EXHIBIT 99.2
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PLEDGE AND SECURITY AGREEMENT
between
MEI HOLDINGS, L.P.
as Debtor
and
NOMURA ASSET CAPITAL CORPORATION
Dated June 5, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS.............................. 1
Section 1.1 Definitions.................................. 1
Section 1.2 Principles of Construction................... 1
ARTICLE II
OBLIGATIONS SECURED.......................... 2
Section 2.1 Obligations Secured.......................... 2
ARTICLE III
GRANT OF SECURITY INTEREST, ETC..................... 2
Section 3.1 Collateral Assignment, Pledge and Grant
of Security Interest....................... 2
Section 3.2 Delivery of Collateral and
Related Evidence........................... 3
Section 3.3 Distributions................................ 4
Section 3.4 Voting Power, Etc............................ 4
Section 3.5 No Assumption................................ 4
Section 3.6 Securities Laws.............................. 4
ARTICLE IV
EVENTS OF DEFAULT........................... 5
Section 4.1 Events of Default............................ 5
ARTICLE V
REMEDIES................................ 5
Section 5.1 Remedies..................................... 5
Section 5.2 Purchasers of Collateral..................... 6
Section 5.3 Sale......................................... 6
Section 5.4 Appointment of Attorney-in-Fact.............. 6
Section 5.5 Limitation of Secured Party's Liability...... 7
Section 5.6 Waiver of Rights............................. 7
Section 5.7 Recourse..................................... 8
Section 5.8 Securities Restrictions...................... 8
Section 5.9 Application of Proceeds...................... 9
Section 5.10 Remedies Cumulative.......................... 9
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES..................... 10
Section 6.1 Representations and Warranties
of the Debtor.............................. 10
ARTICLE VII
COVENANTS............................... 11
Section 7.1 Covenants of the Debtor...................... 11
ARTICLE VIII
MISCELLANEOUS............................. 13
Section 8.1 Effective Date............................... 13
Section 8.2 Duties of the Secured Party.................. 13
Section 8.3 Notices...................................... 14
Section 8.4 Severability................................. 15
Section 8.5 Separate Counterparts........................ 15
Section 8.6 Successors and Assigns....................... 15
Section 8.7 Amendments, Waivers, Etc..................... 16
Section 8.8 Headings..................................... 16
Section 8.9 Governing Law: Forum Selection;
Submission to Jurisdiction................. 16
Section 8.10 References to Other Documents................ 16
Section 8.11 Indemnity.................................... 16
Section 8.12 Termination.................................. 16
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PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is made on June 5, 1997, between
MEI HOLDINGS, L.P., a Delaware limited partnership with its principal place of
business and chief executive office at c/o The Hampstead Group, Texas Commerce
Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇-▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("the Debtor"), and
NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation with offices at Two
World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (the "Secured
Party").
W I T N E S S E T H:
WHEREAS, Debtor and the Secured Party are parties to that certain
Loan Agreement, dated as of the date hereof (as modified, supplemented, amended
or restated from time to time in accordance with the terms thereof, the "Loan
Agreement"), pursuant to which the Secured Party has agreed to provide a Loan to
Debtor in aggregate outstanding principal amount not to exceed $10,000,000;
WHEREAS, the Debtor owns approximately 81% of all of the outstanding
common stock of Malibu;
WHEREAS, it is a condition precedent to the Secured Party making the
Loan to Debtor under the Loan Agreement that the Loan be secured by the
collateral provided under this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used herein, and not
otherwise defined herein (including within Annex A hereof), shall have the
respective meanings specified in the Loan Agreement.
