EXHIBIT 10.29.1
MALIBU ENTERTAINMENT WORLDWIDE, INC.
SERIES CC PREFERRED STOCK
SHAREHOLDERS' AGREEMENT
THIS SERIES CC PREFERRED STOCK SHAREHOLDERS' AGREEMENT, dated as of
September 7, 2001, (this "AGREEMENT"), is entered into by and among Malibu
Entertainment Worldwide, Inc., a Georgia corporation (the "COMPANY"), MEI
Holdings, L.P., a Delaware limited partnership ("MEIH"), Old Hill Partners,
Inc., a Delaware corporation ("OLD HILL"), and such other Persons that become
parties hereto after the date of this Agreement in accordance with the terms
and provisions contained herein (collectively, "HOLDERS").
RECITALS
MEIH owns all the outstanding shares of the Series CC Preferred Stock, no
par value per share (the "SERIES CC STOCK"), of Malibu Entertainment Worldwide,
Inc., a Georgia corporation (the "COMPANY").
Upon the terms and subject to the conditions of the Warrant (defined
below), Old Hill has the right to acquire shares of Series CC Stock.
It is in the best interests of MEIH and Old Hill to memorialize certain
aspects of the relationship of the parties, including restrictions with respect
to transferring the Series CC Stock, all as hereinafter set forth.
In consideration of the mutual covenants and agreements contained herein,
the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, the following terms
herein shall have the following meanings:
"ACCEPTED SHARES" is defined in Section 2.9 of this Agreement.
"AFFILIATE" means, with respect to any person, any entity controlling,
controlled by or under common control with such designated person. For the
purposes of this definition, "control" shall have the meaning specified as of
the date of this Agreement for that word in Rule 405 promulgated by the
Commission under the Securities Act.
"AGREEMENT" is defined in the opening paragraph of this Agreement.
"APPROVED SALE" is defined in Section 2.3 of this Agreement.
"CASH EQUIVALENTS" means (a) immediately marketable, liquid and direct
obligations issued or unconditionally guaranteed by the United States federal
government or issued by any agency thereof and backed by the full faith and
credit of the United States of America, (b) immediately marketable,
liquid and direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof and, at the time of acquisition, having the highest
rating obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc., or (c) freely tradable and immediately marketable
equity or debt securities listed for or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers Automated Quotation System, which in the case of any equity
security are of an issue of equity securities having an aggregate listed market
value as of the day of determination of at least $250,000,000, or in the case
of a debt security are of an issue of debt securities having an aggregate
listed market value as of the day of determination of at least $500,000,000.
"COMMISSION" means the Securities and Exchange Commission and any
successor commission or agency having similar powers.
"COMMON STOCK" means the common stock, no par value per share, of the
Company.
"COMPANY" is defined in the Recitals of this Agreement.
"DEMAND REGISTRATION" has the meaning specified in the Registration Rights
Agreement.
"EMPLOYEE INCENTIVE SECURITIES" means Securities issued to employees or
directors of the Company and approved by the Company's Board of Directors.
"EXERCISE PERIOD" is defined in Section 2.9 of this Agreement.
"HOLDERS" is defined in the opening paragraph of this Agreement.
"INCLUDABLE SHARES" has the meaning specified in Section 2.10 of this
Agreement.
"MAJORITY SERIES CC HOLDERS" is defined in Section 2.3 of this Agreement.
"MEIH" is defined in the opening paragraph of this Agreement.
"MEIH PARTY" means MEIH and each person to whom MEIH transfers shares of
Series CC Stock.
"NOTICE OF PURCHASE" is defined in Section 2.9 of this Agreement.
"OFFER NOTICE" is defined in Section 2.2 of this Agreement.
"OFFERED SECURITIES" is defined in Section 2.2 of this Agreement.
"OFFERED SHARES" is defined in Section 2.9 of this Agreement.
"OLD HILL" is defined in the opening paragraph of this Agreement.
"OLD HILL PARTY" means Old Hill and each Person to whom Old Hill transfers
the Warrant and/or the shares of Series CC Stock underlying the Warrant.
"PERMITTED OLD HILL TRANSFER" shall mean a Transfer of any Series CC
Securities to (a) all of the partners of Old Hill, as an "in kind" distribution
of partnership assets, (b) a wholly-owned
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subsidiary of Old Hill, (c) Footbridge Limited Trust, Footbridge Capital LLC,
FLT Opportunity Fund, Inc., FLT Opportunity Fund LLC or Footbridge Capital II
LLC or (d) any other party specifically approved in writing by MEIH.
