Exhibit 10.21


 


FIRST AMENDMENT TO CREDIT AND
SECURITY AGREEMENT


 


This
First Amendment to Credit and Security Agreement (“Amendment”) is entered into
as of August 18, 2009, by and between REAL
D, a California corporation (“Borrower”)
and City National Bank, a national
banking association (“CNB”).


 


RECITALS


 


A.                                   Borrower and
CNB are parties to that certain Credit and Security Agreement, dated as of July 26,
2007 (the “Credit Agreement”).


 


B.                                     Borrower and
CNB desire to supplement and amend the Credit Agreement as hereinafter set
forth.


 


NOW, THEREFORE, the parties agree as
follows:


 


1.                                       Definitions. Capitalized terms used in this Amendment without
definition shall have the meanings set forth in the Credit Agreement.


 


2.                                       Amendments. The Credit Agreement is amended as follows:


 


2.1                                 Sections 1.3,
1.5, 1.12, 1.18, 1.19.5, 1.37 and 1.54 are deleted in their entirety and  reserved for
future use.


 


2.2                                 Sections 1.7,
1.17, 1.20, 1.21, 1.23, 1.24, 1.39, 1.47 and 1.53 in the Definitions section  are stricken
and replaced with the following:


 


1.7                                 “Borrowing Base” will be in an amount, determined by CNB,
equal to the  lesser of (a) the sum of (i) seventy
five percent (75%) of Eligible Recurring Revenues, plus (ii) fifty percent
(50%) of the Paid Admission Based Payments, or (b) the Backlog divided by
3. In no event will the Borrowing Base exceed the lesser of the Revolving
Credit Commitment.


 


1.17                           “EBITDA” will be determined on a consolidated basis for
Borrower and  the Subsidiaries, in accordance with GAAP,
and means the sum of (a) net income after eliminating extraordinary gains
and losses, plus (b) interest expense, plus (c) provisions for income
taxes, plus (d) property and use taxes not reimbursed to Borrower, plus (e) depreciation
and amortization, plus (f) monitoring fees (in an aggregate amount not to
exceed $350,000.00 per year) paid by Borrower to Shamrock, plus (g) restructuring
charges, severance costs and reserves (including restructuring charges relating
to acquisitions and the consolidation of facilities), plus (h) impairment
of long lived assets, each of such items determined based on the months in the
fiscal period ending on the date of determination.


 


1.20                           “Eligible Period” means, for any measurement date, (a) for
purposes of  calculating the Borrowing Base, the twelve (12) month period beginning
on the measurement date, and (b) for purposes of calculating the Backlog,
the thirty-six (36) month period beginning on the measurement date.


 


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1.21                           “Eligible Recurring Revenues” means, for any Eligible
Period, the sum  of Release Based Payments plus Scheduled
License Payments.


 


1.23                           “Facility Fee” is $62,500.


 


1.24                           “Fixed Charges” means, as of the date of determination, the
sum (without  duplication) of (a) the aggregate amount
of Current Maturity of Long-Term Debt (“Current Maturity of Long-Term Debt”
means that portion Borrower’s consolidated long-term liabilities, determined in
accordance with GAAP for borrowed money, which will, by the terms thereof,
become due and payable within one (1) year following the date of the
balance sheet upon which such calculations are based; provided, however,
that the outstanding principal balance of the Loans due and payable within such
one (1) year period shall not be included in Fixed Charges), plus (b) all
interest incurred on borrowed money, plus (c) provisions for income taxes,
plus (d) all capital expenditures for maintenance, other than any costs
related to the roll-out of new REAL D 3-D theater systems, each of such items
to be determined based on the number of months elapsed in the fiscal period
ending on the date of determination. Capital expenditures for maintenance will
specifically exclude (i) any replacement of Z Screens with XLs (i.e.,
upgrades), and (ii) any purchases of Digital Link Projectors and servers.
The provision for income taxes will specifically exclude sales and use taxes
and property taxes.


 


1.39                           “Paid Admission Based Payments” means, for an Eligible
Period, with  respect to those Eligible License Agreements
under which royalty payments are based on an admission fee for each paid
admission for each Screen for each motion picture the estimated box office
receipts shown on the Paid Admission Based Payments Schedule provided by
Borrower to CNB.


