<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
to
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1995.
COMMISSION FILE NUMBER 0-15939
SHOWSCAN ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-3940004
(State of incorporation) (I.R.S. Employer Identification No.)
3939 LANDMARK STREET, CULVER CITY, CALIFORNIA 90232
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (310) 558-0150
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
-----------------------
<S> <C>
Common Stock, $.001 par value None
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
YES X NO __________
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of June 20, 1995 was approximately $27,679,689 (based on last
NASDAQ-reported sale price of $5.75 per share of Common Stock on that date).
There were 5,248,859 shares of registrant's common stock outstanding as of June
20, 1995.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
DOCUMENTS INCORPORATED BY REFERENCE
Portions of registrant's Proxy Statement for its 1995 Annual Meeting
of Stockholders are incorporated herein by reference in Part III of this
Report.
________________________________________________________________________________
This report contains 37 consecutively numbered pages.
The exhibit index is on page 8 .
1
<PAGE> 2
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
a.(1)(2) FINANCIAL STATEMENTS AND SCHEDULES.
See the Index to Consolidated Financial Statements and Financial
Statement Schedules on Page F-1 hereafter, which is incorporated herein by
reference.
a.(3) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
3.1 Restated Certificate of Incorporation.(j)
3.2 Certificate of Amendment to Restated Certificate of Incorporation, dated
August 3, 1990.(j)
3.3 Second Certificate of Amendment of Restated Certificate of Incorporation
of Showscan Corporation, dated August 18, 1994.(j)
3.4 Certificate of Designations, Powers and Preferences with respect to
Series A Convertible Preferred Stock of Showscan Corporation, as filed
with the Secretary of State of Delaware on September 22, 1993.(b)
3.5 Certificate of Designations, Powers and Preferences with respect to
Series B Preferred Stock of Showscan Corporation, as filed with the
Secretary of State of Delaware on September 22, 1993.(b)
3.6 Certificate of Designations with respect to Series C Convertible
Preferred Stock of Showscan Corporation, as filed with the Secretary of
State of Delaware on August 22, 1994.(h)
3.7 Certificate of Designations with respect to Series D Participating
Preferred Stock of Showscan Entertainment Inc., as filed with the
Secretary of State of Delaware on November 9, 1994.(j)
3.8 Bylaws of the Company, as amended.(j)
4.1 Specimen certificate of the Common Stock, $.001 par value, of the
Company.(a)
4.2 Form of warrants issued to Whale Securities Corp. and its designees.(c)
4.3 Form of warrant issued to Sutro & Co. Incorporated.(a)
4.4 Stock Purchase Warrant, dated March 9, 1989, issued by the Company to
Columbia Pictures Industries, Inc.(a)
4.5 Specimen certificate of Series A Convertible Preferred Stock, $.001 par
value, of the Company.(g)
4.6 Specimen certificate of Series B Preferred Stock, $.001 par value, of the
Company.(g)
4.7 Warrant Agreement, dated as of September 27, 1993, among Showscan
Corporation and Charles B. Moss, Jr. and DiBenedetto Showscan Limited
Partnership.(b)
4.8 Form of Warrant Agreement entered into with William D. Eberle.(g)
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
4.9 Registration Rights Agreement, dated as of September 27, 1993, among
Showscan Corporation, Charles B. Moss, Jr., Thomas R. DiBenedetto and
DiBenedetto Showscan Limited Partnership.(b)
4.10 Specimen Certificate of Series C Convertible Preferred Stock, $.001 par
value, of the Company.(j)
4.11 Warrant Agreement, dated as of August 19, 1994, by and between Showscan
Corporation and United Artists Theatre Circuit, Inc.(h)
4.12 Registration Rights Agreement, dated as of August 19, 1994, by and
between Showscan Corporation and United Artists Theatre Circuit, Inc.(h)
4.13 Rights Agreement, dated as of November 11, 1994, by and between Showscan
Entertainment Inc. and Continental Stock Transfer & Trust Company.(i)
4.14 Registration Rights Agreement, dated as of September 22, 1994, by and
among Showscan Entertainment Inc., Charles B. Moss, Jr. and DiBenedetto
Showscan Limited Partnership.(j)
9.1 Voting Agreement, dated as of August 19, 1994, by and among Showscan
Corporation, United Artists Theatre Circuit, Inc., Charles B. Moss, Jr.,
and Thomas R. DiBenedetto.(h)
10.1 Lease dated June 15, 1989 between the Company and Landmark Investments
Ltd. ("Lease").(d)
10.2 Amendment No. 1 to Lease, dated February 20, 1991.(a)
10.3 Amendment No. 2 to Lease, dated January 21, 1992.(e)
10.4 Amendment No. 3 to Lease, dated February 18, 1993.(f)
10.5 Amended and Restated Showscan Corporation 1987 Stock Option Plan.(c)
10.6 Showscan Entertainment Inc. 1992 Stock Option Plan, as amended.
10.7 Modification, Consent and Assignment Agreement dated April 26, 1985
between the Company, Douglas Trumbull and Brock/Trumbull Entertainment
Corporation.(c)
10.8 Agreement, dated June 27, 1985, between the Company and Future General
Corporation.(c)
10.9 Agreement, dated February 23, 1987, between the Company and Cinema
Products Corporation (the "Camera Agreement").(c)
10.10 Amendment to Camera Agreement, dated July 20, 1988.(a)
10.11 Amendment to Camera Agreement, dated February 1, 1989.(a)
10.12 Showscan 1985 Agreement, dated April 16, 1985, and Agreement, dated
August 31, 1983, between Showscan Investors and Brock-Trumbull
Entertainment Corporation.(c)
10.13 Amendment to Royalty Agreement, dated July 6, 1990, between the Company
and WLS Partners.(a)
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.14 Amendment to payment terms of the Royalty Agreement, dated November 13,
1990, between the Company and WLS Partners.(a)
10.15 Universal CityWalk Lease, dated November 24, 1992, by and among the
Company and MCA Development Company.(f)
10.16 Purchase Agreement dated as of September 27, 1993, among Showscan
Corporation, Charles B. Moss, Jr., Thomas R. DiBenedetto and DiBenedetto
Showscan Limited Partnership.(b)
10.17 Joint Venture Agreement, dated as of September 27, 1993, among Showscan
Attractions, Inc., Moss Family O&O Corp., and DiBenedetto O&O Limited
Partnership, with respect to the organization of Showscan Attractions
Venture.(b)
10.18 Joint Venture Agreement, dated as of September 27, 1993, among Showscan
CityWalk, Inc., Moss Family LA Corp., and DiBenedetto CityWalk Limited
Partnership, with respect to the organization of Showscan CityWalk
Venture.(b)
10.19 Proprietary Property Acquisition and Management Agreement, dated as of
September 27, 1993, between Showscan Corporation and Showscan Attractions
Venture.(b)
10.20 Development and Disposition Services Agreement, dated as of September 27,
1993, among Showscan Attractions Venture, DiBenedetto Showscan, Inc. and
Moss Entertainment Corp.(b)
10.21 Employment Agreement, dated March 3, 1994, between the Company and
William C. Soady.(g)
10.22 Employment Agreement, dated May 3, 1994, between the Company and Dennis
Pope, as amended.(j)
10.23 Purchase Agreement, dated as of August 19, 1994, by and between Showscan
Corporation and United Artists Theatre Circuit, Inc.(h)
10.24 Joint Venture Agreement, dated as of August 19, 1994, by and between
Showscan Corporation and United Artists Theatre Circuit, Inc.(h)
10.25 Theatre Rights Agreement, dated as of August 19, 1994, among Showscan
Corporation, United Artists Theatre Circuit, Inc. and Showscan/United
Artists Theatres Joint Venture.(h)
10.26 First Amendment to Theatre Rights Agreement, dated as of March 30, 1995,
by and among Showscan Entertainment Inc., United Artists Theatre Circuit,
Inc. and Showscan/United Artists Theatres Joint Venture.*
10.27 Master Management and Development Agreement, dated as of August 19, 1994,
among Showscan Corporation, United Artists Theatre Circuit, Inc. and
Showscan/United Artists Theatres Joint Venture.(h)
10.28 Amendment No. 1 to the Showscan Attractions Joint Venture Agreement,
dated as of September 22, 1994, by and among DiBenedetto O&O Limited
Partnership, Showscan Attractions, Inc., and Moss Family O&O Corp.(j)
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
10.29 Standstill Agreement, dated as of August 22, 1994, by and among Showscan
Corporation, United Artists Theatre Circuit, Inc., Charles B. Moss, Jr.,
Thomas DiBenedetto and DiBenedetto Showscan Limited Partnership.(h)
10.30 Stock Exchange Agreement, dated as of September 22, 1994, by and among
Showscan Entertainment Inc., Charles B. Moss, Jr., Thomas R. DiBenedetto,
and DiBenedetto Showscan Limited Partnership.(j)
10.31 Royalty Agreement, dated as of September 22, 1994, by and among Showscan
Entertainment Inc., Moss Family O&O Corp. and DiBenedetto O&O Limited
Partnership.(j)
10.32 Memorandum of Agreement, dated as of April 24, 1995, by and between
Showscan Framingham, Inc. and General Cinema of Framingham Inc.*
21.1 List of Subsidiaries of the Company.(j)
23.1 Consent of Ernst & Young LLP.(j)
</TABLE>
_______________________
* Confidential treatment of this exhibit has been requested
and confidential portions have been omitted and filed
separately with the Securities and Exchange Commission.