Section 1.2 Principles of Construction. All references to articles,
sections, schedules, and exhibits are to articles, sections, schedules and
exhibits in or to this Agreement unless otherwise specified. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this
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Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
OBLIGATIONS SECURED
Section 2.1 Obligations Secured. This Agreement is made by the
Debtor for the benefit of the Secured Party, to secure the following:
(i) any and all obligations of Debtor under the Loan
Agreement, including, without limitation, Debtor's obligation under the
Note and any and all other obligations of Debtor to make payments to the
Secured Party in accordance with the terms of the Loan Agreement;
(ii) the payment or reimbursement, as the case may be, of any
and all sums incurred or advanced by the Secured Party, pursuant to this
Agreement in order to preserve the Collateral or to preserve the Secured
Party's interest in the Collateral; and
(iii) the payment or reimbursement, as the case may be, of any
and all reasonable out-of-pocket costs and expenses actually incurred or
paid by the Secured Party, in connection with any proceeding for the
collection or enforcement of any indebtedness, obligations or liabilities
of the Debtor referred to in clauses (i) or (ii) of this Section 2.1, or
any exercise by the Secured Party of its rights hereunder or under any of
the other Loan Documents (including, without limitation, underwriting fees
or discounts and any other costs and expenses of re-taking, holding,
preparing for sale, selling or otherwise disposing of or realizing on the
Collateral), together with reasonable attorneys' fees and disbursements,
court costs and other expenses actually incurred.
All such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iii) of this Section 2.1 are hereinafter collectively referred to as
the "Obligations."
ARTICLE III
GRANT OF SECURITY INTEREST, ETC.
Section 3.1 Collateral Assignment, Pledge and Grant of Security
Interest. To secure the payment and performance of all the Obligations, the
Debtor does hereby collaterally assign, convey, mortgage, pledge, hypothecate
and transfer, and does
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hereby grant a continuing security interest in, all of the Debtor's right, title
and interest in the following, whether now existing or hereafter from time to
time acquired (collectively, the "Collateral") to the Secured Party:
(i) the Pledged Interest;
(ii) all right, title and interest of the Debtor, arising out of, as
a result of or in connection with the Pledged Interest;
(iii) all payments due or to become due to the Debtor after the date
hereof, arising out of, as a result of or in connection with the Pledged
Interest, whether as dividends or distributions of cash or property or otherwise
(collectively, the "Distributions") and all of the Debtor's rights arising out
of, as a result of or in connection with the Pledged Interest, whether now
existing or hereafter arising or acquired, to exercise all voting, consensual
and other powers of ownership pertaining to the Pledged Interest (including,
without limitation, to make determinations, to exercise any election (including,
without limitation, election of remedies) or option, or to give or receive any
notice, consent, amendment, waiver or approval), together with full power and
authority to demand, receive, enforce, collect or give receipt for any of the
foregoing, to enforce or execute any checks or other instruments or orders, to
file any claims and to take any action which, in the opinion of the Secured
Party, may be necessary or advisable in connection with any of the foregoing;
and
(iv) all proceeds of any and all of the foregoing and all increases,
substitutions, replacements, additions, and accessions thereto (including the
1,000,000 shares of common stock of Malibu owned by the Debtor on the date
hereof and pledged to another financial institution on the date hereof, upon the
release, if any, of such shares from such pledge).
Section 3.2 Delivery of Collateral and Related Evidence. On the
Closing Date, the Debtor shall deliver to the Secured Party (A) the Pledged
Interest, (B) the originals of all stock certificates representing the Pledged
Interest together with stock powers duly executed in blank, (C) such UCC
financing statements, executed by the Debtor and in a form ready for filing, as
may be necessary or desirable to perfect the first priority security interests
in the Collateral granted to the Secured Party pursuant to this Agreement, (D)
satisfactory evidence that all other filings, recordings, registrations and
other actions the Secured Party deems necessary or desirable to establish,
preserve and perfect the security interests granted to the Secured Party
pursuant to this Agreement shall have been made, and (E) such other documents,
including execution copies of the Loan Documents and incumbency certificates of
the Debtor, as
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the Secured Party may deem necessary or desirable in connection herewith.
Section 3.3 Distributions. All distributions that are paid on the
Pledged Interest shall be payable to the Secured Party and held by the Secured
Party, in accordance with the terms of this Agreement, as additional collateral
for the Obligations.