"PERMITTED TRANSFER" shall mean a Transfer of any Series CC Securities to
any Permitted Transferee.
"PERMITTED TRANSFEREE" means;
(a) in the case of any Person that is a partnership, any Person that
is a direct or indirect, current or former limited or general partner of such
Person;
(b) in the case of any Person that is a limited liability company, any
Person that is a direct or indirect, current or former member of such Person;
(c) in the case of any Holder, any voting trust established in
compliance with all applicable laws; or
(d) in the case of any Holder, any Affiliate of such Holder.
"PERSON" means an individual, partnership, corporation, business trust,
limited liability company, joint stock company, trust, unincorporated
association, joint venture, or other entity of whatever nature.
"PIGGYBACK REGISTRATION" has the meaning specified in the Registration
Rights Agreement.
"PRO RATA AMOUNT" means, as of any date with respect to a specified Holder,
the percentage equal to (a) the number of shares of Series CC Securities held by
such Holder as of that date, which number shall assume the exercise of the
Warrant held by any such Holder, divided by (b) the number of shares of Series
CC Securities held on that date by all members of the specified group of Holders
(e.g., MEIH Parties or all Holders), which number shall assume the exercise of
the Warrant held by any such Holder.
"PROPORTIONATE PERCENTAGE" is defined in Section 2.9 of this Agreement.
"PROPOSAL" is defined in Section 2.9 of this Agreement.
"PROPOSED PURCHASER" is defined in Section 2.4 of this Agreement.
"PURCHASERS" is defined in Section 2.2 of this Agreement.
"REGISTRABLE SECURITIES" has the meaning specified in the Registration
Rights Agreement.
"REGISTRATION RIGHTS AGREEMENT" is defined in Section 2.10 of this
Agreement.
"RESTRICTED HOLDERS" is defined in Section 2.8 of this Agreement.
"SECURITIES" means any debt or equity securities of the Company, whether
now or hereafter authorized or issued, and any instrument convertible into, or
exercisable or exchangeable for, any such
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Securities or Security.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES CC OFFER" is defined in Section 2.2 of this Agreement.
"SERIES CC SECURITIES" is defined in Section 2.1 of this Agreement.
"SERIES CC STOCK" is defined in the Recitals of this Agreement.
"SIGNIFICANT TRANSFER" is defined in Section 2.4 of this Agreement.
"TAG-ALONG ACCEPTANCE NOTICE" is defined in Section 2.4 of this Agreement.
"TAG-ALONG RIGHT" is defined in Section 2.4 of this Agreement.
"TAG-ALONG SALE NOTICE" is defined in Section 2.4 of this Agreement.
"TAG-ALONG SELLER" is defined in Section 2.4 of this Agreement.
"THIRD PARTY" means a Person who is a prospective purchaser of Series CC
Stock in a bona fide arm's length transaction from a Holder where such purchaser
is not a Permitted Transferee of such Holder.
"TRANSFER" means (a) any sale, assignment, transfer, negotiation, pledge,
hypothecation, other disposition and any even or transaction in which a lien is
created or (b) any other transaction, the effect of which is to transfer
substantially all the ownership, including indirect ownership, of the
Securities.
"TRANSFEROR" is defined in Section 2.2 of this Agreement.
"WARRANT" means the Warrant dated as of September 7, 2001, issued by the
Company and entitling Old Hill to purchase shares of Series CC Stock.
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ARTICLE 2
RESTRICTIONS ON TRANSFER
SECTION 2.1 General Restrictions. Except for Permitted Old Hill Transfers,
Old Hill and each subsequent Old Hill Party and, except for Permitted Transfers,
MEIH and each subsequent MEIH Party agree not to Transfer (a) any interest in
the Warrant, (b) any interest in any shares of Series CC Stock or (c) any
interest in any Security issued pursuant to Section 3.1 of this Agreement or
upon conversion of the shares of Series CC Stock (collectively, (a), (b) and (c)
shall be referred to as the "SERIES CC SECURITIES") held by such Holder except
in a Transfer made in accordance with the provisions of this Agreement. Any such
Transfer sought to be made in violation of this Agreement shall be null and
void, and neither the Company nor any transfer agent shall give any effect in
the Company's stock records to such attempted Transfer. Notwithstanding any
provision in this Agreement, there shall be no requirement for an MEIH Party to
receive the consent of an Old Hill Party prior to a Transfer of Series CC
Securities and nothing in this Agreement shall be deemed to prohibit any such
Transfer.