(a) Previously filed as an exhibit to the Company's Registration
Statement on Form S-1, Registration No. 33-40531, as
amended, and incorporated herein by reference.
(b) Previously filed as an exhibit to the Schedule 13D filed
with the Securities and Exchange Commission by Charles B.
Moss, Jr., Thomas R. DiBenedetto and DiBenedetto Showscan
Limited Partnership, dated September 27, 1993, and
incorporated herein by reference.
(c) Previously filed as an exhibit to the Company's Registration
Statement on Form S-1, Registration No. 33-13582, as
amended, and incorporated herein by reference.
(d) Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for Fiscal Year Ended March 31, 1990,
and incorporated herein by reference.
(e) Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31,
1992, and incorporated herein by reference.
(f) Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for Fiscal Year Ended March 31, 1993,
and incorporated herein by reference.
(g) Previously filed as an exhibit to the Company's Registration
Statement on Form S-1, Registration No. 33-78236, as
amended, and incorporated herein by reference.
(h) Previously filed as an exhibit to the Company's Current
Report on Form 8-K dated August 19, 1994, and incorporated
herein by reference.
5
<PAGE> 6
(i) Previously filed as an exhibit to the Company's Current
Report on Form 8-K dated November 11, 1994, and incorporated
herein by reference.
(j) Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31,
1995, and incorporated herein by reference.
b. THE FOLLOWING REPORTS ON FORM 8-K WERE FILED DURING THE FOURTH QUARTER
OF THE FISCAL YEAR ENDED MARCH 31, 1995.
Inapplicable.
6
<PAGE> 7
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: September 25, 1995
SHOWSCAN ENTERTAINMENT INC.
By /s/ W. TUCKER LEMON
------------------------------
W. Tucker Lemon
Vice President, General Counsel
and Secretary
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page Number
----------- ----------- -----------
<S> <C>
10.6 Showscan Entertainment Inc. 1992 Stock Option
Plan, as amended.
10.26 First Amendment to Theatre Rights Agreement, dated
as of March 30, 1995, by and among Showscan
Entertainment Inc., United Artists Theatre Circuit, Inc.
and Showscan/United Artists Theatres Joint Venture.
10.32 Memorandum of Agreement, dated as of April 24,
1995, by and between Showscan Framingham, Inc. and
General Cinema of Framingham Inc.
</TABLE>
8
<PAGE> 1
EXHIBIT 10.6
SHOWSCAN ENTERTAINMENT INC.
1992 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Showscan Entertainment Inc. 1992 Stock
Option Plan (the "Plan"), is to provide an incentive to officers, directors and
key employees of Showscan Entertainment Inc. (sometimes referred to as the
"Parent") and its subsidiaries (individually and collectively, the "Company")
and to other persons providing significant services to the Company to remain in
the employ of the Company or provide services to the Company and contribute to
its success.
As used in the Plan, the term "Code" shall mean the Internal Revenue
Code of 1986, as amended, and any successor statute, and the terms "Parent" and
"Subsidiary" shall have the meaning set forth in Sections 424(e) and (f) of the
Code.
2. ADMINISTRATION. The Plan shall be administered by a Plan Committee
which shall be established by the Board of Directors of the Company (the
"Board"). The Plan Committee shall be comprised of two or more disinterested
directors of the Board as defined in Rule 16b-3 (or any successor rule)
promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, which currently provides that
disinterested directors may not receive any options under the Plan while they
are members, nor may they have received any options under the Plan during the
12 months prior to becoming a member of the Plan Committee. The Plan Committee
shall determine the meaning and application of the provisions of the Plan and
all option agreements executed pursuant thereto, and its decisions shall be
conclusive and binding upon all interested persons. Subject to the provisions
of the Plan, the Plan Committee shall have the sole authority to determine:
(a) The persons to whom options to purchase shares of Common Stock
of the Parent ("Stock") shall be granted;
(b) The number of options to be granted to each person;
(c) The price to be paid for each share of Stock upon the exercise
of each option;
(d) The period within which each option shall be exercised and,
with the consent of the optionee, any extensions of such period
(provided, however, that the original period and all extensions shall
not exceed the maximum period permissible under the Plan); and
(e) The terms and conditions of each stock option agreement
entered into between the Company and persons to whom the Company
has granted an option and of any amendments thereto (provided that
the optionee consents to each such amendment).
1
<PAGE> 2
The Plan Committee shall meet at such times and places as it determines,
including by means of a telephone conference call. A majority of the members
shall constitute a quorum, and a decision of a majority of those present at any
meeting at which a quorum is present shall constitute the decision of the Plan
Committee. A memorandum signed by all of the members of the Plan Committee
shall constitute the decision of the Plan Committee without the necessity, in
such event, for holding an actual meeting.
3. ELIGIBILITY. Officers, directors and key employees of the Company
(including independent contractors and consultants) and persons providing
significant services to the Company shall be eligible to receive grants of
options under the Plan.
4. STOCK SUBJECT TO PLAN. There shall be reserved for issue upon the
exercise of options granted under the Plan 800,000 shares of Stock or the
number of shares of Stock, which, in accordance with the provisions of Section
10 hereof, shall be substituted therefor. Such shares may be treasury shares.
If an option granted under the Plan shall expire or terminate for any reason
without having been exercised in full, unpurchased shares subject thereto shall
again be available for the purposes of the Plan.
