reasonable efforts
to arrange for any of the Tag-Along Rightholders to meet with the
Proposed Purchaser. At such meeting, the Tag-Along Rightholders may
present a proposal involving the sale of their shares to the Proposed
Purchaser. Following such presentation, in the event that the
Proposed Purchaser does not desire to purchase shares of Series BB
Preferred Stock, then the Tag-Along Seller shall have the right to
sell its shares of Preferred Stock to such Proposed Purchaser during
the subsequent 90 day period on terms and conditions substantially
similar to those in effect on the day of the presentation and neither
the Tag-Along Seller nor the Proposed Purchaser shall have any
obligation to purchase the shares of Series BB Preferred Stock.
(d) Each Tag-Along Rightholder that exercises its Tag-Along Rights
pursuant to this Section 9.12 shall, at the request of the Tag-Along
Seller and without further cost and expense to the Tag-Along Seller,
execute and deliver such other instruments of conveyance and transfer
and take such other actions as may reasonably be requested in order to
consummate the proposed sale of Preferred Stock or Common Stock by the
Tag-Along Seller and the Tag-Along Rightholders which have exercised
their Tag-Along Rights pursuant to this Section 9.12. Each Tag-Along
Rightholder that exercises its Tag-Along rights will bear its pro rata
share (based upon the number of shares sold by all Shareholders
participating in the transaction) of the reasonable costs and expenses
of any sale of shares pursuant to this Section 9.12 to the extent such
costs are incurred for the benefit of all selling shareholders and are
not otherwise paid by the Company or the acquiring party. Costs
incurred by any Lender on its own behalf will not be considered costs
of the transaction hereunder.
Section 9.13. Full Access. For so long as any Lender holds any Lender
-----------
Stock acquired hereunder, the Company upon reasonable advance written notice
will permit, representatives of such lender to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records (including tax records), contracts, and documents of or
pertaining to the Company.
Section 9.14. Proceedings and Documents. Lenders' counsel will receive
-------------------------
all such counterpart original and certified or other copies of such documents as
they may reasonably request.
33
<PAGE>
ARTICLE 10
DEFAULT, TERMINATION, REMEDIES AND INDEMNIFICATION
Section 10.1. [Intentionally Omitted].
Section 10.2. [Intentionally Omitted].
Section 10.3. Remedies upon Event of Default. Unless otherwise
------------------------------
specifically provided herein and in addition to other remedies that may be
expressly set forth herein, each Party will have all remedies available at law
and in equity in upon the occurrence of an Event of Default by the other Party.
Without limiting the generality of the foregoing, the Parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the Parties will be
entitled to specific performance of the terms hereof, in addition to such other
rights and remedies.
Section 10.4. Waiver. Any Party to this Agreement may (a) extend the
------
time for the performance of any of the obligations or other acts of any other
Party, (b) waive any inaccuracies in the representations and warranties of any
other Party contained herein or in any document delivered by any other Party
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions of the other Party contained herein. Any such extension or waiver
will be valid only if set forth in an instrument in writing signed by the Party
to be bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement. The
failure of any Party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights. After the Closing, this Agreement may be waived
or amended by the Company only with the approval of the majority of the members
of its board of directors.
Section 10.5. Indemnification.
---------------
(a) Indemnification Provisions for Benefit of the Lenders. Each of the
-----------------------------------------------------
Company and MCI agrees to indemnify, defend and hold harmless each
Lender and its directors, officers, employees, agents, partners,
members and stockholders (collectively, the "Lender Indemnified
Parties") from and against the entirety of any Adverse Consequences
such Lender Indemnified Party may suffer (INCLUDING, WITHOUT
LIMITATION, ADVERSE CONSEQUENCES CAUSED BY THE NEGLIGENCE OF ANY SUCH
LENDER INDEMNIFIED PARTY) resulting from, arising out of, relating to,
in the nature of, or caused by (i) the breach (or the alleged breach)
of any representation, warranty or covenant of the Company in this
Agreement, and (ii) any operations, businesses or activities of the
Company or its Affiliates. Notwithstanding the foregoing, the
indemnification provided by this Subsection will not apply to Adverse
Consequences resulting from, arising out of, relating to, in the
nature of, or caused by the gross negligence or willful misconduct of,
or breach of this Agreement or any Transaction Document by, any Lender
Indemnified Party.
34
<PAGE>
(b) [Intentionally Omitted].
(c) Claims for Indemnification.
---------------------------
(i) If any third party shall notify any Lender Indemnified Party
with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party
(the "Indemnifying Party") under this Section, then the Lender
Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part
-----------------
of the Lender Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the Lender
Indemnified Party against the Third Party Claim with counsel of
its choice reasonably satisfactory to the Lender Indemnified
Party so long as (A) the Indemnifying Party notifies the Lender
Indemnified Party in writing within fifteen (15) days after the
Lender Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Lender
Indemnified Party from and against the entirety of any Adverse
Consequences the Lender Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (B) the Indemnifying Party provides
the Lender Indemnified Party with evidence reasonably acceptable
to the Lender Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party
Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (D) settlement of,
or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Lender Indemnified Party,
likely to establish a precedential custom or practice adverse to
the continuing business interests of the Lender Indemnified
Party, and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Subsection 10.6(c)(ii)
above, (A) the Lender Indemnified Party may retain separate co-
counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Lender Indemnified
Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not
to be unreasonably withheld, conditioned or delayed), and (C)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third
Party Claim without the prior
35
<PAGE>
written consent of the Lender Indemnified Party (not to be
unreasonably withheld, conditioned or delayed).
(iv) In the event any of the conditions in Subsection 10.6(c)(ii)
above is or becomes unsatisfied, however, (A) the Lender
Indemnified Party may defend against, and consent to the entry
of any judgment or enter into any settlement with respect to,
the Third Party Claim in any manner it reasonably may deem
appropriate (and the Lender Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will
reimburse the Lender Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse
Consequences the Lender Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this
Section.
(d) Determination of Adverse Consequences. The Parties shall take into
--------------------------------------
account the time cost of money (using as the discount rate the
Applicable Rate as of the last Business Day immediately preceding the
date of the written claim for indemnification) in determining Adverse
Consequences for purposes of this Section.
(e) Other Indemnification Provisions. The foregoing indemnification
---------------------------------
provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy.
ARTICLE 11
MISCELLANEOUS
Section 11.1. Survival. The representations, warranties and covenants of
--------
the Company and the Lenders contained in or made pursuant to this Agreement will
survive the execution and delivery of this Agreement and the Closing and will in
no way be affected by any investigation of the subject matter thereof made by or
on behalf of any Lender or the Company.
Section 11.2. Successors and Assigns. Except as otherwise provided
----------------------
herein, the terms and conditions of this Agreement will inure to the benefit of
and be binding upon the respective successors and assigns of the Parties
(including permitted transferees of any shares of Common Stock or Preferred
Stock transferred to a Party pursuant to this Agreement). Nothing in this
Agreement, express or implied, is intended to confer upon any Party other than
the Parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
36
<PAGE>
Section 11.3. Governing Law. This Agreement and the rights of the
-------------
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Georgia, excluding the conflicts of laws provisions.
