<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
December 31, 1996
------------------------------------------------
Date of Report (date of earliest event reported)
Cinema Ride, Inc.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24592 95-4417467
- ---------------- ---------------- --------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
Incorporation) Number)
12001 Ventura Place, Suite 340
Studio City, California 91604
----------------------------------------
(Address of principal executive offices)
(818) 761-1002
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
On December 31, 1996, Cinema Ride, Inc. (the "Company") closed a
financing with Finova Technology Finance, Inc. (the "Lender") structured as a
sale leaseback transaction of certain equipment owed by the Company. The gross
loan amount was for $1,575,026.88 to be paid over a four year term at $40,903.45
per month. The loan bears a variable interest rate based on the average weekly
interest rate of three-year U.S. Treasury Securities. The financing agreement
requires the Company to repurchase the equipment at the end of the lease for
$157,503.
In connection with obtaining this financing, the Lender required the
Company to raise a minimum of $500,000 through a combination of equity,
subordinated debt, or conversion to equity of existing notes/liabilities. The
Company, to date, has issued 444,285 shares of the Company's common stock to
various vendors and 250,000 shares to existing noteholders in lieu of amounts
owed by the Company, enabling the Company to meet the Lender's requirement. The
Company also issued 100,000 warrants to the Lender at an exercise price of $2.00
per share, and an aggregate of 265,643 warrants to the brokers at an exercise
price based on 110% of the market value at the closing date of the financing.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
4.1 Warrant Certificate.
4.2 Warrant Holder Rights Agreement dated as of December 31, 1996
between the Company and the Lender.
10.1 Master Equipment Lease Agreement dated as of December 12, 1996
between the Lender and the Company.
2
<PAGE>
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: January 21, 1997
CINEMA RIDE, INC.
By: /s/ Mitch Francis
------------------
Mitch Francis, President
3
<PAGE>
EXHIBIT 4.1
CINEMA RIDE, INC.
100,000 WARRANTS
-------
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK OF THE COMPANY
ISSUABLE UPON EXERCISE OF SUCH WARRANTS HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY STATE SECURITIES
LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY OR AN OPINION REASONABLY SATISFACTORY TO THE COMPANY OF COUNSEL TO THE
HOLDER THAT SAID SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED, AS
THE CASE MAY BE, WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
ANY APPLICABLE STATE SECURITIES LAW. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF
THE WARRANTS REPRESENTED BY THIS CERTIFICATE REPRESENTS THAT IT IS ACQUIRING
THIS WARRANT FOR INVESTMENT PURPOSES.
CINEMA RIDE, INC.
WARRANT CERTIFICATE
to purchase Common Stock
Expiring December 31, 2003
-----------------
This Warrant Certificate certifies that Finova Technology Finance,
--------------------------
Inc. or registered assigns, is the registered holder of Warrants expiring
- ----
December 31, 2003, (the "Warrants") to purchase common stock, $.01 par value per
- -----------------
share (the "Common Stock"), of Cinema Ride, Inc., a Delaware corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company one fully paid and non-assessable share of Common Stock (a "Warrant
Share") at the purchase price per share (the "Exercise Price") of $2.00 per
----
share, payable in cash, by certified or bank check, or at the option of the
holder as provided in Section 12 hereof, upon surrender of this Warrant
Certificate and payment of the applicable Exercise Price at the office or agency
of the Company, but only subject to the conditions set forth herein. The
foregoing Exercise Price and the number of Warrant Shares issuable upon exercise
of the Warrants are subject to adjustment upon the occurrence of certain events
set forth herein.
NO WARRANT MAY BE EXERCISED AFTER 5:00 P.M., LOS ANGELES TIME ON
DECEMBER 31, 2003, AND TO THE EXTENT NOT EXERCISED BY SUCH TIME, SUCH WARRANTS
- -----------------
SHALL BECOME VOID.
The Warrants are subject to the following additional terms:
1
<PAGE>
SECTION 1. Registration of Transfers and Exchanges. Subject to
---------------------------------------
compliance with the terms of this Warrant Certificate, the Company shall from
time to time register the transfer of this Warrant Certificate upon the records
to be maintained by it for that purpose, upon surrender thereof accompanied (if
so required by it) by a written instrument or instruments of transfer in form
satisfactory to the Company, duly executed by the registered holder hereof or by
the duly appointed legal representative thereof or by a duly authorized
attorney. Upon any such registration or transfer, a new Warrant Certificate
shall be issued to the transferee(s) and the surrendered Warrant Certificate
shall be cancelled by the Company.
The holder of the Warrants represented by this Warrant Certificate
agrees that prior to any proposed transfer of the Warrants or of the Warrant
Shares, if such transfer is not made pursuant to an effective Registration
Statement under the Securities Act of 1933, as amended (the "Act"), such holder
shall deliver to the Company an opinion of counsel, reasonably satisfactory in
form and substance to the Company, and from counsel reasonably satisfactory to
the Company, that the Warrants or Warrant Shares may be so sold without
registration under the Act.
The Warrant holder agrees that each certificate representing Warrant
Shares will bear the following legend:
"The securities evidenced or constituted hereby have been acquired for
investment purposes and have not been registered under the Securities
Act of 1933, as amended. Such securities may not be sold,
transferred, pledged or hypothecated unless (i) effected in compliance
with that certain Warrant Holder Rights Agreement, dated as of
December 31, 1996, among the Company and the other signatories
thereto, and (ii) the registration provisions of said Act and any
applicable state securities or "blue sky" laws have been complied with
or the Company has received an opinion of counsel reasonably
satisfactory to the Company that such registration is not required."
The Company may deem and treat the registered holder hereof as the
absolute owner of the Warrants (notwithstanding any notation of ownership or
other writing hereon made by anyone), for the purpose of any exercise hereof, of
any distribution to the holder hereof, and for
2
<PAGE>
all other purposes, and the Company shall not be affected by any notices to the
contrary. The Warrants do not entitle the holder hereof to any rights of a
stockholder of the Company.
The holder of this Warrant Certificate is entitled to certain
registration rights with respect to the Warrants and the Warrant Shares
purchasable upon exercise hereof. Said registration rights are set forth in
full in a Warrant Holder Rights Agreement, dated of even date herewith, between
the Company and Finova Technology Finance, Inc..
-------------------------------
SECTION 2. Terms of Warrants: Exercise of Warrants. Subject to the
---------------------------------------
terms contained herein, the holder of this Warrant Certificate shall have the
right, which may be exercised at any time until 5:00 p.m., Los Angeles time, on
December 31, 2003 to purchase and receive from the Company the number of validly
- -----------------
issued, fully paid and non-assessable Warrant Shares which the holder may at the
time and from time to time be entitled to receive on exercise of the Warrants
represented by this Warrant Certificate and payment of the applicable Exercise
Price then in effect for such Warrant Shares. Each Warrant not exercised prior
to 5:00 p.m., Los Angeles time, on December 31, 2003 shall become void, and all
-----------------
rights hereunder and all rights in respect thereof hereunder shall cease as of
such time.
A Warrant may be exercised upon surrender to the Company at its
principal office of this Warrant Certificate with the form of election to
purchase attached hereto duly completed and signed, and upon payment to the
Company for the account of the Company of the applicable Exercise Price, as
adjusted as herein provided, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made in cash, by certified or official bank check payable to the order
of the Company, or at the option of holder, as set forth in Section 12 hereof.
Subject to the provisions of Section 3 hereof, upon such surrender of
this Warrant Certificate and payment of the applicable Exercise Price, the
Company shall issue and cause to be delivered with all reasonable dispatch to
the holder of this Warrant Certificate a certificate or certificates for the
number of full Warrant Shares issuable upon the exercise of such Warrants,
together with cash as provided in Section 7. Such certificate or certificates
for the Warrant Shares shall be deemed to have been issued and, subject to
applicable federal and state securities laws and regulations, any person so
designated to be named therein shall be deemed to have become a holder of record
of such Warrant Shares as of the date of the surrender of this
3
<PAGE>
Warrant Certificate and payment of the applicable Exercise Price. Such
certificate or certificates for the Warrant Shares shall bear the legend set
forth in Section 1 hereto. If the exercise is for less than all the Warrant
Shares, a new Warrant Certificate shall be issued for the remaining Warrant
Shares.
SECTION 3. Payment of Taxes. The Company will pay any documentary
----------------
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of such holder's Warrants.
SECTION 4. Mutilated or Missing Warrant Certificates. In case this
-----------------------------------------
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction of such Warrant Certificate and indemnity, if
requested, also satisfactory to it. An applicant for such substitute Warrant
Certificate shall also comply with such other reasonable requirements and pay
such other reasonable charges as the Company may prescribe.
SECTION 5. Reservation of Warrant Shares. The Company will at all
-----------------------------
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Warrant Certificate on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 7. The
4
<PAGE>
Company will furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto transmitted to the holder pursuant to Section 8
hereof.
Before taking any action which would cause an adjustment to the
Exercise Price in accordance with Section 6 hereof, the Company will take any
corporate action which may, in the opinion of its counsel (which may be counsel
employed by the Company), be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be validly issued, fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof, other than those
created by the holder of such Warrants.
SECTION 6. Adjustment of Exercise Prices and Number of Warrant Shares
----------------------------------------------------------
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
- --------
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 6. The Exercise Price shall
be adjusted simultaneously upon occurrence of such events. For purposes of this
Section 6, "Common Stock" means shares now or hereafter authorized of any class
of common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
a. In case the Company shall at any time after the date of original
issuance hereof do any of the following: (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue by reclassification
of its Common Stock any shares of capital stock of the Company; then immediately
after the distribution date of such stock dividend or the effective date of such
subdivision, split-up, combination or reclassification, as the case may be, the
number of shares of Common Stock which the registered holder of this Warrant is
entitled to purchase hereunder and the Exercise Price of such shares of Common
Stock shall be appropriately adjusted so that the registered holder hereof shall
be entitled to purchase the number of shares of Common Stock that such holder
would have held after such stock
5
<PAGE>
dividend, subdivision, split-up, combination or reclassification, as the case
may be, at the aggregate Exercise Price such holder would have paid for such
shares of Common Stock, if such holder had exercised the Warrants represented by
this Warrant Certificate prior to such event.
b. In case of any consolidation or merger to which the Company is a
party other than a merger or consolidation in which the Company is the
continuing corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, or in case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), lawful and adequate provisions shall be
made whereby the registered holder of this Warrant Certificate shall thereafter
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant Certificate and in lieu of the shares of
Common Stock immediately theretofore purchasable hereunder and receivable upon
the exercise of the Warrants, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for a number of outstanding
shares of Common Stock equal to the number of outstanding shares of Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
Warrants represented by this Warrant Certificate, and in any such case
appropriate provision shall be made with respect to the rights and interests of
the registered holder of this Warrant Certificate to the end that the provisions
hereof (including without limitation, to the extent provided herein, provisions
for adjustments of the Exercise Price and of the number of shares of Common
Stock purchasable and receivable upon the exercise of the Warrants represented
by this Warrant Certificate) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor entity (if other than the Company) resulting from such consolidation
or merger or the entity purchasing such assets shall assume by written
instrument executed and delivered to the registered holder of this Warrant
Certificate, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provision, such
registered holder of this Warrant Certificate may be entitled to purchase.
Notice of any such consolidation, merger, statutory exchange, sale or
conveyance, and of the provisions so proposed to be made, shall be mailed to the
registered holder of this Warrant Certificate not less than forty-five (45) days
prior to such event or promptly upon
6
<PAGE>
the Company's receiving notice thereof. A sale of all or substantially all of
the assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
c. Before taking any action which would cause an adjustment reducing
either the Exercise Price below the then par value of the shares of Common Stock
issuable upon the exercise of the Warrants, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock at such adjusted Exercise Price.
d. In case at any time or from time to time, conditions arise by
reason of action taken by the Company, which in the opinion of its Board of
Directors or the holder of this Warrant Certificate, are not adequately covered
by the provisions of this Warrant Certificate, and might adversely affect the
exercise rights of the holder of this Warrant Certificate, then the Board of
Directors of the Company shall appoint a firm of independent certified public
accountants of recognized national standing (which may be the firm regularly
retained by the Company), who shall give their opinion upon the adjustment, if
any, on a basis consistent with the standards established in the other
provisions of this Warrant Certificate, necessary with respect to the Exercise
Price or the number of Warrant Shares issuable upon exercise of the Warrants, so
as to preserve, without dilution, the exercise rights of the holder of this
Warrant Certificate and the number of Warrant Shares issuable upon exercise of
the Warrants by the holder hereof to the extent contemplated by this Section 6.
Upon receipt of such opinion, which shall be conclusive and binding on the
Company and the holder, the Board of Directors of the Company shall forthwith
make the adjustments provided therein.
SECTION 7. Fractional Interests. The Company shall not be required
--------------------
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 7,
be issuable upon exercise of any Warrants (or specified portion thereof), the
Company shall issue a full Warrant Share in lieu of such fractional share.
7
<PAGE>
SECTION 8. Notices to the Warrant Holder. Upon any adjustment of the
-----------------------------
Exercise Price and/or the number of Warrant Shares issuable upon exercise of the
Warrants pursuant to Section 6, the Company shall promptly thereafter cause to
be given to the Warrant holder, as provided in Section 9, a certificate setting
forth the Exercise Price and/or the number of Warrant Shares issuable upon
exercise of the Warrants after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based. Where appropriate, such notice to the Warrant holder may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 8.
In case:
a. the Company shall authorize the issuance to holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants; or
b. the Company shall authorize the distribution to holders of shares
of Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings); or
c. of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
d. of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
e. the Company proposes to take any action which would require an
adjustment of the Exercise Price or the number of Warrant Shares issuable upon
exercise of the Warrants pursuant to Section 6;
then the Company shall promptly give to the registered holders of the Warrant
Certificates at their respective addresses appearing on the Warrant register by
first-class mail, postage prepaid, a written notice describing the specific
details of such contemplated action, including,
8
<PAGE>
without limitation (i) the date as of which the holders of record of shares of
Common Stock to be entitled to receive any such rights, options, warrants or
distribution are to be determined, or (ii) the initial expiration date set forth
in any tender offer or exchange offer for shares of Common Stock, or (iii) the
date on which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up.
SECTION 9. Notices. Any notice, request, instruction or other
-------
document to be given hereunder shall be in writing, shall be deemed to have been
duly given or delivered when delivered personally or telecopied (receipt
confirmed, with a copy sent by certified or registered mail as set forth herein)
or sent by certified or registered mail, postage prepaid, return receipt
requested, or by Federal Express or other reputable overnight delivery service,
to the address of the party set forth below or to such address as the party to
whom notice is to be given may provide in a written notice to the Company, a
copy of which written notice shall be on file with the Secretary of the Company:
a. To the Company:
Cinema Ride, Inc.
12001 Ventura Place, Suite 340
Studio City, California 91604
b. To the Registered Holder:
At the address of such Registered Holder on the register
maintained pursuant to Section 1 hereof.
SECTION 10. Amendments. This Warrant Certificate may only be amended
----------
or modified by a written instrument executed by the Company and the registered
holders of 100% of the issued and outstanding Warrants.
SECTION 11. Governing Law. This Warrant Certificate shall be
-------------
governed by and construed under the laws of the State of California, without
reference to choice or conflict of laws principles.
9
<PAGE>
SECTION 12. Cashless Exercise. At the option of a holder, the
-----------------
exercise price may be paid by surrendering the Warrant Certificate covering that
number of Warrant Shares with a fair market value equal to aggregate exercise
price. As used herein, fair market value shall be the average of the closing
prices for the Company's Common Stock for the ten trading days preceding the
date of the notice of exercise.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed and delivered by its Secretary.
Dated: 12-24-96 CINEMA RIDE, INC., a Delaware corporation
-------------------
By /s/ Gary Packman
----------------------
Gary Packman
Secretary
10
<PAGE>
CINEMA RIDE, INC.
PURCHASE FORM
-------------
Number of Warrants exercised _______________
The undersigned hereby irrevocably elects to exercise the right
represented by this Warrant Certificate to purchase ______________ shares of
Common Stock and herewith tenders in payment for such shares $_____________ in
cash in accordance with the terms hereof. The undersigned requests that a
certificate representing such shares be registered and delivered as follows:
Name: _________________________________
Address: _________________________________
_________________________________
_________________________________
Delivery Address: _________________________________
(if different)
_________________________________
11
<PAGE>
ASSIGNMENT
----------
(To be signed only upon assignment of Warrant)
----------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
------------------------
------------------------
(Insert Social Security No. or
other identifying number of Assignee)
the within Warrant, hereby irrevocably constituting and appointing
attorney to transfer said Warrant on the
- --------------------------------------
books of the Company with full power of substitution in the premises.
DATED:
----------------------- ------------------------------
Signature of Registered Holder
Signature Guaranteed:
NOTE: The above signature must correspond
with the name as written on the face
of this Warrant Certificate.
12
<PAGE>
EXHIBIT 4.2
Piggyback Rights
WARRANT HOLDER RIGHTS AGREEMENT
This Warrant Holder Rights Agreement ("Agreement") is made as of the
31st day of December, 1996 by and among Cinema Ride, Inc. and Finova Technology
- ---- -------------- -----------------
Finance, Inc. ("Investor").
- ------------
The parties hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the
-------------------
following terms shall have the following meanings:
"Commission" shall mean the Securities and Exchange Commission or any
------------
other federal agency at the time administering the Securities Act.
"Company's Common Stock" or "Common Stock" shall mean the Common
------------------------ --------------
Stock, par value $.Ol per share, of the Company.
A "Controlling Person" of a particular entity shall mean a person that
--------------------
controls such entity within the meaning of Section 15 of the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Holder" shall mean Investor and any other person holding Registrable
------
Securities to whom the rights under the Agreement have been transferred in
accordance with Section 10.
"Investor" shall mean Finova Technology Finance, Inc.
-------- ------------------------------
"Public Offering" means an underwritten public offering of the Company
-----------------
pursuant to an effective registration statement under the Securities Act.
"Registrable Securities" shall mean (i) the Shares; and (ii) any
-----------------------
Common Stock of the Company issued or issuable in respect of the Shares upon any
stock split, stock dividend, recapitalization, or similar event, or any Common
Stock otherwise issued or issuable with respect to the Shares.
The terms "register," "registered" and "registration" shall refer to a
----------- ------------ --------------
registration effected by preparing and filing a registration statement in
compliance
<PAGE>
with the Securities Act, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
-----------------------
stated below, incurred by the Company including, without limitation all
registration, qualification and filing fees, printing expenses, escrow fees,
messenger and delivery expenses, fees and disbursements of counsel, accountants,
investment bankers and other person retained by the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"Restricted Securities" shall mean the Warrants, the Shares and any
-----------------------
other securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event.
"Securities Act" means the Securities Act of 1933, as amended.
----------------
"Selling Expenses" shall mean all underwriting discounts, selling
------------------
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
"Shares" shall mean the shares of the Company's Common Stock issuable
------
to a Holder pursuant to the exercise by such Holder of the Warrants.
"Warrants" shall mean the warrants issued to Investor to purchase
--------
100,000 Shares (subject to adjustment).
- -------
Any other capitalized term used herein which is not otherwise defined
above shall have the meaning set forth in the Loan Agreement.
2. Restrictions upon Transfer.
--------------------------
Each certificate representing Restricted Securities shall be stamped
or otherwise imprinted with a legend in the form provided in Exhibit A attached
hereto (in addition to any legend required under applicable state securities
laws). Investor hereby consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Company's Common Stock in
order to implement the restrictions on transfer established in this Agreement.
2
<PAGE>
3. Company Registration.
--------------------
3.1 Notice of Registration. If at any time or from
----------------------
time to time the Company shall determine to register any of its Common Stock
exclusively for cash, either for its own account or the account of security
holders, other than (i) a registration on Form S-8 or otherwise relating solely
to employee benefit plans, (ii) a registration on Form S-4, or (iii) a
registration on any other form which does not permit secondary sales, the
Company will:
(a) promptly give to each Holder written notice thereof;
and
(b) except as set forth in Section 3.2 below, include in
such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all Registrable
Securities as are specified in a written request or requests, actually received
by the Company within 15 days after receipt of such written notice from the
Company, by any Holder.