5. TERMS OF OPTIONS
(a) Incentive Stock Options. It is intended that options granted
pursuant to this Section 5 (a) qualify as incentive stock options as
defined in Section 422 of the Code. Incentive stock options shall be
granted only to employees of the Company. Each stock option agreement
evidencing an incentive stock option shall provide that the option is
subject to the following terms and conditions and to such other terms
and conditions not inconsistent therewith as the Plan Committee may deem
appropriate in each case:
(1) Option Price. The price to be paid for each share of Stock
upon the exercise of each incentive stock option shall be determined
by the Plan Committee at the time the option is granted, but shall
in no event be less than 100% of the fair market value of the shares
on the date the option is granted, or not less than 110% of the Fair
Market Value of such shares on the date such option is granted in
the case of an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or of its Parent or
Subsidiaries. As used in this Plan the term "date the option is
granted" means the date on which the Plan Committee authorizes the
grant of an option hereunder or any later date specified by the Plan
Committee. For the purposes of the Plan, Fair Market Value of the
shares shall be (i) the closing sales price of shares of Stock sold
on the New York Stock Exchange, American Stock Exchange or the
NASDAQ National Market System on the date the option is granted (or
if there was no sale on such date, the highest asked price for the
Stock on such date), (ii) if the Stock is not listed on either of
those exchanges or traded on the NASDAQ National Market System on
the date the option is granted, the mean between the "bid" and
"asked" prices of the Stock in the National Over-The-Counter
2
<PAGE> 3
Market (or other similar market quotation system) on the date the
option is granted, or (iii) if the Stock is not traded in any
market, the price determined by the Plan Committee to be the fair
market value, based upon such evidence as it may deem necessary or
desirable.
(2) Period of Option and Exercise. The period or periods within
which an option may be exercised shall be determined by the Plan
Committee at the time the option is granted, but in no event shall
any option granted hereunder be exercised more than ten years from
the date the option was granted nor more than five years from the
date the option was granted in the case of an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the
Company or of its Parent or Subsidiaries.
(3) Payment for Stock. The option exercise price for each share
of Stock purchased under an option shall be paid in full at the time
of purchase. The Plan Committee may provide that the option price
be payable, at the election of the holder of the option and with the
consent of the Plan Committee, in whole or in part either in cash or
by delivery of Stock in transferable form, such Stock to be valued
for such purpose at its Fair Market Value on the date on which the
option is exercised. No share of Stock shall be issued upon
exercise until full payment therefor has been made, and no optionee
shall have any rights as an owner of Stock until the date of
issuance to him of the stock certificate evidencing such Stock.
(4) Limitation on Amount Becoming Exercisable in Any One
Calendar Year. Subject to the overall limitations of Section 4
hereof (relating to the aggregate shares subject to the Plan), the
aggregate Fair Market Value (determined as of the time the option is
granted) of Stock with respect to which incentive stock options are
exercisable for the first time by the optionee during any calendar
year (under the Plan and all other incentive stock option plans of
the Company, the Parent, and Subsidiaries) shall not exceed
$100,000.
(b) Nonqualified Stock Options. Nonqualified stock options may be
granted not only to employees but also to directors who are not
employees of the Company and to consultants, independent contractors,
and other persons who provide substantial services to the Company. Each
nonqualified stock option granted under the Plan shall be evidenced by a
stock option agreement between the person to whom such option is granted
and the Company. Such stock option agreement shall provide that the
option is subject to the following terms and conditions and to such
other terms and conditions not inconsistent therewith as the Plan
Committee may deem appropriate in each case:
(1) Option Price. The price to be paid for each share of Stock
upon the exercise of an option shall be determined by the Plan
Committee at the time the option is granted, but shall in no event
be less than 100% of the Fair Market Value of the shares on the
3
<PAGE> 4
date the option is granted, or not less than 110% of the Fair Market
Value of the shares on the date such option is granted in the case
of an individual then owning (within the meaning of Section 424(d)
of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or of its Parent or Subsidiaries.
As used in this Plan, the term "date the option is granted" means
the date on which the Plan Committee authorizes the grant of an
option hereunder or any later date specified by the Plan Committee.
"Fair Market Value" of the Stock should be determined as set forth
in section 5(a)(1) hereof.
(2) Period of Option and Exercise. The periods, installments or
intervals during which an option may be exercised shall be
determined by the Plan Committee at the time the option is granted,
but in no event shall such period exceed 10 years from the date the
option is granted.
(3) Payment for Stock. The option exercise price for Stock
purchased under an option shall be paid in full at the time of
purchase. The Plan Committee may provide that the option exercise
price be payable at the election of the holder of the option, with
the consent of the Plan Committee, in whole or in part either in
cash or by delivery of Stock in transferable form, such Stock to be
valued for such purpose at its Fair Market Value on the date on
which the option is exercised. No share of Stock shall be issued
until full payment therefor has been made, and no optionee shall
have any rights as an owner of shares of Stock until the date of
issuance to him of the stock certificate evidencing such Stock.
6. NONTRANSFERABILITY. The options granted pursuant to the Plan shall
be nontransferable except by will or the laws of descent and distribution, and
shall be exercisable during the optionee's lifetime only by him and after his
death, by his personal representative or by the person entitled thereto under
his will or the laws of intestate succession.
7. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. Upon termination
of the optionee's employment or other relationship with the Company, his rights
to exercise options then held by him shall be only as follows (in no case do
the time periods referred to below extend the term specified in any option):
(a) Death. Upon the death of an optionee, any option which he
holds may be exercised (to the extent exercisable at his death), unless
it otherwise expires, within such period after the date of his death
(not to exceed twelve (12) months) as the Plan Committee shall prescribe
in his option agreement, by the employee's representative or by the
person entitled thereto under his will or the laws of intestate
succession.
(b) Retirement. Upon the retirement (either pursuant to a Company
retirement plan, if any, or pursuant to the approval of the Plan
Committee) or disability (within the meaning of Section 22(e) (3) of the
Code) of an officer, director or employee, an outstanding option
4
<PAGE> 5
may be exercised (to the extent exercisable at the date of such
retirement or disability) by him within such period after the date of
his retirement or disability (not to exceed three (3) months) as the
Plan Committee shall prescribe in his option agreement.
(c) Other Termination. In the event an officer, director or
employee ceases to serve as an officer or director or leaves the employ
of the Company for any reason other than as set forth in (a) and (b),
above, or a nonemployee ceases to provide services to the Company, any
option which he holds shall, unless the applicable option agreement
provides otherwise, remain exercisable (to the extent exercisable as of
the date of termination) until the earlier of (i) 30 days after the date
of such termination, or (ii) the expiration or termination date of such
option as set forth in the applicable option agreement.
(d) Plan Committee Discretion. The Plan Committee may in its sole
discretion accelerate the exercisability of any or all options upon
termination of employment or cessation of services.
8. DISCRETIONARY ACCELERATION ON MERGER OR SALE OF THE PARENT. In the
event the Parent or its stockholders enter into an agreement to dispose of all
or substantially all of the assets or capital stock of the Parent by means of a
sale, merger, consolidation, reorganization, liquidation or otherwise, an
option granted under the Plan will, in the discretion of the Plan Committee, if
so authorized by the Board of Directors and conditioned upon consummation of
such disposition of assets or stock, become immediately exercisable in full
during the period commencing as of the date of the execution of such agreement
and ending as of the earlier of the stated termination date of the option or
the date on which the disposition of assets or stock contemplated by the
agreement is consummated.
9. TRANSFER TO RELATED CORPORATION. In the event an employee leaves
the employ of the Parent to become an employee of a Subsidiary or any employee
leaves the employ of a Subsidiary to become an employee of the Parent or
another Subsidiary, such employee shall be deemed to continue as an employee
for purposes of this Plan.