SECTION 2.2 Rights of First Refusal with Respect to Series CC Stock
(a) If an Old Hill Party (a "TRANSFEROR") wishes to Transfer any
Series CC Securities except in a Transfer pursuant to Sections 2.3 or 2.4, the
Transferor shall do so only for cash, Cash Equivalents or a combination of both,
and shall first deliver written notice (an "OFFER NOTICE") to each MEIH Party
identifying the security proposed to be Transferred (the "OFFERED SECURITIES")
and the proposed transferee, and stating the price at which, and other material
terms on which, the Transferor wishes to Transfer the Offered Securities,
including the anticipated date of the proposed Transfer, which shall be a date
not earlier than thirty (30) days after the date the Offer Notice is delivered.
(b) Delivery of an Offer Notice to each MEIH Party shall constitute an
offer by the Transferor to Transfer all of the Offered Securities in the
aggregate, but not less than all of the Offered Securities in the aggregate (the
"SERIES CC OFFER"), to the MEIH Parties pursuant to this Section 2.2, at the
price and on the other terms described in the Offer Notice.
(c) Upon receipt of the Offer Notice, each MEIH Party shall have the
right to purchase the portion of the Offered Securities equal to such MEIH
Party's Pro Rata Amount of such Offered Securities, exercisable by written
notice delivered to the Transferor within fifteen (15) days after receipt of
the Offer Notice. The participating MEIH Parties also may allocate the right to
purchase the Offered Securities between or among them in any proportion they
choose, as reflected in a notice to the Transferor within such fifteen (15) day
period.
(d) If the MEIH Parties shall not have exercised their rights to
purchase all of the Offered Securities in the aggregate during the period
specified in Section 2.2(c) above, then within three (3) days after the
expiration of the period specified in Section 2.2(c) above, the Transferor shall
notify each MEIH Party who agreed to purchase its Pro Rata Amount of the Offered
Securities of the portion of Offered Securities which remain available for
purchase. Each MEIH Party shall then have the right to purchase all of the
remaining Offered Securities or, if more than one MEIH Party wishes to purchase
all of the remaining Offered Securities, their Pro Rata Amount of the remaining
Offered Securities, with only the shares of Series CC Stock (or Common Stock, if
no shares of Series CC are then outstanding)
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held by the MEIH Parties who wish to purchase the remaining Offered Securities
considered in computing the Pro Rata Amount. Such right shall be exercisable by
written notice delivered to the Transferor within five (5) days after receipt of
the notice specified in this Section 2.2(d).
(e) If any of the MEIH Parties, either individually or in the
aggregate (collectively, the "PURCHASERS"), shall have exercised their rights to
purchase all of the Offered Securities, then within thirty (30) days after the
expiration of the five (5) day period specified in Section 2.2(d) above, the
Transferor shall Transfer the Offered Securities to the Purchasers, and the
Purchasers shall acquire the Offered Securities, at the price and on the other
terms described in the Offer Notice. The consummation of the Transfer shall take
place at 10:00 a.m. local time at the offices of the Company, on the date
specified for the proposed Transfer in the Offer Notice, or at such other
location or date on which the participants in the transaction agree in writing,
at which time the Purchasers shall deliver the appropriate consideration in the
form of cash or Cash Equivalents, and the Transferor shall deliver certificates
representing the shares of Series CC Stock to be sold, free and clear of any and
all liens, claims and encumbrances whatsoever (except those imposed by this
Agreement and securities laws generally), together with such other instruments
and documents of transfer as the Purchasers shall reasonably request.
(f) If the MEIH Parties do not, either individually or in the
aggregate, accept the Series CC Offer in its entirety, then the Transferor may
Transfer the Offered Securities (subject to the provisions of this Agreement,
securities laws generally and to any other agreements binding on the Transferor)
to the transferee named in the Offer Notice at a price and on other terms not
more favorable to the transferee than those terms set forth in the Offer Notice,
at any time within the sixty (60) day period beginning on the date that the
Transferor shall have received final notice (or by expiration of the period
specified in Section 2.2(d) above) that the MEIH Parties shall not have elected
to purchase the Offered Securities in the aggregate. The provisions of this
Section 2.2 shall again apply to any Transfer of Offered Securities not
Transferred within such period or any Transfer of Offered Securities at a lower
price or on terms that are more favorable to the transferee than those terms set
forth in the Offer Notice.