3.2 Underwriting. If the registration of which the Company
------------
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3.1 (a). In such event the right of any Holder to
registration pursuant to Section 3.1 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. The foregoing shall include, without limitation, such powers of
attorney and escrow agreements as the underwriters may require. Notwithstanding
any other provision of Section 3.1, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration. If any Holder disapproves of the terms of any
such underwriting, it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter.
3.3 Company Termination of Registration. The Company reserves
-----------------------------------
the right to terminate any such registration at anytime and for any reason
without liability to any Holder.
3
<PAGE>
3.4 Expenses. All Selling Expenses relating to securities
--------
registered on behalf of the Holders in connection with a registration pursuant
to this Section 4 shall be borne by the Holders of such securities pro rata on
the basis of the number of shares so registered and all Registration Expenses
shall be borne by the Company.
4. Delay of Registration. No Holder shall have any right to
---------------------
obtain or seek an injunction, restraining or otherwise delaying any registration
as the result of any controversy that might arise under this Agreement.
5. Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. The Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become effective;
(b) Furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such Holders and underwriters may reasonably request
in order to facilitate the public offering of such securities.
6. Indemnification.
---------------
6.1 Indemnification by Company. To the extent permitted by law,
--------------------------
the Company will indemnify each Holder, each of its officers, directors,
shareholders, employees, representatives and partners, and each Controlling
Person of such Holder, with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each Controlling Person of any underwriter, against all expenses,
claims, losses, damages or liabilities (or actions in respect thereon, including
any of the foregoing incurred in any investigation or inquiry or in any
settlement of any litigation commenced or threatened, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other document,
or any amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
4
<PAGE>
make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Company of the Securities Act, the
Exchange Act, or any state securities law, or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers, directors, shareholders, employees, representatives and
partners, and each such Controlling Person, each such underwriter and each such
Controlling Person of any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 6.1 shall not (i) apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld); (ii) apply to any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, underwriter, or
controlling person; or (iii) inure to the benefit of any underwriter from whom
the person asserting any such loss, claim, damage or liability purchased the
Registrable Securities which are the subject thereof (or to the benefit of any
person controlling such underwriter) with respect to a preliminary prospectus or
final prospectus if such underwriter (if required by the Act) failed to send or
give a copy of the most recent prospectus, if the most recent prospectus
furnished by the Company shall correct the untrue statement or alleged untrue
statement or omission or alleged omission which is the basis of the loss, claim,
damage, liability, or action for which indemnification is sought, to such person
at or prior to the written confirmation of the sale of such Registrable
Securities to such person. This indemnity will be in addition to any liability
which the Company may otherwise have.
6.2 Indemnification by Holders. To the extent permitted by law,
--------------------------
each Holder will, if Registrable Securities held by such Holder are included in
the securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors, officers,
shareholders, employees, representatives, attorneys and partners, each
underwriter, if any, of the Company's
5
<PAGE>
securities covered by such a registration statement, each Controlling Person of
the Company or such underwriter, and each other Holder, each of such other
Holder's officers, directors, shareholders, employees, representatives and
partners and each Controlling Person of such other Holder, against all claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in any investigation or inquiry or in any settlement
of any litigation, commenced or threatened, arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act, the Exchange
Act or any state securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law applicable to the
Company in connection with any such registration, qualification or compliance,
and each Holder will reimburse the Company, such other Holders, such directors,
officers, shareholders, employees, representatives, attorneys, partners, such
underwriters and such Controlling Persons for any legal or any other expenses
actually incurred in connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement), omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document or such violation (or alleged violation) is
committed, in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use in any such registration statement, prospectus, offering
circular or other document; provided, however, that the indemnity agreement
contained in this Section 6.2 shall not (i) apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of such Holder (which consent shall not be
unreasonably withheld); or (ii) inure to the benefit of any underwriter from
whom the person asserting any such loss, claim damage or liability purchased the
Registrable Securities which are the subject thereof (or to the benefit of any
person controlling such underwriter) with respect to a preliminary prospectus or
final prospectus if such underwriter (if required by the Act) failed to send or
give a copy of the most recent prospectus, if the most recent prospectus
furnished by the Company shall correct the untrue statement or alleged untrue
statement or omission or alleged omission which is the basis of the loss, claim,
damage, liability, or action for which indemnification is sought, to such person
at or prior to the written confirmation of the sale of such
6
<PAGE>
Registrable Securities to such person. This indemnity will be in addition to
any liability which each Holder may otherwise have.
6.3 Defense of Claims. Each party entitled to indemnification
-----------------
under Sections 6.1 or 6.2 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under the Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. Notwithstanding the foregoing, however, (i) if the
Indemnified Party reasonably determines that there may be a conflict between the
positions of the Indemnifying Party and of the Indemnified Party in connection
with the defense of such action, suit, investigation, inquiry or other
proceeding or that there may be legal defenses available to such Indemnified
Party different from or in addition to those available to the Indemnifying
Party, then counsel for the Indemnified Party shall be entitled to conduct a
defense to the extent reasonably determined by such counsel to be necessary to
protect the interest of the Indemnified Party, and (ii) in any event, the
Indemnified Party shall be entitled to have counsel chosen by such Indemnified
Party participate in, but not to conduct, the defense. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as a unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
6.4 Contribution. If the indemnification provided in
------------
either Section 6.1 or Section 6.2 is held by a court of competent jurisdiction
to be unavailable to an Indemnified Party with respect to any loss, liability,
claim, damage or expense referred to therein, then the Indemnifying Party
thereunder shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand, and of the Indemnified Party, on the
7
<PAGE>
other hand, in connection with the statements or omissions which resulted in
such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, provided, however, that no person guilty of
-------- -------
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Each party entitled to
contribution agrees that upon service of a summons or other initial legal
process upon such party in connection with any action instituted against such
party in respect of which contribution may be sought, such party will promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission to notify such party or parties of
any such service shall not relieve the party from whom contribution may be
sought from any obligation such party or parties may have hereunder, or
otherwise (except as specifically provided in Section 6.3 above).
7. Information from Holders. The Holder or Holders of
------------------------
Registrable Securities included in any registration shall, as a condition
precedent to the Company's obligation to register the securities of such Holder
or Holders, fumish to the Company such information regarding such Holder or
Holders, the Registrable Securities held by them and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement. At the request of the Company, each Holder who
is including any Registrable Securities in the registration shall deposit in
escrow with an escrow agent chosen by the Company those Registrable Securities
which such Holder proposes to sell, accompanied by an irrevocable power of
attorney authorizing the escrow agent to, without limitation, sell such
Registrable Securities to the underwriter upon the effectiveness of the
registration statement.
8. Standoff Agreement. Each Holder agrees, in connection with
------------------
any public offering of the Company's Common Stock, upon request of the Company
or the underwriters managing such public offering of the Company's Common Stock,
not to sell, make any short sale of, loan, grant any option or right to
purchase, or otherwise dispose of in any public sale
8
<PAGE>
or distribution, any Registrable Securities or any securities convertible into
or exchangeable or exercisable for Common Stock (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time before and after (not
to exceed 60 days before and 180 days after) the effective date of such
registration as may be requested by the underwriters; provided, that the
officers and directors of the Company who own Common Stock of the Company also
agree to such restrictions on the shares held by them.
9. Transfer of Rights. The registration rights hereunder may
------------------
be assigned only to a party who acquires at least 20% of the Registrable
Securities; provided, however that no party may be assigned any of the foregoing
-------- -------
rights unless the Company is given written notice by the assigning party at the
time of such assignment stating the name and address of the assignee and
identifying the securities of the Company as to which the rights in question are
being assigned; and provided further that any such assignee shall receive such
-------- -------
assigned rights subject to all the terms and conditions of this Agreement.
10. Termination of Registration Rights. The right of any
----------------------------------
Holder to request registration or inclusion in any registration pursuant to
Sections 3 or 4 hereof shall terminate at such time as such Holder may sell all
Registrable Securities owned by him under Rule 144 during any 90 day period.
11. Miscellaneous.
-------------
11.1 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least 66-2/3% of the Registrable Securities.
11.2 Notices. All notices and other communications provided for
-------
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(a) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in accordance with the provisions of
this Section 11.2, which address initially is as follows:
9
<PAGE>
FINOVA TECHNOLOGY FINANCE, INC.
10 WATERSIDE DRIVE
FARMINGTON, CT 06032
ATTENTION: MR. DICK SCHWARTZ
TELECOPY NO.: (860) 676-1814
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11.2.
(b) if to the Company, initially at:
CINEMA RIDE, INC.
12001 VENTURA PLACE, SUITE 340
STUDIO CITY, CALIFORNIA 91604
ATTENTION: MR. MITCH FRANCIS
TELECOPY NO.: (818) 761-1072
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11.2.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, first class postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
11.3 Successors and Assigns. Subject to the provisions of
----------------------
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties, including without
limitation and without the need for an express assignment, subsequent Holders of
Registrable Securities.
11.4 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.5 Headings. The headings of this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
11.6 Governing Law and Venue. This Agreement is to be governed
-----------------------
by and construed in accordance with the laws of the State of California. Any
suit brought hereon shall be brought in the state or federal courts sitting in
Los Angeles, California, the parties hereto hereby waiving any claim or defense
that such forum is not convenient or
10
<PAGE>
proper. Each party hereby agrees that any such court shall have in personam
jurisdiction over it and consents to service of process in any manner authorized
by California law.
11.7 Attorneys' Fees. If either the Company or any Holder shall
---------------
bring an action against the other by reason of the breach of any covenant,
provision or condition hereof, or otherwise arising out of this Agreement, the
unsuccessful party shall pay to the prevailing party its reasonable attorneys'
fees and costs in addition to any other relief to which it may be entitled.
11.8 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
11.9 Entire Agreement. This Agreement is intended by the parties
----------------
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understanding between the parties with respect to such subject
matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"COMPANY"
CINEMA RIDE, INC.
By: /s/ Mitch Francis
---------------------------
Its: President
"INVESTOR"
By: /s/ Richard Schwartz
---------------------------
Its: Senior Vice President
11
<PAGE>
EXHIBIT A
"The securities evidenced or constituted hereby have been acquired for
investment purposes and have not been registered under the Securities Act
of 1933, as amended. Such securities may not be sold, transferred, pledged
or hypothecated unless (i) effected in compliance with that certain Warrant
Holder Rights Agreement, dated as of December 31, 1996, among the Company
and the other signatories thereto, and (ii) the registration provisions of
said Act and any applicable state securities or "blue sky" laws have been
complied with or the Company has received an opinion of counsel reasonably
satisfactory to the Company that such registration is not required."
12
<PAGE>
EXHIBIT 10.1
MASTER EQUIPMENT LEASE AGREEMENT
DATED AS OF
DECEMBER 12, 1996
BETWEEN
FINOVA TECHNOLOGY FINANCE, INC.
(LESSOR)
AND
CINEMA RIDE, INC.
(LESSEE)
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. Agreement for Lease of Equipment........................... 1
2. Delivery, and Acceptance of Equipment...................... 1
3. Disclaimer of Warranties................................... 2
4. Primary Term............................................... 3
5. Rent....................................................... 3
6. Lessee's Representations and Warranties.................... 4
7. Identification Marks....................................... 5
8. Fees and Taxes............................................. 6
9. General Indemnity.......................................... 7
10. Use of Equipment; Location; Liens.......................... 7
11. Maintenance and Repairs; Additions to Equipment............ 8
12. Loss, Damage or Destruction of Equipment................... 9
13. Reports; Inspections....................................... 10
14. Insurance.................................................. 10
15. Return of Equipment........................................ 11
16. Lessor's Ownership; Equipment To Be and Remain
Personal Property.......................................... 13
17. Other Covenants............................................ 14
18. Events of Default.......................................... 15
19. Assignment and Transfer by Lessor.......................... 19
20. Recording and Filing; Expenses............................. 20
21. Quiet Enjoyment............................................ 20
22. Failure or Indulgence Not Waiver; Additional Rights of
Lessor..................................................... 20
23. Sublease................................................... 20
24. Purchase Obligation........................................ 21
25. Prepayment Option.......................................... 21
26. Notices.................................................... 21
27. Entire Agreement; Severability; Amendment or
Cancellation of Lease...................................... 21
28. Waiver of Jury............................................. 22
29. Restriction of Limitation Periods and Damages.............. 22
30. Governing Law; Consent to Jurisdiction and Service......... 22
31. Lessor's Right to Perform for Lessee....................... 22
32. Agreement for Lease Only................................... 22
33. Binding Effect............................................. 22
34. General.................................................... 22
35. Definitions................................................ 23
</TABLE>
i
<PAGE>
MASTER EQUIPMENT LEASE AGREEMENT
--------------------------------
MASTER EQUIPMENT LEASE AGREEMENT dated as of December 12, 1996,
between CINEMA RIDE, INC. (hereinafter called "Lessee"), a Delaware corporation
that has its executive office and principal place of business at 12001 Ventura
Place, Suite 340, Studio City, California 91604 and FINOVA TECHNOLOGY FINANCE,
INC. (hereinafter called "Lessor"), a Delaware corporation with its principal
place of business at 10 Waterside Drive, Farmington, Connecticut 06032-3065.
In consideration of the mutual covenants hereinafter contained, Lessee
and Lessor agree as follows:
1. Agreement for Lease of Equipment. Lessor shall lease to Lessee
and Lessee shall lease from Lessor, upon the terms and conditions specified in
this Master Lease and the applicable Rental Schedule, the Equipment as described
in the applicable Rental Schedule including Schedule A of such Rental Schedule
and this Master Lease. Each Rental Schedule shall incorporate the terms of this
Master Lease and shall constitute a separate lease (the term "this Lease" shall
refer collectively to the applicable Rental Schedule and this Master Lease).
Only the signed copy of each Rental Schedule and not this Master Lease shall
constitute chattel paper the possession of which can perfect a security
interest. In the event of a conflict between the provisions of this Master Lease
and the provisions of any Rental Schedule, the provisions of the Rental Schedule
shall prevail.
2. Delivery, and Acceptance of Equipment.
(a) Lessor and Lessee agree that the vendor of the Equipment
to Lessor or, as to any Equipment to be sold by Lessee to Lessor and leased
back, the vendor of the Equipment to Lessee (in either case, the "Vendor") will
be responsible to deliver the Equipment to Lessee at the location specified in
the applicable Rental Schedule. Such delivery shall be delivery of the Equipment
by Lessor to Lessee under this Lease unless such Equipment is to be sold by
Lessee to Lessor and leased back. Provided that no Event of Default has
occurred, no event which with the passage of time or giving of notice would be
an Event of Default has occurred, and is continuing, and the conditions set
forth in the next following paragraph have been met and the Equipment is not to
be sold by Lessee to Lessor and leased back, Lessor hereby authorizes Lessee,
acting as Lessor's agent, to accept for Lessor, and in Lessor's name, the
Equipment from the Vendor upon delivery pursuant to the purchase contract for
the Equipment. Such acceptance shall be acceptance of the Equipment by Lessee
under this Lease. Nevertheless, if within five business days after Lessee has
received delivery of an item of the Equipment, Lessee has not given Lessor
written notice of a defect therein and Lessor has not notified Lessee not to
accept the Equipment, Lessee shall be deemed to have (a) acknowledged receipt of
such item of the Equipment in good condition and repair and (b) accepted such
item of the Equipment under this Lease. Lessee agrees to confirm any acceptance
of the Equipment by Lessee by executing a Certificate of Inspection and
Acceptance and providing the same to Lessor in accordance with the notice
provision hereof on or about the Lease Commencement Date, but no later than the
date for payment to the Vendor.
(b) Conditions precedent to every progress payment and Lease
Term Commencement shall include that (i) no payment shall be past due to Lessor
or any assign of Lessor from Lessee or any Guarantor (as hereinafter defined),
whether as a lessee, a guarantor or in some other capacity; (ii) Lessee shall be
in compliance with the provisions of this Lease; (iii) all documentation then
required by Lessor's Counsel
1
<PAGE>
shall have been received by Lessor; (iv) Lessee shall not be in default under
any material contract to which Lessee is a party or by which Lessee or the
property of Lessee is bound; and (v) there shall not have been any material
adverse change or threatened material adverse change in the financial or other
condition, business, operations, properties, assets or prospects of Lessee, any
Guarantor or any Manufacturer (as hereinafter defined) since September 30, 1996,
or from the written information that has been supplied to Lessor prior to
November 8, 1996 by Lessee, any Guarantor or any Manufacturer.
(c) As additional security for its obligations under the
Lease, the Lessee shall have assigned to the Lessor the rights to use with the
Equipment, the existing and future films associated with the rides. Such rights
shall be assignable to third party buyers and Lessee of the Equipment in the
event of repossession of the Equipment by the Lessor.
(d) The Lessee shall have raised a minimum of $500,000 in
new equity, subordinated debt or debt conversion to equity, acceptable to the
Lessor.
3. Disclaimer of Warranties. LESSEE ACKNOWLEDGES THAT IT HAS
SELECTED BOTH THE EQUIPMENT AND EVERY MANUFACTURER AND OTHER VENDOR OF THE
EQUIPMENT, THAT LESSEE HAS NOT RELIED UPON LESSOR FOR SUCH SELECTION AND THAT
LESSEE HAS A COPY OF THE PURCHASE CONTRACT(S) FOR LESSOR'S PURCHASE OF THE
EQUIPMENT. LESSOR HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE ANY
------------------- ---
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY,
- --------------------------------------------------------------------------
FITNESS FOR USE, FITNESS FOR A PARTICULAR PURPOSE OR TITLE OF THE EQUIPMENT (OR
- -------------------------------------------------------------------------------
ANY PART THEREOF) OR AS TO COMPLIANCE WITH SPECIFICATIONS, COMPLIANCE WITH
- -----------------
GOVERNMENTAL REGULATIONS, QUALITY, SELECTION, INSTALLATION, SUITABILITY,
PERFORMANCE, CONDITION, DESIGN, ABSENCE OF DEFECTS, OPERATION, OR NON-
INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY
RIGHTS OF THE EQUIPMENT (OR ANY PART THEREOF). LESSEE, SHALL LEASE THE
-----------------------
EQUIPMENT "AS IS, WHERE IS". LESSOR HEREBY DISCLAIMS ANY AND ALL SUCH
- ---------------------------
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED. LESSEE AND LESSOR AGREE THAT
ALL RISKS INCIDENT TO THE MATTERS REFERRED TO IN THIS SECTION ARE TO BE BORNE BY
LESSEE. Lessor has and shall have no responsibility for the installation,
adjustment or servicing of the Equipment. The provisions of this Section have
been negotiated and are intended to be a complete exclusion and negation of any
representations or warranties by Lessor, express or implied, with respect to the
Equipment that may arise pursuant to any law now or hereafter in effect, or
otherwise. In no event shall defect in, or unfitness of, any or all of the
Equipment, or any breach of warranty or representation by any or every
Manufacturer or other Vendor relieve Lessee of the obligation to pay rent or to
make any other payments required hereunder or to perform any other obligation
hereunder. Without limiting the generality of the foregoing, Lessor shall not be
responsible or liable for any (i) defect, either latent or patent, in any of the
Equipment or for any direct or consequential damages therefrom, (ii) loss of use
of any of the Equipment or for any loss of profits or any interruption in
Lessee's business occasioned by Lessee's inability to use any or all of the
Equipment for any reason whatsoever, or (iii) in the event that any Vendor
delays or fails to make delivery of any or all of the Equipment or fails to
fulfill or comply with any purchase contract or order. For as long as no Event
of Default shall have occurred hereunder, Lessor hereby transfers and assigns to
Lessee during the Lease Term (as hereinafter defined) all right and interest of
Lessor in any Manufacturer's and other Vendor's warranties with respect to any
and all of the Equipment, and agrees to execute all documents reasonably
necessary to effect such transfer and assignment, except that to the extent any
rights of Lessor with respect to the Equipment may not be assigned or otherwise
be available to
2
<PAGE>
Lessee, Lessor shall instead use reasonable efforts to enforce such rights
against such Manufacturers or other Vendors but only upon the request and at the
expense of Lessee.
