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EXHIBIT 99.17
RECAPITALIZATION AGREEMENT
THIS RECAPITALIZATION AGREEMENT ("AGREEMENT") is entered into as of March
1, 1999 between Nomura Asset Capital Corporation ("NOMURA"), Malibu
Entertainment Worldwide, Inc. ("MALIBU"), Malibu Centers, Inc. ("MCI"), MEI
Holdings, L.P. ("MEIH") and SZ Capital, L..P. ("SZ") to evidence the parties'
agreements with respect to the $21,390,375 loan from Nomura to MCI (the "MCI
LOAN"), the $21,034,759 loan from Nomura to MEI (the "MEIH LOAN"), the loan from
SZ to Malibu (the "SZ LOAN"), the loans from MEIH to Malibu (the "MALIBU LOANS")
and the recapitalization of Malibu. The parties agree to work diligently and in
good faith to complete and execute final documentation incorporating the terms
of this Agreement, and such other terms as the parties may reasonably require,
on or before May 1, 1999 (as and if extended pursuant to Paragraph 8 below, the
"CLOSING DATE"). Except for Paragraph 1, this Agreement is subject to the
completion of such final documentation.
1. INTEREST ACCRUAL. Nomura agrees that no interest payments will be
payable under the MCI Loan and the MEIH Loan prior to the Closing Date.
Such interest will instead be capitalized on the dates such interest
payments were due. Each reference in Paragraphs 2, 3 and 4 below to the
"amount" of the MCI Loan, the MEIH Loan or the SZ Loan, as applicable,
will be deemed to include all principal (including capitalized
interest), accrued but unpaid interest and other charges due and owing
with respect to such loan.
2. MCI LOAN. The MCI Loan is currently secured by first mortgages on parks
in Xxxxxx Hills, California and Houston (Willowbrook), Texas and
guaranteed by MEIH. On or before the Closing Date, MCI will repay $11.4
million of the MCI Loan in cash. Upon such payment, Nomura will
exchange the remaining balance of the MCI Loan as of such date for
preferred stock of Malibu having the terms described for "Series B" on
Exhibit "A" ("SERIES B PREFERRED STOCK") at par, resulting in the
discharge of the MCI Loan and the release of the collateral securing
it.
3. MEIH LOAN. On the Closing Date (a) Nomura will exchange the entire
amount of the MEIH Loan as of such date for Series B Preferred Stock at
par, resulting in the discharge of the MEIH Loan and the release of the
collateral securing it, and (b) without payment of additional
consideration, Malibu will issue to Nomura 6 million shares of Malibu
common stock. If all of the Series B Preferred Stock has not been
redeemed on or before September 30, 2000, Nomura will be entitled to
receive the following: (i) an additional 2 million shares of Malibu
common stock issued by Malibu; and (ii) an additional 4 million shares
of Malibu common stock conveyed by MEIH, all without payment of
additional consideration.
4. SZ LOAN. On the Closing Date, SZ will convert the entire amount of the
SZ Loan as of such date (currently approximately $6 million) into
preferred stock of Malibu having the terms described for "Series A" on
Exhibit "A" ("SERIES A PREFERRED STOCK"). SZ will also agree on the
Closing Date to advance to Malibu (by purchasing additional Series A
Preferred Stock) during the period beginning on the Closing Date and
ending on the third anniversary of the Closing Date (a) up to $12
million in the aggregate (including amounts advanced between November
1, 1998 and the Closing Date) to cover deferred maintenance, working
capital, certain past due payables, and other specified needs of
Malibu,
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and (b) up to an additional $2 million in the aggregate to cover cash
flow shortfalls resulting from below-budget operating performance or
other reasons. Notwithstanding anything to the contrary in this
Xxxxxxxxx 0, XX may not acquire, in the aggregate, in excess of $16
million in par value of Series A Preferred Stock.
5. MALIBU LOANS. On the Closing Date, MEIH will convert the entire amount
of the Malibu Loans as of such date into preferred stock of Malibu
having the terms described for "Series C" on Exhibit "A" ("SERIES C
PREFERRED STOCK")
6. RIGHT TO CONSULT WITH MALIBU ON OPERATING BUDGETS. In order to provide
the parties with a common benchmark against which to measure whether SZ
will be obligated to advance the additional $2 million described above,
Nomura will have the right to review (in good faith) and approve (not
to be unreasonably withheld, conditioned or delayed) Malibu's initial
operating budget for 1999 and subsequent years during which Nomura owns
Series B Preferred Stock.
7. FAILURE OF RECAPITALIZATION TO OCCUR. If the events described in
Paragraphs 2-5 do not occur on or before the Closing Date, then monthly
interest payments as set forth in the loan documents will again become
due and owing from and after the first day after the Closing Date.
8. EXTENSION OF CLOSING DATE. If, on or before May 1, 1999, a binding
commitment has been received by Malibu, MCI or MEIH with respect to the
funding of the $11.4 million described in Paragraph 2 above, then
Malibu, MCI or MEIH may extend the Closing Date to May 28, 1999.
9. AGREEMENT IN PRINCIPLE. Except for Paragraph 1 hereof, this Agreement
is only a conceptual overview of the recapitalization of Malibu and the
other matters discussed herein. Additional reasonable details regarding
such transactions (consistent with the terms of this Agreement) will be
agreed upon by the parties and reflected in the final documentation.
Executed as of the date first above written.