Section 3.4 Voting Power, Etc. Unless an Event of Default shall have
occurred and be continuing, the Debtor shall be entitled to exercise all voting,
consensual and other powers of ownership pertaining to the Pledged Interest
(including, without limitation, to make determinations, to exercise any election
or option, or to give or receive any notice, consent, amendment, waiver or
approval), provided that no vote shall be cast nor any approval, consent, waiver
or ratification given, nor any power pertaining to the Pledged Interest
exercised, nor any other action taken, which would violate or be inconsistent
with the terms of this Agreement or any of the other Loan Documents, or which
would have the effect of impairing the position or interests of the Secured
Party, or could reasonably be expected to have a material adverse effect on the
ability of the Debtor to perform its obligations hereunder or under any other
Loan Document.
Section 3.5 No Assumption. Notwithstanding any of the foregoing,
whether or not an Event of Default shall have occurred, and whether or not the
Secured Party elects to foreclose or otherwise realize on its security interest
in the Collateral as set forth herein or exercise any of its rights under this
Agreement or any of the other Loan Documents or otherwise, neither this
Agreement, receipt by the Secured Party of any Distributions, the foreclosure or
other realization by the Secured Party of the security interest in the
Collateral nor any exercise by the Secured Party of any of its rights under this
Agreement or the other Loan Documents or otherwise, shall in any way be deemed
to obligate the Secured Party to assume any of the Debtor's obligations, duties,
expenses or liabilities with respect to the Collateral or any agreement relating
thereto, and in the event of any such foreclosure, realization or other exercise
of rights, the Debtor shall remain bound and obligated to perform such
obligations and the Secured Party shall not be deemed to have assumed any of
such obligations.
Section 3.6 Securities Laws. Nothing herein is intended, or shall be
interpreted, to require or permit any sale of the Collateral in violation of any
rule or regulation of the United States Securities and Exchange Commission or
any state "blue sky" or real estate syndication laws.
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ARTICLE IV
EVENTS OF DEFAULT
Section 4.1 Events of Default. The occurrence of any of the events
described in Annex B hereto shall constitute an event of default hereunder
(individually an "Event of Default" and collectively the "Events of Default"),
whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
governmental authority.
ARTICLE V
REMEDIES
Section 5.1 Remedies. Upon the occurrence and during the continuance
of an Event of Default, the Secured Party may declare all Obligations to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice (except in the case of notice which is expressly
required to be given hereunder or under the other Loan Documents), all of which
are hereby waived by the Debtor, and the Secured Party may exercise all the
rights, powers and remedies vested in it (whether vested in it by this Agreement
or any other Loan Document or by law) for the protection and enforcement of its
rights in respect of the Collateral, including, without limitation, the
following rights, which the Debtor hereby agrees to be commercially reasonable:
(i) to receive directly all amounts payable in respect of the
Collateral;
(ii) to transfer all or any part of the Pledged Interest into
the Secured Party's name or the name of its nominee(s) or designee(s);
(iii) to vote all or any part of the Pledged Interest (whether
or not transferred into the name of the Secured Party) and give all
consents, waivers and ratifications in respect of the Collateral and
otherwise act with respect thereto as though it were the outright owner
thereof; and
(iv) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Collateral,
or any interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell (or of the time
or place of sale or adjournment thereof) or to redeem or
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otherwise (all of which are, to the extent permitted by law, hereby waived
by the Debtor), for cash or credit or for other property, for immediate or
future delivery without any assumption of credit risk, and for such price
or prices and on such terms as the Secured Party in its absolute
discretion may determine. The Debtor hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with
respect to the Collateral, whether before or after sale hereunder, and all
rights, if any, of marshalling the Collateral and any other security for
the Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Secured Party may bid for and purchase all or any part
of the Collateral so sold free from any such right or equity of
redemption. To the fullest extent permitted by law, the Secured Party
shall not be liable for failure to collect or realize upon any or all of
the Collateral or for any delay in so doing nor shall it be under any
obligation to take any action whatsoever with regard thereto.
Section 5.2 Purchasers of Collateral. Upon any sale of the
Collateral by the Secured Party hereunder (whether by virtue of the power of
sale herein granted, pursuant to judicial process or otherwise), the receipt of
the Secured Party or the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold, and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Secured Party or such officer or be answerable
in any way for the misapplication or nonapplication thereof.