10. ADJUSTMENT OF SHARES; TERMINATION OF OPTIONS.
(a) Adjustment of Shares. In the event of changes in the
outstanding Stock by reason of stock dividends, split-ups,
consolidations, recapitalizations, reorganizations or like events (as
determined by the Plan Committee), an appropriate adjustment shall be
made by the Plan Committee in the number of shares reserved under the
Plan, in the number of shares set forth in Section 4 hereof, and in the
number of shares and the option price per share specified in any stock
option agreement with respect to any unpurchased shares. The
determination of the Plan Committee as to what adjustments shall be made
shall be conclusive. Adjustments for any options to purchase fractional
shares shall also be determined by the Plan Committee. The Plan
Committee shall give prompt notice to all optionees of any adjustment
pursuant to this Section,
5
<PAGE> 6
(b) Termination of Options on Merger, Sale or Liquidation of
Parent. Notwithstanding anything to the contrary in this Plan, in the
event of any merger, consolidation or other reorganization of the Parent
in which the Parent is not the surviving or continuing corporation (as
determined by the Plan Committee) or in the event of the liquidation or
dissolution of the Parent, all options granted hereunder shall terminate
on the effective date of the merger, consolidation, reorganization,
liquidation, or dissolution unless there is an agreement with respect
thereto which expressly provides for the assumption of such options by
the continuing or surviving corporation.
11. SECURITIES LAW REQUIREMENTS. The Company's obligation to issue
shares of its Stock upon exercise of an option is expressly conditioned upon
the completion by the Company of any registration or other qualification of
such shares under any state and/or federal law or rulings and regulations of
any government regulatory body or the making of such investment representations
or other representations and undertakings by the optionee (or his legal
representative, heir or legatee, as the case may be) in order to comply with
the requirements of any exemption from any such registration or other
qualification of such shares which the Company in its sole discretion shall
deem necessary or advisable. The Company may refuse to permit the sale or
other disposition of any shares acquired pursuant to any such representation
until it is satisfied that such sale or other disposition would not be in
contravention of applicable state or federal securities law.
12. TAX WITHHOLDING. As a condition to exercise of an option or
otherwise, the Company may require an optionee to pay over to the Company all
applicable federal, state and local taxes which the Company is required to
withhold with respect to the exercise of an option granted hereunder. At the
discretion of the Plan Committee and upon the request of an optionee, the
minimum statutory withholding tax requirements may be satisfied by the
withholding of shares of Stock otherwise issuable to the optionee upon the
exercise of an option.
13. AMENDMENT. The Board of Directors may amend the Plan at any time,
except that without stockholder approval:
(a) The number of shares of Stock which may be reserved for
issuance under the Plan shall not be increased except as provided in
Section 10(a) hereof;
(b) The option price per share of Stock subject to incentive stock
options may not be fixed at less than 100% of the Fair Market Value of a
share of Stock on the date the option is granted;
(c) The maximum period of ten (10) years during which the options
may be exercised may not be extended;
(d) The class of persons eligible to receive options under the Plan
as set forth in Section 3 shall not be changed; and
6
<PAGE> 7
(e) This Section 13 may not be amended in a manner that limits or
reduces the amendments which require stockholder approval.
14. EFFECTIVE DATE. The Plan shall be effective upon its adoption by
both the Board of Directors and stockholders of the Company.
15. TERMINATION. The Plan shall terminate automatically as of the close
of business on the day preceding the 10th anniversary date of its effectiveness
or earlier by resolution of the Board of Directors, or upon consummation of the
disposition of capital stock or assets of the Parent, as described in Sections
8 and 10(b) hereof. Unless otherwise provided herein, the termination of the
Plan shall not affect the validity of any option agreement outstanding at the
date of such termination.
16. STOCK OPTION AGREEMENT. Each option granted under the Plan shall be
evidenced by a written agreement ("Stock Option Agreement") executed by the
Company and accepted by the optionee, which (i) shall contain each of the
provisions and agreements herein specifically required to be contained therein,
(ii) shall indicate whether such option is to be an incentive stock option or a
nonqualified stock option, and if it is to be an incentive stock option, such
Stock Option Agreement shall contain terms and conditions permitting such
option to qualify for treatment as an incentive stock option under Section 422
of the Code, (iii) may contain the agreement of the Optionee to remain in the
employ of, and/or to render services to, the Company or the Parent or any
Subsidiary for a period of time to be determined by the Plan Committee, and
(iv) may contain such other terms and conditions as the Plan Committee deems
desirable and which are not inconsistent with the Plan.
17. NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any option
granted hereunder shall confer upon any optionee any right to continue in the
employ of the Company or to continue to perform services for the Company or any
Parent or Subsidiary, or shall interfere with or restrict in any way the rights
of the Company to discharge or terminate any officer, director, employee,
independent contractor or consultant at any time for any reason whatsoever,
with or without good cause.
7
<PAGE> 1
EXHIBIT 10.26
FIRST AMENDMENT TO THEATER RIGHTS AGREEMENT
This First Amendment to Theater Rights Agreement (this "Amendment") is
made as of March 30, 1995 by and among Showscan Entertainment Inc., a Delaware
corporation formerly known as Showscan Corporation ("Showscan"),
Showscan/United Artists Theatres Joint Venture, a Colorado general partnership
(the "Joint Venture"), and United Artists Theatre Circuit, Inc., a Maryland
corporation ("United Artists").
RECITALS
A. Showscan, the Joint Venture and United Artists are currently party to that
certain Theater Rights Agreement, dated as of August 19, 1994 (the
"Agreement"). Capitalized terms used in this Amendment without definition
shall have the meanings given thereto in the Agreement.
B. Showscan, the Joint Venture and United Artists now desire to modify and
amend the Agreement in the manner and on the terms and conditions set forth in
this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Repurchase of Warrants.
(a) Simultaneously with the execution and delivery of
this Amendment, and as a condition thereof, Showscan shall repurchase from
United Artists, and United Artists shall sell to Showscan, warrants
representing the right to purchase 48,000 shares of Showscan common stock,
$.001 par value (the "Common Stock"), at an exercise price of $8.50 which had
originally been issued to United Artists on August 22, 1994.
(b) Concurrently herewith United Artists shall deliver to
Showscan the original Warrant certificate evidencing a right to purchase 75,000
shares of Common Stock and Showscan shall deliver to United Artists a new
certificate entitling United Artists to purchase 27,000 shares of Common Stock.
2. Amendment of Section 3.2(b). Upon satisfaction of the
condition set forth in Section 1 of this Amendment, Section 3.2(b) of the
Agreement shall be amended by adding thereto a new sentence immediately
following the current third sentence thereof, which new sentence shall read in
its entirety as follows:
"Showscan shall not be entitled to receive any of the forgoing
liquidated damages that would otherwise be due if prior to the end of
the Offer Period United Artists has actually paid to Showscan at least
{text redacted} in the aggregate for (i) {text redacted} or to be
{text redacted} in Simulator Theater Units pursuant to {text redacted}
above, and (ii) {text
<PAGE> 2
redacted} and {text redacted} (other than {text redacted} and other
{text redacted} items) with respect to the {text redacted} of such
{text redacted}."
3. No Other Modifications. Except as expressly set forth in this
Amendment, the Agreement shall remain unmodified and in full force and effect.
4. Miscellaneous.
4.1 Further Assurances. Each party agrees to perform all
such acts, including without limitation, the execution of documents, as may
reasonably be requested by any party in order to more fully effectuate the
purposes of this Amendment.