4. Primary Term. The Primary Term for each item of the Equipment
shall commence on the Lease Commencement Date provided for by the Rental
Schedule for such Equipment, and unless sooner terminated pursuant to the
provisions of this Lease, shall be for the number of calendar months set forth
in such Rental Schedule, plus the number of days remaining in any partial
calendar month if the Lease Commencement Date occurs on other than the first day
of a month. Notwithstanding the foregoing, the provisions of this Master Lease
on indemnification of Lessor by Lessee shall apply between Lessor and Lessee
with respect to any Equipment from the time that any order for the Equipment is
placed by Lessor.
5. Rent.
(a) Lessee shall pay to Lessor in cash or by check as rent
for the Equipment during the Lease Term, the amounts provided for in the Rental
Schedule ("Basic Rent") for such Equipment on the dates designated therein
("Payment Dates"), at the location of Lessor set forth therein, or at such other
address or to such other person or entity as Lessor, from time to time, may
designate.
(b) Lessee shall also pay to Lessor, upon notice by Lessor
to Lessee that payment is due, any sums other than for Basic Rent that Lessee at
any time shall be required to pay Lessor pursuant to the provisions of this
Lease, including but not limited to sums payable by reason of payments by Lessor
to any Vendors in advance of the delivery of such Equipment or the commencement
of the Lease Term for such Equipment, together with every additional charge,
interest and cost which may be added for non-payment or late payment of any such
sums or of Basic Rent. All such sums shall be additional rent ("Additional
Rent") and Lessor shall provide Lessee with notification as to the amount of any
Additional Rent. If Lessee shall fail to pay any Additional Rent, Lessor shall
have all rights, powers and remedies with respect thereto as are provided herein
or by law in the case of non-payment of Basic Rent.
(c) With respect to any amount of Basic Rent or Additional
Rent not received by Lessor within three days from when due hereunder, Lessee
shall pay to Lessor interest on such amount from the due date thereof until
payment is received by Lessor at two percent per month or the highest rate of
interest on amounts past due that is not unlawful, whichever is lower (the
"Default Interest Rate"). Additionally, with respect to each such instance of
late payment, Lessee shall pay to Lessor, within three days of notification that
such payment is due, a collection fee of $500, which fee approximates Lessor's
administrative costs, at minimum, to collect such unpaid Basic Rent or
Additional Rent.
(d) LESSEE AGREES THAT TIME IS OF THE ESSENCE TO LESSOR IN
LESSEE'S MAKING PAYMENTS OF BASIC RENT AND ADDITIONAL RENT WHEN SUCH PAYMENTS
BECOME DUE.
(e) This Lease is a net-net-net lease and, notwithstanding
any other provisions of this Lease, it is intended that Basic Rent and
Additional Rent shall be paid without notice, demand, counterclaim, setoff,
deduction or defense and without abatement, suspension, deferment, diminution or
reduction. Lessee shall perform all its obligations under this Lease at its sole
cost and expense. Except to the extent otherwise expressly specified herein, the
3
<PAGE>
obligations and liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including, without limitation:
(i) any defect in the condition, quality or fitness for use of the Equipment or
any part thereof; (ii) any damage to, removal, abandonment, salvage, loss,
scrapping or destruction of or any requisition or taking of the Equipment or any
part thereof; (iii) any restriction, prevention or curtailment of or
interference with any use of the Equipment or any part thereof; (iv) any defect
in title or rights to the Equipment or any lien on such title or rights or on
the Equipment; (v) any change, waiver, extension, indulgence or other action or
omission in respect of any obligation or liability of Lessor; (vi) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceedings relating to Lessee or any action taken
with respect to this Lease by any trustee or receiver of Lessee or by any court,
in any such proceeding; (vii) any claim that Lessee has or might have against
any Person (as hereinafter defined), including without limitation Lessor; (viii)
any failure on the part of Lessor to perform or comply with any of the terms
hereof or of any other agreement; (ix) any invalidity, unenforceability or
disaffirmance of this Lease or any provision hereof against or by Lessee; or (x)
any other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not Lessee or Lessor shall have notice or knowledge of any of the
foregoing. To the extent permitted by law, Lessee waives all rights now or
hereafter conferred by statute or otherwise to quit, terminate, cancel, rescind
or surrender this Lease, or to any diminution or reduction of Basic Rent or
Additional Rent payable by Lessee hereunder.
6. Lessee's Representations and Warranties. Lessee represents and
warrants (and if requested by Lessor, promptly will provide supporting documents
to the effect and an opinion of counsel substantially in the form requested by
Lessor) that as of the date that Lessee signs this Master Lease, as of any date
that Lessor makes a payment to a Vendor prior to the date all Equipment has been
accepted for lease hereunder, as of each date that any Equipment is accepted for
lease hereunder and as of each Lease Commencement Date pursuant to a Rental
Schedule hereunder: (i) all items of the Equipment are new and unused as of the
Lease Commencement Date, unless otherwise specified in the applicable Rental
Schedule in which event the specified items of the Equipment shall have been
delivered new to Lessee by their suppliers not more than 90 days prior to their
Lease Term Commencement; (ii) Lessee is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, and is
qualified and in good standing to do business wherever necessary to carry on its
present business and operations, including the jurisdictions where the Equipment
is or will be located; (iii) Lessee has the power to enter into this Lease and
the other instruments and documents executed by Lessee in connection herewith
(together with this Lease, the "Transactional Documents") and to pay and perform
its obligations under this Lease and the other Transactional Documents; (iv)
this Lease and the other Transactional Documents have been duly authorized,
executed and delivered by Lessee, and constitute the valid, legal and binding
obligations of Lessee enforceable in accordance with their terms; (v) no vote or
consent of, or notice to, the holders of any class of stock of Lessee is
required, or if required, such vote or consent has been obtained or given, to
authorize the execution, delivery and performance of this Lease and the other
Transactional Documents by Lessee; (vi) neither the execution and delivery by
Lessee of this Lease or the other Transactional Documents, nor the consummation
by Lessee of the transactions contemplated hereby or thereby, nor compliance by
Lessee with the provisions hereof or thereof, conflicts with or results in a
breach of any of the provisions of any Certificate of Incorporation or By-laws
or partnership or trust agreement or certificate of Lessee, or
4
<PAGE>
of any applicable law, judgment, order, writ, injunction, decree, award, rule or
regulation of any court, administrative agency or other governmental authority,
or of any indenture, mortgage, deed of trust, other agreement or instrument of
any nature to which Lessee is a party or by which it or its property is bound or
affected or pursuant to which it is constituted, or constitutes a default under
any thereof or will result in the creation of any lien, charge, security
interest or other encumbrance upon any of the Equipment, other than the
interests therein of Lessor or any Assignee (as hereinafter defined), or upon
any other right or property of Lessee or will in any manner adversely affect
Lessor's or any Assignee's right, title and interest in any of the Equipment;
(vii) no consent, approval, withholding of objection or other authorization of
or by any court, administrative agency, other governmental authority or any
other Person is required, except such consents, approvals or other
authorizations which have been duly obtained and are in full force and effect
and copies of which have been furnished Lessor, in connection with the
execution, delivery or performance by Lessee, or the consummation by Lessee, of
the transactions contemplated by this Lease and the other Transactional
Documents; (viii) there are no actions, suits or proceedings pending, or, to the
knowledge of Lessee, threatened, in any court or before any administrative
agency or other governmental authority against or affecting Lessee, which, if
adversely decided would or could, individually or in the aggregate, materially
and adversely affect the financial or other condition, business, operations,
properties, assets or prospects of Lessee or the ability of Lessee to perform
any of its obligations under this Lease or under the other Transactional
Documents, except for any such actions, suits or proceedings that Lessee has
described in writing to Lessor; (ix) no Event of Default or event or condition
which upon the passage of time, the giving of notice, or both, would constitute
an Event of Default, exists or is continuing; (x) there has been no material
adverse change or threatened change in Lessee's, any Guarantor's or any
Manufacturer's financial or other condition, business, operations, properties,
assets or prospects since the date of Lessee's, such Guarantor's or
Manufacturer's most recent financial statements reported on by an independent
public accounting firm prior to the date of this Master Lease, since the dates
of each such Person's interim and annual financial statements, if any,
subsequent to such prior statements, or from the written information that has
been supplied to Lessor by Lessee, any Guarantor or such Manufacturer; (xi)
Lessee possesses any and all authorizations, certifications and licenses which
are or may be required to use and operate the Equipment; (xii) the actual
Acquisition Cost pursuant to the applicable Rental Schedule of each item of the
Equipment does not exceed the fair and usual price for like quantity purchases
of such item and reflects all discounts, rebates and allowances for the
Equipment given to Lessee, any Guarantor or any affiliate of Lessee or any
Guarantor by any Vendor or other Person including, without limitation, discounts
for advertising, prompt payment, testing or other services; (xiii) all
information supplied to Lessor by Lessee or any Guarantor is correct and does
not omit any statement necessary to make the information supplied not
misleading; and (xiv) the financial statements of Lessee and any Guarantor have
been prepared in accordance with generally accepted accounting principles
consistently applied and accurately and completely present the financial
condition and the results of operations of Lessee and such Guarantors at the
dates of and for the periods covered by such statements.
7. Identification Marks. To the extent requested by Lessor or if
required by applicable law, Lessee shall affix to the Equipment at Lessee's
expense signs, labels, or other forms of notice to disclose Lessor's ownership
of, and the interest of any Assignee in, the Equipment. Lessee shall keep and
maintain such signs, labels or other forms of notice affixed to the Equipment
throughout the Lease Term.
5
<PAGE>
Lessor may furnish such signs, labels or other forms of notice to Lessee. Except
as otherwise directed by Lessor, Lessee shall not allow the name of any person
other than Lessor to be placed on any part of the Equipment as a designation
that might reasonably be interpreted as a claim of ownership.
8. Fees and Taxes. Lessee agrees to pay promptly when due, and to
indemnify and hold Lessor harmless from, all license, title, registration and
recording fees whatsoever, all taxes including, without limitation, sales, use,
franchise, personal property, excise, import, export and stamp taxes and customs
duties, and all charges together with any penalties, fines or interest thereon
which are assessed, levied or imposed by any governmental or taxing authority
against Lessor with respect to any or all of the Equipment or the purchase,
acquisition, ownership, construction, installation, shipment, delivery, lease,
possession, use, maintenance, condition, operation, control, return or other
disposition thereof or the rents, receipts or earnings arising therefrom which
accrue or are payable with respect to the Equipment or this Lease or which are
assessed, are based on a valuation date, or are due during or with respect to
the Lease Term or any subsequent period until the Equipment has been returned to
Lessor pursuant to the provisions of this Lease or until the Equipment has been
purchased by Lessee pursuant to any purchase option provisions of this Lease,
excluding, however, any taxes solely measured by Lessor's net income from the
general operation of Lessor's business. In the event any fees, taxes or charges
payable by Lessee pursuant to the next preceding sentence are paid by Lessor, or
if Lessor is required to collect or pay any thereof, Lessee shall reimburse
Lessor therefor (plus any penalties, fines or interest thereon) promptly upon
demand. Unless and until Lessor notifies Lessee in writing to the contrary,
Lessee shall file and pay any personal property taxes levied or assessed on the
Equipment directly to the levying authority. Upon Lessor's written request,
Lessee shall submit to Lessor satisfactory evidence of payment by Lessee of any
or all amounts for which Lessee is required to make payment or to indemnify
Lessor hereunder that are paid by Lessee, and of the filing of any and all
reports, returns and other documentation required in connection with any such
payment. However, Lessor may, if it elects, estimate such personal property
taxes and bill Lessee therefor periodically in advance. In the event Lessor
elects to pay the personal property taxes directly to a levying authority,
Lessor shall submit to Lessee a copy of its personal property tax return and its
receipt for the full amount of such personal property taxes so paid by Lessor.
All of the obligations of Lessee under this Section shall continue in full force
and effect notwithstanding any expiration, termination, rescission or
cancellation of this Lease. Lessee acknowledges that Lessor may not be exempt
from the payment of any of the amounts referred to herein, even though Lessee
might have been exempt therefrom if it were the owner or purchaser of the
Equipment, and Lessee agrees that this Section shall apply, and the amounts due
from it hereunder shall be due, whether or not Lessee might itself have
otherwise been exempt from any such payments. Subject to the foregoing, Lessee
shall have the right to contest in good faith any such taxes levied or imposed
by any governmental or taxing authority, provided that Lessee shall have given
Lessor not less than ten days prior notice of its intention to contest and full
particulars of the proposed contest, in the opinion of Lessor the proposed
contest will not adversely affect the interests of Lessor or any Assignee, and
Lessee either shall have paid the taxes or provided for a bond or other security
so that none of the Equipment will be subject to seizure, confiscation or
forfeiture. For purposes of this Section, the term "Lessor" shall include each
member of Lessor's affiliated group, if any.
6
<PAGE>
9. General Indemnity.
(a) Lessee shall indemnify Lessor and any Assignee (as
hereinafter defined), and their respective agents and servants, against, and
agrees to defend, protect, save and keep them harmless from, any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, expenses and disbursements, including attorneys' fees and expenses and
costs for customs, completion, performance and appeal bonds, of whatsoever kind
and nature (including, without limitation, for negligence, tort liability,
damages by reason of strict or absolute liability, punitive damages, and
indirect and consequential damages, but excluding any such amounts imposed or
incurred as a result of Lessor's gross negligence or willful misconduct),
imposed on or incurred by or assessed against Lessor and/or any Assignee, in any
way relating to or arising out of (i) the failure of Lessee to provide or obtain
any certificates, documents, consents, authorizations, clearances, licenses,
permits or instruments required hereunder or under any of the other
Transactional Documents, or (ii) the ordering, construction, installation,
delivery, testing, ownership, lease, possession, use, maintenance, operation,
control, movement, import, export, shipment, condition, or return of the
Equipment (including but not limited to latent and other defects, whether or not
discoverable by Lessor or Lessee, and any claim for patent, trademark,
copyright, software or other intellectual property infringement) until such time
as the Equipment shall have been returned to Lessor pursuant to the provisions
of this Lease or until the Equipment shall have been purchased by Lessee
pursuant to any purchase option provisions of this Lease.
(b) The obligations of Lessee under this Section shall
survive the payment of all known obligations under and any expiration,
termination, rescission or cancellation of this Lease, and are expressly made
for the benefit of and shall be enforceable by Lessor, its successors and any
Assignee.
10. Use of Equipment; Location; Liens.
(a) During the Lease Term, Lessee warrants and agrees that
the Equipment shall be used and operated and otherwise be in compliance with any
established operating procedures therefor of any Manufacturer and all statutes,
regulations and orders of any governmental body having power to regulate the
Equipment or its use. Lessee shall bear and pay all costs of such compliance.
Lessee shall not permit the Equipment to be used or maintained in any manner or
condition that would violate, or could result in the termination of, the
insurance policies carried by Lessee pursuant to the provisions of this Lease on
insurance, or in any manner or condition or for any purpose for which, in the
opinion of any Manufacturer, the Equipment is not designed or suited.
(b) Lessee agrees that without Lessor's prior written
consent, it will not remove any of the Equipment from the location specified in
the Rental Schedule for such Equipment or permit any of the Equipment to be used
by anyone other than Lessee, Lessee's employees or a responsible independent
contractor engaged by Lessee.
(c) During the Lease Term and until the Equipment has been
returned to Lessor pursuant to the provisions of this Lease or until the
Equipment is purchased by Lessee pursuant to any purchase option provisions of
this Lease, Lessee will not directly or indirectly create, incur, assume or
suffer to exist any mortgage, security interest, lien or encumbrance on the
Equipment or Lessor's or any Assignee's title thereto or interest therein,
except in the name of
7
<PAGE>
Lessor and its successor(s) and any Assignee. Lessee, at its own expense, will
promptly take such action as may be necessary to keep the Equipment free and
clear of, and to duly discharge, any such mortgage, security interest, lien or
encumbrance not excepted above.
(d) Lessee agrees to procure and maintain in effect all
licenses, certificates, permits and other approvals and consents required by
federal, state and local laws and regulations in connection with Lessee's
possession, use, operation and maintenance of the Equipment. During the Lease
Term, Lessee agrees that 100 percent of the use of the Equipment shall be
"qualified business use" as that term is and shall be from time to time defined
by the Internal Revenue Code of 1986, as amended.
(e) Lessee shall cooperate fully with Lessor or any Assignee
to perfect and record their respective interests in connection with the
Transactional Documents including, without limitation, the filing of financing
statements and will pay such Persons their reasonable costs related thereto.
Lessee authorizes Lessor to file financing statements that are signed only by
Lessor or that are signed for Lessee by Lessor in any jurisdiction when
permitted by law or local authority. Lessee hereby grants to Lessor power-of-
attorney to act as Lessee's attorney-in-fact to sign Lessee's name on financing
statements as "Debtor".
11. Maintenance and Repairs; Additions to Equipment.
(a) Lessee shall, for the entire Lease Term, at its sole
expense, maintain all of the Equipment in good, safe and efficient operating
repair, appearance and condition, will keep all components of the Equipment
properly calibrated and aligned, will make all required adjustments,
replacements and repairs and will obtain and install any upgrades for the
Equipment that are announced and available for sale by a Manufacturer
(collectively, "maintenance and repairs"). Such maintenance and repairs shall
include, but not be limited to, all recommended or advised by a Manufacturer,
all required or advised by cognizant governmental agencies or regulatory bodies
and all commonly performed by prudent business and/or professional practice. All
maintenance and repairs to any item of the Equipment shall be made by the
Manufacturer or, upon prior written approval by Lessor, those of substantially
equal skill or knowledge in maintaining and repairing the Equipment.
(b) Lessee shall not modify the Equipment without the prior
written consent of Lessor. Any replacements, substitutions, additions,
attachments, accessions, parts, fittings, accessories, modifications,
enhancements, maintenance and repairs and other upgrades to the Equipment
whenever made shall be considered accessions to the Equipment and shall
automatically become the property of Lessor.
(c) All instruction manuals, published statements of
capabilities and technical specifications, service, maintenance and repair
records, installation, qualification, certification and calibration reports,
usage logs, and printed material relating to the Equipment shall be deemed part
of the Equipment. Computer programs, programming codes, operating systems, data
processing instructions, series of instructions or statements which are machine
readable, and any like symbols or signals usable by an electronic data
processing system (collectively "Software") that has been or shall be installed
or entered in the Equipment shall become a part of the Equipment except for any
Software that is proprietary Software of Lessee and is not a modification,
change, enhancement or improvement to any Software which is identified or listed
in the description of specific items of the
8
<PAGE>
Equipment in or attached to a Rental Schedule. Whenever Lessee acquires Software
licenses from other parties, with respect to the Software such licenses shall
automatically and without further action by Lessee be assigned to Lessor and
become through assignment a part of the Equipment transferable to any future
user of the Equipment for use with the Equipment.
12. Loss, Damage or Destruction of Equipment.
(a) Lessee shall bear all risks of damage to, taking of, or
theft, loss or destruction of, any or all of the Equipment commencing as of the
date of this Master Lease and continuing throughout the Lease Term and until
such Equipment has been returned to Lessor or purchased by Lessee pursuant to
any purchase option provisions of this Lease. Except as otherwise herein
expressly provided, no damage to, taking of or theft, loss or destruction of any
Equipment shall impair any obligation of Lessee to Lessor under this Lease,
including, without limitation, the obligation to pay Basic Rent.
(b) In the event that any item of Equipment shall become
damaged from any cause whatsoever, Lessee agrees to promptly notify Lessor in
writing of such fact, fully informing Lessor of the details thereof. If any item
of Equipment is damaged (unless the same, in the opinion of Lessor is
irreparably damaged, in which case the provisions of this Lease with respect to
a Casualty Occurrence shall apply), Lessee shall, at its sole cost and expense,
place the same in good repair, condition and working order or replace the same
with "like property" having the same value and operating capabilities and useful
life at least equal to the damaged Equipment prior to the date of such damage,
which property shall thereupon become subject to this Lease with title thereto
in Lessor. In the event that an item of Equipment has been damaged, but not
irreparably, if no Event of Default has occurred and is continuing hereunder,
upon receipt by Lessor of evidence, satisfactory to Lessor, that such repair,
restoration or replacement has been completed, and an invoice therefor, Lessor
shall release to Lessee or its supplier the proceeds of any insurance received
by Lessor as a result of such damage for the purpose of reimbursing Lessee for
the costs of repairing, restoring or replacing such item.