Section 5.3 Sale. The Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time and such
sale may be made at the time' and place to which it was so adjourned. The Debtor
agrees that to the extent notice of any such sale or an adjournment thereof is
required by law (notwithstanding the waiver of such notice herein) and the
applicable statutes do not specify the minimum notice period required, the
Secured Party need not give more than 10 days' notice of the time and place of
any public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters.
Section 5.4 Appointment of Attorney-in-Fact. The Debtor hereby
appoints the Secured Party, effective upon an Event of Default (but only for so
long as such Event of Default is continuing), as the Debtor's attorney-in-fact,
with full power of substitution for the purposes specified in, or contemplated
by, this Agreement. Such appointment is irrevocable and coupled with an
interest. As attorney-in-fact, the Secured Party may (in
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addition to the actions specified in other provisions of this Agreement), in the
name, place and stead of the Debtor, make and execute all conveyances,
assignments and transfers of the Collateral sold pursuant hereto, and the Debtor
hereby ratifies and confirms all that the Secured Party, as attorney-in-fact,
shall do by virtue hereof. Nevertheless, the Debtor shall, if so requested by
the Secured Party, ratify and confirm any sale or sales by executing and
delivering to the Secured Party, or to such purchaser or purchasers, all such
instruments as may, in the reasonable judgment of the Secured Party, be
advisable for the purpose.
Section 5.5 Limitation of Secured Party's Liability. The Secured
Party shall incur no liability as a result of the manner or terms of sale of the
Collateral, or any part thereof, at any public or private sale conducted during
the continuance of an Event of Default in a manner and on terms that are
commercially reasonable. The Debtor hereby waives, to the fullest extent
permitted by applicable law, any claims against the Secured Party arising by
reason of the fact that the price at which the Collateral, or any part thereof,
may have been sold at a private sale was less than the price which might have
been obtained at public sale or was less than the aggregate amount of the
Obligations, even if the Secured Party accepts the first offer received which
the Secured Party in good ▇▇▇▇▇ ▇▇▇▇▇ to be commercially reasonable under the
circumstances and does not offer the Collateral to more than one offeree. To the
extent permitted by law, the Debtor shall have the burden of proving that any
such sale of the Collateral was conducted in a commercially unreasonable manner.
Section 5.6 Waiver of Rights. The Debtor hereby waives to the
fullest extent permitted by law: (i) presentment, demand, protest or any notice
(except in the case of notice which is expressly required to be given under this
Agreement or the other Loan Documents) of any kind in connection with this
Agreement, the other Loan Documents and the Collateral; (ii) trial by jury;
(iii) notice in connection with the Secured Party's retention, taking possession
or disposition of any of the Collateral, including, without limitation, any and
all prior notice for any prejudgment remedy or remedies; (iv) all claims,
damages and demands occasioned by such retention, taking of possession or
disposition; (v) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Secured Party's
rights hereunder; and (vi) all rights, if any, of redemption, appraisement,
valuation, marshalling, stay, extension or moratorium now or hereafter in force
under any applicable law in order to prevent or delay the enforcement of this
Agreement or any of the other Loan Documents or the absolute sale of the
Collateral or any portion thereof. In furtherance of the foregoing, the Debtor
agrees upon request of the Secured Party to either waive or exercise within ten
(10)
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days following written request from the Secured Party, any right of redemption
the Debtor may have at law or in equity with respect to the Collateral that may
not lawfully be waived and if the Debtor shall elect to exercise such right of
redemption, the Debtor shall, within three (3) days following the exercise of
such right of redemption, deliver to the Secured Party any and all amounts of
principal and any accrued interest in respect of the Loan and the Note and all
other Obligations due and payable with respect to the Guaranty. If the Debtor
fails to waive or exercise such right of redemption within ten (10) days
following such written request from the Secured Party, the Debtor shall be
deemed to have waived its right of redemption and the Secured Party shall have
the right in its sole and absolute discretion to execute, as attorney-in-fact
for the Debtor, an instrument on the Debtor's behalf waiving any such right of
redemption.
Any sale of, or any other realization upon, any Collateral shall
operate to divest all right, title, interest, claim and demand, either at law or
in equity, of the Debtor therein and thereto, and shall be a perpetual bar both
at law and in equity against the Debtor and against any and all Persons claiming
or attempting to claim the Collateral so sold or realized upon, or any part
thereof, from, through or under the Debtor. Any grant of an option to purchase
any Collateral during the continuance of an Event of Default shall be binding on
the Debtor notwithstanding any right of redemption of the Debtor.