(g) Promptly after any sale pursuant to this Section 2.2, the
Transferor shall notify each MEIH Party of the consummation thereof and shall
furnish such evidence of the completion (including date of completion) of such
sale and of the terms thereof as each MEIH Party may reasonably request.
SECTION 2.3 Drag-Along Rights
(a) If MEIH Parties holding at least a majority of the then
outstanding shares of the Series CC Stock ("MAJORITY SERIES CC HOLDERS") approve
in writing the sale of all or a portion of their Series CC Stock to any Person
(other than transactions with an Affiliate of any Holder) (such a transaction
being an "APPROVED SALE"), upon request of the Majority Series CC Holders each
Old Hill Party will consent to, vote for, and raise no objections against, and
waive dissenters' and appraisal rights, if any, with respect to, the Approved
Sale, and if the Approved Sale is structured as a sale of stock, each such Old
Hill Party (i) will exercise the Warrant (unless such Warrant is terminated or
exercised) and (ii) will agree to sell and shall sell along with such Majority
Series CC Holders its Pro Rata Amount of Series CC Securities in the Approved
Sale (including any shares of Common Stock, if a conversion is requested
pursuant to Section 2.5 of this Agreement). Such MEIH Parties will negotiate the
terms of any Approved Sale and shall not assume any fiduciary duty to any Old
Hill Party
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in relation thereto.
(b) The obligations of each Old Hill Party with respect to an Approved
Sale are subject to the requirements that (i) each Old Hill Party receive an
amount of consideration in respect of each share of Series CC Stock held by it
that is the same form and amount of consideration received by any other holder
in respect of each share of Series CC Stock and if any holder of Series CC
Stock is given an option as to the form and amount of consideration to be
received, each Old Hill Party holding shares of Series CC Stock will be given
the same option and (ii) each Old Hill Party receive an amount of consideration
in respect of each share of Common Stock held by it that is 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, each Old Hill Party holding
shares of Common Stock will be given the same option.
(c) Each Old Hill Party shall, in connection with a sale of its shares of
Series CC Stock or Common Stock pursuant to this Section 2.3, at the request of
the Majority Series CC Holders, 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 as soon as reasonably
possible.
SECTION 2.4 Tag-Along Rights.
(a) Each MEIH Party agrees that in connection with the consummation of any
transaction or series of related transactions involving the transfer of shares
of Series CC Stock by such MEIH Party that constitute a "Significant Transfer"
(as hereinafter defined), each Old Hill Party will be offered an equal
opportunity (the "TAG-ALONG RIGHT") to participate in such transaction or
transactions based on its Pro Rata Amount of shares of Series CC Stock held by
all Holders participating in such transaction and, subject to paragraph (b)
below, on identical terms. As used herein, "SIGNIFICANT TRANSFER" means a
Transfer by an MEIH Party to any Person or Persons (including repurchases (but
not redemptions) by the Company) of all of the shares of Series CC Stock which
are beneficially owned by such MEIH Party other than (i) a Transfer pursuant to
an Approved Sale or (ii) a Permitted Transfer.
(b) Prior to any Significant Transfer subject to these provisions, the
selling MEIH Party (the "TAG-ALONG SELLER") shall notify each Old Hill Party in
writing of the proposed sale. Such notice (the "TAG-ALONG SALE NOTICE") shall
set forth the number of shares of Series CC 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"). Each Old
Hill Party may exercise the Tag-Along Right by delivery of a written notice
(the "TAG-ALONG ACCEPTANCE NOTICE") to the Tag-Along Seller within fifteen (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 such Old Hill
Party proposes to include its Pro Rata Amount (as determined in Section 2.4(a))
of Series CC Stock in the proposed sale. If no Tag-Along Acceptance Notice is
received during the fifteen (15) day period referred to above, the Tag-Along
Seller shall have the right during the subsequent sixty (60) day period to
effect the proposed sale of shares of Series CC Stock on terms and conditions
no more favorable than those stated in the Tag-Along Sale Notice. The
provisions of this Section 2.4 shall again apply to any Significant Transfer of
Series CC Stock not
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Transferred within such period or any Transfer of Series CC Stock at a higher
price or on terms that are more favorable to the Tag-Along Seller than those
terms set forth in the Tag-Along Sale Notice.