 


1.47                           “Revolving Credit Commitment” or “Commitment” means CNB’s  commitment to
make the Loans in the aggregate principal amount outstanding at any one time of
up to (a) Fifteen Million Dollars ($15,000,000.00) if the minimum number
of Screens is less than 3,300, (b) Twenty Million Dollars ($20,000,000) if
the minimum number of Screens equals or exceeds 3,300 but are less than 3,450,
and (c) Twenty Five Million Dollars ($25,000,000.00) if the minimum number
of Screens equals or exceeds 3,450.


 


1.53                           “Termination Date” means the earlier to occur of (a) July 31,
2010, or (b)  the Initial Public Offering Date, unless the
term of this Agreement is renewed by CNB for an additional period under Section 3,
or such earlier terminated date under Section 9.3 upon the occurrence of
an Event of Default. Upon any renewal, the Termination Date will be the renewed
maturity date determined by CNB.


 


2.3                                 New Sections
1.55, 1.56, 1.57, 1.58, 1.59 and 1.60 are added as follows:


 


1.55                           “Backlog” means, for an Eligible Period, an amount, determined
by CNB,  equal to the sum of (a) one hundred percent (100%) of Eligible
Recurring Revenues plus (b) fifty percent (50%) of the Paid Admission
Based Payments shown on the Paid Admission Based Payments Schedule; provided,
however, that the amount of


 


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Released
Based Payments included in Eligible Recurring Revenues shall be based on a
maximum number of 5,000 Screens for any motion picture. For the purposes of
this calculation, all 3-D motion pictures that are announced by studios to
occur with releases scheduled shall be included, even if the release has been
scheduled for a period (e.g. Christmas 2011 or Summer 2012) rather than a
specific date, and the related box office receipts (whether estimated or
actual) shall include those for both foreign and domestic Screens.


 


1.56                           “Backlog Report” means a report, in form and substance
satisfactory to  CNB, executed by Borrower to evidence the
Backlog.


 


1.57                           “First Amendment” means that certain First Amendment to Credit
and  Security Agreement dated as of August 18, 2009 between CNB and
Borrower.


 


1.58                           “Initial Public Offering Date” means the date on which
Borrower  completes an initial public stock offering or a debt offering , either
case, in excess of Fifty Million Dollars ($50,000,000.00) in the aggregate to
Persons who are not shareholders of Borrower as of the date of the First
Amendment.


 


1.59                           “Paid Admission Based Payments Schedule” means, a schedule, in form  and substance
satisfactory to CNB, listing of the motion pictures scheduled or tentatively
scheduled for release (and whether or not then titled) in the next twelve (12)
month and thirty-six (36) month periods from the date of determination, the
release date of each such motion picture, and the estimated box office receipts
and resulting Paid Admission Based Payments for each such motion picture for
such periods; provided, however, that the estimated box office receipts
and resulting Paid Admission Based Payments due to Borrower shall be calculated
based on an assumed ticket price of $10.00 and a $.50 Paid Admission Based
Payment. For the purposes of this calculation, all 3-D motion pictures that are
announced by studios to occur with releases scheduled shall be included, even
if the release has been scheduled for a period (e.g. Christmas 2011 or Summer
2012) rather than a specific date, and the related box office receipts (whether
estimated or actual) shall include those for both foreign and domestic Screens.


 


1.60                           “Change in Control” means (a) that date
upon which both Stephen Royer  and Andy Howard are no
longer members of the Board of Directors of Borrower, or (b) any merger or
other acquisition of Borrower with an unrelated third party in circumstances in
which those shareholders holding a majority of the outstanding capital stock of
Borrower prior to such transaction no longer do so after the closing of such
transaction, or a sale of all or substantially all of the assets of Borrower to
an unrelated third party.


 


2.4                                 Section 2.1.1
is stricken and replaced with the following:


 


2.11                           Interest. The Loans will bear interest from disbursement until
due (whether at stated maturity, by acceleration on otherwise) at an annual
rate equal to, at Borrower’s option, either (a) for a LIBOR Loan, the
LIBOR Interest Rate plus four and one-quarter percent (4.25%), or (b) for
a Prime Loan, the fluctuating Prime Rate plus two and three-quarters percent
(2.75%). Interest on the Loans


 


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and
other charges incurred under this Agreement will accrue daily and be payable (a) except
in respect of a LIBOR Loan, quarterly in arrears, commencing on October 1,
2009, and on the first day of January, April and July thereafter; (b) if
a LIBOR Loan, on the last day of each Interest Period therefore and upon any
prepayment thereof (to the extent accrued on the amount prepaid); and (c) at
the Termination Date. A Loan tied to the LIBOR Interest Rate is called a “LIBOR
Loan,” and a Loan tied to the Prime Rate is called a “Prime Loan.” A Loan will
be a Prime Loan any time it is not a LIBOR Loan.


