Document:

Exhibit 10.1

 

[Execution]

 

AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT

 

AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT, dated December 31, 2010 (this “Amendment No. 1”), is by and among Wells Fargo Capital Finance, LLC, successor by merger to Wachovia Capital Finance Corporation (New England), in its capacity as agent (in such capacity, “Agent”) for the Lenders (as hereinafter defined), the parties to the Loan Agreement (as hereinafter defined) as lenders (each individually an “Existing Lender” and collectively, “Existing Lenders”), Nu Horizons Electronics Corp., a Delaware corporation (“Administrative Borrower”); NIC Components Corp., a New York corporation (“NIC”); Nu Horizons International Corp., a New York corporation (“International”); Razor Electronics, Inc., a New York corporation (“RAZ”); Titan Supply Chain Services Corp., a New York corporation (“TUS”, and together with Administrative Borrower, NIC, International, and RAZ, individually each a “US Borrower” and, collectively, “US Borrowers”), Nu Horizons Electronics Limited, a company incorporated in England and Wales with registration number 02181478 (“NEE-UK”), NIC Components Europe Limited, a company incorporated in England and Wales with registration number 03495816 (“NIC-UK”, and together with NEE-UK, individually each a “UK Borrower” and, collectively, “UK Borrowers” and together with US Borrowers, each individually, a “Borrower” and collectively, “Borrowers”), Nu Horizons Electronics Asia Pte Ltd, a company organized under the laws of Singapore (“Nu Horizons Asia”), NIC Components Asia Pte Ltd, a company incorporated under the laws of Singapore (“NIC Asia”), Titan Supply Chain Services Pte Ltd, a company organized under the laws of Singapore (“TSA”), Nu Horizons Electronics Europe Limited, a company incorporated in England and Wales with registration number 03507689 (“NU-UK”), Titan Supply Chain Services Limited, a company incorporated in England and Wales with registration number 04930783 (“TSE”), NuXchange B2B Services, Inc., a Delaware corporation (“NUX” and together with NU-UK, Nu Horizons Asia, NIC Asia, TSA, and TSE, each individually, a “Guarantor” and collectively “Guarantors”).

 

W  I  T  N  E  S  S  E  T  H :

 

WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into financing arrangements pursuant to which Lenders (or Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Loan and Security Agreement, dated June 28, 2010, by and among Agent, Lenders, Borrowers and Guarantors (as the same now exists and is amended and supplemented pursuant hereto, the “Loan Agreement”; capitalized terms used herein and not otherwise defined herein shall have the meaning given to such terms in the Loan Agreement);

 

WHEREAS, Administrative Borrower, Arrow Electronics, Inc. (“Arrow”) and Neptune Acquisition Corporation, Inc. (“Neptune”) entered into a Agreement and Plan of Merger, dated as of September 19, 2010, (as amended from time to time, the “Merger Agreement”), pursuant to which the parties intend to consummate the Arrow Transaction (as defined herein);

 

 

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders agree to amend certain provisions of the Loan Agreement as set forth herein, and Agent and Lenders are willing to agree to such requests on the terms and subject to the conditions set forth herein;

 

WHEREAS, by this Amendment No. 1, Agent, Lenders, Borrowers and Guarantors desire and intend to evidence such amendments;

 

NOW THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.     Definitions.

 

(a)           Additional Definitions.  As used herein, the following terms shall have the meanings given to them below and the Loan Agreement is hereby amended to include, in addition and not in limitation, the following definitions:

 

(i)    “Amendment No. 1” shall mean Amendment No. 1 to Loan and Security Agreement, dated December 31, 2010, by and among Borrowers, Guarantors and Agent, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

(ii)   “Arrow Transaction” shall mean the merger of Administrative Borrower with and into Neptune as contemplated by the Merger Agreement.

 

(iii)  “Arrow Transaction Notice” shall mean a notice from Administrative Borrower to Agent substantially in the form of Exhibit A hereto, which notice shall set forth the Borrowers’ intention to terminate the Loan Agreement and the other Loan Documents upon the consummation of the Arrow Transaction.

 

(b)           Interpretation.  For purposes of this Amendment No. 1, all terms used herein that are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Loan Agreement as amended by this Amendment No. 1.