Section 5.7 Recourse. (i) The Obligations are full recourse
obligations of the Debtor. If the sale or other disposition of the Collateral
fails to satisfy all of the Obligations in full, the Debtor shall be liable for
the deficiency.
(ii) Anything contained herein, or in any other Loan Document to the
contrary notwithstanding, no recourse shall be had for the Obligations against
any partner, agent, director, officer, or employee of the Debtor. It is
understood that the preceding sentence shall not (A) in the event of any
malfeasance, such as fraud, misappropriation of funds or intentional
misrepresentation, estop the Secured Party from instituting or prosecuting a
legal action or proceeding or otherwise making a claim against the person or
persons committing such malfeasance, and (B) constitute a waiver, release or
discharge of any Obligation, and the same shall continue until paid or
discharged in full.
Section 5.8 Securities Restrictions. The Debtor understands that
compliance with the Federal Securities Laws may very strictly limit the course
of the Secured Party's conduct if the Secured Party were to attempt to dispose
of all or any part of the Collateral and may also limit the extent to which or
the manner in which any subsequent transferee of any Collateral may
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dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Secured Party in any attempt to dispose of all or any
part of the Collateral under applicable "blue sky" or other state securities
laws or similar laws analogous in purpose or effect. Accordingly, the Debtor
agrees that if the Secured Party is entitled hereunder to sell Collateral and at
the time of such sale the Secured Party, in its sole discretion, deems any of
the Collateral restricted securities, (i) the Secured Party shall be entitled to
place all or any part of such Collateral for private placement by an investment
banking firm or other financial institution, that any such investment banking
firm or other financial institution may purchase all or any part of such
Collateral for its own account, and that the Secured Party shall be entitled to
place all or any part of such Collateral privately with a purchaser or
purchasers who shall represent and agree that such Collateral is being purchased
for its or their own account and not with a view to the distribution thereof
within the meaning of the Federal Securities Laws, and (ii) the Secured Party
shall have the right, but not the obligation, to cause the Pledged Interest to
be sold or placed in a public or private sale.
Section 5.9 Application of Proceeds. Except as provided in Section
3.3 hereof, the proceeds of any Distributions received by the Secured Party
during the continuation of an Event of Default, and the proceeds of any
collection, recovery, receipt, appropriation, realization or sale pursuant to
this Agreement shall be applied, as follows, without duplication:
First, to the costs and expenses actually incurred in connection
therewith (including, without limitation, reasonable attorneys' fees and
disbursements, court costs and other expenses);
Second, to any sums advanced hereunder;
Third, to the payment of any and all amounts payable to the Secured
Party under the Loan Agreement;
Fourth, to the payment of any other Obligations then due and owing;
and
Fifth, if no other Obligation is then outstanding, any surplus then
remaining shall be paid to the Debtor.
Section 5.10 Remedies Cumulative. No right, power or remedy herein
or in the other Loan Documents conferred upon or reserved to the Secured Party
is intended to be exclusive of any other right, power or remedy; every such
right, power and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right, power and remedy given hereunder, under the
other Loan Documents or now or hereafter existing at
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law or in equity or otherwise; and the assertion or employment of any such
right, power or remedy shall not prevent the concurrent assertion or employment
of any other such right, power or remedy. No delay by or failure of the Secured
Party, to exercise any such right, power or remedy following the occurrence of
an Event of Default shall impair any such right, power or remedy or be construed
to be a waiver of such Event of Default or an acquiescence therein, and every
such right, power and remedy may be exercised from time to time, and as often as
shall be deemed expedient, by the Secured Party. In case the Secured Party shall
have instituted any action or proceeding to enforce any such right, power or
remedy by foreclosure, sale, entry or otherwise, and such proceeding shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Secured Party, then and in every such case the Debtor and the
Secured Party shall be restored to their former positions and rights hereunder
with respect to the Collateral and all rights, powers and remedies of the
Secured Party shall continue as if no such action or proceeding had been
instituted. If the Debtor fails to perform any other of the Obligations, the
Secured Party may perform, or cause performance of, the same and the reasonable
expenses of the Secured Party incurred in connection therewith shall be payable
by the Debtor on demand and secured hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of the Debtor. In order
to induce the Secured Party to enter into this Agreement, the Debtor represents
and warrants to the Secured Party as follows:
(i) the Debtor is the legal, record and beneficial owner of,
and has good title to, the Pledged Interest and the other Collateral
related thereto, subject to no Lien (other than the Liens created by this
Agreement);
(ii) all instruments and stock or other certificates
representing the Pledged Interest have been delivered to the Secured Party
simultaneously herewith, including, stock powers duly executed in blank.