4.2 Successors and Assigns. Except as otherwise
expressly provided in this Amendment, all covenants and agreements contained in
this Amendment by or on behalf of any of the parties will bind and inure to the
benefit of the respective successors and assigns of the parties whether so
expressed or not.
4.3 Severability. Whenever possible, each provision of
this Amendment will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Amendment.
4.4 Counterparts. This Amendment may be executed in two
or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
4.5 Choice of Law. This Amendment shall be interpreted
in accordance with the substantive law of the State of Colorado without regard
to its choice of law provisions.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
UNITED ARTISTS THEATRE CIRCUIT, INC.
By: /s/ Kurt C. Hall
---------------------------------
Title: Executive Vice President and Chief
Financial Officer
SHOWSCAN ENTERTAINMENT INC.
By: /s/ Dennis Pope
---------------------------------
Title: Executive Vice President and Chief
Financial Officer
SHOWSCAN/UNITED ARTISTS THEATRES
JOINT VENTURE
By: Showscan Entertainment Inc. as
Managing Partner
By: /s/ Dennis Pope
----------------------------------
Title: Executive Vice President and Chief
Financial Officer
3
<PAGE> 1
EXHIBIT 10.32
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement (the "Agreement") is made and entered
into as of the 24th day of April, 1995, by and between Showscan Framingham,
Inc., a Delaware corporation ("Showscan") and wholly-owned subsidiary of
Showscan Entertainment Inc. ("SEI"), and General Cinema of Framingham Inc., a
Massachusetts corporation ("General Cinema") and wholly-owned subsidiary of
General Cinema Corp. of Massachusetts ("GCC"), for the purpose of creating a
general partnership (the "Partnership") between Showscan and General Cinema
under the Uniform Partnership Act of the Commonwealth of Massachusetts (the
"Partnership Law"), upon the following terms and conditions:
1. Organization:
(a) The parties hereto form a general partnership
pursuant to the provisions of the Partnership Law,
and adopt and enter into this Agreement upon the
terms and conditions set forth herein. To the
extent the rights or obligations of the partners are
different by reasons of any provision of this
Agreement than they would be in the absence of such
provisions, this Agreement, shall, to the extent
permitted by the Partnership Law, control.
(b) The name of the Partnership is Showscan/General
Cinema Ventures, a Massachusetts general partnership,
and its principal executive office is c/o General
Cinema Corp. of Massachusetts, 1280 Boylston Street,
Chestnut Hill, Massachusetts 02167, or such other
place or places as the partners may hereafter
determine.
(c) The partners shall, from time to time, file and
publish such Fictitious Business Statements regarding
the use of a business name of the Partnership and
renewals thereof, or other documents, as may be
required by the laws of the jurisdictions in which
the Partnership conducts its business. In addition,
the partners shall file, from time to time, as
necessary, statements of partnership setting forth the
names of the partners, the authority of the partners
with respect to licensing or disposition of assets
of the Partnership and such other matters as either
party may reasonably request. Either partner shall
act as the other's agent or attorney-in-fact and
execute on its behalf any documents necessary to
effectuate the foregoing.
(d) Each of Showscan and General Cinema shall hold equal
voting interests in the Partnership and such voting
interests shall not vary regardless of any relative
differences in respective capital accounts.
Showscan and
1
<PAGE> 2
General Cinema shall be the only partners of the
Partnership, unless mutually agreed.
2. Purpose: The purpose (character of business) of the
Partnership shall be to develop and operate twin
(each with six four-seat McFadden motion bases and
pods) film-based Showscan simulation theatres (the
"Showscan Theatres") at GCC's theatre complex in
Framingham, Massachusetts (the "Complex"), and to
engage in any other legal business or activity
related thereto. A special use permit will be
required to be obtained from local authorities.
General Cinema will use reasonable efforts, with
Showscan's assistance and cooperation, to obtain
such permit.
3. Term: (a) The Partnership's term (the "Term") shall commence
on the date of execution of this Agreement and shall
continue until the earlier to occur of: (a) five
years measured from the date of opening of the
Showscan Theatres, with an option to be exercised by
mutual agreement of Showscan and General Cinema to
extend the term for successive additional periods of
five years, or (b) December 31, 2025, unless
previously terminated in accordance with the
Partnership Law or provisions of this Agreement.
(b) Either party shall have the right to terminate this
Agreement at any time after the first two years of the
Term if (a) the Showscan Theatres have had an
operating loss, after all expenses of operation
(excluding for this purpose the Management Fee,
described below, payable to General Cinema and Film
Rental, described below, payable to SEI) and before
interest, taxes, depreciation and amortization, for
each of the prior two years of operation, and (b)
thereafter have an operating loss, calculated in the
same fashion, for any consecutive period of thirteen
(13) weeks.
4. Capital: The Partnership shall maintain capital accounts of
the partners. The initial capital contributions of
the partners shall be as follows:
(a) Showscan shall make in-kind capital contributions to
the Partnership of equipment, including motion bases
and pods and related mechanical equipment (the
"Showscan Equipment"), to be valued at $1,602,000
({text redacted} of retail). The Showscan Equipment
shall be similar in operational capabilities to the
Showscan installation at the Trocadero in London,
England, and shall carry SEI's usual {text redacted}
on its equipment. From time to time either party
may advance monies to the other party, and in return
(a) the advancing party shall be credited with an
equivalent amount of the receiving party's capital
contribution and
2
<PAGE> 3
(b) the value of the receiving party's in-kind
contribution shall be correspondingly reduced by the
amount of monies received by the receiving party.
(b) General Cinema shall make in-kind capital
contributions to the Partnership of tenant
improvements for the Showscan Theatres in the amount
of General Cinema's {text redacted}, currently
estimated at {text redacted}. General Cinema will
also be credited with an additional in-kind capital
contribution of {text redacted} for existing
facilities at the Complex (e.g. lobby, ticketing
stations, restrooms) which will be used in common
with GCC's theatre operations and the Showscan
Theatres. General Cinema shall also be credited
with a capital contribution of {text redacted},
representing the present value of {text redacted} of
{text redacted} due by the Showscan Theatres.
(c) Within 15 days of the opening of the Showscan
Theatres (which shall be the first date of paid public
admissions to the Showscan Theatres), the partners
will certify to each other (with documentation) their
respective in-kind contributions and thereafter will
equalize the initial capital accounts by having the
partner with the larger capital account elect to
either (i) be repaid in accordance with Paragraph
8(b) or (ii) have the partner with the smaller
capital account make a cash capital contribution to
the Partnership in an amount sufficient to equalize
the initial capital contributions of the partners.
Such cash capital contribution shall be used as
working capital of the Partnership.
(d) After such equalization of capital contributions,
the partners shall agree on the working capital
needs of the Partnership and, to the extent
necessary (i) make additional, equal, cash
contributions to the capital of the Partnership or
(ii) distribute excess cash in accordance with
Paragraph 8 hereof. Upon completion of the initial
capitalization of the Partnership, each partner's
interest shall be fully paid and nonassessable and
no partner shall be required to make further capital
contributions to the Partnership.