(c) In the event that any item of Equipment shall become
lost, stolen, destroyed or irreparably damaged from any cause whatsoever, or if
any item of Equipment or Lessor's title thereto shall be requisitioned or seized
by any governmental authority (each such occurrence being herein called a
"Casualty Occurrence") during the Lease Term and until it has been returned to
Lessor pursuant to the provisions of this Lease or until the Equipment is
purchased by Lessee pursuant to any purchase option provisions of this Lease,
Lessee shall promptly notify Lessor in writing of such fact, fully informing
Lessor of all details of the Casualty Occurrence in question, and shall pay
Lessor in cash the greater of (i) the "Stipulated Loss Value" as set forth in
the Table of Stipulated Loss Values attached to the Rental Schedule pursuant to
which such item of Equipment is leased hereunder, calculated as of the date of
the Casualty Occurrence, or (ii) the Fair Market Value (as hereinafter defined)
of the item of Equipment in question as of the date of the Casualty Occurrence.
This payment shall be made within 30 days following the Casualty Occurrence,
together with the Basic Rent accrued and unpaid with respect to such Equipment
as of the date of the Casualty Occurrence, plus all Additional Rent or amounts
owing with respect to such Equipment on such date of payment.
(d) Upon the payment of the greater of the Stipulated Loss
Value or Fair Market Value of the Equipment in question in accordance with the
terms of this Section, and the payment of all
9
<PAGE>
Basic Rent, Additional Rent and any other sums then due hereunder, this Lease
shall terminate with respect to the Equipment or part thereof suffering the
Casualty Occurrence and all Lessor's rights and title to such Equipment shall
pass to Lessee, "as is" and "where is", without any representation or warranty
by, or recourse to, Lessor, as provided by the provisions of this Master Lease
on disclaimer of warranties and as evidenced by a duly executed bill of sale
naming Lessor as the seller and Lessee as the buyer.
(e) Provided that no Event of Default has occurred and no
event that with the passage of time or giving of notice, or both, would be an
Event of Default has occurred and is continuing, any insurance proceeds received
as the result of a Casualty Occurrence with respect to any or all items of the
Equipment shall be applied first in reduction of any other then unpaid
obligation of Lessee to Lessor hereunder and second in reduction of Lessee's
obligation to pay the greater of the Fair Market Value or the Stipulated Loss
Value for such item if not already paid by Lessee to Lessor, or, if already paid
by Lessee, to the reimbursement of Lessee therefor, and the balance of the
insurance proceeds, if any, shall be paid to Lessee.
13. Reports; Inspections. Lessee will cause to be furnished to
Lessor, if requested, from time-to-time a statement showing the condition and
such other information regarding the Equipment as Lessor may reasonably request.
Lessor and any Assignee shall have the right, upon reasonable notice to Lessee,
to inspect the Equipment including Lessee's records with respect to the
Equipment, to copy such records, and to inspect and copy Lessee's records with
respect to the financial statements Lessee is required to furnish Lessor or has
warranted to Lessor pursuant to this Lease. Any inspection by Lessor or any
Assignee shall not be deemed to be approval or acknowledgment by Lessor or such
Assignee of the safety, freedom from defects, performance or compliance with
specifications or governmental requirements of the Equipment or of the
conformity of the Equipment or such financial statements to the requirements or
warranties of this Lease, and the disclaimers set forth in the provisions of
this Master Lease on disclaimer of warranties shall apply to any such
inspection. Lessee shall pay or reimburse Lessor for Lessor's costs and travel
expenses for one such inspection per year, and for Lessor's costs, travel
expenses and salaries and the charges and such expenses of Lessor's advisers for
the inspection following an inspection which encountered a breach of the
requirements of this Lease or the warranties of Lessee pursuant to this Lease.
14. Insurance. During the Lease Term and until all Equipment has
been returned to Lessor pursuant to the provisions of this Lease or until the
Equipment is purchased by Lessee pursuant to any purchase option provisions of
this Lease, Lessee shall procure and maintain at its expense with reputable
insurers acceptable to Lessor (i) insurance on all of the Equipment in an amount
not less than the greater of the Equipment's Stipulated Loss Value or Fair
Market Value replacement cost insuring against all risks of loss or damage to
the Equipment and against such other risks as Lessee would, in the prudent
management of its properties, maintain with respect to similar equipment owned
by it, and (ii) comprehensive public liability and property damage insurance, in
such amounts as shall be satisfactory to Lessor but for not less than the
greater of $1,000,000 or the amounts customarily maintained by parties similar
to Lessee for similar leased equipment with similar contemplated use, insuring
Lessor and any Assignees, as their interests may appear, against liability for
death, bodily injury, professional malpractice, and property damage arising Out
of or resulting from the design, construction, manufacture, ownership, use,
operation, lease or maintenance of, or otherwise in connection with, the
10
<PAGE>
Equipment. On the policies referred to in clause (i), such insurance shall name
Lessor (and any Assignees) as loss payee so that (and Lessor and Lessee hereby
agree that) the insurance proceeds payable under such policies will be payable
and paid to Lessor (and to any Assignees) to the extent of their interest. On
the policies referred to in clause (ii), such insurance will name Lessor (and
any Assignees) as an additional insured as its interests may appear. All such
policies shall provide that they may not be invalidated against Lessor (or any
Assignees) because of any violation of a condition or a breach of warranty of
the policies or application therefor by Lessee, that they may not be altered or
canceled except after 30 days' prior written notice to Lessor, and that Lessor
and any Assignee have the right but not the obligation to pay the premiums with
respect to coverage required by this Lease in order to continue such insurance
in effect or to obtain like coverage. Under the policies of insurance required
to be maintained by Lessee pursuant to this Master Lease, Lessee agrees to waive
any right of subrogation and to cause the insurance carrier to waive any right
of subrogation in each instance as such right may exist against Lessor or any
Assignee and for any and all loss or damage to the Equipment. Lessee shall
maintain and deliver evidence to Lessor of such insurance written by insurers
and in amounts satisfactory to Lessor. Should Lessee fail to provide such
insurance coverage, Lessor may obtain coverage protecting interests of Lessor
and Lessee, or the interest of Lessor only, for part or all of the Lease Term or
such period beyond the Lease Term as is required by this Lease or by the
insurance company issuing such coverage. The proceeds of such insurance shall be
applied, at the option of Lessee if no Event of Default shall exist, and
otherwise at Lessor's option, toward (i) replacement, restoration or repair of
the Equipment or (ii) payment of the obligations of Lessee under this Lease.
Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make claims for,
receive payment of, and execute and endorse all documents, checks or drafts for
loss or damage under any such policies.
15. Return of Equipment.
(a) At the end of the Lease Term for any Equipment, Lessee
at its sole expense shall forthwith return possession of such Equipment without
omissions to Lessor by:
(i) properly preparing, crating and/or assembling
such Equipment (in accordance with the Manufacturer's instructions if such
instructions exist) for shipment by common carrier with all containers and
pieces labeled with model, part and unit numbers and descriptions; and
(ii) shipping such Equipment by common carrier, with
insurance and freight prepaid, to a place designated by Lessor within a 1,000
mile radius of the specified location under this Lease for such Equipment.
Lessor shall pay additional shipping charges incurred because of distances in
excess of such 1,000 miles.
The insurance required by clause (ii) above shall provide that in the
event of loss such insurance shall pay Lessor in cash directly the greater of
(A) the full replacement value of such Equipment and (B) the "Stipulated Loss
Value" as set forth in the Exhibit to the Rental Schedule calculated as of the
Payment Date next preceding the date of loss. Lessee acknowledges that "full
replacement value" may exceed Fair Market Value.
(b) When the Equipment is returned to Lessor it shall be
complete. The condition of the Equipment including Software upon receipt by
Lessor shall be not less than (i) meeting all
11
<PAGE>
specifications for such fully upgraded equipment as published most currently by
the respective Equipment vendor(s), Manufacturer(s) or supplier(s) (collectively
referred to, together with their successors and assigns, if any, as "Vendors"),
(ii) in fully operational condition, (iii) capable of being installed and
operated in the normal course by another user, (iv) for each item of the
Equipment for which the Vendor has a program of maintenance and service
including certification for reinstallation and for qualification under the
maintenance and service program certified in writing by the Vendor that the
items of the Equipment are in compliance with the conditions specified in this
paragraph, are accepted by the Vendor for reinstallation and are qualified for
the usual and customary service and maintenance program of the Vendor, (v)
legally qualified for future use or operation of the Equipment by another lessee
or purchaser of the Equipment, (vi) free of defects, visible or concealed,
including, but not limited to, damage or malfunction of any kind, dents,
fractures, chips, scratches, stains, defacements, discolorations, rust,
corrosion, electrical shorts, fluid restrictions or blockages, disconnections,
breakage or the like, (vii) safe for routine and usual operation, (viii) in
compliance with any and all pertinent governmental or regulatory rules, laws or
guidelines for its operation or use, (ix) free of Lessee's markings or
labelings, and (x) free of any advertising or insignia not requested by Lessor
that was placed on the Equipment by Lessee.
(c) Lessor reserves the right to inspect the Equipment
within 30 days of its return to verify compliance with the provisions of this
Master Lease on Equipment maintenance and repairs and additions and on return of
Equipment. Should there be less than full compliance, Lessor at its option may
(i) perform or cause to be performed through service organizations of its own
choosing such maintenance and repairs, including upgrades, replacements, the
obtaining of paid-up Software licenses and other services, as it deems necessary
to effect such compliance, (ii) require Lessee to perform or cause to be
performed such maintenance and repairs, including upgrades, replacements, the
obtaining of paid-up Software licenses and other services, as Lessor deems
necessary to effect such compliance and/or (iii) reasonably estimate the costs
to effect such compliance. Lessee shall pay to Lessor the costs for performance
of (i) or (ii) above, or the estimated costs under (iii) above, in any such case
including the costs of the inspection(s). If maintenance and repairs, including
upgrades, replacements, and the obtaining of paid-up Software licenses and other
services, are necessary to place any of the Equipment under any Rental Schedule
in the condition required by this Lease, Lessee shall continue to pay to Lessor
monthly Additional Rent at the last prevailing rate during the Lease Term for
Basic Rent on the Equipment under such Rental Schedule for the period of delay
until all such required maintenance and repairs can be performed, or for the
period of time reasonably necessary to accomplish such maintenance and repairs.
For any such period that applies, Lessee shall continue to provide the insurance
required during the Lease Term. However, Lessor's acceptance of such rent and
provision of insurance during such period shall not constitute a renewal of the
Lease Term, a waiver of Lessor's right to prompt return of such Equipment in the
condition required by this Section, or a waiver of Lessor's right to possession
of such Equipment.
(d) Should the inspection reveal any item(s) of the
Equipment to be missing, Lessee shall be responsible for paying to Lessor
promptly the greater of the Stipulated Loss Value or the Fair Market Value of
such item(s) of the Equipment computed as of the last Payment Date prior to the
end of the Lease Term, plus the amount of any impairment of the Fair Market
Value of the remaining item(s) of the Equipment due to the absence of such
missing item(s) of the Equipment.
12
<PAGE>
(e) In the event that Lessee fails to return any of the
Equipment when required, at the election of Lessor effected by notice to Lessee,
the Lease Term for such Equipment shall be extended on a month-to-month basis on
the same terms as previously in effect, and Lessee shall pay to Lessor monthly
in advance Basic Rent for such Equipment at the last prevailing rate during the
unextended Lease Term, until such Equipment has been returned to Lessor pursuant
to the provisions of this Lease. Notwithstanding any month-to-month continuance
of this Lease, Lessor may resort to any remedies available to it under this
Lease, at law or in equity, to recover such Equipment at any time following the
end of such extended Lease Term .
(f) Lessor may give notice to Lessee not more than 120 days
and not less than 30 days prior to the end of the Lease Term that Lessee shall
delay returning the Equipment to Lessor and shall keep the Equipment on the
premises of Lessee in working condition after the end of the Lease Term and
until requested by Lessor to return the Equipment or until six months after the
end of the Lease Term, whichever first occurs, at which time Lessee shall
forthwith return possession of the Equipment without omissions to Lessor as
provided by the provisions of this Section other than this paragraph. After the
end of the Lease Term, Lessee shall not use the Equipment except in the
performance of demonstrations requested by Lessor. During the period from notice
to delay returning the Equipment until requested to return the Equipment or six
months after the end of the Lease Term, Lessee shall maintain the Equipment in
the same condition as required to be maintained during the Lease Term, shall
cooperate with Lessor, shall grant access to Lessee's premises for inspection of
the Equipment by potential purchasers and future lessees of the Equipment and
representatives of Lessor, and shall facilitate demonstrations of the Equipment
by Lessor. During such period and thereafter until the Equipment is delivered to
a common carrier with the insurance upon such delivery required by this Section,
Lessee shall continue to maintain the insurance required by this Lease during
the Lease Term. Lessee shall continue to have the risk of loss of the Equipment
and the obligation to indemnify Lessor as provided by this Lease until the
return of the Equipment to Lessor following such period and delivery.
16. Lessor's Ownership; Equipment To Be and Remain Personal
Property.
(a) Lessee acknowledges and agrees that it does not have,
and by execution of this Lease and/or payments and performance hereunder it
shall not have or obtain, any title to the Equipment, nor any property right or
interest, legal or equitable, therein, except its rights as Lessee hereunder and
subject to the terms hereof. Lessee shall not have or claim a security interest
and shall not seek or obtain replevin, detinue, specific performance,
sequestration, claim and delivery, or like remedies in or for this Lease, any
rents under this Lease, any or all of the Equipment, any items of personal
property identified to become items of the Equipment, or any proceeds of any or
all of the foregoing.
(b) All of the Equipment shall be and remain personal
property notwithstanding the manner in which the Equipment may be attached or
affixed to realty. Upon the expiration, cancellation or termination of the Lease
Term of any or all of the Equipment, Lessee shall have the obligation, and
Lessor shall have the right, to remove, or cause the removal of, such Equipment
from the premises where the same is then located, for return to Lessor pursuant
to the provisions of this Master Lease on return of Equipment and, if
applicable, on Events of Default, whether or not any of the Equipment is affixed
or attached to realty or to any building. In the exercise of its rights, Lessor
shall
13
<PAGE>
not be liable for any damage to the realty or any such building or other real or
personal property occasioned by any removal of the Equipment by Lessee or Lessor
or the agents of Lessee or Lessor. Lessee further covenants and agrees that
Lessee will, at the request of Lessor, obtain and deliver to Lessor concurrently
with the execution and delivery of each Rental Schedule, a waiver, in recordable
form, from the owner and any landlord, tenant or holder of any lien or
encumbrance on the realty or building(s) on or in which any of the Equipment
described in such Rental Schedule shall be located, under which such owner,
landlord, tenant and holder (i) agree and consent that such Equipment is and
shall be personal property, owned by and removable by Lessor upon the
expiration, cancellation or termination of the Lease Term thereof, and (ii)
waive any rights of distraint or similar rights with respect to such Equipment.
(c) If Lessee is unable to return, or is prevented from
returning, any of the Equipment to Lessor upon the expiration, cancellation or
termination of the Lease Term as required under the provisions of this Master
Lease on return of Equipment, for any reason whatsoever, including, but not
limited to, the assertion by any third party of any claim against such
Equipment, or of any right with respect thereto, whether or not resulting from
the manner in which such Equipment is affixed or attached to, or installed in,
the realty or any building(s) thereon or any other personal or real property, or
from the failure of any owner, landlord or tenant of said realty (or the
building(s) thereon) or the holder of any lien or encumbrance to execute the
waiver in writing of such fact, for all purposes of this Lease such Equipment
shall be deemed to have been the subject of a Casualty Occurrence. Thereupon,
Lessee shall pay to Lessor the amounts provided for by the provisions of this
Master Lease on loss, damage or destruction of Equipment, with respect to such
Equipment, at the time, in the manner, and with the consequences provided by
such provisions.
(d) Notwithstanding the foregoing provisions of this
Section, without Lessor's prior written consent, Lessee shall not permit any of
the Equipment to be attached or affixed to, imbedded in or incorporated into any
building, structure, real estate or other personal or real property so as to
become a fixture.
17. Other Covenants.
(a) Lessee agrees to furnish, upon Lessor's request, such
financial, business and operational information concerning Lessee and any or all
Guarantors, including copies of its and their tax returns, as Lessor or its
assigns may reasonably request during the Lease Term. Additionally, Lessee
shall furnish to Lessor and its assigns without notice or demand therefor two
complete copies of its and of every Guarantor's (i) quarterly interim financial
statements within 45 days of the close of each of the first three fiscal
quarters of every year, certified by the chief financial officer of,
respectively, Lessee or such Guarantor and (ii) annual financial statements
within 90 days of the close of each fiscal year reported on by independent
accountants without material adverse qualification or comment. All such
financial statements shall be prepared in accordance with generally accepted
accounting principles consistently applied, and shall accurately and completely
present Lessee's and every Guarantor's financial condition and results of
operations at the dates of and for the periods covered by such statements.
(b) Lessee shall promptly furnish to Lessor copies of (i)
filings that Lessee or any Guarantor makes with the SEC or other government
agencies under the securities laws including but not limited to definitive proxy
statements, registration statements, prospectuses
14
<PAGE>
and tender offer filings, and reports on holdings or acquisitions of securities,
relating to proxy solicitations, and on Form 10-K, 10-Q, 8-K or similar forms,
and any amendments to such filings, (ii) press releases of Lessee or any
Guarantor, and (iii) new product (or service) announcements of Lessee or any
Guarantor.
(c) If Lessee or any Guarantor or a general partner of
Lessee or any Guarantor is a corporation, Lessee shall give Lessor notice of all
meetings of the stockholders or directors of such corporation and copies of all
materials that are furnished to the stockholders or directors for the meetings
at the same time that the notice or materials are sent to the stockholders or
directors. If Lessee or any Guarantor or a general partner of Lessee or any
Guarantor is a partnership, Lessee shall give Lessor notice of all meetings of
such partnership and copies of all materials that are furnished to the partners
for the meetings at the same time that the notice or materials are sent to the
partners. Lessor shall have the right to have its representative attend any and
all such meetings at the expense, including travel costs, of Lessee.
(d) There shall be no actual or threatened conflict with, or
violation of, any statute, regulation, standard or rule relating to Lessee, its
present or future operations, or the Equipment.
(e) All information supplied to Lessor or its assigns by
Lessee or any Guarantor shall be correct and shall not omit any statement
necessary to make the information supplied not be misleading. There shall be no
material breach of the representations and warranties made by Lessee in
connection with this Lease or by any Guarantor in connection with a Guaranty (as
hereinafter defined).
(f) Lessee shall give Lessor notice of any change in the
address of the executive office or principal place of business of Lessee not
less than 15 days prior to the change.
(g) No change shall occur in the control, and no material
change shall occur in the ownership, of Lessee or any Guarantor, and no
Guarantor shall assert in writing that the obligations of the Guarantor as a
Guarantor or in its Guaranty are not in full force and effect.
(h) Lessee shall not make any payment or distribution of
money, checks, securities or property to any Person in contravention of the
provisions of any Guaranty or subordination that such Person has made in favor
of Lessor or its assigns of which Lessee shall have notice or knowledge.