(iii) the Debtor has full power, authority and legal right to
execute and deliver this Agreement and the other Loan Documents to which
it is a party and to pledge the Collateral to the Secured Party pursuant
to this Agreement;
(iv) this Agreement creates, in favor of the Secured Party and
as security for the Obligations, a valid
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and enforceable first-priority perfected Lien on all of the Collateral,
subject to no Lien in favor of any other Person;
(v) no consent, filing, recording or registration is required
to perfect the Lien purported to be created by this Agreement except such
as are contemplated by this Agreement;
(vi) each of this Agreement and the other Loan Documents to
which the Debtor is party constitutes its legal, valid and binding
obligation enforceable in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles;
(vii) the Debtor's principal place of business and chief
executive office is at the address as set forth in the introductory
paragraph of this Agreement.
ARTICLE VII
COVENANTS
Section 7.1 Covenants of the Debtor. In order to induce the Secured
Party to enter into this Agreement, the Debtor covenants and agrees as follows:
(i) the Debtor will defend the Secured Party's right, title,
claim of possession and Lien in and to the Collateral against the claims
and demands of all Persons, except as permitted in clause (iii) below; and
the Debtor covenants and agrees that it will have like title to and right
to pledge any other property at any time hereafter pledged to the Secured
Party as Collateral hereunder;
(ii) the Debtor shall promptly deliver to the Secured Party
share certificates or other documents representing the Pledged Interest,
together with stock powers duly executed; if at any time the Secured Party
notifies the Debtor that it requires additional stock powers with respect
to the Pledged Interest endorsed in blank, the Debtor shall promptly
execute in blank and deliver such stock powers to the Secured Party;
(iii) the Debtor will pay and discharge all Liens, charges,
claims, taxes and other governmental charges, and all contractual
obligations requiring the payment of money, before such become overdue,
that may affect the Collateral or any portion thereof, unless (but
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only to the extent that) (a) such payment is being contested in good faith
and in accordance with law, and (b) the failure to make such payment
cannot result in the loss of the Collateral or any portion thereof;
(iv) upon demand by the Secured Party, the Debtor shall pay,
or cause to be paid, all reasonable fees and expenses actually incurred by
the Secured Party in connection with the preparation and negotiation of
the Loan Documents, the amendment or modification of the Loan Documents
and the prosecution or defense of any action or proceeding or other
litigation affecting or relating to the Loan Documents (including, without
limitation, reasonable attorneys' fees and disbursements); and the Secured
Party may pay any of such fees and expenses and any amounts so paid shall
be secured by this Agreement;
(v) the Debtor agrees that it will join with the Secured Party
in executing and, at its own expense, file and refile under the UCC such
financing statements, continuation statements and other documents in such
offices as the Secured Party may reasonably deem necessary or desirable
and wherever required or permitted by law in order to perfect and preserve
the Secured Party's security interest in the Collateral and hereby
authorizes the Secured Party to file financing statements and amendments
thereto relative to all or any part of the Collateral without the
signature of the Debtor where permitted by law, and agree to do such
further acts and things and to make, execute and deliver to the Secured
Party such additional conveyances, assignments, agreements, instruments
and financing statements as the Secured Party may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or to
further assure and confirm unto the Secured Party its rights, powers and
remedies hereunder, and if the Debtor shall fail to execute any such
additional conveyances, assignments, agreements, instruments or financing
statements, the Secured Party, as attorney-in-fact for the Debtor, may in
the name, place and stead of the Debtor, make, execute and deliver any of
the foregoing, provided, however, that none of the foregoing shall relieve
the Debtor of its responsibility for such filings and perfection;
(vi) upon demand by the Secured Party, the Debtor shall
furnish to the Secured Party such proof or evidence as the Secured Party
may reasonably request from time to time with respect to (a) the
continuing correctness of the representations and warranties set forth
herein as of the date made, (b) compliance with and performance by the
Debtor of the covenants contained herein, and (c) such other matters with
respect to the transactions contemplated hereby as the Secured Party shall
reasonably request;
