-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M7vsEtpVFx9xLa2JMuPs9tpalaz7mCvvI+IaZi+oXHkd3EBVeDGMwJLjFCPWY5Gj l6et7ZarQLtKs8O/VB2eWA== 0000950148-97-003145.txt : 19980102 0000950148-97-003145.hdr.sgml : 19980102 ACCESSION NUMBER: 0000950148-97-003145 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971229 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971231 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOWSCAN ENTERTAINMENT INC CENTRAL INDEX KEY: 0000812882 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 953940004 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09710 FILM NUMBER: 97747235 BUSINESS ADDRESS: STREET 1: 3939 LANDMARK ST CITY: CULVER CITY STATE: CA ZIP: 90232 BUSINESS PHONE: 3105580150 MAIL ADDRESS: STREET 1: 3939 LANDMARK STREET CITY: CULVER CITY STATE: CA ZIP: 902322315 FORMER COMPANY: FORMER CONFORMED NAME: SHOWSCAN CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SHOWSCAN FILM CORP DATE OF NAME CHANGE: 19901116 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------- Form 8-k CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 29, 1997 Showscan Entertainment Inc. -------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-15939 95-3940004 - ------------------------ ------------------------ --------------------- (State of Incorporation) (Commission File Number) (IRS Employer Identification No. ) -------------------------------- 3939 Landmark Street Culver City, CA 90232 -------------------------------- (Address of principal executive offices) (Zip Code) (310) 558-0150 -------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE -------------------------------- (former name or former address, if changed since last report) 2 Item 5. Other Events. On December 29, 1997, Showscan Entertainment Inc., a Delaware corporation (the "Company"), entered into an amendment ("Amendment No. 1") to the Agreement and Plan of Reorganization (the "Merger Agreement") with Iwerks Entertainment, Inc., a Delaware corporation ("Iwerks"), and IWK-1 Merger Corporation, a Delaware corporation and a wholly-owned subsidiary of Iwerks ("Merger Sub") dated August 4, 1997, pursuant to which Merger Sub will be merged with and into the Company (the "Merger"). Amendment No. 1 amends the Merger Agreement to provide that (a) each share of common stock, par value $.001 per share, of the Company (the "Company Common Stock") which is outstanding immediately prior to the Merger will be converted into the right to receive 0.62 shares of common stock, par value $0.001 per shares, of Iwerks (the "Iwerks Common Stock") and (b) each share of Series C Convertible Preferred Stock, par value $.001 per share, of the Company (the "Company Preferred Stock") will be converted into the right to receive shares of Iwerks Common Stock in an amount equal to the number of shares of the Company Common Stock into which such share of the Company Preferred Stock is convertible immediately prior to the Merger multiplied by 0.62. The Merger Agreement, prior to Amendment No. 1, had provided for a 0.85 exchange ratio rather than 0.62 in each of the foregoing provisions. In addition, Amendment No. 1 amends certain provisions of the Merger Agreement to provide that one current director of the Company will be appointed by Iwerks as a Class I director of Iwerks' Board of Directors immediately following the Merger, which director will be designated by the Company. In addition, Amendment No. 1 provides that Iwerks will as soon as practicable following the Merger expand the number of its directors to serve on its Board of Directors to seven and appoint two additional qualified candidates to serve as Class II and Class III directors, each of whom will be elected by a majority of Iwerks' then existing Board of Directors. The Merger Agreement, prior to Amendment No. 1, had provided for the appointment of three individuals who currently serve on the Corporation's Board of Directors to be appointed to Iwerks' Board of Directors as a Class I, Class II and Class III director, respectively, immediately after the Merger. In addition to the foregoing, Amendment No. 1, among other things, amends certain provisions of the Merger Agreement to (a) make inapplicable the "no-shop" provisions and related obligations of the Company with respect to alternative proposals until January 15, 1998, (b) permit the Company to terminate the Merger Agreement (as amended by Amendment No. 1) until January 15, 1998 without any obligation to pay the $1,500,000 termination fee described in the Merger Agreement, provided that the Company shall in such event reimburse Iwerks for all of its out of pocket expenses incurred in connection with the Merger up to the date of such termination up to a maximum of $1,000,000, and (c) extend the date on which Iwerks or