Section 11.4. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. Each such multiple
counterpart of this Agreement may be transmitted via facsimile or other similar
electronic means and executed by one or more of the undersigned, and a facsimile
of the signature of one or more of the undersigned shall be deemed an original
signature for all purposes and have the same force and effect as a manually-
signed original.
Section 11.5. Titles and Subtitles. The titles and subtitles used in
--------------------
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 11.6. Notices. Unless otherwise provided, any notices, requests,
-------
claims, demands or other communications required or permitted under this
Agreement will be given in writing and will be deemed effectively given (a) upon
personal delivery to the Party to be notified, (b) one Business Day following
deposit with a nationally recognized overnight courier service, (c) three
Business Days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid, and (d) upon transmission by facsimile (if a
confirmation of delivery is printed by the sending facsimile machine and a copy
of the notice is also sent by one of the other methods authorized herein), in
each case addressed to the Party to be notified at the address indicated for
such Party as follows, or at such other address as such Party may designate by
ten (10) days' advance written notice to the other Parties:
If to the Company: Malibu Entertainment Worldwide, Inc.
717 North Harwood, Suite 1650
Dallas, Texas 75201
Attn: Chief Financial Officer
Facsimile: (214) 210-8702
If to MCI: Malibu Centers, Inc.
717 North Harwood, Suite 1650
Dallas, Texas 75201
Attn: Chief Financial Officer
Facsimile: (214) 210-8702
37
<PAGE>
If to MEIH: MEI Holdings, L.P.
Chase Tower
2200 Ross Avenue, Suite 4200-W
Dallas, Texas 75201
Attn: Secretary/Treasurer
Facsimile: (214) 220-4948
If to SZ: SZ Capital, L.P.
Chase Tower
2200 Ross Avenue, Suite 4200-W
Dallas, Texas 75201
Attn: Secretary/Treasurer
Facsimile: (214) 220-4948
If to any of the Company, MCI, MEIH or SZ, a copy also to:
Munsch Hardt Kopf & Harr, P.C.
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
Attn: William T. Cavanaugh, Jr., Esq.
Facsimile: (214) 855-7584
If to Nomura or Trust:
Nomura Asset Capital Corporation
2 World Financial Center
Building B, 21st Floor
New York, New York 10281
Attn: Timothy Mackey
Facsimile: (212) 667-1861
With a copy to: Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attn: Peter D. Cripps, Esq. and David W. Forti, Esq.
Facsimile: (215) 994-5106
Section 11.7. Finder's Fee and Commissions. Each Party represents that it
----------------------------
neither is nor will be obligated for any finder's, broker's or investment
banker's fee or commission in connection with this transaction. Each Lender
agrees to indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's, broker's or investment
banker's fee or commission (and the costs and expenses of defending against such
liability or asserted liability) for which such Lender or any of its officers,
partners,
38
<PAGE>
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless each Lender from any liability for any commission or
compensation in the nature of a finder's, broker's or investment banker's fee or
commission (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
Section 11.8. Transaction Costs and Other Expenses. The Company and MCI
------------------------------------
will be responsible for paying or reimbursing the Lenders for all reasonable
Transaction Costs. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement or any other Transaction Document, the
prevailing Party will be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such Party may
be entitled.
Section 11.9. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended only with the written consent of the Company and the Lenders and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only if set
forth in an instrument in writing, signed by the Party to be bound thereby. Any
amendment or waiver effected in accordance with this Section will be binding
upon each holder of any Lender Stock purchased under this Agreement at the time
outstanding (including securities into which such Lender Stock is convertible),
each future permitted transferee of all such Lender Stock, the Company and MCI.
Section 11.10. Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision will be
excluded from this Agreement and the balance of the Agreement will be
interpreted as if such provision were so excluded and will be enforceable in
accordance with its terms.
Section 11.11. Aggregation of Stock. All shares of Lender Stock held or
--------------------
acquired by entities or Persons that are Affiliates will be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
Section 11.12. Entire Agreement. This Agreement and the Transaction
----------------
Documents constitute the entire agreement among the Parties and no Party will be
liable or bound to any other Party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein. This Agreement (including the Transaction Documents) constitutes the
entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof, including without
limitation the Prior Agreement. In the event of any conflict or inconsistency
between the terms and provisions of this Agreement and the terms and provisions
of any Transaction Document, the terms and provisions of such Transaction
Document will control.
Section 11.13. Consents and Approvals. Unless otherwise expressly set
----------------------
forth herein, any consent or approval required hereunder must be in writing and
may be granted or withheld in the sole and absolute discretion of the Party from
whom such consent or approval is requested.
39
<PAGE>
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.
Company:
-------
MALIBU ENTERTAINMENT WORLDWIDE, INC.,
a Georgia corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
MCI:
---
MALIBU CENTERS, INC.,
a Delaware corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
Nomura:
------
NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
Trust:
-----
PARTNERSHIP ACQUISITION TRUST V,
a Delaware business trust
By:____________________________________
Name:__________________________________
Title:_________________________________
40
<PAGE>
MEIH:
----
MEI HOLDINGS, L.P.,
a Delaware limited partnership
By: MEI GENPAR, L.P.,
a Delaware limited partnership,
its general partner
By: HH GenPar Partners,
a Texas general partnership,
its general partner
By: Hampstead Associates, Inc.,
a Texas corporation,
a managing general partner
By:_________________________________
Name:____________________________
Title:___________________________
SZ:
--
SZ CAPITAL, L.P.,
a Delaware limited partnership
By: SZ GENPAR, L.P.,
a Delaware limited partnership,
its general partner
By: HH GenPar Partners,
a Texas general partnership,
its general partner
By: Hampstead Associates, Inc.,
a Texas corporation,
a managing general partner
By:_________________________________
Name:____________________________
Title:___________________________
41
<PAGE>
EXHIBIT "A-1"
Form of Certificate of Designation for Series AA Preferred Stock
----------------------------------------------------------------
A-1
<PAGE>
EXHIBIT "A-2"
Form of Series AA Registration Rights Agreement
-----------------------------------------------
A-2
<PAGE>
EXHIBIT "B-1"
Form of Certificate of Designation for Series BB Preferred Stock
----------------------------------------------------------------
B-1
<PAGE>
EXHIBIT "B-2"
Form of Series BB Registration Rights Agreement
-----------------------------------------------
B-2
<PAGE>
EXHIBIT "C-1"
Form of Certificate of Designation for Series CC Preferred Stock
----------------------------------------------------------------
C-1
<PAGE>
EXHIBIT "C-2"
Form of Series CC Registration Rights Agreement
-----------------------------------------------
C-2
<PAGE>
EXHIBIT "D"
Form of Mutual Release
----------------------
D-1
<PAGE>
EXHIBIT "E"
Form of Stock Purchase Request
------------------------------
1
<PAGE>
[LETTERHEAD]
[Date]
SZ Capital, L.P.