 

2.             Events of Default.  Section 12.1(p) of the Loan Agreement is hereby amended and restated in its entirety as follows:

 

“(p)  any Change of Control shall occur; provided, that, there shall be no Default or Event of Default pursuant to this clause (p) if all of the following occur (i) such Change of Control occurs in accordance with the consummation of the Arrow Transaction pursuant to the Merger Agreement, (ii) at least one (1) Business Day prior to the occurrence of such Change of Control, Agent has received an Arrow Transaction Notice from the Administrative Borrower, (iii) such Change of Control occurs on

 

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or before January 5, 2011, and (iv) all of the Obligations of Borrowers owing to Agent and Lenders under the Loan Documents are satisfied in full and the Loan Documents are terminated in accordance with Section 16.1(a) hereof and the Termination Agreement, substantially in form and substance annexed on Exhibit B of Amendment No. 1 is executed and delivered and the conditions precedent set forth therein are satisfied in full to the satisfaction of Agent within one (1) Business Day after the occurrence of said Change of Control;”

 

3.             Term.  Section 16.1(a) of the Loan Agreement is hereby amended by deleting the second sentence thereof and replacing it with the following “In addition, (i) Borrowers may terminate this Agreement at any time (A) upon ten (10) days prior written notice to Agent (which notice shall be irrevocable) or (B) upon less than ten (10) days prior written notice to Agent (which notice shall be irrevocable), in connection with the consummation of the Arrow Transaction, provided, that, the Administrative Borrower shall have delivered an Arrow Transaction Notice to Agent at least one (1) Business Day prior to terminating this Agreement and (ii) Agent may, at its option, and shall at the direction of Required Lenders, terminate this Agreement at any time on or after an Event of Default.”

 

4.             Representations and Warranties.  Borrowers hereby represent and warrant to Agent and Lenders as follows:

 

(a)           no Default or Event of Default exists or has occurred and is continuing;

 

(b)           this Amendment No. 1 has been duly authorized, executed and delivered by all necessary action on the part of each Borrower and, if necessary, their respective equity holders and is in full force and effect as of the date hereof, and the agreements and obligations of each of the Borrowers contained herein constitute legal, valid and binding obligations of each of the Borrowers, enforceable against them in accordance with their terms; and

 

(c)           the execution, delivery and performance of this Amendment No. 1 (i) are all within each Borrower’s corporate powers and (ii) are not in contravention of law or the terms of any Borrower’s certificate or articles of incorporation, bylaws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower is a party or by which any Borrower or its property are bound.

 

5.             Conditions Precedent.  The amendments contained herein shall only be effective upon the receipt by the Agent of counterparts of this Amendment No. 1, duly authorized, executed and delivered by Borrowers and the Required Lenders.

 

6.             No New Borrowings.  The Borrowers, the Required Lenders and the Agent hereby agree that, notwithstanding any provisions to the contrary contained in the Loan Agreement, upon and after delivery of a Arrow Transaction Notice by the Administrative Borrrower to the Agent, the Borrowers shall not make any requests for any Loans or issuance of

 

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any Letters of Credit and Agent, Issuing Bank and Lenders shall have no obligation to honor any such request.

 

7.             Effect of this Amendment.  Except as expressly set forth herein, no other amendments, consents, changes or modifications to the Loan Agreement are intended or implied and Borrowers shall not be entitled to any other or further amendment or consent by virtue of the provisions of this Amendment No. 1 or with respect to the subject matter of this Amendment No. 1.  To the extent of conflict between the terms of this Amendment No. 1 and the other Loan Documents, the terms of this Amendment No. 1 shall control.  The Loan Agreement and this Amendment No. 1 shall be read and construed as one agreement.

 

8.             Governing Law.  The validity, interpretation and enforcement of this Amendment No. 1 and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

 

9.             Binding Effect.  This Amendment No. 1 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

 

10.          Entire Agreement.  This Amendment No. 1 represents the entire agreement and understanding concerning the subject matter hereof among the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.

 

11.          Headings.  The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 1.

 

12.          Counterparts.  This Amendment No. 1 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of this Amendment No. 1 by telefacsimile or other electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 1.  Any party delivering an executed counterpart of this Amendment No. 1 by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Amendment No. 1, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Amendment No. 1.