(c) In the event that an Old Hill Party exercises its Tag-Along Rights
pursuant to this Section 2.4, such Old Hill Party 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 Series CC Stock by the Tag-Along Seller and such Old Hill
Party. Each Old Hill Party agrees that if it exercises its Tag-Along Rights it
will bear its pro rata share (based upon the number of shares sold by all
Holders participating in the transaction) of the costs and expenses of any sale
of shares pursuant to this Section 2.4 to the extent such costs are incurred
for the benefit of all selling shareholders and are not otherwise paid by the
acquiring party. Costs incurred by any Holder on its own behalf will not be
considered costs of the transaction hereunder.
SECTION 2.5 Mandatory Conversion. In the event that one or more MEIH
Parties elect to convert all or any portion of the outstanding Series CC Stock
into Common Stock pursuant to the terms of the Company's Certificate of
Incorporation, and upon receipt of five (5) days prior notice from such MEIH
Parties of such election, each of the Old Hill Parties shall, on the date set
forth in such aforementioned notice, (i) exercise the Warrant (unless already
terminated or exercised) and (ii) convert, along with such MEIH Parties
electing to convert, the same percentage of its shares of Series CC Preferred
Stock into shares of Common Stock.
SECTION 2.6 Mandatory Voting. In the event that a majority in interest of
the MEIH Parties elects to waive their right to vote with the holders of the
Common Stock on an as-converted basis, then each Old Hill Party shall waive its
right to vote with the holders of the Common Stock on an as-converted basis.
SECTION 2.7 Voting Power. Old Hill and each subsequent Old Hill Party
hereby represent that they have been advised that, based on current outstanding
ownership and assuming exercise of the Warrant, they will not acquire
sufficient voting power to influence any votes made by the holders of all of
the Company's capital stock on an as-converted basis or any class votes made by
holders of Series CC Stock, including, without limitation, any consents
required from the holders of Series CC Stock pursuant to Section 2.10.2 of the
Certificate of Designations for the Series CC Stock, including, without
limitation, consenting to an amendment to the Series CC Certificate of
Designations.
SECTION 2.8 Agreement to be Bound. Prior to the termination of this
Agreement, no Series CC Securities may be Transferred to any Third Party or
Permitted Transferee (the "RESTRICTED HOLDERS") by an Old Hill Party or an MEIH
Party unless such Restricted Holder, prior to such sale, transfer or other
disposition, agrees in writing, in form and substance satisfactory to MEIH, to
be bound by the terms hereof to the same extent and in the same manner as the
transferor of such Series CC Securities, a copy of which writing shall be
maintained on file with the secretary of the Company and shall include the
address of such Restricted Holder to which notices hereunder shall be sent.
Each such supplementary agreement shall become effective upon its execution by
MEIH or Old Hill and the Restricted Holder, and it shall not require the
signatures or the consent of any other party hereto. Upon such execution such
Restricted Holder shall be bound by all the restrictions placed on Old Hill
Parties or MEIH Parties, as the case may be, hereby, shall be subject to any
additional restrictions set forth in
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such supplementary agreement and shall enjoy only such rights as are
specifically set forth in such supplementary agreement.
SECTION 2.9 Pre-Emptive Rights.
(a) Other than issuances of Employee Incentive Securities, the Company
shall not issue or sell any additional shares of Series CC Stock or any capital
stock ranking prior or superior to, or on parity with respect to dividends or
other distributions or upon liquidations, dissolution or winding up of the
Company (including securities convertible into, or options, warrants or other
rights to purchase Series CC Stock or such other capital stock) (collectively,
the "OFFERED SHARES") without first providing each Old Hill Party the right to
subscribe for its Proportionate Percentage (as defined below) of the Offered
Shares at a price and on such other terms which are at least as favorable as the
Company shall have offered or proposes to offer and which the Company shall have
specified in a notice delivered to each Old Hill Party (the "PROPOSAL"). The
Proposal by its terms shall remain open and irrevocable for a period of thirty
(30) days from the date it is delivered by the Company to each Old Hill Party
(the "EXERCISE PERIOD").
"PROPORTIONATE PERCENTAGE" means, for any Old Hill Party, a percentage
of Offered Shares covered by the Proposal equal to such holder's percentage
ownership of the Company's issued and outstanding shares of Series CC Stock
(assuming the exercise of the Warrant).
(b) Notice of each Old Hill Party's intention to accept the Proposal
shall be evidenced by a writing signed by such holder and delivered to the
Company prior to the end of the Exercise Period (the "NOTICE OF PURCHASE")
setting forth such holder's Proportionate Percentage of the Offered Shares which
such holder has elected to purchase (the "ACCEPTED SHARES").