Chase Tower
2200 Ross Avenue
Suite 4200-W
Dallas, Texas 75201
Attn: Secretary/Treasurer
Re: Malibu Entertainment Worldwide, Inc. Stock Purchase Request
Ladies and Gentlemen:
This Stock Purchase Request is delivered pursuant to Section 2.2(a) of the
Second Amended and Restated Recapitalization Agreement, dated as of July 20,
1999, by and among Malibu Entertainment Worldwide, Inc., Malibu Centers, Inc.,
MEI Holdings, L.P., SZ Capital, L.P., Nomura Asset Capital Corporation and
Partnership Acquisition Trust V (the "Recapitalization Agreement").
As reflected in the most recent Working Capital Report (as such term is
defined in the Recapitalization Agreement), the Company lacks (or within the
next sixty (60) days will lack) the necessary funds to meet its Working Capital
Requirements (as such term is defined in the Recapitalization Agreement).
Therefore, SZ Capital, L.P. is hereby notified of its obligation to
purchase $_________ of Series AA Preferred Stock, no par value, of Malibu
Entertainment Worldwide, Inc. (____ shares) within the next thirty (30) days.
Very truly yours,
2
<PAGE>
SCHEDULE 5.1
Schedule of Exceptions
----------------------
5.1(i) Litigation
----------
ThrillTime Entertainment International, Inc., a British Columbia
corporation ("ThrillTime"), has alleged that the Company is in default of its
obligations under that certain Master Purchase and License Agreement dated as of
December 12, 1996, as amended (the "Master Agreement"), by and between
ThrillTime, the Company, and SuperStar Dragsters, Inc. On June 17, 1999,
ThrillTime notified the Company of its intention to submit its disputes with the
Company to arbitration pursuant to the terms of the Master Agreement.
ThrillTime seeks monetary damages and is currently in the process of
ascertaining the full extent of its alleged damages that it has suffered due to
the Company's alleged breach.
3
<PAGE>
SCHEDULE 9.9
Affiliate Transactions
----------------------
A. Investment Agreement, dated June 5, 1996, as amended, by and between
Mountasia Entertainment International, Inc. and MEIH, and all related
agreements, obligations and transactions, including, and limited to:
1. Services Agreement, dated as of August 28, 1996, by and between
Mountasia Entertainment International, Inc. and The Hampstead Group,
L.L.C., as amended;
2. Warrant for Shares of Common Stock of Mountasia Entertainment
International, Inc. dated August 28, 1996 and issued to MEIH, as
amended; and
3. Registration Rights Agreement, dated as of August 28, 1996, by and
between the Company and the Purchaser.
B. The purchase of shares of Series AA Preferred Stock by SZ pursuant to the
terms of this Agreement.
C. The purchase of shares of Series CC Preferred Stock by MEIH pursuant to the
terms of this Agreement.
4
<PAGE>
CERTIFICATE OF DESIGNATIONS OF SERIES BB PREFERRED STOCK
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 "Corporation"), hereby certifies as follows:
-----------
I.
The name of the corporation is Malibu Entertainment Worldwide, Inc.
II.
Section 2 of Article III of the Articles of Incorporation is hereby amended
to add the following Subsection 2.9:
"2.9 Series BB Preferred Stock. Five thousand shares of Preferred
-------------------------
Stock, no par value, of the Corporation are designated as "Series BB
Preferred Stock" having the voting powers, preferences and relative
participating, optional and other special rights, and the qualifications,
limitations or restrictions thereof, as are set forth below (the "Series BB
---------
Preferred"). Shares of Series BB Preferred shall not be sold for
---------
consideration that is less than the liquidation preference of such shares.
2.9.1. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series BB Preferred, in preference
to the holders of the Common Stock, no par value per share (the "Common
------
Stock"), and of any and all other classes or series of preferred or other
-----
capital stock of the Corporation other than the Series AA Preferred
(hereinafter defined) of the Corporation (collectively, the "Series BB
---------
Junior Stock"), will be entitled to receive dividends, when and as declared
------------
by the Board out of funds legally available therefor, at an annual rate of
$9,000 per share, payable quarterly in arrears on the 1st day of each of
January, April, July and October of each year (except that if any such date
is not a Business Day (as defined below), then such dividend will be
payable on the next day that is a Business Day) (the "Dividend Payment
----------------
Date"), commencing with the date of the first issuance of any shares of the
----
Series BB Preferred (the "Initial Issuance Date"), prior and in preference
---------------------
to any declaration or payment of any dividend on Series BB Junior Stock
(other than (i) a dividend or distribution on Series BB Junior Stock solely
in shares of Series BB Junior Stock and then only if all accrued but unpaid
1
<PAGE>
dividends on the Series BB Preferred have been or are concurrently being
paid as provided herein and (ii) a dividend or distribution on Series BB
Junior Stock in cash with Series BB Approval (as defined below) prior
thereto as provided in Section 2.9.2(b)). Such dividends will be cumulative
and accrue with respect to each share of Series BB Preferred from the date
of issuance of such share of Series BB Preferred (the "Dividend
--------
Commencement Date"), whether or not declared by the Board and whether or
-----------------
not there are funds of the Corporation legally available for payment of
such dividends. No accrued or accumulated dividends on the Series BB
Preferred will bear interest. As used herein, the term "Series AA
---------
Preferred" means all shares of Preferred Stock, no par value, of the
---------
Corporation that are designated as "Series AA Preferred Stock", as set
forth in the Charter. For purposes hereof, "Business Day" means any day
------------
other than a Saturday, Sunday or any other day on which national banks in
Dallas, Texas are not open for business.
(b) Any dividends that accrue and are payable shall be paid (i)
by the issuance as of the Dividend Payment Date of additional shares of
fully paid, nonassessable Series BB Preferred having an aggregate
liquidation preference equal to the amount of such accrued dividends or
(ii) in cash, with the determination of whether dividends are to be paid in
cash or by issuance of additional shares to be made by the Board, in its
sole discretion; provided, however, that any dividends that first accrue on
or after January 1, 2002 may not be paid by the issuance of additional
shares of Series BB Preferred unless the Corporation has first obtained
Series BB Approval in writing prior to the applicable Dividend Payment
Date. In the event that dividends are declared and paid by the issuance of
additional shares of Series BB Preferred as provided in the previous
sentence, such dividends will be deemed paid in full and will not
accumulate. The Corporation will deliver certificates representing shares
of Series BB Preferred issued pursuant to this Section 2.9.1(b) promptly
after the Dividend Payment Date.
(c) Each dividend will be payable to holders of record as they
appear on the stock books of the Corporation on the record date which shall
be the last day of a fiscal quarter of the Corporation.
(d) Notwithstanding anything to the contrary contained herein,
without a Series AA Approval (as such term is defined in the Certificate of
Designations for the Series AA Preferred), (i) no dividends, whether in
cash or in additional shares of Series BB Preferred, shall be paid on the
Series BB Preferred with respect to any quarter unless all accrued but
unpaid dividends on the Series AA Preferred together with dividends on the
Series AA Preferred for the current quarterly period shall have been paid
by the Corporation and (ii) no cash dividends on the Series BB Preferred
shall be paid for any quarterly periods ending after January 1, 2003 unless
cash dividends for such quarterly period are paid to the holders of Series
AA Preferred contemporaneously therewith or prior thereto.