 


2.5                                 Section 2.3
is stricken and replaced with the following:


 


2.3                                 Prepayments.


 


2.3.1                        Optional
Prepayments. Subject to the provisions of Section 2.6,
Borrower will have the right to prepay, without premium or penalty, all or any
portion of the Loans; provided, that on each prepayment, Borrower will pay the
accrued interest on the prepaid principal, to the date of such prepayment.


 


2.3.2.                     Mandatory
Prepayment. Subject to the provisions of Section 2.6,
Borrower agrees that on the Initial Public Offering Date, or in the event of a
Change in Control, Borrower will repay in full the Obligations. In addition, if
at any time the Backlog is less than three (3) times the outstanding
aggregate principal balance of the Loans, Borrower shall prepay to CNB fifty
percent (50%) of each Paid Admission Based Payment, Release Based Payment and
Scheduled License Payment due and received by Borrower under License Agreements
until such time as the Backlog equals or exceeds three (3) times the
outstanding aggregate principal balance of the Loans.


 


2.6                                 Clause (c) in
Section 2.6 is amended by deleting the phrase “the Administrative Agent”  contained
therein and inserting in its place and stead “CNB”.


 


2.7                                 Section 6.2
is stricken and replaced with the following:


 


6.2                                 Financial Statements. Borrower will furnish to CNB
on a continuing  basis:


 


6.2.1                        Within thirty (30) days
after the end of each month, or sooner if available, a financial statement
consisting of not less than a balance sheet, income statement, reconciliation
of net worth and statement of cash flows, prepared consistent with prior
periods and in accordance with GAAP, which financial statement may be
internally prepared;


 


6.2.2                        Within one hundred fifty
(150) days after the close of Borrower’s fiscal year, a copy of the annual
audit report for Borrower and the Subsidiaries, including therein a balance
sheet, income statement, reconciliation of net worth and statement of cash
flows, with notes thereto, the balance sheet, income statement and statement of
cash flows to be audited by a certified public accountant acceptable to CNB,
certified by such accountant to have been prepared in accordance with GAAP and
accompanied by the following: (a) supporting


 


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schedules
of costs of goods sold, operating expenses and other income and expense items,
and (b) Borrower’s certification as to whether any event has occurred
which constitutes an Event of Default or Potential Event of Default, and if so,
stating the facts with respect thereto;


 


6.2.3                        Within forty five (45) days
after the end of each quarterly accounting period of each fiscal year, Borrower’s
Covenant Compliance Certificate; and


 


6.2.4                        Upon request by CNB, a copy
of the Federal Income Tax Return of Borrower.


 


2.7                                 Section 6.3.3
is stricken and replaced with the following:


 


6.3.3                        Within thirty
(30) days after the end of each month, a Borrowing Base Certificate, together
with the Backlog Report, including the Paid Admission Based Payments Schedule.


 


2.8                                 Sections 6.10
and 6.11 are stricken and replaced with the following:


 


6.10                           Financial
Tests.  Borrower will maintain:


 


6.10.1                  EBITDA of not less than (a) $3,000,000.00
for the fiscal quarter ending September 30, 2009, (b) $6,000,000.00
for the six month fiscal period ending December 31, 2009, (c) $9,000,000.00
for the nine month fiscal period ending March 31, 2010, and (d) $12,000,000.00
for the trailing twelve months ending June 30, 2010 and each trailing
twelve months thereafter, measured on a quarterly basis; and


 


6.10.2                  A ratio of EBITDA to Fixed Charges of not
less than 1.25 at all times, with the measurements of EBITDA and Fixed Charges
based on the fiscal periods specified in Section 6.10.1 above.


 


6.11                           Minimum
Screens.  Borrower will have Screens subject to License
Agreements of not less than (a) 3,200 from the date of the First Amendment
through March 30, 2010, and (b) 4,000 on and after March 31,
2010.