(c) In the event that all of the Old Hill Parties elect to purchase
all of the Offered Shares offered in the Proposal, the Company shall sell to
each such holder the number of Accepted Shares set forth in such holder's Notice
of Purchase.
(d) In the event that one or more of the Old Hill Parties do not elect
to purchase all of the Offered Shares offered in the Proposal, the Company shall
sell to each holder that has so elected to purchase the number of Accepted
Shares, if any, set forth in such holder's Notice of Purchase. Any other Old
Hill Party may purchase any remaining shares offered in the Proposal not
purchased by the other Old Hill Parties pro rata based on their respective
Proportionate Percentages, or as they may otherwise agree.
(e) No later than thirty (30) days after the expiration of the
Exercise Period, the Company shall deliver to each Old Hill Party who has
submitted a Notice of Purchase to the Company a notice indicating the number of
Offered Shares which the Company shall sell to such holder pursuant to this
Section 2.9 and the terms and conditions of such sale, which shall be in all
respects (including, without limitation, unit price, interest rates, dividend
rates and other material terms) the same as specified in the proposal. The sale
of such Offered Shares shall take place not later than 10 days after receipt of
such notice.
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Any such sale of Offered Shares that were not selected for purchase by
the Old Hill Parties as provided above shall take place not later than ninety
(90) days after the expiration of the Exercise Period. Such sale shall be upon
terms and conditions in all respects (including, without limitation, unit price
and interest rates) which are no less favorable to the Company than those set
forth in the Proposal. Any refused Offered Shares not purchased as contemplated
by the Proposal within the 90-day period specified above shall remain subject to
this Section 2.9.
SECTION 2.10. Subsequent Registration by Company of Common Stock
(a) MEIH and the Company are parties to that certain Registration
Rights Agreement, dated as of July 20, 1999 (the "REGISTRATION RIGHTS
AGREEMENT"). Whenever an MEIH Party exercises its rights to a Demand
Registration, such MEIH Party shall, within five (5) days of exercising such
rights, give written notice of such exercise to each Old Hill Party at the
address of such holder appearing on the records of the Company, and the Company
shall offer to include under such registration any Registrable Securities held
by each Old Hill Party. The Registration Rights Agreement is hereby deemed
amended pursuant to Section 11(c) of the Registration Rights Agreement to the
extent necessary to include the Registrable Securities held by Old Hill as
Registrable Securities and to entitle each Old Hill Party to all of the rights
applicable to a Purchaser (as defined in the Registration Rights Agreement) and
a holder of Registrable Securities under the Registration Rights Agreement and
each Old Hill Party agrees to be bound by all of the obligations applicable to
such parties set forth in the Registration Rights Agreement; provided, however,
each Old Hill Party shall have no right to request or participate in any Demand
Registration or Piggyback Registration except to the extent permitted by this
Section 2.10. Whenever the Company proposes to file a registration statement
under the Securities Act for which MEIH will have the right to request a
Piggyback Registration, the Company shall provide each Old Hill Party with the
notice required to be given to holders of Registrable Securities pursuant to
Section 4(a) of the Registration Rights Agreement. To the extent, and only in
the event, that any MEIH Parties have requested the inclusion of Registrable
Securities in either a Demand Registration or a Piggyback Registration, each Old
Hill Party may request the inclusion of Registrable Securities in such
registrations, no more five (5) days after receipt of the notice provided for in
this Section 2.10(a). Such request shall be sent to the Company (and the Company
shall forward a copy of such request to each MEIH Party requesting inclusion in
such registration) and shall also include the facts with respect to such
proposed disposition and any information regarding such holder required to be
set forth in such registration statement. All filing fees, costs and other
expenses incurred in connection with any such filing under this Section 2.10 and
in complying with applicable securities and Blue Sky laws shall be for
the account of the Company.