2.9.2. Voting Rights. Holders of Series BB Preferred will have
-------------
no voting rights and their consent will not be required for taking any
corporate action
2
<PAGE>
except (a) for any amendments to this Certificate of Designations of Series
BB Preferred Stock, (b) as otherwise required by law or as otherwise
provided in Section 2.9.3 herein and (c) that, if any share of Series BB
Preferred is then outstanding, the affirmative vote or consent of holders
of a majority of the then-outstanding shares of Series BB Preferred, voting
together as a single voting group (provided that any such amendment
described in Section 2.9.2(a) herein that adversely changes the dividend
payable on or liquidation preference of the Series BB Preferred shall
require the affirmative vote or consent of all holders of Series BB
Preferred) (a "Series BB Approval"), will be required in order for the
------------------
Corporation to:
(i) Amend the Charter in any way, whether by amending the terms
of this Section 2.9 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 BB Preferred;
(ii) Subject to Section 2.9.1(a), declare or pay any cash or
other dividends on, or make any other distributions in respect of any
other shares of Series BB Junior Stock;
(iii) Redeem or purchase or otherwise acquire for consideration
any shares of any Series BB Junior Stock (except (A) in connection
with the exercise of employee stock options and (B) in connection with
the repurchase of up to $2,500,000 in liquidation preference of Series
CC Preferred Stock, no par value, of the Corporation (the "Series CC
---------
Preferred"), plus an amount equal to all accrued but unpaid dividends
---------
thereon during each calendar year pursuant to Section 2.10.9 of the
Certificate of Designations of Series CC Preferred Stock);
(iv) Authorize or issue any shares of capital stock or increase
the authorized number of shares of any class or series of capital
stock ranking prior or superior to, or on parity with, the Series BB
Preferred with respect to dividends or other distributions or upon
liquidation, dissolution or winding up of the Corporation (except to
SZ Capital, L.P. or its successors or assigns in accordance with (A)
the terms of the Second Amended and Restated Recapitalization
Agreement, dated July 1999, among the Corporation, Malibu Centers,
Inc., Nomura Asset Capital Corporation ("Nomura"), Partnership
------
Acquisition Trust V (the "Trust"), MEI Holdings, L.P. ("MEIH") and SZ
----- ----
Capital, L.P. ("SZ") (the "Recapitalization Agreement") and (B) shares
-- --------------------------
of Series AA Preferred issued pursuant to Section 2.8.1 of the
Certificate of Designations of Series AA Preferred Stock);
(v) Pay any dividends on the Series BB Preferred that first
accrue on or after January 1, 2002 by the issuance of additional
shares of Series BB Preferred;
3
<PAGE>
(vi) Issue any shares of Series BB Preferred other than the
shares issued to Partnership Acquisition Trust V on the date of the
Recapitalization Agreement or issued as payments of dividends on
shares of Series BB Preferred as provided herein;
(vii) Issue more than $18,500,000 in liquidation preference of
shares of Series AA Preferred to SZ Capital, L.P. or its affiliates
pursuant to Sections 2.9(a) and 2.9(b) of the Recapitalization
Agreement or otherwise;
(viii) Amend Section 2.8.8 of the Certificate of Designations of
Series AA Preferred Stock or Section 2.10.9 of the Certificate of
Designations of the Series CC Preferred Stock; or
(ix) In one or a series of related transactions, consolidate or
merge with or into (whether or not the Corporation is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets to,
another person or entity or adopt a plan relating to the liquidation
or dissolution of the Corporation unless (1) either (I) the
Corporation shall be the surviving or continuing entity or (II) the
entity (if other than the Corporation) formed by or surviving any such
consolidation or merger or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made shall be a
corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (2) the Series BB
Preferred shall be converted into or exchanged for and shall become
shares of the successor, transferee or resulting entity, having in
respect of such successor, transferee or resulting entity
substantially the same powers, preferences and relative participating,
optional or other special rights, and the qualifications, limitations
or restrictions thereon, that the Series BB Preferred had immediately
prior to such transaction; (3) the Corporation or such successor,
transferee or resulting entity as applicable, shall have a
Consolidated Net Worth (immediately after such transaction but prior
to any purchase accounting adjustments for such transaction) equal to
or greater than the Consolidated Net Worth of the Corporation
immediately prior to such transaction; and (4) the Corporation
delivers to the holders of the Series BB Preferred prior to the
consummation of the proposed transaction an officer's certificate or
an opinion of counsel reasonably satisfactory to the holders of the
Series BB Preferred to the combined effect that such sale, assignment,
transfer, lease, conveyance or other disposition complies with the
terms of the Articles of Incorporation, including without limitation,
this Certificate of Designations, and that all conditions precedent to
such sale, assignment, transfer, lease, conveyance or other
disposition have been satisfied. Notwithstanding the foregoing, the
consent of the holders of the Series BB Preferred shall not be
required to authorize or approve the merger of any wholly-owned
subsidiary of the Corporation with and into the Corporation.
4
<PAGE>
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related
transactions) of properties or assets of one or more subsidiaries of
the Corporation which, if all properties and assets of such
subsidiaries were held directly by the Corporation, would constitute a
transfer of all or substantially all of the properties and assets of
the Corporation shall be deemed to be a transfer of all or
substantially all of the properties and assets of the Corporation.
"Consolidated Net Worth" means the net worth of the Corporation and
----------------------
its subsidiaries determined by the Corporation's auditors based on the
consolidated balance sheet of the Corporation prepared in accordance
with GAAP. As used herein, "GAAP" means the generally accepted
----
accounting principles in the United States.
The Corporation will not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could purchase or otherwise acquire such
shares at such time and in such manner in accordance with the foregoing
restrictions.
2.9.3. Voting Rights in Certain Circumstances.
--------------------------------------
(a) (i) Except as otherwise set forth in this Section 2.9.3, if
for any reason (x) on January 1, 2002, the Corporation has not paid
either by cash or the issuance of additional shares of Series BB
Preferred in accordance with and as permitted by the provisions of
this Section 2.9, all dividends that are accrued and payable for all
quarterly periods ending prior to January 1, 2002, (y) at any time on
and after January 1, 2003, the Board does not declare or the
Corporation does not pay all dividends first accruing on or after
January 1, 2002 in full in cash for any two quarters or (z) the
Corporation does not redeem all shares of Series BB Preferred in
accordance with Section 2.9.6 prior to January 1, 2014 (any of (x),
(y), or (z) a "Series BB Board Representation Event"), then the
------------------------------------
holders of Series BB Preferred will be entitled, at any annual meeting
of the shareholders or any special meeting called for such purpose
(which meeting will be called upon the request of the holders of at
least 20% of the then-outstanding shares of Series BB Preferred as
provided below), to elect (1) a number of directors (the "Series BB
---------
Directors") equal to the Series BB Board Representation Number (as
---------
defined below) and (2) as set forth in paragraph (ii) below, three
Outside Directors (as defined below)(the rights to elect directors set
forth in clauses (1) and (2) are sometimes referred to herein as the
"Board Representation Requirement").