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(vii) the Debtor shall promptly, upon becoming aware thereof,
notify the Secured Party in writing of any condition or event that
constitutes a Default or an Event of Default;
(viii) the Debtor shall notify the Secured Party in writing at
least twenty (20) Business Days prior to the date the Debtor changes its
principal place of business or chief executive office, which notice shall
set forth the full and complete new address of the principal place of
business or chief executive office of the Debtor; and
(ix) the Debtor will not, directly or indirectly, sell,
convey, transfer, assign, encumber or otherwise dispose of, grant rights
with respect to, or mortgage or create a security interest in any of the
Collateral (or any associated options, rights or interests).
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Effective Date. Prior to the initial borrowing under the
Loan Agreement, all of the following conditions shall be satisfied:
(i) the Secured Party shall have received each of the items
specified in Section 3.2 hereof;
(ii) the Secured Party shall have received all of the
instruments, documents, certificates and agreements required to be
delivered to the Secured Party hereunder on or before the Closing Date,
including, without limitation, UCC financing statements, and the Debtor
shall have performed all other actions required to be performed by the
Debtor on or before the Closing Date.
Section 8.2 Duties of the Secured Party. (a) The Secured Party shall
be obliged to perform such duties and only such duties as specifically are set
forth in this Agreement and no implied covenants or obligations shall be read
into this Agreement against the Secured Party.
(b) Any corporation into which the Secured Party may be merged
or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which it shall be a party, or any corporation
succeeding to its business, shall succeed to all rights, obligations and
immunities hereunder without the execution or filing of any document or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
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(c) No provision of this Agreement shall require the Secured
Party to advance, expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights and powers hereunder.
(d) The Secured Party makes no representation as to the
validity, value, genuineness or the collectability of any Collateral, security
or other document or instrument held by or delivered to it.
(e) The Secured Party shall not be called upon to advise any
party as to the selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(f) The Secured Party shall not be deemed to be a fiduciary in
performing its duties under this Agreement.
Section 8.3 Notices. All notices, approvals, demands, requests,
consents and other communications provided for hereunder shall be in writing,
shall refer to this Agreement, and shall be delivered by hand or by facsimile
transmission or sent by registered or certified mail, return receipt requested,
or by overnight courier service to the recipient at the address set forth below:
If to the Debtor to:
MEI HOLDINGS, L.P.
c/o The Hampstead Group
Texas Commerce Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax #: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax #: ▇▇▇-▇▇▇-▇▇▇▇
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If to the Secured Party to:
Nomura Asset Capital Corporation
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax #: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to Secured Party's Counsel:
▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Fax #: ▇▇▇-▇▇▇-▇▇▇▇
or, at such other address or facsimile number as shall be designated by a party
in a written notice to the other party. All such notices and other
communications shall be deemed given and effective: (a) when sent by mail, on
the second Business Day after the date deposited in the United States mail, (b)
when sent by overnight courier, on the next Business Day after delivery to the
courier service, and (c) when delivered by hand or transmitted by facsimile, on
the date of delivery or transmission, as the case may be.
Section 8.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction or invalidate any other
provision of this Agreement in such or any other jurisdiction.
Section 8.5 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 8.6 Successors and Assigns. The Debtor may not assign its
rights or obligations hereunder without the prior written consent of the Secured
Party. The Secured Party shall have the right to assign or transfer its rights
under this Agreement without limitation. Any assignee or transferee of the
Secured Party shall be entitled to all the benefits afforded the Secured Party
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
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Section 8.7 Amendments, Waivers, Etc. This Agreement may be amended,
and compliance with any provision hereof may be waived, but only in a written
instrument signed by the Debtor and the Secured Party.