(b) Notwithstanding anything contained in this Section 2.10 to the
contrary, if the managing underwriter of any underwritten offering determines
that the number of securities requested to be included in a registration under
Section 2.10(a) hereof would materially and adversely affect such offering, the
Company shall give written notice to each Old Hill Party of such determination
and state the number of Registrable Securities that such managing underwriter
has determined can be included in such registration (collectively, the
"INCLUDABLE SHARES"). In the event that the number of Registrable Securities
requested by the Old Hill Parties and the MEIH Parties to be included in a
registration under Section 2.10(a) is greater than the number of Registrable
Securities that such managing underwriter has determined can be included in such
registration, the number of Registrable Securities shall be
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reduced so that the number of Registrable Securities for each Old Hill Party
and for each MEIH Party is equal to such holder's percentage ownership of the
Company's issued and outstanding shares of Series CC Securities (assuming the
exercise of the Warrant) multiplied by the sum of all Registrable Securities
held by Old Hill Parties and MEIH Parties that are included in such
registration. The Company will furnish each Old Hill Party with copies of such
registration statements and of the prospectus included therein in such
quantities as may be reasonably necessary for the purpose of proposed
disposition. In the case of any registration initiated under this Section 2.10,
the Company shall have the right to designate the managing underwriter in any
underwritten offering. Underwriting fees, discounts, commissions, other
compensation and expense shall be proportionately borne by the Company, the MEIH
Parties and the Old Hill Parties on the basis of shares offered and sold by the
underwriters for their respective accounts.
ARTICLE 3
MISCELLANEOUS
SECTION 3.1. Dividends in Stock. If a stock dividend is paid on any share
of Series CC Stock held by any party to this Agreement, or if any shares of
Series CC Stock held by any party to this Agreement is exchanged for stock of a
different class or series, or for voting trust certificates evidencing any
beneficial interest in such stock, or if any other event (such as a stock split,
reclassification, or similar event) shall occur so that any Holders shall
receive additional or replacement Securities (whether of the same or a different
class or series), then such Securities of the same or a difference class or
series, or such voting trust certificates, as the case may be, shall thereupon
become subject to the provisions of this Agreement upon the same terms and
conditions as the Series CC Stock originally covered by this Agreement.
SECTION 3.2 Legends.
(a) The Warrant and each certificate evidencing any other Series CC
Securities that are issued to any Old Hill Party shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATED HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER STATE OR FOREIGN
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, OR TRANSFERRED EXCEPT IN
COMPLIANCE THEREWITH. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
SERIES CC PREFERRED STOCK SHAREHOLDERS' AGREEMENT, DATED AS OF SEPTEMBER 7,
2001, COPIES OF WHICH WILL BE FURNISHED BY THE COMPANY UPON REQUEST.
(b) In addition to the legend required by Section 3.2(a), each such
certificate issued to any Holder or any subsequent transferee shall be stamped
or otherwise imprinted with any legend required pursuant to applicable state
corporation and securities laws. If any stock subject to this Agreement shall
cease to be subject to the restrictions on transfer set forth above or otherwise
required herein, the Company shall, upon written request of the Holder thereof,
issue to such Holder a new certificate evidencing such Series CC Securities
without the applicable legend required by Section
11
3.2(a) endorsed thereon.
(c) The Company may decline to acknowledge or register a Transfer of any
Series CC Securities bearing any legend required hereunder (or may decline to
remove a legend under Section 3.2(b)), and may instruct any transfer agent for
its Securities to decline the same, unless the Company is reasonably satisfied
that the Series CC Securities being transferred have been registered or are
exempt from registration under applicable securities laws.
SECTION 3.3 Headings. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction
of any provisions hereof.
SECTION 3.4 Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, singular and plural as the identity
of that Person referred to requires.
SECTION 3.5 Remedies. The parties acknowledge that the Series CC
Securities are unique chattels and possess a special, unique and extraordinary
character which would make it difficult to assess the monetary damage which any
party hereto would sustain in the event of a breach hereof by another party
hereto and that in the event of any such breach by any Holder or the Company,
the other parties would be irreparably harmed and could not be made whole by
monetary damages. The Company and each Holder accordingly agree (a) to waive
the defense in any action for specific performance that a remedy at law would
be adequate, and (b) that an aggrieved party hereunder shall be entitled to
compel specific performance of this Agreement, in addition to any other remedy
to which they may entitled at law or in equity.
SECTION 3.6 Entire Agreement. This Agreement and the other documents and
agreements executed by the parties hereto on this date or referred to herein
together constitute the entire agreement and understanding of the parties
hereto in respect of the subject matter referred to herein and therein, and
there are no restrictions, promises, representations, warranties, covenants, or
undertakings with respect to the subject matter hereof, other than those
expressly set forth or referred to herein or therein. Except as otherwise
expressly set forth herein, this Agreement supersedes all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
SECTION 3.7 Notices. All communications in connection with this Agreement
shall be in writing and shall be deemed properly given if hand delivered or
sent by telecopier (provided that such communication is confirmed by same-day
deposit in the United States mail first class postage prepaid) or overnight
courier with adequate evidence of delivery or sent by registered or certified
mail return receipt requested and, if to MEIH, addressed to MEIH at the address
for notices set forth below:
MEI Holdings, X.X.