---------------------------------
(ii) If a Series BB Board Representation Event has occurred, the
Board Representation Requirement set forth in paragraph (i) above
shall also require that the Board of Directors of the Corporation
include three Outside Directors. The Outside Directors shall be
approved by a vote (an "Outsider Director Vote") of each of (1) the
----------------------
holders of Series BB Preferred, voting as a separate voting group, and
(2) the holders of the Common Stock, Series AA Preferred pursuant to
their rights in Section
5
<PAGE>
2.8.2(a) of the Certificate of Designations of Series AA Preferred
Stock, and Series CC Preferred pursuant to their rights in Section
2.10.2(a) of the Certificate of Designations of Series CC Preferred
Stock, voting together as a single voting group, separate from the
Series BB Preferred, with the number of votes each share of Series AA
or Series CC Preferred, as the case may be, is entitled to cast being
determined with reference to the number of shares of Common Stock into
which such share of Series AA or Series CC Preferred, as the case may
be, may be converted.
(iii) "Affiliate" means, with respect to any person or entity,
---------
any other person or entity that, directly or indirectly through one or
more intermediaries, controls or is controlled by, or is under common
control with, such person or entity. The "Series BB Board
---------------
Representation Number" shall be equal to (x) the number of directors
---------------------
constituting the entire Board of Directors of the Corporation minus
three (or such lesser number of Outside Directors which shall be in
office), divided by (y) 2; provided that if such calculation produces
a fraction, such fraction shall be rounded upward to the next nearest
whole number to determine the Series BB Board Representation Number
and provided further that in no event shall the Series BB Board
Representation Number be less than two. A director shall qualify as
an "Outside Director" if such director is not an Affiliate (except in
----------------
his capacity as a director of the Corporation), officer or employee of
the Corporation, MEIH, SZ, Trust or any other holders of a majority of
the then-outstanding shares of Series AA Preferred, Series BB
Preferred, Series CC Preferred or Common Stock, or any of its
subsidiaries and is not an officer, director or employee of any
Affiliate of the Corporation, MEIH, SZ, Trust or any other holders of
a majority of the then-outstanding shares of Series AA Preferred,
Series BB Preferred, Series CC Preferred or Common Stock.
(iv) The Corporation will notify all holders of Series BB
Preferred as promptly as possible after the occurrence of a Series BB
Board Representation Event of such occurrence and the material facts
relating thereto. In the event that the Corporation obtains a Series
BB Approval to pay a dividend that first accrues on or after January
1, 2002 by issuance of additional shares of Series BB Preferred in
lieu of cash and the Corporation agrees to pay such dividend in shares
of Series BB Preferred, the receipt of such approval by the
Corporation and subsequent delivery of certificates representing
shares of the Series BB Preferred issued in full payment of such
dividend shall constitute a waiver of the voting rights specifically
provided in this Section 2.9.3(a) for the quarter in which such
dividends were required to be declared by the Board and paid by the
Corporation. Under no circumstances shall such waiver by the holders
of Series BB Preferred in one quarter constitute a waiver for
subsequent quarters.
(b) (i) Whenever the right to elect directors of the
Corporation has accrued to the holders of Series BB Preferred, the
Corporation may,
6
<PAGE>
and upon the written request of the holders of record of at least 20%
of the then-outstanding shares of Series BB Preferred will, promptly
satisfy the Board Representation Requirement by increasing the size of
the Board and/or using reasonable efforts to secure the resignations
of such number of directors as is necessary to enable the Series BB
Directors and the Outside Directors to promptly be elected to the
Board. If the Board Representation Requirement is not so satisfied,
then, at any time after the right to elect directors has vested in the
Series BB Preferred pursuant to this Section 2.9.3, the Secretary of
the Corporation may, and, upon the written request of the holders of
record of at least 20% of the then-outstanding shares of the Series BB
Preferred, addressed to the Secretary at the principal office of the
Corporation, will, call a special meeting of the holders of Series BB
Preferred for the election of the Series BB Directors and the Outside
Directors (and the holders of the Common Stock and Series AA and
Series CC Preferred in respect of the Outside Directors) as herein
above provided, to be held within 30 calendar days after such call and
at the place and upon the notice provided by law and in the Bylaws of
the Corporation 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 within 30 calendar days after receipt of
any such request, then the holders of record of at least 20% of the
then-outstanding Series BB Preferred may designate in writing one of
their number to call such meeting, and the person so designated may
call such meeting to be held at the place and upon the notice above
provided, and for that purpose will have access to the stock ledger of
the Corporation. If any such special meeting has been called by the
Secretary of the Corporation or by the holders of the Series BB
Preferred as above provided, and if the holders of at least a majority
of the then-outstanding shares of Series BB Preferred and entitled to
vote at such meeting are present or represented by proxy at such
meeting or any adjournment thereof, then, by vote of the holders of at
least a majority of such shares of Series BB Preferred present or so
represented at such meeting, the then-authorized number of directors
of the Corporation will be increased by such number of directors as is
necessary to enable the Series BB Directors and the Outside Directors
to promptly be elected to the Board, and at such meeting, the holders
of the Series BB Preferred will be entitled to elect the additional
Series BB Directors so provided for and the applicable holders will be
entitled to elect by an Outsider Director Vote the additional Outside
Directors, such that the holders of Series BB Preferred shall have
elected a number of Series BB Directors equal to the Series BB Board
Representation Number and the applicable holders shall have elected by
an Outsider Director Vote three Outside Directors, but any directors
so elected will hold office only until their respective successors are
duly elected and qualified at the annual meeting of shareholders or
special meeting held in place thereof next succeeding their election,
at which time their successors will be elected by vote of the
applicable holders present or so represented at such meeting. The
foregoing remedy will not be deemed exclusive, and shall be in
addition to all other rights and remedies
7
<PAGE>
available at law or equity to the holders of Series BB Preferred.
Except for the waiver described in Section 2.9.3(a), the failure to
exercise, or any delay in exercising any rights under this Section
2.9.3 as to a particular Series BB Board Representation Event will not
diminish or otherwise affect the rights hereunder.
(c) Upon the occurrence of a Series BB Board Representation
Event, each holder of a share of the Series BB Preferred will be entitled
to receive the same prior notice of any shareholders' meeting as provided
to the holders of Common Stock in accordance with the Bylaws of the
Corporation, as well as prior notice of all shareholder actions to be taken
by legally available means in lieu of meeting, and will vote separately as
a class to the extent herein provided. Fractional votes will be permitted,
and any fractions will be counted in computing voting rights. Any action
which may be taken by the holders of Series BB Preferred may be taken
without a meeting of Series BB Preferred shareholders upon the execution of
written consents to such action by holders of the number of shares of
Series BB Preferred that would be required to vote in favor of taking such
action at any meeting of holders of Series BB Preferred at which all such
holders were present and voting.
