-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QRybYkZjLGPDiWrLCbYp7QJJSYqABtWh/F9QBDSVgdScQR5MoBQxKIF+jjIvf+/Y V0frU7hGFw7VFs4CE3hQFg== 0000950148-95-000618.txt : 19950928 0000950148-95-000618.hdr.sgml : 19950927 ACCESSION NUMBER: 0000950148-95-000618 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950925 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOWSCAN ENTERTAINMENT INC CENTRAL INDEX KEY: 0000812882 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 953940004 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09710 FILM NUMBER: 95576004 BUSINESS ADDRESS: STREET 1: 3939 LANDMARK ST CITY: CULVER CITY STATE: CA ZIP: 90232 BUSINESS PHONE: 3105580150 MAIL ADDRESS: STREET 1: 3939 LANDMARK STREET CITY: CULVER CITY STATE: CA ZIP: 902322315 FORMER COMPANY: FORMER CONFORMED NAME: SHOWSCAN CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SHOWSCAN FILM CORP DATE OF NAME CHANGE: 19901116 0000950148-95-000618.txt : 19950927 0000950148-95-000618.hdr.sgml : 19950927 ACCESSION NUMBER: 0000950148-95-000618 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950925 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOWSCAN ENTERTAINMENT INC CENTRAL INDEX KEY: 0000812882 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 953940004 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09710 FILM NUMBER: 95576004 BUSINESS ADDRESS: STREET 1: 3939 LANDMARK ST CITY: CULVER CITY STATE: CA ZIP: 90232 BUSINESS PHONE: 3105580150 MAIL ADDRESS: STREET 1: 3939 LANDMARK STREET CITY: CULVER CITY STATE: CA ZIP: 902322315 FORMER COMPANY: FORMER CONFORMED NAME: SHOWSCAN CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SHOWSCAN FILM CORP DATE OF NAME CHANGE: 19901116 10-K/A 1 AMENDMENT #1 TO ANNUAL REPORT ON FORM 10-K/A 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) 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)
Registrant's telephone number, including area code: (310) 558-0150 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ----------------------- Common Stock, $.001 par value None
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 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
Exhibit Number Description ------ ----------- 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)
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Exhibit Number Description ------ ----------- 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)
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Exhibit Number Description ------ ----------- 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)
4 5 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)
_______________________ * 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 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 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 8 EXHIBIT INDEX
Exhibit No. Description Page Number ----------- ----------- ----------- 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.
8 EX-10.6 2 1992 STOCK OPTION PLAN 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 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 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 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 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 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 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 EX-10.26 3 FIRST AMENDMENT TO THEATER RIGHTS AGREEMENT 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 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 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 EX-10.32 4 MEMORANDUM OF AGREEMENT 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 16 EXHIBIT A {TEXT ENTIRELY REDACTED} A-1 -----END PRIVACY-ENHANCED MESSAGE-----