(e) It is intended that the maintenance of capital
accounts by the Partnership comply with Treasury
Regulations Section 1.704-1(b), and all provisions
of this Agreement shall be interpreted and applied
in a manner consistent with such Regulations. In
the event the partners shall determine that it is
prudent to modify the manner in which the capital
accounts, or any debits or credits thereto
(including, without limitation, debits or credits
relating to liabilities which are secured by
contributed
3
<PAGE> 4
or distributed property or which are assumed by the
Partnership or partners), are computed in order to
comply with such Regulations, the partners may make
such modification, provided that it is not likely to
have a material effect on the amounts distributable
to any person pursuant to this Agreement upon the
dissolution of the Partnership. The partners also
shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the capital
accounts of the partners and the amount of
Partnership capital reflected on the Partnership's
balance sheet, as computed for book purposes, in
accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(q), and (ii) make appropriate
modifications in the event unanticipated events (for
example, the acquisition by the Partnership of oil
or gas properties) might otherwise cause this
Agreement not to comply with Treasury Regulations
Section 1.704-1(b).
5. Management:
(a) Except as provided herein, all management decisions
with respect to the Partnership shall be made by a
four- person Management Committee, which Management
Committee shall determine by mutual agreement the
operating and capital expenditure budgets and
marketing plan for the operation of the Showscan
Theatres, as well as the schedule for exhibition of
Showscan software at the Showscan Theatres. The
partners shall each appoint two persons to the
Management Committee.
(b) Day-to-day management will be handled by General
Cinema, as the "Operating Partner." Detailed
management responsibilities, which shall include
preparation of monthly financial reports,
administrative and compliance matters, shall be
established for General Cinema by the Management
Committee. General Cinema shall be the "Tax Matters
Partner" of the Partnership in accordance with
Section 6231(a)(7) of the Internal Revenue Code.
(c) Showscan shall be referred to as the "Creative
Partner."
(d) Either partner may loan funds to the Partnership to
meet cash flow needs, provided the Management
Committee agrees on the terms and amounts of such
loans.
4
<PAGE> 5
(e) In the event that there is a dispute between the
partners concerning this Agreement, the operation
of the Showscan Theatres or a deadlock of the
Management Committee, the partners agree to negotiate
and mediate their differences prior to litigation.
6. Compensation
to Partners:(a) For its service in managing the day-to-day operations
of the Showscan Theatres, General Cinema shall
receive a fee (the "Management Fee") equal to {text
redacted} of the {text redacted} for the Showscan
Theatres, against a monthly minimum management fee of
{text redacted}, payable monthly in accordance with
customary theatre settlement procedures, together
with a bonus in an amount such that the aggregate
Management Fee (including bonus) paid to General
Cinema equals the aggregate {text redacted} (as
hereinafter defined) {text redacted}.
(b) SEI will make available to the Showscan Theatres
the full use of its entire current and future
library of film software unless SEI has entered into
a written agreement with respect to future films
which prohibits SEI from making a particular film
available to third parties in general or in
particular geographic areas. In exchange for access
to SEI's film library, the Partnership will pay to
SEI film rental ("Film Rental") equal to {text
redacted} of the gross box office receipts for the
Showscan Theatres up to the first {text redacted} of
gross box office receipts each year beginning on the
opening date, and {text redacted} of such gross
receipts that are in excess of {text redacted}.
Notwithstanding the foregoing, the Film Rental shall
never be less than a minimum of {text redacted} in
any month.
(c) After the expiration of all periods for which rent
has been prepaid, GCC will be paid rent for the
use of the locations within the Complex equal to
GCC's {text redacted}. Allocation of {text redacted}
are to be based on the {text redacted} of the {text
redacted} of the Showscan Theatres ({text redacted}
which includes an allocation of common area) to the
total {text redacted} of the Complex.
(d) Payment of fees in accordance with this Paragraph
to partners or affiliates of partners shall be
treated as either an I.R.S. Code Section 707(a) or
707(c) expenditure and not as a Partnership
distribution, and accordingly will be treated as an
expense deduction of the Partnership in arriving at
net income and/or net loss. As a result, any such
payment of fees will not affect the partners' capital
accounts except to the extent
5
<PAGE> 6
that they impact the determination of net income or
net loss of the Partnership.
7. Expenses: The Partnership shall pay directly or reimburse the
partners or their affiliates, as appropriate, for
the direct expenses of operation of the Showscan
Theatres and for any and all goods, materials and
services furnished to the Partnership by the partners
and/or their affiliates, other than those goods,
materials or services for which compensation is
already provided pursuant to this Agreement.
8. Distributions: Cash funds from all sources including, without
limitation, cash from operations and cash from the
sale of Partnership assets (but excluding cash from
the liquidation/winding-up of the Partnership which
will be distributed in accordance with Paragraph 16
hereof), which in the agreement of the Management
Committee are not required to meet the needs of the
business of the Partnership, shall be distributed, at
least quarterly, to the partners in the following
order of priority:
(a) First, to the partner with the greater
capital account balance until the capital
accounts of each partner are equivalent;
(b) Second, to the partner with the greater
capital account balance as a preferred return on
such excess capital equal to the announced prime
lending rate of Bank of America plus one (1)
percentage point per annum for the period that such
excess capital was outstanding; and
(c) Then, 50% to Showscan and 50% to General
Cinema.
In computing cash available for distribution to
partners,{text redacted} of the Showscan Theatres
shall first be used to pay the {text redacted} of the
operation of the Showscan Theatres (including,
without limitation, amounts payable to {text
redacted}, general {text redacted} including {text
redacted} expenses and {text redacted} expenses
(which are not included in the {text redacted}), cost
of {text redacted} costs, applicable taxes and the
{text redacted} and {text redacted} discussed above)
and then to provide an appropriate {text redacted}.
9. Allocations of
Net Income and
Net Loss: Any and all Net Income, Net Loss and tax credits
shall be allocated 50% to Showscan and 50% to
General Cinema where "Net Income" and "Net Loss"
shall mean, for each fiscal year or other period, an
6
<PAGE> 7
amount equal to the Partnership's taxable income
or loss for such year or period, determined in
accordance with I.R.S. Code Section 703(a) (for
this purpose, all items of income, gain, loss, or
deduction required to be stated separately pursuant
to I.R.S. Code Section 703(a)(1) shall be included in
taxable income or loss).
10. {text redacted}: {text redacted} of the Complex {text redacted} be
{text redacted} in the {text redacted} of the
Showscan Theatres unless a specific portion of the
aggregate {text redacted} can be directly attributed
to the activities of the Showscan Theatres (as, for
example, if there was a separate {text redacted}), in
which case such attributed {text redacted} will be
{text redacted} in the {text redacted} of the
Showscan Theatres for the purposes of Paragraph 8.
11. {text redacted}: Showscan {text redacted} shall be available {text
redacted} in the Complex, regardless of whether a
separate {text redacted} area is established for the
Showscan Theatres. All of the {text redacted} from
{text redacted} of such {text redacted} shall be
separately tracked by the Operating Partner and shall
be considered {text redacted} of the Showscan
Theatres for the purposes of Paragraph 8 hereof.
12. Exclusivity:
(a) Showscan and SEI grant to the Partnership, GCC and
to General Cinema the exclusive right (except for
existing locations) to operate a Showscan motion
simulation theatre in circular zones (the "Exclusive
Zones") around each of the present GCC theatres in
the following towns in Massachusetts:{text redacted},
Framingham,{text redacted}, and {text redacted}.
Each Exclusive Zone shall have a {text redacted} of
{text redacted} as depicted on Exhibit A hereof.
GCC, the Partnership and General Cinema grant to
Showscan and SEI the exclusive right to provide any
motion simulation systems installed at any location
now or hereafter owned or operated by the
Partnership, GCC or General Cinema in any of the
Exclusive Zones.