the Company has the right to terminate the Merger Agreement if the Merger is not then consummated from December 31, 1997 to March 31, 1998. In connection with amending the terms of the Merger pursuant to Amendment No. 1, the Company's Board of Directors considered as favorable to its determination the presentations and opinion delivered by Allen & Company, Inc. to the effect that the consideration to be paid to the holders of the Company Common Stock and Company Preferred Stock pursuant to the Merger Agreement, as amended by Amendment No. 1, is fair to the stockholders of the Company from a financial point of view. Amendment No. 1 is filed as Exhibit 2.1 hereto and is incorporated herein by reference. A copy of the press release dated December 30, 1997 issued by the Company relating to Amendment No. 1 is filed as Exhibit 99.1 and is incorporated herein by reference. Item 7. Financial Statement, Pro Forma Financial Information and Exhibits. 3 (c) The following exhibits are filed as part of this Report: 2.1 Amendment No. 1 dated December 29, 1997 to Agreement and Plan of Reorganization by and among Iwerks Entertainment, Inc., IWK-1 Merger Corporation, and Showscan Entertainment Inc. 99.1 Press Release dated December 30, 1997. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: December 30, 1997 Showscan Entertainment Inc. By: /s/ W. TUCKER LEMON ------------------------------- Name: W. Tucker Lemon Title: Senior Vice President, General Counsel and Secretary 5 INDEX OF EXHIBITS EXHIBIT NO. DESCRIPTION - ----------- ----------- 2.1 Amendment No. 1 dated December 29, 1997 to Agreement and Plan of Reorganization by and among Iwerks Entertainment, Inc., IWK-1 Merger Corporation, and Showscan Entertainment Inc. 99.1 Press Release dated December 30, 1997. EX-2.1 2 EXHIBIT 2.1 1 EXHIBIT 2.1 AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF REORGANIZATION Amendment No. 1 to Agreement and Plan of Reorganization (the "Amendment No. 1") dated this December 29, 1997, by and among Iwerks Entertainment, Inc., a Delaware corporation ("Parent"), IWK-1 Merger Corporation, a Delaware corporation ("Sub") and Showscan Entertainment Inc., a Delaware corporation (the "Company"). RECITALS A. Parent, Sub and the Company have entered into that certain Agreement and Plan of Reorganization (the "Merger Agreement") dated August 4, 1997 pursuant to which Sub shall merge with and into the Company, the separate existence of Sub shall cease and the Company shall continue as the surviving corporation. As used herein and in the Merger Agreement the term "Agreement" shall mean the Merger Agreement as amended by this Amendment No. 1, and the term "Merger" shall mean the merger contemplated by the Merger Agreement as amended by this Amendment No. 1. Terms used herein without definition shall have the meanings given those terms in the Merger Agreement. B. The consummation of the Merger is subject to the satisfaction of various conditions, including but not limited to, the approval of the stockholders of Parent. C. The Merger Agreement provides, in certain circumstances, that either Parent or the Company shall have the right to terminate the Merger Agreement if the Merger is not consummated prior to December 31, 1997. D. Because of the uncertainty associated with the receipt of approval from Parent's stockholders and because of the uncertainty associated with the consummation of the Merger prior to the termination of the Merger Agreement, the parties have agreed to the amendment of Section 2.5 of the Merger Agreement and the other amendments provided for herein. E. The Boards of Directors of Parent, Company and Sub each has determined that a business combination among Parent, the Company and Sub is in the best interest of their respective companies and stockholders, and accordingly have approved and adopted this Amendment No. 1 and adoption of the Merger Agreement and Merger as amended hereby by their respective stockholders. AGREEMENT NOW THEREFORE, in consideration of the foregoing premises and mutual covenants herein provided, the parties agree as follows: 1. Section 2.5(a)(i) and (ii) of the Merger Agreement is hereby amended and restated 2 to read in its entirety as follows: "(i) each share of Company Common Stock outstanding immediately prior to the Effective Time shall entitle the holder thereof to 0.62 validly issued, fully paid and nonassessable shares of Parent Common Stock (the "Per Share Consideration"); (ii) each share of Company Preferred Stock outstanding immediately prior to the Effective Time shall entitle the holder thereof to that number of validly issued, fully paid and nonassessable shares of Parent Common Stock as is equal to the number of shares of Company Common Stock into which such share of Company Preferred Stock is convertible immediately prior to the Effective Time multiplied by 0.62;" 2. Section 6.16 of the Merger Agreement is hereby amended by adding the following to the end of such Section: "The first sentence of this Section 6.16 shall not become applicable until January 15, 1998, except that the Company shall notify Parent in writing prior to furnishing any information to, or entering into discussions or negotiations with, any Person concerning an Alternative Proposal (provided that nothing herein shall require the Company to identify such Person)." 