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EXHIBIT 99.19
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
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS............................................................................................1
SECTION 1.1. DEFINITIONS......................................................................................1
ARTICLE 2 SALES OF SERIES AA 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 TRUST; PREEMPTIVE RIGHTS.............................12
SECTION 3.1 PREPAYMENT OF MCI-NOMURA LOAN BY THE NOMURA PREPAYMENT AMOUNT AND RELEASE OF COLLATERAL.........12
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.......................................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 TRUST..................................................15
SECTION 3.5 PREEMPTIVE RIGHTS...............................................................................17
SECTION 3.6 LEGENDS.........................................................................................18
ARTICLE 4 CONVERSION OF REMAINING BALANCE OF MALIBU-MEIH LOANS INTO SERIES CC PREFERRED STOCK; SUBSEQUENT
ISSUANCE OF SERIES CC PREFERRED STOCK............................................................................19
SECTION 4.1 CONVERSION OF BALANCE OF MALIBU-MEIH LOAN INTO SERIES CC PREFERRED STOCK........................19
SECTION 4.2 MEIH DISCRETIONARY PURCHASE.....................................................................19
SECTION 4.3 LEGENDS.........................................................................................19
SECTION 4.4 MEIH WARRANT....................................................................................19
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..........................................................26
ARTICLE 6 [INTENTIONALLY OMITTED]...............................................................................26
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..................................................................................28
SECTION 9.3 SECURITIES LAWS LIMITATIONS ON DISPOSITIONS OF THE LENDER STOCK..................................28
SECTION 9.4 [INTENTIONALLY OMITTED]..........................................................................29
SECTION 9.5 PUBLIC ANNOUNCEMENTS.............................................................................29
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SECTION 9.6 SECURITIES FILINGS...............................................................................29
SECTION 9.7 HSR FILINGS......................................................................................29
SECTION 9.8 FURTHER ASSURANCES...............................................................................29
SECTION 9.9 AFFILIATE TRANSACTIONS...........................................................................29
SECTION 9.10 TRUST'S RIGHT TO RECEIVE BOARD OF DIRECTORS' MATERIALS...........................................30
SECTION 9.11 SALE OF THE COMPANY..............................................................................30
SECTION 9.12 TAG-ALONG RIGHTS.................................................................................32
SECTION 9.13 FULL ACCESS......................................................................................33
SECTION 9.14 PROCEEDINGS AND DOCUMENTS........................................................................33
ARTICLE 10 DEFAULT, TERMINATION, REMEDIES AND INDEMNIFICATION...................................................33
SECTION 10.1 [INTENTIONALLY OMITTED].........................................................................33
SECTION 10.2 [INTENTIONALLY OMITTED].........................................................................33
SECTION 10.3 REMEDIES UPON EVENT OF DEFAULT..................................................................33
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...................................................................................36
SECTION 11.4 COUNTERPARTS....................................................................................36
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............................................................38
SECTION 11.9 AMENDMENTS AND WAIVERS..........................................................................38
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
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
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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:
▇. ▇▇▇▇▇▇, 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.
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"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 ▇-▇, ▇-▇
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 Document shall not have been true and correct in all
material respects when made, (ii) such Party
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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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
"INDEMNIFYING PARTY" has the meaning given to such term in Subsection
10.5(c).
"INITIAL SERIES AA PURCHASE PRICE" means the excess of (i) the Nomura
Prepayment Amount over (ii) the Sale-Leaseback Net Proceeds.
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"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.
"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
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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 $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.
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"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.
"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.
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"PARKS" means, collectively, (i) the SpeedZone park located in ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ 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.
"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.
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"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).
"STANDSTILL AGREEMENT" means that certain Standstill Agreement, dated as of
August 28, 1996, between Mountasia Entertainment International, Inc. and MEIH.
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"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.
"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).
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"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.
(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
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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.
(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
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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.
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
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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.
(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
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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:
(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.
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(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:
(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
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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
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.
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(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 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
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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 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.
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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 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).
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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 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is issued and
outstanding, (11) an unvested stock grant to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
for 500,000 shares is outstanding, (12) warrants for the purchase
of 773,153
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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 ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ will be issued and outstanding, (13) an unvested stock
grant to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 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, 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
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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, 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
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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 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
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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 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.
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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, 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.
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(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 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]
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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 ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ 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;
(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;
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(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 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
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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 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
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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 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
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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 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.
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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 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
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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.
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
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37
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.
(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
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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 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'
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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.
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.
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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.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to MCI: Malibu Centers, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to MEIH: MEI Holdings, ▇.▇.
▇▇▇▇▇ Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary/Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to SZ: SZ Capital, ▇.▇.
▇▇▇▇▇ Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary/Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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If to any of the Company, MCI, MEIH or SZ, a copy also to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Nomura or Trust:
Nomura Asset Capital Corporation
2 World Financial ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and ▇▇▇▇▇ ▇.
▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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, 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
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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.
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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: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Chief Executive Officer
-------------------------------------
MCI:
MALIBU CENTERS, INC.,
a Delaware corporation
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: Vice President
-------------------------------------
NOMURA:
NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Vice President
-------------------------------------
TRUST:
PARTNERSHIP ACQUISITION TRUST V,
a Delaware business trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Attorney-in-Fact
-------------------------------------
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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: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Title: Vice President
------------------------------
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: /s/ ▇▇▇▇ ▇. READ
------------------------------------
Name: ▇▇▇▇ ▇. Read
-------------------------------
Title: Vice President
------------------------------
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EXHIBIT "A-1"
Form of Certificate of Designation for Series AA Preferred Stock
A-1
46
EXHIBIT "A-2"
Form of Series AA Registration Rights Agreement
A-2
47
EXHIBIT "B-1"
Form of Certificate of Designation for Series BB Preferred Stock
B-1
48
EXHIBIT "B-2"
Form of Series BB Registration Rights Agreement
B-2
49
EXHIBIT "C-1"
Form of Certificate of Designation for Series CC Preferred Stock
C-1
50
EXHIBIT "C-2"
Form of Series CC Registration Rights Agreement
C-2
51
EXHIBIT "D"
Form of Mutual Release
D-1
52
EXHIBIT "E"
Form of Stock Purchase Request
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[LETTERHEAD]
[DATE]
SZ Capital, ▇.▇.
▇▇▇▇▇ Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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,
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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.
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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