18. Events of Default. If one or more of the following events
(hereinafter called "Events of Default" or an "Event of Default") shall occur:
(i) default shall be made in the payment of any Basic
Rent or Additional Rent due under this Master Lease or under any Rental Schedule
hereto, and any such default shall continue for more than 10 days after the due
date thereof;
(ii) any representation or warranty by Lessee or any
Guarantor made in this Master Lease or in any Guaranty or other Transactional
Document or certificate furnished to Lessor in connection with this Lease or
pursuant hereto shall at any time prove to be incorrect in any material respect;
15
<PAGE>
(iii) Lessee shall make or permit any unauthorized
assignment or transfer of this Master Lease or any Rental Schedule to this
Master Lease or of any of Lessee's rights and obligations hereunder or
thereunder, or Lessee shall make or permit any unauthorized sublease or transfer
of any Equipment or the possession of any Equipment;
(iv) Lessee shall default in the observance and/or
performance of any other covenant, condition or agreement on the part of Lessee
to be observed and/or performed under this Master Lease, under any Rental
Schedule hereto, or under any other Transactional Document, which default is not
governed by paragraphs (i), (ii) or (iii) above, and such default shall continue
for 30 days after written notice from Lessor to Lessee specifying the default
and demanding the same to be remedied;
(v) Lessee or any Guarantor shall make an assignment
for the benefit of creditors, or cease being in substantially the same line or
lines of business in which it is presently engaged, or generally fail to pay its
debts as they become due, or become insolvent or commence a voluntary case under
the federal Bankruptcy Code as now or hereafter constituted or any other
applicable federal or state bankruptcy, insolvency or similar law, or admit in
writing its inability to pay its debts as they mature, or consent to the
appointment of a trustee or receiver, or a trustee or a receiver shall be
appointed for Lessee or any Guarantor or for a substantial part of Lessee's or
any Guarantor's property without such party's consent and such appointment shall
be not dismissed for a period of 60 days; there shall have been entered a decree
or order for relief by a court having jurisdiction in respect of Lessee or any
Guarantor, or approving as properly filed a petition seeking a reorganization,
arrangement, adjustment or composition of or in respect of Lessee or any
Guarantor in an involuntary proceeding or case under any applicable federal or
state bankruptcy, insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee or similar official of Lessee or any
Guarantor or of any substantial part of its property, or ordering the winding-up
or liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 days, or there shall have been filed a
petition by or against Lessee or any Guarantor under any bankruptcy law or other
insolvency law and, if petition is filed against Lessee or such Guarantor, the
petition is not withdrawn or dismissed within 60 days after the date of filing;
or Lessee or any Guarantor shall cease doing business as a going concern or
shall liquidate or be dissolved;
(vi) Lessee or any Guarantor shall, without the prior
written consent of Lessor, enter into a merger, consolidation or division,
effect a share exchange of its outstanding stock for the stock of another
corporation, or sell or otherwise dispose of all or a major part of its assets
or of assets that produce all or a major part of its revenues or profits;
provided, however, that Lessee or any Guarantor, without violating the
provisions of this clause, may consolidate with or merge with a corporation or
other entity organized under the laws of one of the states of the United States
(the surviving entity, a "successor"), or sell (except by means of a sale and
leaseback arrangement) all or substantially all of its business and assets to
such a successor, on the condition that any successor expressly assume in
writing all of the obligations of Lessee pursuant to this Lease or of such
Guarantor pursuant to its Guaranty, and that the net tangible assets and the net
worth (determined in accordance with generally accepted accounting principles)
of the successor after the consolidation, merger or sale shall be at least equal
to the net
16
<PAGE>
tangible assets and the net worth of Lessee or such Guarantor, as the case may
be, immediately prior to the consolidation, merger or sale;
(vii) there shall occur under any other lease, contract
or agreement between Lessee and Lessor, an Event of Default, as defined in such
lease, contract or agreement;
(viii) any of the Equipment shall be attached, levied
upon, encumbered, pledged, seized or taken under any judicial process (except
for any attachment, levy, encumbrance or pledge caused to be placed on the
Equipment by Lessor) and such proceedings shall not be vacated, or fully stayed,
within 30 days thereof;
(ix) at any time there shall occur under (A) any lease
between Lessee and a party other than Lessor as lessor or (B) under any lease
wholly or partially guaranteed by Lessee, the exercise by the lessor of its
possessory remedies or commencement of legal proceedings by the lessor for
default under the lease; provided that the aggregate future payments remaining
to be made or guaranteed by Lessee exceed $100,000, and that under a lease
described in (B) above within ten days of notice to Lessee of such exercise of
remedies and demand for payment by Lessee any such amount guaranteed by Lessee
remains unpaid; or
(x) any obligation of Lessee in excess of $100,000
for the payment of borrowed money or the acquisition of assets by purchase,
conditional sale or other arrangement is not paid or refinanced at maturity,
whether by acceleration or otherwise, or is declared due and payable prior to
the stated maturity thereof by reason of default or other violation of the terms
of any promissory note or agreement evidencing or governing such obligation, and
Lessor has given Lessee an opportunity to either cure the purported Event of
Default or supply information satisfactory to Lessor that it does not, in fact,
exist;
this Lease shall be declared in default, immediately and without notice upon the
occurrence of in Event of Default specified in clause (v) above, and in the case
of any other Event of Default, upon Lessor at any time at its option subsequent
to such Event of Default giving notice to Lessee that this Lease is declared in
default. At any time after this Lease has been declared in default, Lessor may
exercise one or more of the following remedies, to the extent not then
prohibited by law, as Lessor in its sole discretion may elect:
(I) to proceed by appropriate court action or
actions at law or in equity or in bankruptcy to enforce performance by Lessee of
the covenants and terms of this Lease and/or to recover damages for the breach
thereof,
(II) to terminate or cancel this Lease upon
written notice to Lessee whereupon all rights of Lessee to use the Equipment
shall immediately terminate, but Lessee shall not be relieved of any obligations
under this Lease;
(III) whether or not this Lease be so
terminated or canceled, and without notice to Lessee, to repossess and/or to
render inoperable the Equipment wherever found, with or without legal process,
and for this purpose Lessor and/or its agents may enter upon any premises of or
under the control or jurisdiction of Lessee or any agent of Lessee without
liability for suit, action or other proceeding by Lessee and remove the
Equipment therefrom; Lessee hereby expressly waives any claims for damages
occasioned by such repossession; LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
JUDICIAL
17
<PAGE>
HEARING WITH RESPECT TO REPOSSESSION OF THE EQUIPMENT AFTER AN EVENT OF DEFAULT;
(IV) to hold or to use any Equipment returned
to Lessor or repossessed by Lessor for any purpose whatsoever, to sell any
Equipment at a private or public, cash or credit sale, to re-lease any
Equipment, in all the foregoing events free and clear of any rights of Lessee
and without any duty to account to Lessee with respect to such action or
inaction;
(V) whether or not Lessor shall have
exercised, or shall hereafter at any time exercise, any of its other rights with
respect to an item of the Equipment, upon written notice to Lessee, to demand
that Lessee pay to Lessor, and Lessee shall pay to Lessor on the date specified
in such notice, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent for such Equipment that prior to the Event of Default
was to have been paid on Payment Dates subsequent to the date specified in such
notice), the sum equal to the excess, if any, of 125% of the Stipulated Loss
---
Value for such item of Equipment computed as of the latest Payment Date when
------------
all Basic Rent and Additional Rent then due and payable has been fully paid over
whichever of the following three amounts Lessor, in its sole discretion, shall
designate in such notice:
(A) the present value of the fair market
rental value (determined as hereafter provided in this Section) of such
item of the Equipment for the remainder of the Lease Term as of the date
specified in such notice, the present value to be computed on the basis of
a seven percent per annum rate of discount from the respective dates upon
which such rent would be paid,
(B) the fair market sales value (determined
as hereafter provided in this Section) of such item of Equipment as of the
date specified in such notice, or
(C) if Lessor shall have sold or re-leased
any item of Equipment pursuant to clause (IV) above, the net proceeds of
such sale or re-lease,
plus interest at the Default Interest Rate (a) on such sum from the such Payment
--- -------
Date until paid and (b) on whichever of such three amounts is so designated by
- ----
Lessor from such Payment Date until whichever one of the following shall be
------------
applicable to the designated amount: the time when the fair market rental or
sales value shall have been so determined or the time when the Equipment shall
have been sold or re-leased; and
(VI) to forthwith recover from Lessee, and
Lessee shall be fully liable for, all Basic Rent that shall accrue until the
date that the Equipment is returned to or repossessed by Lessor and any
Additional Rent including collection fees, whenever accrued, and interest at the
Default Interest Rate.
In addition to the foregoing, Lessor may also recover from Lessee all
costs and expenses arising out of Lessee's default, including, without
limitation, expenses of repossession of the Equipment and the storage,
inspection, repair, reconditioning, sale and re-leasing thereof, and reasonable
attorneys' fees incurred by Lessor in exercising any of its rights or remedies
hereunder. For the purposes of this Section only, "fair market rental value"
and "fair market sales value" shall be determined by an appraisal of an
independent appraiser chosen by Lessor, and the cost of any such appraisal shall
be borne by Lessee. No remedy referred to in this Section is intended to be
exclusive, but
18
<PAGE>
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to Lessor at law or in equity or in bankruptcy. Lessor
shall have no duty to pay Lessee any surplus from sale or lease of the
Equipment, or in the fair market rental or sales value of the Equipment, above
all amounts payable by Lessee to Lessor. The exercise by Lessor of any one or
more remedies shall not be deemed to preclude the simultaneous or later exercise
by Lessor of any or all such previously exercised remedies and any and all other
remedies.
19. Assignment and Transfer by Lessor.
(a) Lessor may at any time and from time to time assign to
one or more security assignees (all herein called the "Secured Party" and also
called an "Assignee") for the purpose of securing a loan to Lessor or for any
other purpose, and at its sole discretion, may also sell or transfer to one or
more Persons (herein called the "Transferee" and also called an "Assignee"), in
any case subject to the rights of Lessee under this Lease but without notice to
or consent of Lessee, this Lease, any other Transactional Documents, any or all
of the Equipment, and all sums at any time due and to become due or at any time
owing or payable by Lessee to Lessor under this Lease or pursuant to any or all
of the Transactional Documents. The Secured Party shall not be obligated to
perform any duty, covenant or condition required to be performed by Lessor under
this Lease or any other Transactional Documents.
(b) Lessee agrees that notwithstanding any assignment to a
Secured Party, each and every covenant, agreement, representation and warranty
of Lessor under this Lease shall be and remain the sole liability of Lessor and
of every successor in interest of Lessor (excluding any Secured Party) or, in
the case of assignment to a Transferee, shall become and remain the sole
liability of the Transferee if so agreed to by the Transferee and if not so
agreed to shall be and remain the sole liability of Lessor. Lessee further
agrees and acknowledges that any assignment, sale or transfer by Lessor could
not and shall not materially change any duty or obligation of Lessee or
materially increase any burden or risk of Lessee.
(c) Lessee further acknowledges and agrees that from and
after the receipt by Lessee of written notice of an assignment from Lessor,
Lessee shall comply with the directions or demands given in writing by the
Secured Party or (to the extent not inconsistent with the directions or demands
of the Secured Party) by the Transferee, and the Secured Party or Transferee
shall have the right to exercise (either in its own name or in the name of
Lessor) all rights, privileges, and remedies of Lessor provided for herein.
Lessee agrees that any obligation to a Secured Party as a result of the
assignment of this Lease to a Secured Party as aforesaid shall not be reduced or
minimized by reason of any claim, defense, counterclaim, set-off, abatement,
reduction or recoupment or other right that Lessee might otherwise have been
able to assert against Lessor, any prior Assignee or any Transferee. After any
assignment to a Secured Party and unless and until Lessee is otherwise notified
by the Secured Party, this Lease may not be amended or modified, and no consent
or waiver hereunder shall be effective, without the prior written consent of the
Secured Party. Lessee agrees to execute and Lessor or any Transferee or Secured
Party may record any instruments and documents relating to such assignment,
mortgage or security interest desired by Lessor or any Transferee or Secured
Party. Lessee shall promptly provide any such instruments and documents that
are requested by Lessor or any Assignee including certificates indicating any
claim, defense, counterclaim, set-off, abatement, reduction, recoupment or other
right that Lessee may have against Lessor or any Assignee, the date to which
Basic Rent has been
19
<PAGE>
paid under each Rental Schedule hereunder and that this Lease is in effect
without default or amendment, or the extent of such default or amendment, as the
case may be.
20. Recording and Filing; Expenses. Lessee will, upon demand of
Lessor, at Lessee's cost and expense, do and perform any other act and will
execute, acknowledge, deliver, file, register, record and deposit (and will re-
file, re-register, re-record or re-deposit whenever required) any and all
instruments required by law or requested by Lessor (or any Assignee) including,
without limitation, financing statements under the Uniform Commercial Code
(which, notwithstanding the intent of Lessor and Lessee that this is a true
lease, Lessor shall have the right to file wherever and whenever Lessor
requires), for the purpose of providing proper protection to the satisfaction of
Lessor (and/or any Assignee) of Lessor's title to any Equipment (and/or of any
Assignee's security interest in the Equipment) or for the purpose of carrying
out the intention of this Lease. Lessee will also pay, or will upon demand
reimburse Lessor for, all reasonable costs and expenses incurred by Lessor in
connection with this Lease, any other Transactional Documents, and any related
transactions, closings, assignments, sales and transfers to any Secured Party or
Transferee, enforcement of Lessor's rights under this Lease and the other
Transactional Documents, proceedings involving Lessee or any Guarantor as a
debtor under any chapter of the Bankruptcy Code, filings, the documentation of
this and any related transactions, and fees and costs of attorneys for Lessor in
connection therewith.
21. Quiet Enjoyment. So long as no Event of Default has occurred
and is continuing hereunder, Lessee shall have peaceful and quiet use and
enjoyment of the Equipment during the Lease Term as against acts of Lessor or
anyone claiming solely by, through or under Lessor including any Secured Party
or Transferee.
22. Failure or Indulgence Not Waiver; Additional Rights of Lessor.
(a) No failure to exercise, and no delay in exercising, any
right, power or remedy hereunder on the part of Lessor shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. Any waiver, to be effective, must be in writing. A
waiver of any covenant, term or condition contained herein shall not be
construed as a waiver of any subsequent breach of the same covenant, term or
condition. Receipt by Lessor of any Basic Rent or Additional Rent with
knowledge of the breach of any provision hereof shall not constitute a waiver of
such breach.
(b) Lessor shall be entitled to injunctive relief in case of
the violation or attempted or threatened violation of any of the provisions
hereof, to a decree compelling performance of any of the provisions hereof, and
to any other remedy allowed in law or in equity.
23. Sublease. Lessee shall not sublease the Equipment, relinquish
possession of the Equipment, or assign, pledge or hypothecate this Lease or any
of Lessee's rights or obligations hereunder, in whole or in part, without the
prior written consent of Lessor. Nevertheless, any such sublease and the rents,
profits and proceeds therefrom shall be the property of Lessor and, unless
Lessor has consented to such sublease, Lessor within 30 days after receiving
notice thereof in accordance with the provisions of this Master Lease on notices
shall have the right to declare the sublease void from its purported
commencement, to terminate the sublease or to accept the sublease. Any such
attempted relinquishment of possession, assignment, pledge or
20
<PAGE>
hypothecation by Lessee without such consent shall be null and void. Lessor
shall not unreasonably withhold its consent to an assignment by Lessee of its
rights under this Lease.
24. Purchase Obligation. Lessee shall be obligated to purchase all
items of the Equipment then subject to a Rental Schedule at the expiration of
the Primary Term for such items of the Equipment for a purchase price, payable
in immediately available funds, equal to the Fair Market Value of such items
which Fair Market Value Lessor and Lessee agree shall be equal to ten percent
(10%) of the original Acquisition Cost of the Equipment, plus any applicable
sales, excise or other taxes imposed as a result of such sale (other than net
income taxes attributable to such sale). The purchase price hereunder for the
Equipment subject to Rental Schedule No. 1 shall be $157,502.69, plus any
applicable sales, excise or other taxes imposed as a result of such sale (other
than net income taxes attributable to such sale). Lessor's sale of any item of
the Equipment shall be on an "as-is", "where-is" basis, without any
representation or warranty by or recourse to Lessor, as provided by the
provisions of this Master Lease on disclaimer of warranties, and shall be
subject to such additional terms and conditions as may be specified in file
Rental Schedule.
25. Prepayment Option. After at least 24 Basic Rent Payments shall
have been made onevery Rental Schedule under this Master Lease for all of the
Equipment, the Lessee shall have the right to prepay this Lease by making
payment to the Lessor of the amount equal to the sum of all future payments of
the Basic Rent and for the purchase of the Equipment at the end of the 48 month
Lease Term, discounted at the rate of 6% per annum from the dates when such
payments otherwise shall have been due, plus any applicable sales taxes and any
other amounts then due and unpaid under the Lease.
26. Notices. Any notice or other communication required or
permitted to be given by either party hereto to the other party shall be deemed
to have been given upon its receipt, in writing, by the receiving party at its
address set forth below, or at such other address as the receiving party shall
have furnished to the other party by notice pursuant to this Section.
If to Lessee: Cinema Ride, Inc.
12001 Ventura Place, Suite 340
Studio City, CA 91604
If to Lessor: FINOVA Technology Finance, Inc.
10 Waterside Drive
Farmington, CT 06032-3065
27. Entire Agreement; Severability; Amendment or Cancellation of
Lease. This Lease constitutes the complete and exclusive statement of the terms
of the agreement between the parties with respect to the leasing of the
Equipment and any sale of the Equipment by Lessor to Lessee. Any provision of
this Lease which is prohibited or unenforceable in any jurisdiction shall be, as
to such jurisdiction, ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. LESSEE
ACKNOWLEDGES RECEIPT OF A COPY OF THIS MASTER LEASE. Lessor and Lessee agree
that neither this Lease nor Lessee's acceptance or deemed acceptance of any or
all of the Equipment may he canceled, waived, altered, amended, repudiated,
terminated, rescinded,
21
<PAGE>
revoked or modified, except by a writing signed by Lessee and a duly authorized
representative of Lessor.
______________________________
Signature of Lessee
28. Waiver of Jury. Lessor and Lessee waive any right and all
right to trial by jury in any action or proceeding relating in any way to this
Lease.
29. Restriction of Limitation Periods and Damages. Any action for
breach of warranty or in respect of or relating to the Equipment or this Lease
that may be brought by Lessee against Lessor or any Assignee must be commenced
within one year after the cause of action accrues. Lessee shall not make any
claim in respect of or relating to the Equipment or this Lease against Lessor or
any Assignee for special consequential or punitive damages.
30. Governing Law; Consent to Jurisdiction and Service. This Lease
shall be governed by and construed in accordance with the laws of the State of
Connecticut (other than the conflicts of laws pro visions). Lessee agrees that
any legal action or proceeding against Lessee in respect of or relating to this
Lease or the Equipment may be brought in any state or federal court sitting in
the city of Hartford in the State of Connecticut. Lessee hereby irrevocably
consents and submits to the nonexclusive personal jurisdiction of said courts
and irrevocably agrees that all claims in any such action or proceeding may be
heard and determined in and enforced by any such court. Lessee irrevocably
consents to the service of summons, notice, or other process relating to any
such action or proceeding by delivery thereof to it by hand or by mail in the
manner set forth in the provisions of this Master Lease on notices.
31. Lessor's Right to Perform for Lessee. If Lessee fails to duly
and promptly perform any of its obligations under this Lease or fails to comply
with any of the covenants or agreements contained herein, Lessor may itself
perform such obligations or comply with such covenants or agreements, for the
account of Lessee, without thereby waiving any default, and any amount paid or
expense (including, without limitation, attorney's fees) reasonably incurred by
Lessor in connection with such performance or compliance shall, together with
interest thereon at the Default Interest Rate, be payable by Lessee to Lessor on
demand.
32. Agreement for Lease Only. Lessor and Lessee agree that this
Lease is and is intended to be a true lease (and not a lease in the nature of a
security interest) and further agree to treat this Lease as a true lease for all
purposes, including, without limitation, tax purposes.
33. Binding Effect. This Lease shall inure to the benefit of and
be binding upon the parties hereto and their respective permitted successors and
assigns.
34. General. The captions in this Master Lease and each Rental
Schedule are for convenience of reference only. There shall be only one
original executed copy of this Master Lease and of each Rental Schedule. This
Master Lease is and each Rental Schedule shall be executed in the State of
Connecticut by Lessor's having countersigned the same in the State of
Connecticut, and are to be and shall be performed in the State of Connecticut by
reason of the requirements
22
<PAGE>
therein for payment by Lessee to Lessor to be made in the State of Connecticut.
35. Definitions. The following terms, not elsewhere defined, shall
have the following meanings for all purposes hereof:
"Acquisition Cost" of any item of the Equipment shall mean an amount
equal to the sum of (i) the purchase price of such item of the Equipment paid by
Lessor pursuant to the purchase order for such item of the Equipment assigned to
or given by Lessor, plus (ii) any excise, sales or use tax, freight,
installation, set-up and other costs that are paid by Lessor on or with respect
to such item of the Equipment on or about the time of Lessor's purchase of the
Equipment or the Lease Commencement Date and that Lessor does not request Lessee
to directly reimburse to Lessor.