Xxxxx Tower
0000 Xxxx Xxxxxx, Xxxxx 0000-X
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to:
12
Xxxxxx Xxxxx Xxxx & Xxxx, P.C.
0000 Xxxxxxxx Xxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
if to Old Hill, addressed to Old Hill at the address for notices set forth
below:
Old Hill Partners, Inc.
00 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxxxx LLP
Suite 1600
0000 Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esquire
and if to the Company:
Malibu Entertainment Worldwide, Inc.
000 X. Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
or such other addresses or Persons as the recipient shall have designated to
the sender by a written notice given in accordance with this Section. Any
notice called for hereunder shall be deemed given when received.
SECTION 3.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without giving
effect to any choice of law or conflict of law provision or rule.
SECTION 3.9 Severability. The invalidity or unenforceability of any
provisions hereof in any jurisdiction shall not affect the validity, legality
or enforceability of the remainder hereof in such jurisdiction or the validity,
legality or enforceability hereof, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
SECTION 3.10 Termination. This Agreement shall terminate and be of no
further force or
13
effect upon the written agreement of all of the Holders; provided, however, in
the event that no Old Hill Party is a holder of Series CC Securities, MEIH may
terminate this Agreement at any time.
SECTION 3.11 Successors, Assigns and Transferees. All representations,
warranties, covenants and agreements of the parties contained in this Agreement
or made in writing in connection herewith, shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective successors
and permitted assigns (including, in the case of Old Hill, any Old Hill
Parties). In addition, and whether or not any express assignment has been made,
the provisions of this Agreement which are for the benefit of the Holders are
also for the benefit of, and enforceable by, any subsequent holders of Series
CC Securities, except any subsequent holder who acquires any such Series CC
Securities after such Series CC Securities have been sold to the public
pursuant to an effective registration statement under the Securities Act or in
a sale under Rule 144 of the Commission.
SECTION 3.12 Assurances. The Holders, by the signing hereof, hereby agree
to execute and deliver such other documents and agreements, including but not
limited to assignments, bills of sale, stock powers, or resolutions, as may be
reasonably necessary, desirable or convenient in order to effect the purposes
hereof.
SECTION 3.13 Amendments; Waivers. Any provision hereof may be amended,
modified or supplemented upon the consent in writing by a majority in interest
of each of the MEIH Parties and the Old Hill Parties, and upon the
effectiveness of such amendment, modification or supplement, all of the Holders
will be deemed to be bound thereby.
SECTION 3.14 Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original,
but all of which together will constitute one and the same instrument. Each
such counterpart may be transmitted via facsimile transmission or other similar
electronic means and a counterpart so transmitted shall be deemed an original
signature for all purposes and have the same force and effect as a manually
signed original.
SECTION 3.15 Construction and Representation. The parties understand and
acknowledge that they have each been represented by (or have had the
opportunity to be represented by) counsel in connection with the preparation,
execution and delivery of this Agreement. This Agreement shall not be construed
against any part for having drafted it.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HOLDERS:
MEIH: MEI HOLDINGS, L.P.,
a Delaware limited partnership
By: MEI GenPar, L.P.
its general partner,
By: HH GenPar Partners,
its general partner,
By: Hampstead, Associates, Inc.,
a managing general partner,
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Old Hill: OLD HILL PARTNERS, INC.,
a Delaware corporation
By: ______________________________________
Name: Xxxx Xxxxxx
Title: Secretary
Company: MALIBU ENTERTAINMENT WORLDWIDE, INC.,
a Georgia corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
[Shareholders' Agreement Signature Page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HOLDERS:
MEIH: MEI HOLDINGS, L.P.,
a Delaware limited partnership
By: MEI GenPar, L.P.
its general partner,
By: HH GenPar Partners,
its general partner,
By: Hampstead Associates, Inc.,
a managing general partner,
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Old Hill: OLD HILL PARTNERS, INC.,
a Delaware corporation
By: ______________________________________
Name: Xxxx Xxxxxx
Title: Secretary
Company: MALIBU ENTERTAINMENT WORLDWIDE, INC.,
a Georgia corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
[Shareholders' Agreement Signature Page]