Section 8.8 Headings. The headings of the various Sections herein
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
Section 8.9 Governing Law: Forum Selection; Submission to
Jurisdiction. (i) This Agreement, and the rights and obligations of the parties
hereunder, shall be construed in accordance with and governed by the law of the
State of New York without regard to choice of law or principles of conflicts of
law.
(ii) Each of the Debtor and the Secured Party hereby submits
to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State Court sitting
in the Borough of Manhattan in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each of the Debtor and the Secured Party
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
Section 8.10 References to Other Documents. All defined terms used
in this Agreement which refer to other documents shall be deemed to refer to
such other documents as they may be amended from time to time, provided such
documents were not amended in breach of a covenant contained in this Agreement
or any of the other Loan Documents.
Section 8.11 Indemnity. (a) The Debtor shall indemnify the Secured
Party (including its directors, officers, employees and agents) and hold it (and
them) harmless from and against any and all losses, liability, penalties,
actions, suits, judgments, demands, damages, costs and expenses, including
reasonable attorneys' fees and expenses, arising out of or in connection with
the failure by the Debtor to perform its obligations under this Agreement,
unless arising solely from the gross negligence or willful misconduct of the
Secured Party or the person seeking indemnification. This indemnity shall
survive the termination of this Agreement and the assignment of the Secured
Party's interest hereunder.
Section 8.12 Termination. Upon payment in full of the Obligations
(as defined in the Loan Agreement), this
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Agreement shall terminate, and the Secured Party, at the request and expense of
the Debtor, will execute and deliver to the Debtor instruments prepared by the
Debtor (including UCC-3 termination statements) acknowledging the termination of
this Agreement, and will duly assign, transfer and deliver to the Debtor
(without recourse and without any representation or warranty, other than a
representation that the Collateral is free from any Liens attributable to the
Secured Party) such of the Collateral as may be in possession of the Secured
Party and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, this Pledge and Security Agreement has been duly
signed and delivered as of the day and year first above written.
MEI HOLDINGS, L.P., a Delaware limited
partnership
By: MEI GENPAR, L.P.
its general partner
By: HH GenPar Partners, its
general partner
By: Hampstead Associates,
Inc., a managing general
partner
By:
-----------------------------------
Name:
Title:
NOMURA ASSET CAPITAL CORPORATION,
as the Secured Party
By:
-----------------------------------------
Name:
Title:
ANNEX A
"Agreement" shall mean this Pledge and Security Agreement, as
modified, supplemented or amended from time to time.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions are
authorized or permitted by law or other government action to be closed in the
State of New York.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
"Collateral" shall have the meaning assigned to such term in Section
3.1 of this Agreement.
"Default" shall mean any event, act or condition which, with notice
or expiration of any applicable grace period, or both, would constitute an Event
of Default.
"Distributions" shall have the meaning assigned to such term in
Section 3.l(iii) of this Agreement.
"Event of Default" shall have the meaning assigned to such term in
Section 4.1 of this Agreement.
"Federal Securities Laws" shall have the meaning ascribed to such
term in Section 5.8 of this Agreement.
"Lien" shall mean with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
"Malibu" shall mean Malibu Entertainment Worldwide,
Inc., a Georgia corporation.
"Obligations" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Pledged Interest" shall mean the 38,323,513 shares of common stock,
without par value, of Malibu, owned by the Debtor and pledged to the Secured
Party on the date hereof.
"UCC" shall mean the Uniform Commercial Code as the same may from
time to time be in effect in the State of New York or any other applicable
jurisdiction.
ANNEX B
(i) The Debtor shall default in the performance of any of its
obligations in this Agreement and such default shall continue unremedied
for a period of five (5) days after notice thereof to the Debtor by the
Secured Party; or
(ii) An Event of Default under the Loan Agreement shall occur;
or
(iii) Except for expiration in accordance with its terms, any
of the Loan Documents shall be terminated or shall cease to be in full
force and effect, for whatever reason (other than due to the action or
inaction of the Secured Party).