"Appraisal" shall mean the following procedure whereby recognized
independent qualified equipment appraisers shall mutually agree upon the amount
in question. The party seeking Appraisal shall deliver a written notice to that
effect to the other party appointing its appraiser, and within 15 days after
receipt of such notice, the other party shall, by written notice, appoint its
appraiser. If within 15 days after appointment of the two appraisers as
described above, the two appraisers are unable to agree upon the amount in
question, a third appraiser shall be chosen within five days thereafter by
mutual agreement of the first two appraisers, or if the first two appraisers
fail to agree upon the appointment of a third appraiser, such appointment shall
be made by an authorized representative of the American Arbitration Association.
The appraisal of the third appraiser shall be given within a period of ten days
after the selection of the third appraiser. The average of the three appraisals
arrived at by the three appraisers shall be binding and conclusive on Lessor and
Lessee. Lessor and Lessee each shall pay the fees of the appraiser appointed by
it and shall share equally the fees and expenses of the third appraiser, if any,
and those of the American Arbitration Association, if applicable.
"Certificate of Inspection and Acceptance" shall mean a certificate in
the form designated by Lessor whereby Lessee evidences its acceptance of one or
more items of the Equipment for lease hereun der.
"Fair Market Value" shall mean, with respect to the Equipment in
question, the amount which would be paid for that Equipment in an arm's-length
sale transaction between an informed and willing buyer (not a used equipment or
scrap dealer) who wants the Equipment to be as described in the next following
sentence and is under no compulsion to buy, and an informed and willing seller
under no compulsion to sell. In determining the Fair Market Value, it shall be
assumed (whether or not the same be true) that the Equipment is fully
operational, installed and in economically productive service and that all
maintenance and repairs including upgrades, replacements and other services
required by this Lease have been performed and that the Equipment is in such
condition to comply fully with the requirements of this Lease, including
provisions of this Master Lease governing the return of Equipment. The costs of
removal from the location of current use and installation at another location
for use shall not be a deduction in determining the Fair Market Value.
"Guarantor" shall mean a guarantor of any or all of the obligations of
Lessee pursuant to this Lease.
23
<PAGE>
"Guaranty" shall mean a writing containing a guaranty of any or all of
the obligations of Lessee pursuant to this Lease.
"Lease Commencement Date" with respect to an item of Equipment shall
mean the date of commencement of the Lease Term of the item as provided by the
applicable Rental Schedule.
"Lease Term" with respect to an item of the Equipment shall mean the
Primary Term plus any and all Renewal Terms plus any period during which Lessee
retains the Equipment on a month-to-month basis pursuant to provisions of this
Master Lease governing the return of the Equipment. The Lease Term shall
include the Lease Commencement Date and the date on which the Lease Term ends.
"Manufacturer" shall mean the Person that manufactures the item of the
Equipment in question.
"Master Lease" shall mean this Master Equipment Lease Agreement.
"Person" shall mean an individual, a corporation, a partnership, an
association, a joint-stock company, a limited liability company, a trust, an
estate, any incorporated organization or similar association, a government or
political subdivision, or any other entity.
"Rental Schedule" shall mean each schedule, executed by Lessor and
Lessee pursuant to this Master Lease, providing for a description of some or all
of the Equipment to be leased hereunder, the place or places where such
Equipment shall be located, its Acquisition Cost, the Basic Rent payable by
Lessee with respect thereto, the Primary Term thereof, the Lease Commencement
Date with respect thereto, and such other matters as Lessor and Lessee may agree
upon.
"Stipulated Loss Value" shall mean the amounts specified in the Table
of Stipulated Loss Values applicable to the items of the Equipment subject to a
Rental Schedule, as provided by the Schedule B attached to the Rental Schedule.
Except as otherwise provided in a writing signed by Lessor and Lessee, the
Stipulated Loss Value immediately prior to the end of the Primary Term for any
items of the Equipment shall be the Stipulated Loss Value throughout any Renewal
Term(s) for such items, and thereafter until such items are returned to Lessor
pursuant to the provisions of this Lease or purchased by Lessee pursuant to any
then applicable purchase option provisions of this Lease.
IN WITNESS WHEREOF, the duly authorized representatives of Lessor and
Lessee have executed this Master Lease as of the date first above written.
LESSOR: LESSEE:
FINOVA TECHNOLOGY CINEMA RIDE, INC.
FINANCE, INC.
By: /s/ Linda Moschitto By: /s/ Mitch Francis
------------------------ ---------------------------
Title: Director - Contract Title: President
--------------------- ------------------------
Administration
---------------------
ATTEST:
By: /s/ Gary Packman
---------------------------
Title: Secretary
------------------------
24
<PAGE>
SECURITY AGREEMENT
AGREEMENT dated as of December 12, 1996 (the "Agreement") between
CINEMA RIDE, INC., a Delaware corporation with its executive office and
principal place of business at 12001 Ventura Place, Suite 340, Studio City,
California 91604 (the "Company"), and FINOVA TECHNOLOGY FINANCE, INC., a
Delaware corporation with its executive office and principal place of business
at 10 Waterside Drive, Farmington, Connecticut 06032-3065 ("FINOVA").
1. Purpose of Agreement and Creation of Security Interest and
Lien. The Company concurrently with the execution and delivery of this
Agreement is entering into a Master Equipment Lease Agreement of even date
herewith ("Master Lease"), as lessee, with FINOVA, as lessor, pursuant to which
certain motion simulators and related equipment (the "Equipment") will be leased
by FINOVA to the Company and the Company has and shall have obligations to
FINOVA. As security for the obligations of the Company now existing or
hereafter arising under the Master Lease and any and all Rental Schedules now or
hereafter entered into thereunder (the Master Lease and all such Rental
Schedules, the "Lease") including but not limited to the obligations of the
Company upon FINOVA declaring the Lease in default or arising on or after an
Event of Default as defined therein, and any and all other obligations now
existing or hereafter arising of the Company to FINOVA including but not limited
to obligations arising under this Agreement, the Company grants a security
interest and a lien to FINOVA in the rights to use with the Equipment the
existing and future films associated with the rides (all such rights hereinafter
referred to as the "Assets"). FINOVA and the Company recognize that the Rights
are nonexclusive and that the Company may continue to grant third parties
nonexclusive licenses to use the Rights provided that such licenses shall not
limit the use of the Rights as provided in the next sentence of this Agreement.
In the event of a repossession of the Equipment or other disposition of the
Equipment by or for FINOVA'S account, FINOVA shall have the power to grant
assignable nonexclusive licenses to use any or all of the Rights with the
Equipment.
2. Location of Company and Assets. The executive office and
principal place of business of the Company is and will continue to be at 12001
Ventura Place, Suite 340, Studio City, California 91604. The Assets are and
shall continue to be located at The Forum Shops at Caesars, 3500 Las Vegas Blvd.
South, Suite J-1, Las Vegas, Nevada and 1481 Broadway, New York, New York.
3. Quiet Enjoyment. Until default hereunder, the Company shall be
entitled to the possession of the Assets and the use and enjoyment of the same.
4. Obligations Arising Under This Agreement. Obligations of the
Company that arise under this Agreement and are, therefore, included among the
obligations secured by the Assets are any costs and expenses incurred in
collection of the obligations or enforcement of the covenants and undertakings
of the Company in this Agreement, including any future advances made by FINOVA
for taxes, levies, insurance, and repairs to or maintenance of or on the Assets,
and the costs for performance by FINOVA of any of the covenants and undertakings
of the Company under this Agreement that are not timely performed by the
Company.
5. Representations and Warranties by the Company. The Company
represents and warrants that (i) the Company is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization and
that such jurisdiction is Delaware, and is
25
<PAGE>
qualified and in good standing to do business wherever necessary to carry on its
present business and operations, including the jurisdiction where the Assets are
located; (ii) the Company has the power to enter into this Agreement and the
other instruments and documents executed by the Company in connection herewith
(together with this Agreement, the "Transactional Documents") and to pay and
perform its obligations under the other Transactional Documents; (iii) the
Transactional Documents have been duly authorized, executed and delivered by the
Company pursuant to resolutions duly adopted by the Board of Directors of the
Company and constitute the valid, legal and binding obligations of the Company
enforceable in accordance with their terms; (iv) no vote or consent of, or
notice to, the holders of any class of stock of the Company is required, or if
required, such vote or consent has been obtained or given, to authorize the
execution, delivery and performance of the Transactional Documents by the
Company and the consummation by the Company of the transactions contemplated
thereby, (v) neither the execution and delivery by the Company of the
Transactional Documents nor the consummation by the Company of the transactions
contemplated thereby, nor compliance by the Company with the provisions thereof,
conflicts with or results in a breach of any of the provisions of the
Certificate of Incorporation or By-laws of the Company, or of any applicable
law, judgment, order, writ, injunction, decree, award, rule or regulation of any
court, administrative agency or other governmental authority, or of any
indenture, mortgage, deed of trust, other agreement or instrument of any nature
to which the Company is a party or by which it is constituted, or constitutes a
default under any thereof or will result in the creation of any lien, charge,
security interest or other encumbrance upon any of the Assets, other than the
security interest therein of FINOVA or any assignee of FINOVA, or upon any other
right or property of the Company; (vi) no consent, approval, withholding of
objection or other authorization of or by any court, administrative agency,
other governmental authority or any other person is required, except such
consents, approvals or other authorizations which have been duly obtained and
are in full force and effect and copies of which have been furnished FINOVA, in
connection with the execution, delivery or performance by the Company of the
Transactional Documents or the performance by the Company of the transactions
contemplated by the Transactional Documents; (vii) there are no actions, suits
or proceedings pending, or, to the knowledge of the Company, threatened, in any
court or before any administrative agency or other governmental authority
against or affecting the Company, which if adversely decided would or could,
individually or in the aggregate, materially and adversely affect the business,
operations, property or financial condition of the Company or the ability of the
Company to perform any of its obligations under the Transactional Documents;
(viii) no default or event or condition which upon the passage of time, the
giving of notice, or both, would constitute a default under this Agreement
exists or is continuing; (ix) the financial statements of the Company have been
prepared in accordance with generally accepted accounting principles
consistently applied and accurately and completely present the financial
condition and the results of operations of the Company as of the dates of and
for the periods covered by such statements; (x) there has been no material
adverse change in the financial condition of the Company since the date of the
Company's most recent financial statement, a true copy of which has been
furnished to FINOVA by the Company; and (xi) the Company possesses any and all
authorizations, certifications and licenses which are or may be required to use
and operate the Assets.
6. General Indemnity.
(a) The Company shall indemnify FINOVA and its assigns, and
the agents and representatives of FINOVA and its assigns, against, and agrees to
defend, protect, save and keep them harmless
26
<PAGE>
from, any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements, including reasonable
attorneys' fees and expenses, of whatsoever kind and nature (including, without
limitation, by way of strict or absolute liability), imposed on or incurred by
or assessed against any of them and in any way relating to or arising out of the
ordering, construction, installation, possession, use, maintenance, change,
updating, reconditioning, licensing, operation, control or condition any or all
of the Assets (including but not limited to latent and other defects, whether or
not discoverable by FINOVA or the Company).
(b) The obligations of the Company under this Section shall
survive the payment of all the obligations secured by this Agreement.
7. Covenants and Agreements of the Company. The Company covenants
and agrees that:
(a) Title. The Assets are not and shall not be subject to
any security interest or to any lien or encumbrance other than that created by
this Agreement. The Company will defend the Assets against the claims and
demands of all persons other than FINOVA and any assigns of FINOVA.
(b) Transfer. The Company has not and will not sell,
exchange, lease, rent, encumber, pledge or transfer the Assets by assignment,
operation of law or otherwise, except that the Company may grant nonexclusive
licenses in any or all of the Assets as provided in Section 1 of this Agreement.
The Company shall not create any security interest or lien on any of the Assets
(except that created by this Agreement) or otherwise dispose of the Assets or
any of the Company's rights therein or under this Agreement.
(c) Maintenance, Taxes, Operation and Registration. The
Assets will be maintained in good condition and repair and shall meet or exceed
the maintenance and safety standards of a prudent owner/operator. The Company
has paid and shall pay and discharge all taxes, levies, and other impositions on
the Assets as well as the cost of repairs to or maintenance of the Assets and,
if the Company fails to maintain the same, FINOVA may do so for the Company's
account adding the amount paid by FINOVA to the obligations secured by this
Agreement. The Company shall have the Assets regularly maintained by the
manufacturers thereof or by appropriate factory authorized dealers. The Company
shall register in compliance with applicable federal, state and local laws and
regulations such lienholder rights as are requested from time to time by FINOVA
or any assignee of FINOVA.
(d) Insurance. The Company has insured and shall insure its
master copies of the Assets against such risks and casualties and in such
amounts as FINOVA shall require, but for not less than such amounts as prudent
obligors in a position similar to the Company would insure assets similar to the
Assets. All insurance policies are and shall be written for the benefit of the
Company and FINOVA as their interests may appear. Each such policy or
certificate evidencing the same shall be delivered to FINOVA prior to the
expiration of its predecessor. Should the Company fail to provide such
insurance coverage, FINOVA may obtain coverage protecting interests of FINOVA
and the Company, or the interest of FINOVA only, for part or all of the Lease
Term or such period beyond the Lease Term as is required by this Agreement or by
the insurance company issuing such coverage. The proceeds of such insurance
shall be applied, at the option of the Company if no Event of Default shall
exist, and otherwise at FINOVA's option, toward (i) replacement, restoration or
repair of the Assets or
27
<PAGE>
(ii) payment of the obligations of the Company to
FINOVA. The Company hereby appoints FINOVA as the Company's attorney-in-fact to
make claims for, receive payment of, and execute and endorse all documents,
checks or drafts for loss or damage under any such policies.
(e) Location. The Company shall not change or permit the
change of the locations for the assets specified in Section 2 of this Agreement
without the prior written consent of FINOVA which consent shall not be
unreasonably withheld, and will permit FINOVA to inspect the Assets at any time.
(f) Value of Assets. The Company shall not permit anything
to be done that may impair the value of any of the Assets or the security
intended to be afforded by this Agreement. FINOVA and its assigns shall have
the right to inspect the Company's records with respect to the Assets.
(g) Filings. The Company shall pay all costs of filing any
financing, continuation, or termination statements with respect to the security
interest created by this Agreement and of recordation of this Agreement as a
lien on the Assets. FINOVA is hereby appointed the Company's attorney-in-fact
to do all acts and things which FINOVA may deem necessary to perfect and
continue perfected the security interest created by this Agreement and to
protect the Assets.
(h) Place of Business. The Company shall notify FINOVA not
less than 15 days prior to any change in the location of the executive office
and principal place of business of the Company from the location set forth at
the head of this Agreement, the establishment of any new place of business, or
any change in its premises or places of business, including of the place of
business of the Company where the Assets are located, but no such notice shall
waive any breach of this Agreement or any of the Transactional Documents
resulting from such change or establishment.
(i) Use. The Company shall use the Assets exclusively in
its present business unless FINOVA gives its written consent to another use.
(j) Possession. The Company is and shall be in possession
of the master copies of the assets.
8. Default and Remedies. In the event of a default in the payment
of any of the obligations secured hereby or the existence of an Event of Default
under the Lease or default in the due observance or performance of any of the
covenants and obligations of the Company in this Agreement or any of the other
Transactional Documents or if any of the representations and warranties of the
Company to FINOVA shall prove to be materially false or misleading or if the
Company shall become insolvent or shall be adjudicated bankrupt, or if
bankruptcy, insolvency, reorganization, arrangement, debt adjustment,
liquidation or receivership proceedings shall be instituted by or against the
Company, and the Company shall consent to the same or admit in writing the
material allegations of the petition filed in such proceedings or such
proceedings shall not be dismissed within ten days after their institution:
after the occurrence of any of the above events (any such occurrence, a
"Default"), FINOVA may declare the Company in default under this Agreement and
all the monetary obligations secured by this Agreement due and payable without
formal demand or notice. From and after such declaration, FINOVA may sell,
lease or otherwise dispose of any or all of the Assets. It is understood and
agreed that this Agreement has been made and entered into pursuant to the
Uniform Commercial Code and that FINOVA has all the rights and remedies accorded
28
<PAGE>
thereby. In addition to those rights, at FINOVA's discretion, the Company
authorizes and empowers FINOVA, with the aid and assistance of any person or
persons, with or without legal process, to enter any premises of the Company, or
any other place or places where any of the master copies of the Assets or any
tangible expressions of the Assets in the possession or control of the Company
are or at any time shall be, and to take possession thereof, and to sell the
same either in bulk or in parcels at public or private sale upon any of such
premises or at such other place or places as FINOVA may designate, or to take
and carry the Assets away and to sell and dispose of the same at public or
private sale for cash or installment payments or by lease and either in bulk or
in parcels, and at the same time to sell or dispose of all the right, title, and
interest of the Company in and to the Assets, and out of the moneys collected
therefrom to pay FINOVA any and all sums then owing to FINOVA that are secured
by this Agreement, and all reasonable costs, fees, charges, and expenses in
connection therewith, including counsel fees, and disbursements, premiums on
bonds, custodian's fees, fees of public officers, and an auctioneer's fee of 15
percent on gross sale proceeds, any disbursements for advertising and labor, use
and occupancy of premises, and any and all other disbursements made or incurred
by FINOVA in connection with the taking, maintaining, storage, repair,
refurbishment and disposition of the Assets, and all reasonable expenses
(including reasonable counsel fees) incident to the enforcement of payment of
any obligations of the Company to FINOVA by any means whatsoever, including but
not limited to, formal means such as any suit or action or participation in, or
in connection with, any case or proceeding under the Bankruptcy Code, or any
successor statute thereto, rendering the excess (if any) to the Company or its
successors or assigns. The Company shall be bound by the result of any sales or
other dispositions made in accordance herewith. If for any reason the Assets
shall fail to satisfy all of the foregoing items, the Company shall pay FINOVA
the deficiency.
9. Premises and Operations. At any time after a Default, (a)
FINOVA may take possession of any premises of the Company and make any
arrangement for the use of such premises by FINOVA, its assigns or third parties
that FINOVA may choose with the landlords of such premises without hindrance or
resulting claim for damages or offset by the Company, and (b) to the extent not
prohibited by law, FINOVA may operate or arrange for the operation of any or all
of the business that has been conducted by the Company.
10. Assignment. FINOVA may at any time and from time to time
assign the Lease and this Agreement. The Company may not assign any of its
rights or obligations under this Agreement except to a permitted assign of the
rights of the Company under the Lease.
11. Expenses. The Company will pay, or will upon demand reimburse
FINOVA for, all reasonable costs and expenses incurred by FINOVA in connection
with this Agreement including, without limitation, closings, inspections,
assignments to any assigns of FINOVA, enforcement of the rights of FINOVA
hereunder, filings, the documentation of this transaction, and costs and
expenses for attorneys for FINOVA and of travel in connection with any of the
foregoing.
12. Notices. Any notice, request or other communication required
or permitted to be given by either party hereto to the other shall be in writing
and shall be deemed to have been given upon hand delivery or mailing, certified
mail postage prepaid, to the receiving party at its address set forth below, or
to such other address as the receiving party shall have furnished to the other
party by notice as herein provided.
29
<PAGE>
If to the Company Cinema Ride, Inc.
12001 Ventura Place, Suite 340
Studio City, CA 91604
If to FINOVA FINOVA Technology Finance, Inc.
10 Waterside Drive
Farmington, CT 06032-3065
13. Severability of Provision. If any provision of this Agreement
shall for any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained in this Agreement.
14. Waivers by Company. If FINOVA shall at any time obtain
possession, either with or without legal process, or be entitled to possession
of any of the Assets (as previously defined and described), it shall not be
necessary for FINOVA to remove such Assets but the Company shall permit, and
hereby authorizes and empowers FINOVA to keep, such Assets on any premises of
the Company and to remove any locks thereon and to put its own locks on such
premises or on any other premises where such Assets may be located until five
days after the sale of such Assets. The Company waives any and all claims of
any nature, kind, or description which it has or may claim to have against
FINOVA or its representatives by reason of its or their taking possession of or
selling any Assets.