(d) Following a Series BB Board Representation Event, whenever
all arrears in dividends on the Series BB Preferred then outstanding for
the quarterly periods that gave rise to the Series BB Board Representation
Event have been paid and dividends thereon for the current quarterly
dividend period shall have been declared by the Board and paid by the
Corporation, then the right of holders of the Series BB Preferred to
satisfy the Board Representation Requirement shall cease (but subject
always to the same provisions for the occurrence of a Series BB Board
Representation Event that causes the vesting of the Board Representation
Requirement specifically set forth in Section 2.9.3(a)), and one month
after all such dividends are paid to the holders of the Series BB Preferred
(i) the term of office of Series BB Directors pursuant to Section 2.9.3
shall terminate in the event that such director(s) were elected to fill
seat(s) on the Board created to satisfy this Section 2.9.3 and/or (ii) the
holders of Series BB Preferred will use reasonable efforts to secure the
resignation(s) of the number of Series BB Directors.
(e) For so long as the Board Representation Requirement is in
effect, then the holders of Series BB Preferred shall at all times be
entitled to elect a number of Series BB Directors equal to the Series BB
Board Representation Number and shall be entitled to vote in the election
of three Outside Directors as set forth in paragraph (a) above, including
in the event the size of the Board is increased to satisfy any similar
board representation requirements held by any other classes or series of
Preferred Stock.
(f) Shares of Series BB Preferred owned by the Corporation or
any subsidiary of the Corporation will not be counted as outstanding for
any purpose of these Articles of Amendment to Articles of Incorporation of
the Corporation.
8
<PAGE>
(g) For so long as the Board Representation Requirement is in
effect, any vacancies among the directorships relating the directors to be
elected solely by vote of the holders of Series BB Preferred pursuant to
their rights to elect the Series BB Directors may be filled by the majority
vote of such Series BB Directors then in office. For so long as the Board
Representation Requirement is in effect, any vacancies among the Outside
Directors may be filled by majority vote of the entire Board of Directors
then in office; provided that a majority of the Series BB Directors then in
office shall have voted in favor of so filling such vacancy.
Notwithstanding the foregoing, any action taken by the Board of Directors
or members thereof to fill vacancies pursuant to this paragraph shall not
detract from the rights of holders of Series BB Preferred to elect and
remove, at any time, the Series BB Directors and the Outside Directors (in
the case of the Outside Directors, such removal to be only with the
concurrence of the holders of Series AA Preferred, Series CC Preferred and
Common Stock voting together as a single voting group, separate from the
Series BB Preferred Stock who shall also vote as a single voting group).
2.9.4. Reacquired Shares. If permitted by law, any shares of
-----------------
Series BB Preferred that are issued and thereafter cease to be issued and
outstanding for any reason will be restored to the status of authorized but
unissued shares of preferred stock of the Corporation, including shares of
Series BB Preferred, and may be reissued as part of a new series of
preferred stock of the Corporation subject to the conditions and
restrictions on issuance set forth herein (including without limitation
Section 2.9.2 hereof) or in any other certificate of designations creating
a series of preferred or any similar stock of the Corporation.
2.9.5. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
liquidation, dissolution or winding up of the Corporation, no distribution
will be made to the holders of shares of Series BB Junior Stock unless,
prior thereto, the holders of shares of Series BB Preferred shall have
received $100,000 per share plus accrued and unpaid dividends. Neither a
consolidation or merger of the Corporation with another corporation or
other legal entity, nor a sale or transfer of all or part of the
Corporation's assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of the Corporation.
2.9.6. Redemption.
----------
(a) Redemption Price. Shares of Series BB Preferred may be
----------------
redeemed (to the extent not previously redeemed) by the Corporation, at its
sole option, at any time after issuance and:
(i) prior to or on January 1, 2001, at a price per share of
$100,000 plus accrued and unpaid dividends through the date such
redemption price is paid ("Accrued Dividends");
-----------------
(ii) after January 1, 2001 and prior to or on January 1, 2002,
at a price per share of $105,000 plus Accrued Dividends;
9
<PAGE>
(iii) after January 1, 2002 and prior to or on January 1, 2003,
at a price per share of $104,000 plus Accrued Dividends;
(iv) after January 1, 2003 and prior to or on January 1, 2004,
at a price per share of $103,000 plus Accrued Dividends;
(v) after January 1, 2004 and prior to or on January 1, 2005,
at a price per share of $102,000 plus Accrued Dividends;
(vi) after January 1, 2005 and prior to or on January 1, 2006,
at a price per share of $101,000 plus Accrued Dividends; and
(vii) after January 1, 2006, at a price per share of $100,000
plus Accrued Dividends;
provided, however, that no shares of Series BB Preferred may be redeemed by
the Corporation under this Section 2.9.6 (A) unless no shares of Series AA
Preferred are outstanding on the date the Redemption Notice is given or
will be outstanding as of the date fixed for redemption or (B) unless the
Corporation has obtained a Series AA Approval to such redemption.
(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 BB Preferred, written notice ("Redemption Notice") will be given by
-----------------
the Corporation by first class mail, postage prepaid, to each holder of
record of Series BB 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 Corporation, 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 BB Preferred except as to the holder or holders to
whom the Corporation 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 BB Preferred are to be redeemed and the total number of shares
of Series BB 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 Corporation; and
(v) that dividends on the shares of Series BB Preferred to be
redeemed will cease to accumulate on the Redemption Date unless the
Corporation defaults in payment in full of the applicable redemption
price.
10
<PAGE>
(c) Upon surrender of the certificate(s) representing shares of
Series BB Preferred that are the subject of redemption pursuant to Section
2.9.6(a), duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), 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.
(d) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the applicable redemption price,
dividends on the Series BB 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 2.9.6(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 BB 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 BB Preferred to be redeemed will cease to accumulate and the holders
thereof will cease to be shareholders of the Corporation and be entitled
only to receive the redemption price.
(e) If (i) the funds of the Corporation legally available for
redemption of shares of Series BB Preferred on the date scheduled for a
redemption are insufficient to redeem the total number of shares of Series
BB Preferred to be redeemed on such date or (ii) the Corporation elects to
redeem fewer than all of the then-outstanding shares of Series BB
Preferred, then the Corporation shall redeem outstanding shares of Series
BB Preferred ratably among the holders of such shares to be redeemed based
on their holdings of Series BB Preferred. The shares of Series BB
Preferred not redeemed will remain outstanding and entitled to all the
rights and preferences provided herein. If the funds of the Corporation
legally available for redemption of shares of Series BB Preferred on the
date scheduled for a redemption are insufficient to redeem the total number
of shares of Series BB Preferred to be redeemed on such date, then at any
time thereafter when additional funds of the Corporation become legally
available, such funds will immediately be used to redeem the balance of the
shares that the Corporation has become obligated to redeem on any scheduled
redemption date that it has not redeemed.