3. Section 6.18 of the Merger Agreement is hereby amended and restated to read in its entirety as follows: "APPOINTMENT OF COMPANY NOMINATED DIRECTOR. Parent hereby agrees to appoint, immediately after the Effective Time, the Person designated by the Company, which Person shall be one of the Company's directors on the date of the Agreement and which shall be designated prior to the effectiveness of the Registration Statement (the "Company Nominated Director") to serve as a director on Parent's Board of Directors as a Class I director, all in accordance with Parent's Bylaws until such time as such director's successor has been duly elected or appointed and qualified or until the earlier death, resignation or removal of such director in accordance with Parent's Bylaws. Parent further agrees, as soon as practicable following the Effective Time, to expand the number of directors to serve on Parent's Board of Directors to seven and to commence a search for two additional qualified candidates to serve as a Class II and Class III director, respectively, who shall be elected by a majority of Parent's then existing Board of Directors." 4. Section 8.1 of the Merger Agreement is hereby amended and restated to read in its entirety as follows: "The Company shall have performed in all material respects its agreements contained in this Agreement required to be performed on or prior to the Effective Time." 5. Section 8.2 of the Merger Agreement is hereby amended and restated to read in its entirety as follows: "Intentionally omitted." 2 3 6. Section 10.1(b) of the Merger Agreement is hereby amended and restated to read in its entirety as follows: "by either Parent of the Company, if the Merger shall not have been consummated by March 31, 1998 (provided that the right to terminate this Agreement under this Section 10.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of or a substantial contributor to the failure of the Merger to occur on or before such date); 7. Section 10.3(a) of the Merger Agreement is hereby amended and restated to read in its entirety as follows: "The Company shall pay Parent a fee of $1,500,000 (the "Company Termination Fee") in the event that (i) this Agreement is terminated pursuant to (x) Section 10.1(d)(i) or 10.1(e), or (y) Section 10.1(f) if prior to the meeting of the stockholders of the Company contemplated pursuant to Section 6.4 an Alternative Proposal is publicly announced and the Company consummates such Alternative Proposal within 12 months of the termination of this Agreement pursuant to Section 10.1(f), or (ii) the condition set forth in Section 7.6 is not satisfied as a result of either (x) false or inaccurate statements made by the Company in the representation letter delivered by the Company to Ernst & Young or (y) a sale or other transfer after the date hereof of the capital stock of the Company or of Parent by an "affiliate" of the Company, as such term is defined and used in Accounting Series Releases 130 and 135, as amended; or (z) any action taken by the Company subsequent to the date of this Agreement; provided, however, the Company Termination Fee shall not be payable by the Company if this Agreement is terminated by the Company pursuant to Section 10.1(d)(i) prior to January 15, 1998, in which case the Company shall reimburse Parent an amount equal to all out of pocket expenses incurred by Parent up to the date of termination of this Agreement in connection with the Merger, but in no event shall such reimbursement obligation exceed $1,000,000 (the "Merger Expenses"). The company Termination Fee and the Merger Expenses shall be payable by wire transfer of same day funds either on the date contemplated in the last sentence of Section 10.1(d) if applicable, or otherwise, within two business days after such amount becomes due. The Company acknowledges that the agreements contained in this Section 10.3(a) are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, Parent would not enter into this Agreement; accordingly, if the Company fails to promptly pay the amount due pursuant to this Section 10.3(a) and, in order to obtain such payment, Parent commences a suit which results in a judgment against the Company for the fee set forth in this Section 10.3(a) the Company shall pay to Parent its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the rate of 10% per annum." 