15. Waiver of Breach. The acceptance of any payments on the
obligations secured by this Agreement by FINOVA after maturity, or the
acceptance of one or more partial payments, or the waiver or condonation of any
breach or default shall not constitute a waiver of any other or subsequent
breach or default or prevent FINOVA from immediately pursuing any or all its
remedies.
16. Governing Law. This Agreement and the rights and remedies
thereunder shall be governed by and construed in accordance with the laws of the
State of Connecticut (other than conflicts of laws provisions).
17. Assignment and Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective permitted
successors and assigns. The Company shall not assign or transfer, or suffer to
be transferred, by operation of law, agreement or otherwise, any of the Assets
or its rights or obligations under this Agreement.
18. Consent to Jurisdiction and Service. The Company agrees that
any legal action or proceeding against it arising out of this Agreement may be
brought to any state or federal court sitting in the City of Hartford in the
State of Connecticut and hereby irrevocably consents and submits to the
nonexclusive personal jurisdiction of said courts and irrevocably agrees that
all claims in any such action or pro ceeding may be heard, determined in and
enforced by any such court. The Company irrevocably consents to the service of
summons, notice or other process relating to any such action or proceeding by
delivery thereof to it by hand or by mail in the manner set forth in the
provision of this Agreement on notices.
19. Waiver of Jury. FINOVA and the Company each waive any and all
---------------------------------------------
right to trial by jury in any action or proceeding relating in
- --------------------------------------------------------------
30
<PAGE>
any way to this Agreement. Witness the execution hereof the day and year first
- -------------------------
above written.
ATTEST: CINEMA RIDE, INC.
----------------
By__________________________
(SEAL)
______________________
ATTEST: FINOVA TECHNOLOGY FINANCE, INC.
-------------------------------
By___________________________
(SEAL)
_______________________
STATE OF
COUNTY OF
On this 24th day of December, in the year 1996, before me, a notary
public, personally appeared Mitch Francis, known to me to be the President of
the corporation that executed the within instrument and the person who executed
the within instrument on behalf of the corporation therein named, and
acknowledged to me that such corporation executed the within instrument pursuant
to a resolution of its board of directors and as its free act and deed.
__________________________________
SUSAN HARRISON
Notary Public
Commission # 1090227
Notary Public - California
[Seal] Los Angeles County
My Comm. Expires Mar 14, 2000
31
<PAGE>
CONSENT TO ASSIGNMENT OF
EQUIPMENT LEASE AGREEMENT
This Consent to Assignment dated as of December 12, 1996, is made by
and between FINOVA TECHNOLOGY FINANCE, INC. ("Lessor") and CINEMA RIDE, INC.
("Lessee"), and relates to a certain Master Equipment Lease Agreement dated
December 12, 1996 (the "Master Lease") and all Rental Schedules thereunder
between Lessor and Lessee (the Master Lease and Rental Schedules sometimes
collectively referred to as the "Lease").
WITNESSETH:
WHEREAS, the terms of the Master Lease provide that the Lessor may
assign the Lease, and all sums at any time due or to become due under the Lease,
at any time to any assignee;
WHEREAS, Lessee desires to lease certain equipment from Lessor
pursuant to the terms of the Lease; and
WHEREAS, Lessor is ready, willing and able to lease certain equipment
to Lessee pursuant to the terms of the Lease.
NOW, THEREFORE, in order to induce Lessor to enter into the Lease and
in consideration of the promises and covenants contained herein, the parties
agree as follows:
1. Lessor hereby notifies and directs Lessee that Lessor intends
to assign to one or more financial institutions (herein called the "Lender") all
of its rights, but none of its obligations, under the Lease, including the right
to receive all periodic rentals and other payments of every kind and nature
payable under the Lease. Upon written notice from Lessor that such assignment
has taken place, all periodic rentals payable under the Lease, commencing with
the payment date specified in such notice (the "Rent Assignment Date"), shall be
payable directly to Lender, unless otherwise provided, in the manner specified
in such notice. All rent due prior to the Rent Assignment Date shall be payable
to Lessor in accordance with the terms of the Lease. Lessee acknowledges that
Lessor may assign different Rental Schedules to different Lenders.
2. Lessee hereby acknowledges receipt of notification from Lessor
of Lessor's intent to assign its rights under the Lease as described above.
Lessee hereby consents to such assignment and agrees that upon request by
Lessor, Lessee will execute and deliver to Lessor and Lender such other
consents, acknowledgments and related documents as Lessor or Lender may
reasonably request, covering the Lease and the equipment which is subject to the
Lease (the "Equipment").
3. Lessee, for itself, its successors and assigns represents,
warrants and agrees as follows for the benefit of Lessor and Lender:
(i) the Equipment is in the possession and control of
Lessee at the places described in the Lease;
(ii) there are no liens or judgments, suits or
proceedings, pending or threatened, against Lessee which would adversely affect
its ability to make payments under the Lease;
(iii) no approval, consent or withholding of objection
is required from any governmental authority with respect to Lessee's performance
under the Lease;
32
<PAGE>
(iv) notwithstanding any breach of the Lease by
Lessor, or the bankruptcy or insolvency of Lessor, or the failure of any
security interest of Lessor or Lender in the Equipment, or any other
circumstance whether similar or dissimilar to the foregoing, as long as Lessee's
possession of the Equipment under the Lease is not impaired thereby Lessee shall
be absolutely and unconditionally obligated to perform all terms and conditions
of the Lease, and shall pay all amounts due under the Lease directly to Lender
without abatement, reduction, counterclaim, defense or offset; Lessee's sole
remedies for such breach of the Lease by Lessor being, to the extent permitted
by the Lease, a claim for damages against Lessor, the vendor or the manufacturer
of the Equipment, or all of them;
(v) Lessee will deliver duplicate copies of all
notices and other communications given to or made by Lessee pursuant to the
Lease to any Lender at the address set forth in the written notice to Lessee
given pursuant to Section 1 hereof;
(vi) Lessee will not enter into any agreement
amending, modifying, or terminating the Lease without the prior written consent
of any Lender, and any such attempted agreement shall be void;
(vii) Lessee has not received notice of a prior sale,
transfer, assignment, hypothecation or pledge of the Lease or of the rents
reserved thereunder, or of the Equipment;
(viii) Lessee has obtained property and public liability
insurance as required by the Lease which names Lessor as loss payee or
additional insured;
(ix) all financial statements of Lessee furnished and
to be furnished to Lessor or Lender are and will be correct and complete in all
respects and fairly present the financial condition and the results of
operations of Lessee for the periods stated therein, and have been or will be
prepared in conformity with generally accepted accounting principles
consistently applied. Lessee acknowledges that all financial statements
delivered and to be delivered to Lessor by Lessee have been and will be
delivered to and relied upon by any Lender; and
(x) there has been no material adverse change in
Lessee's financial condition since the date of the most recent financial
statements furnished to Lessor.
4. Lessee agrees with and acknowledges to Lessor that any
assignment, sale or transfer by Lessor could not and shall not materially change
any duty or obligation of Lessee or materially increase any burden or risk of
Lessee.
33
<PAGE>
5. The terms and conditions of this Consent to Assignment shall be
governed by and construed in accordance with the laws of the State of
Connecticut.
IN WITNESS WHEREOF, the parties have caused this Consent to Assignment
to be executed by their duly authorized representatives.
FINOVA TECHNOLOGY FINANCE, INC.
(LESSOR)
By _____________________________
Its
CINEMA RIDE, INC.
(LESSEE)
By _____________________________
Its President
34
<PAGE>
December 24, 1996
FINOVA Technology Finance, Inc.
10 Waterside Drive
Farmington, Connecticut 06032-3065
Gentlemen:
I am counsel for CINEMA RIDE, INC. ("Seller") and have advised it in
connection with the authorization, execution and delivery of the Sale and
Leaseback Agreement (the "Agreement") dated December 12, 1996, between FINOVA
Technology Finance, Inc., ("Buyer") and Seller (the Agreement and all documents
related thereto including the Master Equipment Lease Agreement dated December
12, 1996, between Buyer as Lessor and Seller as Lessee (the "Lease"), Rental
Schedule No. 1 under the Lease (the "Rental Schedule") and the Bill of Sale
dated December 24, 1996, pursuant to which the Equipment ]eased under the Rental
Schedule is sold by Seller to Buyer are hereinafter referred to as the
"Documents").
In connection with this opinion, I have examined or caused to be
examined the Documents and the Certificate of Incorporation, By-Laws and records
of corporate proceedings of Seller and such other records and documents, and
have made such investigations of law, as I have deemed necessary.
Upon the basis of the foregoing, it is my opinion that:
1. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified and in
good standing to do business wherever necessary to carry on its present business
and operations, including the jurisdiction(s) where the Equipment is or will be
installed.
2. Seller has full power to enter into the Documents and to engage
in the transactions contemplated by the Documents.
3. The person who has executed and delivered the Agreement, Lease
and Rental Schedule and who shall execute and deliver the Bill of Sale has the
authority to bind Seller.
4. The execution, delivery and performance of the Agreement, Bill
of Sale, Lease and Rental Schedule and the sale and leaseback of the Equipment
by Seller pursuant to the Documents will not conflict with or be a breach of any
provisions of the Certificate of Incorporation or By-Laws of Seller or any law
(including fraudulent conveyance and bulk sales laws), judgment, writ,
injunction, decree, award, rule or regulation of any court, administrative
agency or other governmental authority, or of any agreement to which Seller is a
party or by which it is bound, or constitute a default under any thereof.
5. The Agreement, Lease and Rental Schedule are, and the Bill of
Sale, when executed and delivered to Buyer, will be, duly authorized, valid,
legal and binding agreements of Seller enforceable against Seller in accordance
with the respective terms thereof and enforceable against the creditors of
Seller and purchasers from the creditors of Seller.
6. Neither the execution and delivery by Seller of the Agreement
and the other Documents nor the performance by Seller contemplated by the
Agreement and the other Documents result in the creation (other than in favor of
Buyer) of any lien, charge, security
35
<PAGE>
interest or other encumbrance upon any of the Equipment or conflict with or
result in a breach of any of the terms, conditions or provisions of, or
constitute a default under any indenture, mortgage, deed of trust or other
instrument of which I have knowledge (after reasonable investigation) to which
Seller is a party or by which it or its property is bound or affected.
7. No filing, giving of notice or publication is required in
connection with the sale and leaseback or if required such filing, notice or
publication has been duly made or given.
8. No vote or consent of, or notice to, the holders of any class
of stock of Seller is required, or if required, such vote, consent or notice has
been obtained or given, to authorize the execution, delivery and performance by
Seller of the Agreement, Bill of Sale, Lease and Rental Schedule.
9. Seller has and is transferring to Buyer title to the Equipment
free and clear of all liens and encumbrances of any kind or description. In
giving this opinion, liens arising by law for unpaid state and local taxes of
Lessee are specifically covered, and copies of the relevant tax clearances upon
which this opinion relies are attached hereto.
10. No consent, approval, withholding of objection or other
authorization of or by any court, administrative agency, other governmental
authority or any other person is required, except such consents, approvals or
other authorizations which have been duly obtained and are in full force and
effect, in connection with the execution, delivery or performance by Seller of,
or the consummation by Seller of the transactions contemplated by, the
Documents.
11. After reasonable investigation, I know of no actions, suits or
proceedings pending or threatened in any court or before any administrative
agency or other governmental authority against or affecting Seller which, if
adversely determined, will or could, individually or in the aggregate,
materially and adversely affect the business, operations, property or financial
condition of Seller, or the ability of Seller to perform its obligations under
the Documents.
12. Seller possesses any and all authorizations, certifications and
licenses which are or may be required for Seller to use and operate the sold and
leased back Equipment as Lessee under the Lease.
13. After reasonable investigation, I know of no Event of Default
under the Lease or event or condition which with the passage of time, the giving
of notice, or both, would constitute such Event of Default, that exists or is
continuing.
This opinion may be relied upon only by Buyer and its lenders and
assigns.
Very truly yours,
_______________________________
Enclosure
36
<PAGE>
BILL OF SALE
CINEMA RIDE, INC. (hereinafter referred to as "Seller"), in
consideration of the sum of $1,575,026.88 and other good and valuable
consideration paid by FINOVA Technology Finance, Inc. (hereinafter referred to
as "Buyer"), does hereby sell, grant, transfer, assign and convey to Buyer all
right, title and interest of Seller in and to the property described in Schedule
A hereto (hereinafter referred to as the "Equipment").
Seller warrants that there are no liens or encumbrances on the
Equipment and that Seller is transferring title to the Equipment free and clear
of all liens and encumbrances, and Seller does hereby bind and obligate itself
to forever warrant and defend all and singular the Equipment unto Buyer, its
successors and assigns, against the claims and demands of all persons.
To the extent assignable, Seller hereby assigns to Buyer all of
Seller's rights and interests in and to any manufacturer's warranties covering
any or all of the Equipment.
IN WITNESS WHEREOF, Seller has caused these presents to be executed
and attested to by its officers thereunto duly authorized on this 24th day of
December, 1996.
CINEMA RIDE, INC.
-----------------
(Seller)
By:______________________________
Title:___________________________
ATTEST:
________________________
By: Gary Packman
Title: Secretary
37
<PAGE>
Schedule A
to
Bill of Sale dated December 24, 1996
The Equipment consists of the following:
<TABLE>
<CAPTION>
Machine-Model/ Serial Acquisition
Feature Description Number Quantity Cost
- ------------- ----------- ------ -------- -----------
<S> <C> <C> <C> <C>
Ride Simulators Plus Improvements 4 $ 857,142.84
Nevada Sales & Use Tax (7%) $ 75,026.88
Equipment Location: Las Vegas, NV
Ride Simulators Plus Improvements 3 $ 642,857.13
Equipment Location: New York, NY
Total Acquisition Cost................................... $1,575,026.88
</TABLE>
Page 1 of 1
38
<PAGE>
CERTIFICATE OF INCUMBENCY
-------------------------
I, Gary Packman, Secretary of Cinema Ride, Inc., a Delaware
corporation (hereinafter called the "Corporation"), do hereby certify to FINOVA
Technology Finance, Inc. that the resolutions attached hereto were duly adopted
by the Board of Directors of the Corporation on December 24, 1996, that such
resolutions are in accord with the bylaws and the charter documents of the
Corporation as in effect on that date, that such resolutions are duly recorded
in the minute book of the Corporation, and that such resolutions have not been
amended or rescinded or superseded and are in full force and effect on this
date.
I further certify that the charter documents and the bylaws of the
Corporation and the applicable laws and regulations governing the Corporation do
not require the vote or consent of or notice to any shareholders of the
Corporation to authorize the transactions contemplated by the attached
resolutions.
I further certify that the persons listed below are duly elected and
acting officers of the Corporation in the capacities set forth opposite their
names, and that the signatures opposite their names are their genuine
signatures.
<TABLE>
<CAPTION>
Names Titles Signatures
----- ------ ----------
<S> <C> <C>
Chairman
C.E.O.
Mitch Francis President
- -------------------------------------------------------------------------------
Secretary
C.O.B.
Gary Packman Executive V.P.
- -------------------------------------------------------------------------------
</TABLE>
IN WITNESS WHEREOF, I have set my hand and seal of the Corporation
this 24th day of December, 1996.
_________________________________
Secretary
(seal)
39
<PAGE>
RESOLUTIONS FOR SALE AND LEASEBACK
----------------------------------
Resolved: That sale to and the leaseback from FINOVA Technology Finance, Inc.
("FINOVA") by the Corporation of certain personal property as described in the
Sale and Leaseback Agreement (the "Agreement") and the Master Equipment Lease
Agreement (the "Lease"), both dated December 12, 1996, between the Corporation
and FINOVA and in the related Rental Schedules and exhibits contemplated by the
Agreement and the Lease including the proposed Bills of Sale, copies of which
have been presented to and reviewed by the directors on this date and which
shall be attached to the minutes of this meeting as Exhibit A, be, and such sale
and leaseback hereby is, authorized and approved.
Resolved: That the terms and conditions set forth in the Agreement and in the
Lease and the related form of Rental Schedules and exhibits are hereby
authorized, ratified, confirmed and approved.
Resolved: That the execution and delivery to FINOVA of the Agreement and the
Lease, together with the Rental Schedules, exhibits, and other documents
referred to therein, by Mitch Francis and Gary Packman, of the Corporation, or
either one of them, on behalf of the Corporation be, and such execution and
delivery hereby are, authorized, ratified, confirmed and approved, and the
performance by the Corporation of its obligations under the Agreement and the
Lease and such Rental Schedules, exhibits, Bills of Sale and other documents be,
and they hereby are, authorized and approved.
Resolved: That Mitch Francis and Gary Packman, or either one of them, and each
and any of the other officers of the Corporation, be, and each of them hereby
is, authorized and directed to take all such further action, and to execute and
deliver all such further documents and instruments, as may be necessary and/or
appropriate to carry out the terms of and fulfill the obligations of the
Corporation under the Agreement and under the Lease and its related schedules,
exhibits and other documents, including the Bills of Sale under the Agreement
and the Rental Schedules under the Lease.
Resolved: That FINOVA and any assigns of FINOVA may rely on the foregoing
resolutions as authority for the actions taken by the Corporation pursuant to
said resolutions prior to such time when written notice of the revocation,
rescission, amendment, modification, supersession, or other change of said
resolutions is delivered by the Corporation to FINOVA and to any assigns of
FINOVA whose identity and address shall have been provided to the Corporation in
writing.
40
<PAGE>
A SECURITY INTEREST IN THIS RENTAL SCHEDULE TO BE PERFECTED BY POSSESSION MAY
ONLY BE PERFECTED BY POSSESSION OF THE ONE SIGNED COPY OF THIS RENTAL SCHEDULE.
RENTAL SCHEDULE NO. 1
With respect to that certain Master Equipment Lease Agreement dated December 12,
1996 (the "Master Lease") between FINOVA Technology Finance, Inc. ("Lessor") and
CINEMA RIDE, INC. ("Lessee"), Lessor and Lessee agree as follows, and that the
following terms have the following meanings:
1. INSTALLATION SITE: As described in Schedule A attached hereto.
-----------------
2. PRIMARY TERM: Forty-eight (48) calendar months (plus, if
------------
applicable, any partial month commencing on the Lease Commencement Date).
3. PAYMENT: Except as otherwise specified in this Rental
-------
Schedule, payments of Basic Rent and Additional Rent made pursuant to this
Rental Schedule shall be made monthly and shall be due and payable in advance on
the first day of each calendar month (each such date being hereinafter called a
"Payment Date"); provided, however, that Lessee shall pay to Lessor the Basic
Rent for the first and last full calendar month of the Lease Term at the time
that Lessee furnishes to Lessor this Rental Schedule executed by Lessee. If the
Lease Commencement Date shall be other than the first day of a calendar month,
the Basic Rent for such partial month of the Lease Term shall be an amount equal
to one-thirtieth (1/30th) of the monthly Basic Rent set forth in this Rental
Schedule multiplied by the number of days in Such partial month, and such
partial month's rent shall be payable on the first day of the first full
calendar month of the Lease Term. Payment of Basic Rent and Additional Rent
shall be made to Lessor at the following address: FINOVA Technology Finance,
Inc., 10 Waterside Drive, Farmington, CT 06032-3065 or at such other address
where Lessor notifies Lessee to make payment.
4. ACQUISITION COST: $1,575,026.88. The amount of Basic Rent has
----------------
been established based on Lessor's estimate that the aggregate Acquisition Cost
for the Equipment shall be the above amount. In the event that the actual
aggregate Acquisition Cost differs from the above amount, the amount of the
Basic Rent shall be adjusted as described below and Lessee authorizes Lessor to
so adjust the amount of said Basic Rent set forth in this Rental Schedule.
Lessor will inform Lessee in writing of any such adjustments. The Acquisition
Cost for individual items of the Equipment (if any) is set forth on Schedule A
attached hereto.
5. BASIC RENT: For each full calendar month $41,031.03 (plus
----------
applicable sales/use tax), except as it may be changed by (i) a change in the
Acquisition Cost as defined above, or (ii) an adjustment in the Lease Rate
Factor due to a change in the Base Rate, both as defined below. The Basic Rent
is calculated by multiplying the Acquisition Cost by the Lease Rate Factor. If
the Acquisition Cost differs from the amount described above, or if the Lease
Rate Factor is adjusted as described below, the Basic Rent shall be recalculated
using the actual Acquisition Cost and the Lease Rate Factor as adjusted. Lessee
acknowledges that at or before the execution of this Rental Schedule, Lessor
offered to sell the Equipment to Lessee as and to the extent provided by this
Lease for both a cash price and a credit or time price and Lessee chose the
higher time price.