2.9.7. Repurchase Upon Change in Control.
---------------------------------
(a) In the event of the occurrence of a Change in Control, or
if the Corporation enters into a definitive agreement providing for a
transaction that, upon consummation would result in a Change in Control,
the Corporation
11
<PAGE>
will, within 30 calendar days after such Change in Control or the execution
of such an agreement, offer to purchase each then-outstanding share of
Series BB Preferred for an amount per share equal to $100,000 plus accrued
and unpaid dividends through the date of purchase. Within 10 calendar days
after such Change in Control or the execution of such an agreement, the
Corporation will provide written notice (a "Repurchase Notice") to each
-----------------
holder of Series BB Preferred at such holder's address as it appears on the
stock books of the Corporation. The Repurchase Notice will state (i) the
repurchase price, (ii) the commencement date of such offer and the
expiration date of such offer (which shall be no less than 20 Business Days
after the commencement date), (iii) the Repurchase Date (as defined below)
on which shares tendered during the offer period will be repurchased by the
Corporation, (iv) the place or places and manner in which the holder is to
surrender his or her certificate(s) to the Corporation, and (v) that
dividends on the shares of Series BB Preferred that are tendered for
repurchase will cease to accumulate on the Repurchase Date unless the
Corporation defaults in payment in full of the applicable repurchase price.
The Corporation will comply with the requirements of all applicable
securities laws and regulations in connection with such a transfer. The
Corporation will purchase any shares tendered to the Corporation during
such offer period on the applicable Repurchase Date. The term "Repurchase
----------
Date" shall mean (i) with respect to a Change in Control that has already
----
occurred, the expiration date of the offer period, as set forth in the
Repurchase Notice, and (ii) with respect to a Change in Control that will
result upon consummation of an agreement executed by the Corporation, the
date on which the transactions contemplated by such agreement are
consummated; provided, that, if the agreement referenced in the preceding
clause (ii) is terminated prior to closing or the transactions contemplated
thereby are not otherwise consummated, then the Repurchase Date shall not
be deemed to have occurred and the Corporation shall not have any
obligation to consummate the repurchase of shares pursuant to this Section
2.9.7 and the Corporation, by subsequent written notice to the holders of
Series BB Preferred, shall rescind such offer to repurchase and shall
return any certificates previously tendered to the Corporation.
Notwithstanding the foregoing, the Corporation shall not repurchase any
shares of Series BB Preferred on the Repurchase Date unless the Corporation
also repurchases contemporaneously therewith or prior thereto a Ratable
Portion of the shares of Series AA Preferred based on the liquidation value
(face value plus accrued and unpaid dividends) of the outstanding shares of
each series. As used herein, "Ratable Portion" shall be the percentage
---------------
determined by multiplying (A) the quotient of (x) the liquidation value of
the outstanding shares of the applicable series of preferred stock divided
by (y) the aggregate liquidation value of the outstanding shares of the
Series AA Preferred and the Series BB Preferred, and (B) 100.
Upon surrender of the certificate(s) representing shares of
Series BB Preferred that are the subject of repurchase, duly endorsed (or
otherwise in proper form for transfer, as determined by the Corporation),
in the manner and at the place designated in the Repurchase Notice and on
the Repurchase Date, the full repurchase 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
12
<PAGE>
surrendered certificate will be canceled and retired. In the event that
fewer than all of the shares represented by any one certificate are
repurchased, a new certificate will be issued representing the
unrepurchased shares. On and after the Repurchase Date, unless the
Corporation defaults in the payment in full of the applicable repurchase
price, dividends on the Series BB Preferred to be repurchased will cease to
accumulate, and all rights of the holders thereof will terminate with
respect thereto on the Repurchase Date, other than the right to receive the
repurchase price, provided, however, that if a Repurchase Notice has been
given as provided in Section 2.9.7(a) and the funds necessary for
repurchase (including an amount in cash in respect of all dividends that
will accumulate to the Repurchase 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 BB Preferred that are to be repurchased, then, at the close of
business on the day on which such funds are deposited in trust, dividends
on the Series BB Preferred to be repurchased will cease to accumulate and
the holders thereof will cease to be shareholders of the Corporation and be
entitled only to receive the repurchase price.
(b) A "Change in Control" will be deemed to occur upon the
-----------------
occurrence of (1) the MEI Affiliates ceasing to be the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) of 50% or more of the
------------
combined voting power of the Corporation's then-outstanding voting
securities entitled to vote generally in the election of directors ("Voting
------
Stock"), whether directly by a stock sale or indirectly through a merger,
-----
consolidation, recapitalization or similar transaction; (2) the adoption of
a plan of liquidation or distribution by the Corporation; (3) the sale,
lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Corporation and its
subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act); or (4) the first day after the
Initial Issuance on which a majority of the members of the Board are not
Continuing Directors; provided, however, that no event described above will
constitute a "Change in Control" if the transaction that would otherwise
constitute a "Change in Control" has received Series BB Approval prior to
the consummation of such transaction. As used herein, "MEI Affiliate"
-------------
means, collectively, MEI Holdings, L.P., SZ Capital, L.P., each a Delaware
limited partnership, and any person that directly, or indirectly, through
one or more intermediaries, controls or is controlled by, or is under
common control with, such entities, and "Continuing Directors" means, as of
--------------------
any date of determination, any member of the Board who (i) was a member of
such Board on the Initial Issuance Date, (ii) was nominated for election or
elected to the Board with the approval of a majority of the Continuing
Directors who were members of the Board at the time of such nomination or
election or (iii) is an MEI Affiliate or was nominated for election or
elected to the Board by an MEI Affiliate.
2.9.8. Fractional Shares. Series BB Preferred may be issued in
-----------------
fractions of a share which will entitle the holder, in proportion to such
holder's
13
<PAGE>
fractional shares, to receive dividends, participate in distributions, vote
and to have the benefit of all other rights of holders of Series BB
Preferred.
2.9.9. Rank. The Series BB Preferred will rank senior as to all
----
capital stock of the Corporation other than the Series AA Preferred,
including all Series BB Junior Stock, in each case as to (i) the payment of
dividends or other distributions, (ii) the redemption of any shares of the
Corporation's capital stock or (iii) distributions upon liquidation,
dissolution or winding up of the Corporation.
2.9.10.Notice to Holders. Any notice given by the Corporation
-----------------
to holders of record of Series BB Preferred will be effective if addressed
to such holders at their last addresses as shown on the stock books of the
Corporation 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 BB Preferred receives such notice.
2.9.11.Certain Limitations. Notwithstanding any other
-------------------
provision in the Charter or applicable law to the contrary, (a) the vote of
any holder of Series BB 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 BB Preferred will have only the rights and duties set
forth herein and will have no fiduciary or similar rights and duties, and
(c) no holder of Series BB 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 BB Preferred or any
other class or series of capital stock of the Corporation, 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.
2.9.12.Contractual Rights of Holders. The various provisions
-----------------------------
set forth herein for the benefit of the holders of the Series BB Preferred
will be deemed contract rights enforceable by them, including without
limitation, by one or more actions for specific performance.
2.9.13.Rule 144A Information Requirement. For so long as any
---------------------------------
shares of Series BB Preferred remain outstanding, the Corporation shall
make available, upon the request of any holder of Series BB Preferred, to
such holder or beneficial owner or prospective purchaser of Series BB
Preferred, in connection with any proposed sale thereof, the information
required to be delivered pursuant to Rule 144A under the Securities Act."