NOMURA ASSET CAPITAL CORPORATION
By: /s/ XXXXXX XXXXX
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Name: Xxxxxx Xxxxx
Title: Director
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MALIBU CENTERS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman
MEI HOLDINGS, L.P., a Delaware
limited partnership
By: MEI GENPAR, L.P.,
its general partner
By: Hampstead Associates, Inc.,
a managing general partner
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: President/CO-CEO
SZ CAPITAL, L.P., a Delaware
limited partnership
By: SZ GENPAR, L.P.,
its general partner
By: Hampstead Associates, Inc.,
a managing general partner
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: President/CO-CEO
MALIBU ENTERTAINMENT WORLDWIDE, INC.
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman
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EXHIBIT "A" TO RECAPITALIZATION AGREEMENT
TERMS OF SERIES B
CUMULATIVE
PREFERRED STOCK
OF MALIBU
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TERM: Perpetual.
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DIVIDEND RATE: 9% per annum.
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DIVIDEND PAYMENTS: Payable quarterly in cash (except as provided
below) if and when the Board declares a dividend
on Series B Preferred Stock.
At any time prior to January 1, 2002, dividends
will be payable in kind (in additional shares of
Series B Preferred Stock) at Malibu's option.
If cash dividends are not paid when due
(beginning on January 1, 2002) for at least two
quarters, then (i) MEIH will agree to vote its
shares for a slate of directors of Malibu
selected by the holders of the Series B
Preferred Stock equal in number to the number of
MEIH directors on the board, and (ii) the
holders of the Series B Preferred Stock and MEIH
will agree to vote their shares to elect 3
additional directors mutually acceptable to, and
not affiliated with, the holders of the Series B
Preferred Stock and MEIH.
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ACCUMULATION: Unpaid dividends accumulate.
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RANK: Senior in dividend and liquidation preference to
all other Malibu capital stock except Series A
Preferred Stock.
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LIQUIDATION PREFERENCE: $100,000 per share plus accrued and unpaid
dividends.
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VOTING RIGHTS: The holders of a majority of the shares of
Series B Preferred Stock voting as a class must
approve any amendment of the terms of the Series
B Preferred Stock. If the Series B Preferred
Stock is not redeemed prior to January 1, 2014,
then (i) MEIH will agree to vote its shares for
a slate of directors of Malibu selected by the
holders of the Series B Preferred Stock equal in
number to the number of MEIH directors on the
board, and (ii) the holders of the Series B
Preferred Stock and MEIH will agree to vote
their shares to elect 3 additional directors
mutually acceptable to, and not affiliated with,
the holders of the Series B Preferred Stock and
MEIH.
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REDEMPTION: Redeemable at par plus accrued dividends until
January 1, 2001. Thereafter, redeemable as
follows:
1) Between January 1, 2001 and January 1, 2002,
at 105% of par plus accrued and unpaid
dividends.
2) During each of the next 4 one year periods
thereafter, at a premium to par that
decreases 1% each year (in each case plus
accrued and unpaid dividends).
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ADJUSTMENTS FOR MERGERS, Standard for this type of security.
ETC.:
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REGISTRATION RIGHTS: The holders of the Series B Preferred Stock will
receive registration rights that are reasonable
and customary in transactions of this type. Such
rights will be set forth in a registration
rights agreement.
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STOCK GRANTS As additional consideration for the debt
conversion outlined herein:
1) Malibu will issue 6 million shares of
common stock to Nomura at the closing of
the conversion. (Malibu currently has
approximately 50 million shares of common
stock outstanding.) Nomura will have the
same registration rights with respect to
this stock as outlined above.
2) Malibu and MEIH will commit to transfer an
additional 6 million shares of common stock
to Nomura on September 30, 2000 if the
Series B Preferred Stock has not been
redeemed prior to that date.
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MISCELLANEOUS o Malibu will be obligated to make a
repurchase offer at par plus accrued and
unpaid dividends in the event anyone other
than MEIH or affiliated entities acquires a
majority of the Malibu common shares and
effects a change in a majority of the
Malibu board.
o Malibu may issue senior preferred stock as
consideration for new capital invested in
Malibu, including the Series A Preferred
stock.
o Standard anti-dilution protections on 6
million shares which may be required to be
issued on September 30, 2000.
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TERMS OF SERIES C
CUMULATIVE CONVERTIBLE
PREFERRED STOCK
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INTRODUCTION: Concurrent with the closing of the
recapitalization, new Series C Preferred Stock
would be issued to MEIH in exchange for the
conversion of all of its subdebt (plus accrued
interest).
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GENERALLY: Same terms and rights as Series B Preferred
Stock except as described below.
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RANK: Junior to Series A & B Preferred Stock but
senior to all other Malibu capital stock as to
dividends and liquidation preference.
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DIVIDEND RATE: 7%
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CONVERSION Convertible into common stock at $2.50 per share
(subject to standard anti-dilution protections).
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STOCK GRANTS None.
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TERMS OF SERIES A
CUMULATIVE CONVERTIBLE
PREFERRED STOCK
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GENERALLY: Same terms and rights as Series B Preferred
Stock except as described below.
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RANK: Senior in dividend and liquidation preference to
all other Malibu capital stock.
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DIVIDEND PAYMENTS Payable quarterly in cash (except as provided
below) if and when the Board declares a dividend
on Series A Preferred Stock.
At any time prior to January 1, 2004, dividends
will be payable in kind (in additional Series A
Preferred Shares) at Malibu's option.
If cash dividends are not paid when due
(beginning on January 1, 2004), the holders of
the Series A Preferred Stock will have the
right, as a class, to elect a majority of the
directors of Malibu.
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STOCK GRANTS None
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CONVERSION: Beginning September 30, 2000, convertible at any
time at the holder's option into Malibu Common
Shares at 120% of market at the time of the
conversion, determined based on the volume
weighted trading price for the 20 day period
prior to conversion, but not to exceed
$2.50/share. (Holders will be entitled to
standard anti-dilution protections.)
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