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Exhibit 1
ALL INDEBTEDNESS EVIDENCED BY THIS AMENDED AND RESTATED SUBORDINATED
PROMISSORY NOTE IS SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND
TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE TERMS OF,
THE AMENDED AND RESTATED SUBORDINATION AGREEMENT, DATED AS OF JUNE 27,
1997, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME, BY AND AMONG MALIBU ENTERTAINMENT WORLDWIDE, INC.,
AS BORROWER, MEI HOLDINGS, L.P., AS SUBORDINATED LENDER, AND FOOTHILL
CAPITAL CORPORATION, AS SENIOR LENDER.
SECOND AMENDED AND RESTATED SUBORDINATED PROMISSORY NOTE
$65,000,000 New York, N.Y.
March 27, 1998
FOR VALUE RECEIVED, the undersigned, Malibu Entertainment Worldwide,
Inc., a Georgia corporation ("Maker"), promises to pay to the order of MEI
Holdings, L.P., a Delaware limited partnership (together with any subsequent
holder of this Note, "Holder"), at its offices located at c/o The Hampstead
Group, 0000 Xxxx Xxxxxx., Xxxxx 0000 Xxxx, Xxxxxx, Xxxxx 00000, or at such other
address or to such account as Holder may from time to time designate in writing,
the unpaid principal sum of all advances made by Holder to Maker from time to
time in an aggregate principal amount of up to Sixty Five Million United States
Dollars ($65,000,000), together with interest thereon from the date hereof on
the unpaid principal balance at the rate and otherwise as herein provided.
Unless otherwise specified by Holder in writing, all payments on this Note shall
be made in lawful money of the United States of America and in immediately
available funds.
Interest shall accrue on the unpaid principal balance of this Note at
the rate of ten percent (10%) per annum. Accrued but unpaid interest shall be
compounded annually. Interest on the unpaid principal balance of this Note shall
be computed on the actual number of days elapsed, and a year of 360 days.
The unpaid principal amount of this Note and all accrued and unpaid
interest thereon shall become due and be paid on August 31, 2001 (the "Maturity
Date"). Maker may, at its option and upon three (3) Business Days' prior written
notice from Maker to Holder, prepay in whole or in part the outstanding
principal balance of this Note without payment of any premium or penalty.
Holder shall maintain an account or accounts evidencing the
indebtedness of Maker to Holder resulting from each advance made by Holder,
including the amount of principal
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and interest payable and paid to Holder from time to time hereunder. The entries
made in such account or accounts shall be prima facie evidence of the existence
and the amounts of the obligations recorded therein, provided that any failure
of Holder to maintain such account or accounts or any error therein shall not in
any manner affect the obligation of Maker to repay the advances made by Holder
to Maker in accordance with the terms of this Note.
Maker agrees and acknowledges that Holder has no commitment of
any kind to advance funds to Maker and that all advances previously made by
Holder to Maker and all advances, if any, that may be made by Holder to Maker in
the future have been made and will be made at the sole and absolute discretion
of Holder.
Maker shall use the proceeds of the loan evidenced by this
Note solely to fund its working capital requirements and to repay indebtedness
of the Maker the proceeds of which were used by Maker solely to fund its working
capital requirements.
If Maker fails to make any payment of principal, accrued and
unpaid interest or any other amount due hereunder on any due date therefor,
whether at stated maturity or otherwise, the unpaid amount (including, to the
extent enforceable at law, any unpaid amount of interest) shall bear interest
until paid at a rate per annum equal to the lesser of eighteen percent (18%) per
annum and the maximum rate of interest permitted by applicable law (the "Maximum
Amount"). Maker shall also pay to Holder, in addition to the amount due, all
reasonable costs and expenses incurred by Holder in collecting or enforcing, or
attempting to collect or enforce this Note, including without limitation court
costs and reasonable attorneys' fees and expenses (including reasonable
attorneys' fees and expenses on any appeal by either Maker or Holder and in any
bankruptcy proceeding).
With respect to the amounts due pursuant to this Note, Maker
waives demand, presentment, protest, notice of dishonor, notice of nonpayment,
suit against any party, diligence in collection of this Note, and all other
requirements necessary to enforce this Note.
In no event shall any amount deemed to constitute interest due
or payable hereunder (including interest calculated at the Default Rate) exceed
the Maximum Amount, and in the event such payment is inadvertently paid by Maker
or inadvertently received by Holder, then such sum shall be credited as a
payment of principal or other amounts (other than interest) outstanding
hereunder, and, if in excess of the outstanding amount of principal or other
amounts outstanding hereunder, shall be immediately returned to Maker upon such
determination. It is the express intent hereof that Maker not pay and Holder not
receive, directly or indirectly, interest in excess of the Maximum Amount.