III.
All other provisions of the Articles of Incorporation shall remain in full
force and effect.
14
<PAGE>
IV.
This Amendment to the Articles of Incorporation was duly adopted on June
30, 1999 by the Board of Directors of the Corporation without shareholder
approval (which was not required) in accordance with the provisions of Section
14-2-602(d) of the Code.
[Remainder of this Page Intentionally Left Blank]
15
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to the Articles of Incorporation to be executed by its duly authorized officer
as of the ____ day of July, 1999.
By:
----------------------------
Name:
Title:
16
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
---------
entered into as of July 20, 1999, by and between MALIBU ENTERTAINMENT WORLDWIDE,
INC., a Georgia corporation (the "Company"), PARTNERSHIP ACQUISITION TRUST V, a
-------
Delaware business trust (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" has the meaning set forth in Section 6 hereof.
------
(b) "Business Day" means any day other than a Saturday, Sunday or any other
------------
day on which national banks in Dallas, Texas are not open for business.
(c) "Common Stock" means the Common Stock, no par value, of the Company.
------------
(d) "Demand Notice" has the meaning set forth in Section 3 hereof.
-------------
(e) "Demand Registration" has the meaning set forth in Section 3 hereof.
-------------------
(f) "Losses" has the meaning set forth in Section 8 hereof.
------
(g) "Other Equity Securities" means 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.
(h) "Piggyback Registration" has the meaning set forth in Section 4 hereof.
----------------------
(i) "Prospectus" means 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
1
<PAGE>
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.
(j) "Registrable Securities" means 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 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 actually distributed to the
public pursuant to Rule 144; provided, however, "Registrable Securities" shall
not include any equity or debt securities of the Company held by any other
holders of Company Securities that are not party to this Agreement.
(k) "Registration Expenses" has the meaning set forth in Section 7 hereof.
---------------------
(l) "Registration Statement" means 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.
(m) "Rule 144" means 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.
(n) "SEC" means the Securities and Exchange Commission.
---
(o) "Securities" means all Series BB Preferred Shares held by the Purchaser
----------
or its designee and all shares of Common Stock held by the Purchaser or its
designee.
(p) "Securities Act" means the Securities Act of 1933, as amended.
--------------
(q) "Series BB Preferred Shares" means shares of Series BB Preferred Stock,
--------------------------
no par value, of the Company having the terms set forth in the Articles of
Amendment to the Articles of Incorporation of Malibu Entertainment Worldwide,
Inc. filed with the Secretary of State of the State of Georgia on July ____,
1999.
(r) "Special Counsel" has the meaning set forth in Section 7(b) hereof.
---------------
(s) "Underwritten registration" or "underwritten offering" means 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
2
<PAGE>
shares of capital stock of the Company will be deemed to be equal to the number
of shares of Common Stock that would be issued upon the conversion, exercise or
exchange of such Other Equity Security (or any security into which such Other
Equity Security is then convertible) at such time (regardless of whether such
Other Equity Security is actually then convertible, exercisable or
exchangeable).
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 25% of
the total number of a class or series 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 Securities requested to be so registered (but not less than 15% of
the total number of such class or series of Registrable Securities then
outstanding); provided, however, that no Demand Notice may be given prior to 4
-------- -------
months after the effective date of the immediately preceding Demand
Registration, if any.
The number of Demand Registrations pursuant to this Section 3(a) shall
not exceed three for each class or series of Registrable Securities; 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 advise 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 and, as a result thereof, less
than the total number of Registrable Securities requested for inclusion are
included in such Demand Registration or such holders, upon receiving such advice
from the managing underwriter or underwriters, elect not to proceed with such
Demand Registration, and (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.
(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
3
<PAGE>
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 or have otherwise ceased to be
Registrable Securities.
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.
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 15% 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 other holders of its equity securities (other than Registrable Securities),
if any, who have piggyback registration rights with respect thereto and will
permit all such other holders who request to be included in the Demand
Registration to include any or all equity securities held by such other 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 other 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 other
--- ----
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
4
<PAGE>
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.
(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
5
<PAGE>
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).
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 and
declared effective by the SEC, 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 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
6
<PAGE>
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 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 were 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
7
<PAGE>
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 reasonably 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 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
8
<PAGE>
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.
(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,
9
<PAGE>
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) addressed to 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 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 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 reasonably 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 inquiries 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).
(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
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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), (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
and the Special Counsel for the sellers of the Registrable Securities, (v) fees
and disbursements of all
11
<PAGE>
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 By-laws 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 in Section 7(b)
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"), 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 would have completely corrected such untrue
statement or alleged untrue statement or such omission or alleged omission; or
(B) such
12
<PAGE>
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 (i) 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 and (ii) the
failure of such holder of Registrable Securities 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. 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
13
<PAGE>
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 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 proceeds actually received by
such indemnifying party from the sale of Registrable Securities 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.
14
<PAGE>
The indemnity, contribution and expense reimbursement obligations of
the Company hereunder will be in addition to any liability the Company may
otherwise have hereunder 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 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 holders 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 (i) the Registration Rights
--------------------------
Agreement, dated August 28, 1996, between the Company and MEI Holdings, L.P.
(the "First MEI Agreement"), (ii) the Registration Rights Agreement, dated July
-------------------
20, 1999, between the Company and MEI Holdings, L.P. (the "Second MEI
----------
Agreement") and (iii) the Registration Rights Agreement, dated July 20, 1999,
between the Company and SZ Capital, L.P. (the "SZ Agreement"), the Company has
------------
not entered, as of the date hereof, and will not enter, on or after the date
hereof, 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 and, in addition
thereto, without the written consent of the holders of a majority of the then-
15
<PAGE>
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. This Agreement, the First MEI Agreement, the Second MEI Agreement
and the SZ 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 First MEI
Agreement or the Second MEI Agreement or the rights of SZ Capital, L.P. under
the SZ 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
-------- -------
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 75201, 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), with a copy to Munsch Hardt Kopf & Harr, P.C., 4000
Fountain Place, 1445 Ross Avenue, Dallas, Texas 75201, Fax Number (214)
855-7584, Attention: William T. Cavanaugh, Jr., Esq.;
(y) if to Purchaser, initially at 2 World Financial Center, Building
B, 21st Floor, New York, New York 10281, Fax Number (212) 667-1861,
Attention: Timothy Mackey, and thereafter at such other address, notice of
which is given in accordance with the provisions of Section 11(d), with a
copy to Dechert Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street,
Philadelphia, Pennsylvania 19103, Fax Number (215) 994-5106, Attention:
David W. Forti, Esq.; and
16
<PAGE>
(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.
(i) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF GEORGIA, 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.
17
<PAGE>
(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]
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first written above.
Company:
-------
MALIBU ENTERTAINMENT WORLDWIDE, INC.,
a Georgia corporation
By: __________________________________
Name: ________________________________
Title: _______________________________
Purchaser:
---------
PARTNERSHIP ACQUISITION TRUST V,
a Delaware business trust
By: __________________________________
Name: ________________________________
Title: _______________________________
19