 


2.9                                 The Covenant
Compliance Certificate in Exhibit A is stricken and replaced with the one  attached to
this Amendment.


 


3.                                       Existing
Agreement.  Except as expressly amended herein, the
Credit Agreement shall remain in full force and effect, and in all other
respects is affirmed.


 


4.                                       Conditions
Precedent.  This Amendment shall become effective upon
the fulfillment of all of the following
conditions to CNB’s satisfaction:


 


4.1                                 CNB shall have
received this Amendment duly executed by Borrower;


 


4.2                                 CNB shall have
received a separate Continuing Guaranty from and executed by each of  the Guarantors
guarantying repayment of all Obligations of Borrower to CNB; and


 


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4.3                                 CNB shall have
received an amendment fee equal to $50,000.00.


 


5.                                       Counterparts. This Amendment may be executed in any number of
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.


 


6.                                       Governing Law. This Amendment and the rights and obligations
of the parties hereto shall be construed in accordance with, and governed by
the laws of the State of California.


 


IN WITNESS WHEREOF, the parties have executed
this Amendment as of the day and year first above written.


 


	
  “Borrower”

  	
  REAL
  D,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael V. Lewis

  
	
   

  	
   

  	
  Michael V. Lewis, Chairman and Chief

  
	
   

  	
   

  	
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  “CNB”

  	
  City
  National Bank, a
  national

  
	
   

  	
  banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aaron Cohen

  
	
   

  	
   

  	
  Aaron Cohen, Senior Vice President

  



 


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EXHIBIT A


 


COVENANT COMPLIANCE CERTIFICATE


 


The
undersigned,
                                               ,
the                                      of
REAL D, a California corporation
(“Borrower”) delivers this certificate pursuant to the Credit and Security
Agreement (the “Credit Agreement”) dated as of July 26, 2007, between
Borrower and City National Bank (“CNB”), as amended. Terms and Section numbers
used herein shall have the same meaning as the Credit Agreement.


 


The undersigned certifies the accuracy of this Certificate as of                                              ,
(the “Effective Date”).


 


	
  1.

  	
  EBITDA
  (Section 6.10.1)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  EBITDA:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.1

  	
  Net
  income (after eliminating extraordinary gains and losses):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.2

  	
  All
  interest on Debt:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.3

  	
  Cash
  paid for income taxes (including property and use taxes not reimbursed to Borrower):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.4

  	
  Depreciation
  and Amortization:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.5

  	
  Monitoring
  fees (in an aggregate amount not to exceed $350,000.00 per year) paid by
  Borrower to Shamrock

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.6

  	
  1.1.1,
  1.1.2, 1.1.3, 1.1.4, plus 1.1.5

  	
  $

  



 


Required: Not
less than $                                     
.. [In blank space insert figure required in
Credit Agreement]


 


2.             Ratio of EBITDA to Fixed Charges (Section 6.10.2):


 


	
   

  	
  2.1

  	
  EBITDA (from 1.1.6 above):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Fixed Charges:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2.1

  	
  Current Maturity of Long Term Debt:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2.2

  	
  Interest incurred on borrowed money:

  	
  $

  



 


1

















 


	
   

  	
   

  	
  2.2.3

  	
  Cash paid for Income Taxes (excluding property and
  sales and use taxes not reimbursed to Borrower):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2.4

  	
  Maintenance Capital Expenditures (excluding (a)
  any replacement of Z Screens with XLs (i.e. upgrades), (b) purchases of
  Digital Link projectors and servers and (c) any costs related to the roll-out
  of new REAL D 3-D theater systems):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2.5

  	
  Total of 2.2.1, 2.2.2, 2.2.3, and 2.2.4:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Ratio
  of 2.1 to 2.2:

  	
                       to
  one (1)

  



 


Required: At least
             to 1 [In blank space insert figure required in Credit
Agreement]


 


	
  3.

  	
  Minimum Screens (Section 6.11)

  	
   

  



 


Required: At least
                   
[In blank space insert figure required in
Credit Agreement]


 


CERTIFICATION:


 


Each
of the above stated information is true and correct as of the date hereof and
Borrower has met each of the Conditions set forth in Section 4.2 of the
Credit Agreement, and no Events of Default or Potential Events of Default
presently exist.


 


I
declare under penalty of perjury that the foregoing is true and correct.


 


	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature and Title)

  



 


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