Holder may, at any time during the term of this Note
(including any extensions of the term hereof), by written notice to Maker,
convert this Note into one or more subordinated convertible notes (the
"Convertible SubNotes") having terms that the Investment Banker (as defined
below) advises Maker and Holder (which advice will be in the form of a written
term sheet but need not be given in the form of a formal opinion) would be
required to ensure that the proceeds to Holder of an immediate sale of the
Convertible SubNote would be sufficient to repay
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the sum of (i) the then-outstanding principal and interest on this Note and (ii)
all third party costs incurred by the Maker and the Holder in an assumed
secondary public offering by Holder of the Convertible SubNote, including
without limitation any SEC or other filing fees, printing expenses, underwriting
discounts and fees and other fees and expenses (including attorneys' and
accountants' fees and expenses). Within 20 calendar days of Maker's receipt of
the foregoing notice, Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx Incorporated ("ML")
or, if such firm is unwilling or unable to serve, another nationally recognized
investment banking firm will be selected by Holder and the members of the Board
of Directors of Maker not affiliated with Holder or employed by Maker (ML or
such other firm, the "Investment Banker"). In its engagement of the Investment
Banker, Maker will obtain the Investment Banker's agreement to render such
advice as promptly as is practicable. If Holder is advised by legal counsel that
shareholder approval of the issuance of the Convertible SubNote or the issuance
of Common Stock upon conversion of the Convertible SubNote is required by law or
stock exchange rule, Maker will seek shareholder approval of the issuance of the
Convertible SubNotes at the earlier of the next annual or special meeting of
shareholders after the date hereof. The Convertible SubNote and any Shares
issued to the holder thereof upon conversion of the Convertible SubNote will be
"Registrable Securities" under the Registration Rights Agreement, dated as of
August 28, 1996, by and between Maker and Holder. Maker will be responsible for
all of its and Holder's fees and expenses (including the Investment Bankers' and
any attorneys' fees and expenses) in connection the execution and delivery of
the amendment and restatement of this Note and any other matters contemplated by
this Note.
Holder shall not by any act, delay, omission, or otherwise be deemed to
have modified, amended, waived, extended, discharged, or terminated any of its
rights or remedies, and no modification, amendment, waiver, extension,
discharge, or termination of any kind shall be valid unless in writing and
signed by Holder. All rights and remedies of Holder under the terms of this Note
and applicable statutes or rules of law shall be cumulative, and may be
exercised successively or concurrently. Maker agrees that there are no defenses,
equities, or setoffs with respect to the obligations set forth herein, and to
the extent any such defenses, equities, or setoffs may exist, the same are
hereby expressly released, forgiven, waived, and forever discharged. The
obligations of Maker hereunder shall be binding upon and enforceable against
Maker and its successors and assigns and shall inure to the benefit of Holder
and its successors and assigns.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note.
This Note was negotiated in New York, and made by Holder and accepted
by Maker in the State of New York, which State the parties agree has a
substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects, including without limitation matters of
construction, validity, and performance, this Note and the obligations arising
hereunder shall be governed by, and construed in accordance with, the internal
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laws of the State of New York and any applicable law of the United States of
America. To the fullest extent permitted by law, Maker hereby unconditionally
and irrevocably waives any claim to assert that the laws of any other
jurisdiction governs this Note, and this Note shall be governed by and construed
in accordance with the laws of the State of New York pursuant to ss. 5-1401 of
the New York General Obligations Law.
MAKER, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING WITHOUT LIMITATION ANY TORT
ACTION, BROUGHT WITH RESPECT TO THIS NOTE. HOLDER MAY FILE A COPY OF THIS WAIVER
WITH ANY COURT AS WRITTEN EVIDENCE OF MAKER'S KNOWING, VOLUNTARY, AND
BARGAINED-FOR AGREEMENT IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY, AND
THAT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN MAKER AND HOLDER SHALL INSTEAD BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Maker may not assign or delegate this Note or any of its rights or
obligations hereunder without the prior consent of Holder (which consent may be
given or withheld in the sole discretion of Holder). Holder may assign or
delegate this Note or any of its rights or obligations hereunder without prior
consent of or notice to Maker.
This Note amends and restates the $30,000,000 Amended and Restated
Subordinated Promissory Note, dated June 5, 1997, from Maker payable to the
order of Holder and is being issued in replacement of and in substitution for
such promissory note.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed on
its behalf as of the day and year first above written.
MALIBU ENTERTAINMENT WORLDWIDE, INC.
By:
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Name: Xxxxxxx X. XxxxXxxxxxx
Title: Vice President