8. The parties agree that the combined knowledge and experience of the executive management teams of the respective companies will benefit the stockholders of the Surviving Corporation. Accordingly, Parent shall use its commercially reasonable efforts to retain the services of Messrs. Pope and Lemon to assist in the integration of the two companies for a period of up to six months following the closing on terms and conditions mutually satisfactory to Parent and such persons; provided, however, Parent under no circumstances shall be obligated to compensate either Mr. Pope or Mr. Lemon for such services at a rate greater than that their current base salaries as 3 4 employees of Company; and provided that under no circumstances shall such retention of Messrs. Pope and Lemon be given any effect under, or have any affect on, their existing employment, severance and similar arrangements with the Company. 9. The Company hereby represents and warrants to Parent that the Board of Directors of the Company has approved this Amendment No. 1, has determined that the Merger is in the best interests of the Company and its stockholders and has resolved to recommend the adoption of the Merger Agreement (as amended hereby) and the Merger by its stockholders. In connection with such actions, the Board of Directors of the Company has received an opinion of Allen & Company, Inc., its financial adviser, to the effect that the consideration to be paid to the holders of Company Common Stock and Company Preferred Stock pursuant to the Merger is fair to such holders from a financial point of view. 10. Parent hereby represents and warrants to the Company that the Board of Directors of Parent has approved this Amendment No. 1, has determined that the Merger is in the best interests of Parent and its stockholders and has resolved to recommend the approval of the issuance of Parent Common Stock pursuant to the terms of the Merger Agreement (as amended hereby) by its stockholders. In connection with such actions, the Board of Directors of the Parent has received an opinion of Resource Financial corporation, its financial adviser, to the effect that the consideration to be paid to the holders of Company Common Stock and Company Preferred Stock pursuant to the Merger is fair to Parent's stockholders from a financial point of view. 11. This Amendment No. 1 may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 12. Except as expressly modified or amended by the terms hereof, each and everyone of the other provisions of the Merger Agreement shall remain in full force and effect. 13. This Amendment No. 1, the Merger Agreement, the Exhibits and Schedules attached thereto, the other schedules referred to in the Merger Agreement and the Confidentiality Agreement contain the entire understanding of the parties and there are no further or other agreements or understandings, written or oral, in effect between the parties relating to the subject matter hereof unless expressly referred to herein. 4 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Agreement and Plan of Reorganization to be duly executed as of the date and year first above written. IWERKS ENTERTAINMENT, INC. a Delaware corporation By: /s/ ROY A. WRIGHT ------------------------------------ Name: Roy A. Wright Title: Chief Executive Officer SHOWSCAN ENTERTAINMENT INC. a Delaware corporation By: /s/ DENNIS POPE ------------------------------------ Name: Dennis Pope Title: President & CEO IWK-1 MERGER CORPORATION a Delaware corporation By: /s/ ROY A. WRIGHT ------------------------------------ Name: Roy A. Wright Title: Chief Executive Officer 5 EX-99.1 3 EXHIBIT 99.1 1 [News Release] STERN AND COMPANY 12121 Wilshire Boulevard - Suite 520 Los Angeles, California 90025 Telephone: (310) 442-8414 IWERKS ENTERTAINMENT - SHOWSCAN ENTERTAINMENT MERGER AGREEMENT REVISED; CONSUMMATION EXPECTED BY FEBRUARY 1998 Los Angeles, CA - December 30, 1997 - Iwerks Entertainment, Inc. (NASDAQ: IWRK) and Showscan Entertainment Inc. (NASDAQ: SHOW) jointly announced today that they have amended their merger agreement that, when consummated in the first quarter of 1998, will result in a combined entity that is the largest provider of ride simulation entertainment attractions and software in the world. The amended agreement calls for each share of Showscan common stock to be converted into 0.62 of a share of Iwerks common stock. Outstanding Showscan convertible preferred stock will be exchanged for Iwerks common stock at the 0.62 ratio on an as converted basis. The earlier agreement called for a ratio of 0.85. Completion of the transaction is subject to stockholder approval by both companies, as well