(b) {text redacted} or any third party purchasing from
{text redacted} or {text redacted} may invade the
Exclusive Zones (except the one around Framingham)
and install Showscan motion simulation theatres
therein provided that {text redacted} or {text
redacted} gives prior written notice to the
Partnership, GCC and General Cinema of the desired
{text redacted}, the {text redacted} and {text
redacted} of the {text redacted}, and the {text
redacted} and {text redacted} of the theatre (the
"Proposed Theatre"). The Partnership, GCC and
General Cinema shall have a
7
<PAGE> 8
period of {text redacted} calendar days from the day
they receive the written notice (the "Notice Date")
in which to protect their exclusivity by agreeing to
purchase and operate the Proposed Theatre themselves
or a theatre elsewhere in the affected Exclusive Zone
identical in all material respects to the Proposed
Theatre (an "Equivalent Theatre"). Once General
Cinema, GCC and/or the Partnership have exercised
their blocking rights, they will have a period of one
(1) year from the Notice Date in which to build and
open to the public the Proposed Theatre or an
Equivalent Theatre. General Cinema shall pay to
Showscan {text redacted} per theatre (i.e. a twin
theatre location would be {text redacted}) for each
{text redacted} after the one year anniversary that
the Proposed Theatre or an Equivalent Theatre is not
open. This fee shall be paid each month until the
earlier to occur of: (i) the opening of the Proposed
Theatre or an Equivalent Theatre by General Cinema,
GCC or the Partnership, (ii) the opening of the
Proposed Theatre or an Equivalent Theatre by {text
redacted} and/or any {text redacted}, and (iii) the
{text redacted} anniversary of the Notice Date. If
the Proposed Theatre or an Equivalent Theatre is not
open on the one year anniversary, then {text
redacted} and/or {text redacted} shall be free to
{text redacted} to open a motion simulation theatre
in the Exclusive Zone in question so long as any such
contract is executed prior to the opening by General
Cinema, GCC or the Partnership of the Proposed
Theatre or an Equivalent Theatre.
(c) The Partnership, General Cinema or GCC may open a
motion simulation theatre in any of the Exclusive
Zones (except the one around Framingham) using {text
redacted} and {text redacted} provided by someone
other than Showscan provided that General Cinema
gives prior written notice to Showscan and SEI of the
{text redacted} to be provided by the other person
and the {text redacted} for the purchase thereof (the
"Proposed Purchase"). Showscan and SEI shall have a
period of {text redacted} calendar days from the
Notice Date in which to protect their exclusivity by
agreeing to provide {text redacted} (the {text
redacted}) to the Partnership, General Cinema or GCC
on terms {text redacted} in all {text redacted} to
the Proposed Purchase. Once Showscan and SEI have
exercised their blocking rights they will have a
period of {text redacted} months from the Notice Date
in which to provide the {text redacted}. Showscan
shall pay to General Cinema {text redacted} per
theatre (i.e., a twin theatre location would be {text
redacted}) for each {text redacted} after the {text
redacted} anniversary that it has not delivered the
{text redacted}. This fee shall be paid each month
until the earlier to occur of (i) the delivery of the
{text redacted} by Showscan, (ii) the delivery of the
{text redacted} or {text redacted}
8
<PAGE> 9
by {text redacted}, and (iii) the {text redacted}
anniversary of the Notice Date. If Showscan or SEI
has not delivered the {text redacted} by the {text
redacted} anniversary, then General Cinema or GCC
shall be free to purchase the {text redacted} or
{text redacted} elsewhere so long as the contract for
purchase of any such {text redacted} is executed
prior to the delivery by Showscan or SEI of the {text
redacted}.
(d) The provisions of this Paragraph 12 shall expire and
be of no further force or effect upon the
termination or expiration of this Agreement.
13. {text redacted}: The Showscan Theatres shall be {text redacted} in
{text redacted} for the Complex. {text redacted}
to include {text redacted} of the Showscan Theatres on
{text redacted} in the Complex.
14. Intellectual
Property;
Confidentiality: Showscan, SEI, GCC and General Cinema expressly
recognize and agree that all uses by any party
of any patents, trademarks or tradenames of any other
party shall be subject to the prior express written
approval of the party whose patent, trademark or
tradename is proposed to be used. This Agreement does
not constitute any license or other right to use any
patent, trademark or tradename of any party except in
connection with the operation of the Showscan Theatres
as agreed to by the Management Committee. Each party
agrees to treat all non-public information received
from any other party during the term of this Agreement
on a strictly confidential basis for use only in
connection with the operation of the Showscan Theatres
and the administration of this Agreement.
15. Maintenance of
Books and
Records:
(a) The Operating Partner shall keep at its principal
executive office in Massachusetts the Partnership's
books, records and documents required by the
Partnership Law and allow inspection and copying
of the Partnership's books, records and documents as
required by the Partnership Law, at the expense of the
Partnership or partner as designated in such
Partnership Law.
(b) The Operating Partner shall have prepared at least
annually, at the Partnership's expense, unaudited
financial statements (balance sheet, statement of
income or loss, statement of cash flow and
statement of
9
<PAGE> 10
partners' equity) which shall be prepared in
accordance with generally accepted accounting
principles. Copies of such statements and reports
shall be distributed to each partner within 135 days
after the close of each taxable year of the
Partnership.
(c) The Operating Partner shall have prepared quarterly,
at the Partnership's expense, unaudited
financial statements (balance sheet, statement of
income or loss, statement of cash flow and statement
of partners' equity). The quarterly statement shall
be delivered or mailed to the partners within 50 days
after the close of each fiscal quarter.
(d) The Operating Partner, at the Partnership's expense,
shall cause tax returns for the Partnership to
be prepared and timely filed with the appropriate
authorities and shall provide to the partners within
90 days after the end of the Partnership's fiscal
year appropriate information necessary to the
partners to file their federal income tax returns.
The Partnership shall adopt the accrual method of
accounting for tax purposes and a fiscal year of
November 1 to October 31 as its taxable year.
16. Termination and
Dissolution of
the Partnership:
(a) The Partnership shall be dissolved and wound up upon
the first to occur of the following:
(i) Upon the bankruptcy, withdrawal, removal or
dissolution of a partner, unless within 90 days
thereof there are one or more remaining partners and
the remaining partner(s) elect(s) to continue the
business of the Partnership;
(ii) The sale or other disposition of all of the
Partnership business and assets and receipt by
the Partnership of the proceeds of such sales or
other dispositions in cash;
(iii) The expiration of the Term;
(iv) The decree of a court of competent
jurisdiction ordering dissolution and winding up,
subject to no further appeal; or
(v) The majority vote of the partners to dissolve.
10
<PAGE> 11
(b) Upon the dissolution of the Partnership for any
reason other than by court decree, the partners
shall take full account of the assets and liabilities
of the Partnership, shall liquidate the assets as
promptly as is consistent with obtaining the fair
market value thereof, and shall apply and distribute
the proceeds therefrom in the following order:
(i) First, to the payment of creditors of the
Partnership, including partners or affiliates
of partners who are creditors of the Partnership;
provided that, for the purposes of this Paragraph 16,
a partner shall not be deemed a creditor of the
Partnership with respect to obligations of the
Partnership to a partner in respect of a
distribution;
(ii) Second, to the repayment of any obligation
of the Partnership to any partner in respect of
a distribution; and
(iii) Thereafter, to each partner in proportion to
the credit balance, if any, then remaining in
its capital account, adjusted through the date of
such distribution. Each partner shall look solely to
the assets of the Partnership for all distributions
with respect to the Partnership and its capital
contributions thereto and its share of net income or
net loss thereof, and shall have no recourse therefor
(upon dissolution or otherwise) against any partner.