41
<PAGE>
6. LEASE RATE FACTOR: The Lease Rate Factor is $26.051 per $1,000
-----------------
of Acquisition Cost, subject to adjustment as follows. Lessor reserves the
right to increase the amount of the monthly payment of Basic Rent as of the
Lease Commencement Date proportionally to any increase in the weekly average of
the interest rates of three-year U.S. Treasury Securities (the "Base Rate") from
the week ended October 4, 1996 to the week preceding the Lease Commencement
Date, as published in the Federal Reserve Statistical Release H.15. The Lease
Rate Factor will become fixed for the Lease Term as of the Lease Commencement
Date.
7. SUPPLIER: As described in Schedule A attached hereto.
--------
8. DESCRIPTION OF EQUIPMENT: As described in Schedule A attached
------------------------
hereto.
9. LEASE COMMENCEMENT DATE: The Lease Commencement Date shall be
-----------------------
the date of acceptance of the Equipment by Lessee, but such acceptance may not
occur later than December 31, 1996 without the express written consent of
Lessor.
10. STIPULATED LOSS VALUES: See Schedule B attached hereto.
----------------------
11. INCORPORATION OF MASTER LEASE: The provisions of the Master
-----------------------------
Lease are hereby incorporated and made a part of this Rental Schedule.
IN WITNESS WHEREOF, the parties hereto have caused this Rental Schedule to be
executed by their duly authorized representatives.
LESSOR: LESSEE:
FINOVA TECHNOLOGY FINANCE, INC. CINEMA RIDE, INC
By: By:
---------------------------- --------------------------------
Title: Title: President
------------------------- -----------------------------
Date: Date: 12/24/96
-------------------------- ------------------------------
42
<PAGE>
SCHEDULE A
CINEMA RIDE, INC. EQUIPMENT LOCATED WITHIN
THE FORUM SHOPS AT CAESARS
3500 LAS VEGAS BLVD. SOUTH, SUITE J-1
LAS VEGAS, NEVADA
QUANTITY ITEM DESCRIPTION
- -------- ----------------
4 15-Seat Capsules with Seatbelts as follows:
Unit #1 Identification: MSI-SN-2430-B055
Unit #2 Identification: MSI-SN-2430-B069
Unit #3 Identification: MSI-SN-2430-B070
Unit #4 Identification: MSI-SN-2430-B071
4 Electronic Equipment Racks each containing 1 Show Control System,
1 Programmable Logic Computer, 3 Laser Disc Players, 1 4-Channel
Digital Sound System with Amplifier, 7 Speakers and Graphic
Equalizer
4 Flat Silver-Coated Screens (per specifications of approximately 7
feet wide and 5 feet height at a 3:4 aspect ratio)
4 Fan/Wind Systems
8 Video Projectors
4 Pilot Operations Consoles each containing 4 Video Cameras, 1
Monitor, 1 Speaker, 1 Amplifier and 1 Slow-Scan Recorder
8 Retractable Stairways and Platforms
43
<PAGE>
CINEMA RIDE, INC. EQUIPMENT LOCATED
AT 1481 BROADWAY, NEW YORK, NEW YORK:
QUANTITY ITEM DESCRIPTION
- -------- ----------------
3 15-Seat Capsules with Seatbelts as follows:
Unit #1 Identification: MSI-SN-2579-B080
Unit #2 Identification: MSI-SN-2579-B081
Unit #3 Identification: MSI-SN-2579-B082
3 Electronic Equipment Racks each containing 1 Show Control System,
1 Programmable Logic Computer, 3 Laser Disc Players, I 4-Channel
Digital Sound System with Amplifier, 7 Speakers and Graphic
Equalizer
3 Flat Silver-Coated Screens (per specifications of approximately 7
feet wide and 5 feet height at a 3:4 aspect ratio)
3 Fan/Wind Systems
6 Video Projectors
3 Pilot Operations Consoles each containing 4 Video Cameras, 1
Monitor, 1 Speaker, I Amplifier and 1 Slow-Scan Recorder
6 Retractable Stairways and Platforms
44
<PAGE>
SCHEDULE B
----------
TABLE OF STIPULATED LOSS VALUES
This is Schedule B to Rental Schedule No. 1 to Master Equipment Lease Agreement
dated December 12, 1996 between FINOVA TECHNOLOGY FINANCE, INC. ("Lessor") and
CINEMA RIDE, INC. ("Lessee").
Stipulated Loss Values for each item of Equipment shall be determined by
multiplying Acquisition Cost for such item (as set forth in the Rental Schedule)
by the percentage shown below for the applicable Payment Date:
<TABLE>
<CAPTION>
If Casualty If Casualty
Occurrence Occurrence
Occurs On Occurs On
Or After Percentage Or After Percentage
Payment No. Amount Payment No. Amount
- ----------- ----------- ----------- ----------
<S> <C> <C> <C>
1 119.352% 25 67.944%
2 117.330% 26 65.666%
3 115.299% 27 63.376%
4 113.257% 28 61.075%
5 111.205% 29 58.762%
6 109.143% 30 56.438%
7 107.071% 31 54.102%
8 104.988% 32 51.754%
9 102.895% 33 49.395%
10 100.791% 34 47.024%
11 98.677% 35 44.641%
12 96.552% 36 42.246%
13 94.417% 37 39.839%
14 92.271% 38 37.420%
15 90.114% 39 34.989%
16 87.947% 40 32.546%
17 85.768% 41 30.090%
18 83.579% 42 27.623%
19 81.379% 43 25.143%
20 79.167% 44 22.650%
21 76.945% 45 20.145%
22 74.712% 46 17.628%
23 72.467% 47 15.098%
24 70.211% 48 12.555%
</TABLE>
If Casualty Occurs Prior to Payment No. 1 119.352%
45
<PAGE>
Certificate of Inspection and Acceptance
----------------------------------------
I hereby certify that:
(1) I am the duly elected, qualified and presently serving as President of
CINEMA RIDE, INC. (the "Lessee");
(2) All equipment leased by Lessee from FINOVA TECHNOLOGY FINANCE, INC. (the
"Lessor") pursuant to Rental Schedule No. 1 (the "Schedule") of that certain
Master Equipment Lease Agreement between Lessee and Lessor dated December 12,
1996 (the "Lease"), including all software the use of which is licensed to
Lessee by reason of the Lease, has been delivered to Lessee at the Installation
Site specified in the Schedule, has been installed and tested by Lessee and has
been found satisfactory and unconditionally accepted by Lessee for all purposes
of the Lease on this ___ day of December, 19__; and
(3) The equipment conforms to the list set forth in the Schedule.
CINEMA RIDE, INC.
----------------
By:
-------------------------------------
Title: President
----------------------------------
46
<PAGE>
SCHEDULE A
TO
RENTAL SCHEDULE NO. 1
CINEMA RIDE, INC. (LESSEE)
FINOVA TECHNOLOGY FINANCE, INC. (LESSOR)
The Equipment consists of the following:
<TABLE>
<CAPTION>
Machine-Model/ Serial Acquisition
Feature Description Number Quantity Cost
- ------------- ----------- ------- -------- ------------
<S> <C> <C> <C> <C>
Ride Simulators Plus Improvements 4 $ 857,142.84
Nevada Sales & Use Tax (7%) $ 75,026.88
Equipment Location: Las Vegas, NV
Ride Simulators Plus Improvements 3 $ 642,857.13
Equipment Location: New York, NY
Total Acquisition Cost................................... $1,575,026.88
</TABLE>
Lessee hereby authorizes the Lessor to fill in the serial numbers for the units
set forth above on this Schedule and on any Uniform Commercial Code Financing
Statements filed with respect to such units, when such numbers are available for
any unit.
Page 1 of 1
47
<PAGE>
SALE AND LEASEBACK AGREEMENT
----------------------------
This Sale and Leaseback Agreement is entered into as of the 12th day
of December, 1996, by and between Cinema Ride, Inc., a Delaware corporation with
its principal place of business at 12001 Ventura Place, Suite 340, Studio City,
California 91604 (hereinafter referred to as "Seller"), and FINOVA Technology
Finance, Inc., a Delaware corporation with its principal place of business at 10
Waterside Drive, Farmington, Connecticut 06032-3065 (hereinafter referred to as
"Buyer").
WHEREAS, Seller desires to sell to Buyer the personal property listed
in Schedule A attached hereto (such listed personal property being hereinafter
referred to as the "Equipment"), and
WHEREAS, Seller desires to use the Equipment for the exclusive benefit
of Seller under the terms and conditions of the Master Equipment Lease Agreement
dated December 12, 1996, between Buyer (as Lessor) and Seller (as Lessee) and
Rental Schedule No. 1 thereunder (hereinafter referred to together as the
"Lease"),
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the parties agree as follows:
1. Buyer agrees to purchase the Equipment from Seller, and to
lease the Equipment to Seller pursuant to the terms and conditions contained in
the Lease. The Purchase Date for the Equipment and the date that title to the
Equipment shall pass from Seller to Buyer shall correspond with the Lease
Commencement Date as defined in the Lease.
2. Buyer and Seller agree that the Purchase Price of the
Equipment is $1,575,026.88, which amount shall be payable to Seller by Buyer on
the Purchase Date.
3. Seller agrees that upon payment by Buyer of the Purchase Price,
Seller will deliver to Buyer a Bill of Sale, in the form attached hereto as
Exhibit A (the "Bill of Sale"), which will convey to Buyer good and marketable
title to the Equipment, free and clear of all liens and encumbrances of any kind
or description. Seller also agrees to provide Buyer with copies of all
documentation received or executed by Seller upon the original acquisition of
the Equipment by Seller.
4. Buyer and Seller agree that the warranties, covenants and
agreements herein contained shall survive the passing of title.
5. Seller agrees to pay any and all applicable Federal, state,
county or local taxes and any and all present or future taxes or other
governmental charges levied upon or created by the sale of the Equipment
hereunder, including sales, use, or occupation taxes due upon the purchase by
Buyer.
6. To induce Buyer to enter into this Sale and Leaseback
Agreement ("this Agreement") and with the knowledge that Buyer is doing so in
reliance upon these representations and warranties, Seller represents and
warrants to Buyer that (i) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, with full power to enter into this Agreement; (ii) the person who
has executed this Agreement and who shall execute the Bill of Sale has the
authority to bind Seller; (iii) the execution, delivery and performance of this
Agreement and the sale and leaseback of the Equipment by Seller pursuant to the
Lease will not conflict with or be a breach of any provisions of the Certificate
of
48
<PAGE>
Incorporation or By-Laws of Seller or any law (including fraudulent conveyance
laws), judgment, writ, injunction, decree, award, rule or regulation of any
court, administrative agency or other governmental authority, or of any
indenture or other agreement to which Seller is a party or by which it is bound,
or constitute a default under any thereof, (iv) this Agreement and the Bill of
Sale, when executed and delivered to Buyer, will be a duly authorized, valid and
binding agreement of Seller enforceable against Seller in accordance with the
respective terms thereof and enforceable against purchasers from and creditors
of Seller; (v) no filing, giving of notice or publication is required in
connection with the sale and leaseback or if required such filing, notice or
publication has been duly made and given; (vi) no vote or consent of, or notice
to, the holders of any class of stock of Seller is required, or if required,
such vote, consent or notice has been obtained or given, to authorize the
execution, delivery and performance of this Agreement and the Bill of Sale by
Seller; (vii) Seller has and is transferring to Buyer title to the Equipment
free and clear of all liens and encumbrances of any kind or description; and
(viii) no consent, approval, withholding of objection or other authorization of
or by any court, administrative agency, other governmental authority or any
other person is required, except such consents, approvals or other
authorizations which have been duly obtained and are in full force and effect,
in connection with the execution, delivery or performance by Seller or the
consummation by Seller, of the transactions contemplated by this Agreement.
Seller hereby agrees to deliver to Buyer, upon the Lease Commencement Date of
the Lease, an opinion of Seller's counsel, in the form attached hereto as
Exhibit B, to the effect that the above representations of Seller are true and
correct.
7. Seller warrants that it has taken all action necessary to
obtain all agreements, warranties and indemnifications applicable to the
Equipment which are normally provided by the manufacturer to its customers.
Seller hereby assigns to Buyer all of its right, title and interest in and to
all such agreements, warranties and indemnifications. Seller warrants that all
such agreements, warranties and indemnifications are assignable to Buyer.
8. Buyer and Seller agree that this Agreement and all documents
attached hereto shall inure to the benefit of and shall be binding upon Seller
and Buyer, their subsidiaries, successors and assigns, except that the assignee
of Buyer shall not be required to perform any of the obligations of Buyer and
any assignment by Buyer shall not relieve Buyer of its obligations hereunder.
Seller shall not assign any interest in this Agreement or in the documents
attached hereto without Buyer's written consent.
9. Seller agrees that all obligations of Buyer are expressly
contingent and conditional upon: (a) Seller executing and delivering the Lease
for the Equipment in a form which will constitute a valid, binding and legal
obligation and agreement of Seller and which is acceptable to Buyer; (b) Seller
executing a written Certificate of Inspection and Acceptance in the form
required by the Lease; and (c) Seller delivering any and all instruments
required by Buyer under the Lease in a form acceptable to Buyer.
10. The entire agreement between the parties with respect to the
subject matter hereof is contained in this Agreement and the Lease and the
Schedules and Exhibits referenced herein and therein. There are no
understandings, agreements, representations or warranties, express or implied,
respecting this Agreement or the Lease or the Equipment purchased hereunder and
leased thereunder except as specifically set forth in this Agreement, the Lease,
and the Schedules and exhibits hereto and thereto. Buyer shall not be liable for
any
49
<PAGE>
indirect, special or consequential damages, in connection with or arising out of
the furnishing, performance or use of any item of the Equipment or services
provided for in this Agreement, nor shall Buyer be liable in whole or in part
for any event beyond its control.
11. Any notice or other communication required or permitted to be
given by either party hereto to the other party shall be deemed to have been
given upon its receipt, in writing, by the receiving party at its address set
forth below, or at such other address as the receiving party shall have
furnished to the other party by notice pursuant to this paragraph.
If to Seller Cinema Ride, Inc.
12001 Ventura Place, Suite 340
Studio City, CA 91604
If to Buyer FINOVA Technology Finance, Inc.
10 Waterside Drive
Farmington, CT 06032-3065
12. Buyer and Seller agree that this Agreement and the Bill of Sale
shall be governed by and construed in accordance with the laws of the State of
Connecticut (other than the conflicts of laws provisions) and that any legal
action or proceeding arising out of this Agreement or the Bill of Sale may be
brought to any state or federal court sitting in the county of Hartford in the
State of Connecticut. Buyer and Seller hereby irrevocably consent and submit to
the nonexclusive personal jurisdiction of said courts and irrevocably agree that
all claims in any such action or proceeding may be heard, determined in and
enforced by any such court. Seller irrevocably consents to the service of
summons, notice, or other process relating to any such action or proceeding by
delivery thereof to it by hand or by mail in the manner set forth in the
provisions of this Agreement on notices.
13. Buyer and Seller waive any and all right to trial by jury in
any action or proceeding relating in any way to this Agreement or the Bill of
Sale.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on the date set forth below by their duly authorized corporate
officers.
FINOVA TECHNOLOGY FINANCE, INC. CINEMA RIDE, INC. ("Seller")
("Buyer")
By: By:
------------------------------ ----------------------------------
Name (typed): Name (typed:) Mitch Francis
-------------------- ----------------------
Title: Title: President
--------------------------- ------------------------------
Date: Date: 12/24/96
---------------------------- ------------------------------
Attachments:
Exhibit A - Bill of Sale
Exhibit B - Opinion of Counsel for Seller/Lessee
Schedule A - List of Equipment
50
<PAGE>
EXHIBIT A
BILL OF SALE
Cinema Ride, Inc. (hereinafter referred to as "Seller"), in
consideration of the sum of $1,575,026.88 and other good and valuable
consideration paid by FINOVA Technology Finance, Inc. (hereinafter referred to
as "Buyer"), does hereby sell, grant, transfer, assign and convey to Buyer all
right, title and interest of Seller in and to the property described in Schedule
A hereto (hereinafter referred to as the "Equipment").
Seller warrants that there are no liens or encumbrances on the
Equipment and that Seller is transferring title to the Equipment free and clear
of all liens and encumbrances, and Seller does hereby bind and obligate itself
to forever warrant and defend all and singular the Equipment unto Buyer, its
successors and assigns, against the claims and demands of all persons.
To the extent assignable, Seller hereby assigns to Buyer all of
Seller's rights and interests in and to any manufacturer's warranties covering
any or all of the Equipment.
IN WITNESS WHEREOF, Seller has caused these presents to be executed
and attested to by its officers thereunto duly authorized on this 24th day of
December, 1996.
CINEMA RIDE, INC.
----------------
(Seller)
By:
-------------------------------------
Title: President
----------------------------------
ATTEST:
- --------------------------
By: Gary Packman
-----------------------
Title: Secretary
--------------------
51
<PAGE>
AUTHORIZATION BY LESSEE
TO WITHHOLD SUMS FROM SALE AND LEASEBACK
December 24, 1996
FINOVA Technology Finance, Inc.
10 Waterside Drive
Farmington, CT 06032-3065
Dear Sirs:
Cinema Ride, Inc. hereby instructs you to retain the net amount of
$_______________ from the proceeds of our sale and leaseback from your company
pursuant to our Sale and Leaseback Agreement dated December 12, 1996, and to
apply the foregoing amount of $75,026.88 for the sales tax due to the Nevada
Department of Taxation, $_________________ for the first and last full calendar
month's rental payments, $______________ for the interim rental payment,
$_________________ to the New York Department of Taxation for sales and use tax
due on the first, last and interim rental payments, and your reimbursable
expenses of $___________.
Very truly yours,
CINEMA RIDE, INC.
By:_________________________________
52
<PAGE>
CINEMA RIDE, INC.
CONTACT INFORMATION FORM
Please provide us with the names and telephone numbers of the individuals that
we should contact when inquiring about the following:
1. DOCUMENTATION QUESTIONS
2. ACCOUNTS PAYABLE
3. EQUIPMENT QUESTIONS
4. INSURANCE QUESTIONS
1. NAME: Mitch Francis PHONE: 818/761-1002
----------------------- ------------------------
2. NAME: Roger Bassil PHONE: 818/761-1002
----------------------- ------------------------
FAX: 818/761-1072
--------------------------
3. NAME: Mitch Francis PHONE: 818/761-1002
---------------------- -----------------------
4. NAME: Roger Bassil PHONE: 818/761-1002
---------------------- -----------------------
(PLEASE PRINT)
CINEMA RIDE, INC.'S FEDERAL ID# 95-4417467
53
<PAGE>
CINEMA RIDE, INC.
INSURANCE INFORMATION FORM
In order to aid us in tracking the insurance requirements of our lease, please
provide the information stated below for our records.
Property Insurance Liability Insurance
Agency name Eichbert & Assoc. Same as Property
-------------------------- ------------------------------
Contact Julie Same as Property
----------------------------- ------------------------------
Agent's Address 16255 Ventura Bl. Same as Property
---------------------- ------------------------------
#350, Encino, CA 91436
Agent's Phone 818/380-1700 Same as Property
------------------------ ------------------------------
Agent's Fax 818/380-1717 Same as Property
------------------------ ------------------------------
Insurance Co. CHUBB Same as Property
---------------------- ------------------------------
NOTE: PLEASE REQUEST YOUR INSURANCE AGENT TO ISSUE AN INSURANCE CERTIFICATE
DIRECTLY TO FINOVA TECHNOLOGY FINANCE, INC. (FINOVA) AT 10 WATERSIDE DRIVE,
FARMINGTON, CT 06032. FAX # 203-676-1814. FINOVA, ITS LENDERS AND ASSIGNS MUST
BE NAMED AS "LOSS PAYEE" AND "ADDITIONAL INSURED" FOR PROPERTY AND LIABILITY,
RESPECTIVELY.
54