as customary closing and regulatory conditions. Iwerks Entertainment expects to issue approximately 4.1 million shares of common stock in the merger, plus shares issuable upon exercise of outstanding Showscan options and convertible notes. This will result in an estimated transaction value of approximately $16 million, based upon the closing price of Iwerks common stock on the Nasdaq National Market on December 29, 1997 of $2.25 per share. In addition, as part of the amendment, the two companies have extended the agreement to March 31, 1998 from December 31, 1997. The transaction will be accounted for as a pooling of interests, after which Showscan will become a wholly owned subsidiary of Iwerks. In connection with the execution of the definitive merger agreement, certain stockholders of Showscan Entertainment, holding approximately 1.2 million shares of capital stock, have granted Iwerks an irrevocable proxy to vote those shares in favor of the merger at a meeting of Showscan's stockholders in the latter part of February 1998. In addition, certain stockholders of Iwerks Entertainment, holding approximately 1.6 million shares of Iwerks common stock, have granted Showscan an irrevocable proxy to vote those shares in favor of the merger at a meeting of Iwerks' stockholders in the latter part of February 1998. Iwerks and Showscan said the merger amendment will facilitate the consummation of the transaction and better allow for the enhancement of shareholder value. As a result of the merger, the combined company will have: o more than 160 simulation theatres, which is the largest installed base of simulation theatres in the world; o pro forma recurring film licensing revenues of approximately $12 million, based on Iwerks' and Showscan's fiscal 1997 results; o distribution rights to an industry-leading film library of approximately 80 ride simulation titles, including the critically acclaimed Devil's Mine Ride and Cosmic Pinball from the Showscan 39-title library and Dino Island and Secrets of the Lost Temple from the Iwerks 40-title library; and o Showscan's interests in owned and operated attractions in Los Angeles, California at Universal City Walk and in London, England at the Trocadero, among others. -over- 2 Roy A. Wright, Iwerk's Chairman and Chief Executive Officer, said "The combination of these two companies will create a true leader in location based entertainment. This merger creates the critical mass necessary to provide outstanding software and attractions support for what soon will be a network of almost 200 simulation theaters worldwide. From this base we hope to grow a company that will become increasingly more valuable to our customers and our shareholders." Dennis Pope, President and Chief Executive Officer of Showscan, said that "While this process has seemed a long one, it was necessary in order to provide the constituencies of both companies the strongest overall opportunity to reap the benefits of the strength of the combined entity. Moreover, we believe that major shareholders of both companies will concur that our strategy for consummation of this transaction is correct and that the resulting company will be stronger for it." Iwerks Entertainment, Inc. is one of the world's leading producers of high-tech, multi-sensory experiences such as ride simulation, 2D and 3D giant screen theaters, 360-degree video dance clubs and other immersive attractions. Serving prestigious entertainment, information and marketing providers, over 250 Iwerks attractions can be found worldwide at location based entertainment centers, amusement parks, family entertainment centers, shopping centers, casinos, resorts, nightclubs, restaurants, museums, fairs, festivals and more. Showscan Entertainment Inc. was founded in 1984 to commercially exploit the patented Showscan(TM) film process created by Douglas Trumbull and Paramount Pictures. In 1984, Showscan created the first major simulation entertainment attraction at the CN Tower in Toronto, Canada. Showscan then developed a motion simulation theatre product using the hyper-realistic Showscan process which was marketed to theme parks and entertainment centers worldwide. Showscan has long-term multi-theatre installation agreements with United Artists Theatre Circuit, Imagine Japan, Kings' Entertainment Co. (Taiwan) and Reality Cinemas (Australia). Presently, Showscan has 63 screens at 56 sites. CONTACTS: For Showscan Entertainment: Stern and Company -- Steven D. Stern: (310) 442-8414 For Iwerks Entertainment: William J. Battison -- (818) 840-6111 Bozell, Sawyer, Miller -- Joseph Kessler: (310) 442-2532 Stern and Company 12121 Wilshire Boulevard - Suite 520 Los Angeles, California 90025 Telephone: 310-442-8414 - Facsimile: 310-442-8411 -----END PRIVACY-ENHANCED MESSAGE-----