Notwithstanding any provision of this Agreement to
the contrary, no partner shall have any obligation to
pay to the Partnership, any partner or any creditor
of the Partnership any deficit amount in its capital
account.
(c) Upon the dissolution of the Partnership pursuant to
court decree, the dissolution shall be
performed by the persons named by the court decreeing
dissolution, and the assets of the Partnership shall
be distributed in the manner provided above, or in
such other manner as such court may decree.
(d) Unless General Cinema or GCC desires to acquire the
Showscan Equipment pursuant to subparagraph (e)
hereof, upon termination or dissolution of the
Partnership for any reason, Showscan or SEI shall
remove the Showscan Equipment at its expense and pay
to General Cinema or GCC, after deducting the
expenses of removal (i) fifty percent (50%) of the
value of such equipment, measured by the amount of
all capital contributions for such equipment less
actual depreciation measured by a 7 year straight
line depreciation schedule, if Showscan or SEI shall
use the Showscan Equipment itself, or (ii) fifty
percent (50%) of any proceeds received by Showscan or
SEI (as and when received)
11
<PAGE> 12
from a sale by Showscan or SEI of the Showscan
Equipment to a third party.
(e) Upon termination or dissolution of the Partnership
for any reason, General Cinema or GCC may (i)
acquire the Showscan Equipment by making a payment to
Showscan or SEI of fifty percent (50%) of the amount
of all capital contributions for such equipment less
actual depreciation measured by a 7 year straight
line depreciation schedule and, (ii) continue to
license Showscan Films for the remainder of the
initial five (5) year term hereof in exchange for
payment of the Film Rental. Upon termination or
dissolution of the Partnership for any reason,
General Cinema or GCC shall retain any in-kind
contributions it made to the Partnership in
accordance with Section 4(b) hereof and shall pay to
Showscan or SEI fifty percent (50%) of the amount of
the capital contributions recorded for such assets
less the actual depreciation thereof as measured by a
7 year straight line depreciation schedule and less
any expenses incurred by General Cinema or GCC to
retrofit the Showscan Theatres to serve as
traditional film exhibition theatres. In addition,
General Cinema or GCC shall pay to Showscan or SEI an
amount equal to fifty percent (50%) of the present
value of any remaining unused rent that was
capitalized pursuant to Paragraph 4(b) hereof.
17. Indemnification: Neither the partners, nor any officer, director,
employee, shareholder, agent, affiliate or
assignee of the partners shall be liable to the
Partnership or any other partner for any loss or
damage incurred by reason of any act performed or
omitted to be performed in good faith in connection
with the activities of the Partnership or in dealing
with third parties on behalf of the Partnership if
such act or omission does not constitute fraud, gross
negligence, breach of fiduciary duty, direct
contravention of this Agreement or willful
misconduct. The Partnership, and any receiver or
trustee appointed to administer the business or
assets of the Partnership, shall indemnify and pay
all judgments and claims against the partners, their
officers, directors, employees, shareholders,
affiliates and assignees, and save the same harmless
from any liability, loss or damage incurred by them
or by the Partnership by reason of any act performed
or omitted to be performed by them in good faith in
connection with the activities of the Partnership or
in dealing with third parties on behalf of the
Partnership, including costs and attorneys' fees
(which costs and attorneys' fees shall be paid as
incurred) and any amounts expended in the
investigation or settlement of any claims of
liability, loss or damage, provided that such act or
omission does not constitute fraud, gross negligence,
breach of
12
<PAGE> 13
fiduciary duty, direct contravention of this
Agreement or willful misconduct, and provided
further that any such indemnification shall be
recoverable only from the assets of the Partnership
and not from the assets of the partners. Nothing
contained herein is intended to prevent recovery from
a partner by the Partnership or any other partner of
any losses, if any, sustained by reason of acts or
omissions that constitute fraud, gross negligence,
breach of fiduciary duty, direct contravention of
this Agreement or willful misconduct.
18. Notices: All notices required or permitted hereby shall be in
writing and shall be deemed delivered upon
actual delivery by overnight courier services or
electronic means, addressed to the partners at the
following address:
Showscan: Showscan Framingham Inc.
3939 Landmark Street
Culver City, CA 90232-2315
Attention: Dennis Pope
With a copy to: W. Tucker Lemon
Tel: 310-558-0150
Fax: 310-280-0476
General
Cinema: General Cinema of Framingham, Inc.
1280 Boylston Street
Chestnut Hill, MA 02167
Attention: Robert Painter
With a copy to: Robert A. Licht
Tel: 617-277-4340, ext. 8120
Fax: 617-277-2787
19. Assignment: Neither this Agreement nor any interest herein may
be assigned, in whole or in part, by either
party hereto without the prior consent of the other
party hereto, except that without securing such prior
consent but only after notice to the other party,
either party may assign in its rights and obligations
hereunder to any corporation or other entity owned or
controlled by such party, provided that in such
circumstance, such party shall remain liable for its
obligations hereunder. Notwithstanding anything to
the contrary in this Agreement, in no event shall any
transfer of an interest in the Partnership be
permitted if such transfer could, in the opinion of
counsel, jeopardize the company's tax status as a
partnership.
13
<PAGE> 14
Any assignment, sale, exchange or other transfer of
an interest in contravention of any of the
provisions of this Paragraph 19 shall be void and
ineffectual, and shall not bind or be recognized by
the Partnership.
20. Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall
constitute one Agreement, binding on all of the
parties hereto, notwithstanding that all of the
parties are not signatories to the original or the
same counterpart.
21. Further Acts. Each party to this Agreement covenants on behalf of
itself and its successors, heirs and assigns to
execute, with acknowledgment, verification or
affidavit, if required, any and all documents and
writings and to perform any and all other acts, that
may be necessary or expedient in connection with the
creation of this Partnership, the achievement of its
purposes, or the consummation of any matter covered
by this Agreement.
22. Applicable Law: The parties expressly agree that all the terms and
provisions hereof shall be construed under the
laws of the State of Massachusetts and that the
Partnership Law as now adopted shall govern the
aspects of this Agreement absent contrary terms
contained in this Agreement.
23. Entire
Agreement: This document contains the complete and exclusive
agreement between the parties and supersedes
any prior oral or written agreements, understandings,
or communications with respect to the subject matter
of this Agreement. This Agreement may not be
modified or altered except by written instrument duly
executed by both partners.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
GENERAL CINEMA OF FRAMINGHAM, INC.
By: /s/ PAUL R. DEL ROSSI
----------------------------------------
Paul R. Del Rossi, President
SHOWSCAN FRAMINGHAM INC.
By: /s/ WILLIAM C. SOADY
----------------------------------------
William C. Soady, President
THE PARTIES LISTED BELOW EXECUTE THIS AGREEMENT ONLY WITH RESPECT TO TERMS
SET FORTH IN PARAGRAPHS 6(b), 12, 14, 16(d) AND 16(e) OF THE AGREEMENT AND ARE
NOT INTENDED, NOR SHALL THEY BE, CONSIDERED TO BE PARTNERS OF THIS PARTNERSHIP.
SHOWSCAN ENTERTAINMENT INC.
By: /s/ WILLIAM C. SOADY
---------------------------------------
William C. Soady, President and CEO
GENERAL CINEMA CORP. OF MASSACHUSETTS
By: /s/ PAUL R. DEL ROSSI
----------------------------------------
15
<PAGE> 16
EXHIBIT A
{TEXT ENTIRELY REDACTED}
A-1