 

 [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered by their authorized officers as of the day and year first above written.

 

 

	
 
  	
WELLS FARGO CAPITAL FINANCE, LLC,

successor by merger to Wachovia Capital Finance Corporation (New England), as Agent, on behalf of itself and Required Lenders
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Marc J. Breir
  
	
 
  	
 
  	
 
  
	
 
  	
Title:  
  	
Senior Vice President
  

 

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

	
 
  	
 
  	
[Amendment No. 1 to Loan and Security Agreement]
  

 

 

 [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
 
  	
BORROWERS:
  
	
 
  	
 
  	
 
  
	
 
  	
NU HORIZONS ELECTRONICS CORP.  
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg
  
	
 
  	
Title: 
  	
EVP – Finance & CFO
  
	
 
  	
 
  
	
 
  	
NIC COMPONENTS CORP. 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
VP &CFO
  
	
 
  	
 
  
	
 
  	
NU HORIZONS INTERNATIONAL CORP. 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
VP & CFO
  
	
 
  	
 
  
	
 
  	
RAZOR ELECTRONICS, INC.
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
VP & CFO
  
	
 
  	
 
  
	
 
  	
TITAN SUPPLY CHAIN SERVICES, CORP. 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
VP & CFO
  
	
 
  	
 
  
	
 
  	
NU HORIZONS ELECTRONICS LIMITED  
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg
  
	
 
  	
Title: 
  	
VP & CFO
  
	
 
  	
 
  	
 
  
	
 
  	
NIC COMPONENTS EUROPE LIMITED  
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg
  
	
 
  	
Title: 
  	
VP & CFO
  

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

	
 
  	
 
  	
[Amendment No. 1 to Loan and Security Agreement]
  

 

 

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

 

	
 
  	
GUARANTORS:
  
	
 
  	
 
  	
 
  
	
 
  	
NU HORIZONS ELECTRONICS ASIA PTE LTD 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
Chief Financial Officer
  
	
 
  	
 
  
	
 
  	
NIC COMPONENTS ASIA PTE LTD 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
Chief Financial Officer
  
	
 
  	
 
  
	
 
  	
NU HORIZONS ELECTRONICS EUROPE LIMITED 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
VP & CFO
  
	
 
  	
 
  
	
 
  	
NUXCHANGE B2B SERVICES, INC. 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
VP & CFO
  
	
 
  	
 
  
	
 
  	
TITAN SUPPLY CHAIN SERVICES LIMITED 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
VP & CFO
  
	
 
  	
 
  
	
 
  	
TITAN SUPPLY CHAIN SERVICES PTE LTD 
  
	
 
  	
 
  
	
 
  	
By: 
  	
/s/ Kurt Freudenberg 
  
	
 
  	
Title: 
  	
Authorized Person
  

 

	
 
  	
 
  	
[Amendment No. 1 to Loan and Security Agreement]
  

 

 

Exhibit A

to

Amendment No. 1 to Loan and Security Agreement

 

Form of Arrow Transaction Notice

 

See attached.

 

 

Arrow Transaction Notice

 

To:          Wells Fargo Capital Finance, LLC, as Agent
 12 East 49th Street
 New York, New York 10017

 

Ladies and Gentlemen:

 

I, Kurt Freudenberg, the Executive Vice President - Finance and Chief Financial Officer of Nu Horizons Electronics Corp., a Delaware corporation (“Administrative Borrower”) hereby certify to you as follows:

 

1.             I am the duly elected Executive Vice President - Finance and Chief Financial Officer of Administrative Borrower, and do hereby deliver this Arrow Transaction Notice on behalf of Administrative Borrower, the other Borrowers and Guarantors.  Capitalized terms used herein without definition shall have the meanings given to such terms in the Loan and Security Agreement, dated June 28, 2010, by and among Wells Fargo Capital Finance, LLC, as agent for the financial institutions party thereto as lenders (in such capacity, “Agent”) and the financial institutions party thereto as lenders (collectively, “Lenders”), Borrowers and Guarantors (as such Loan and Security Agreement may be amended, modified or supplemented, from time to time, the “Loan Agreement”).

 

2.             Borrowers’ intend to terminate the Loan Agreement and the other Loan Documents in accordance with the terms of the Loan Agreement upon consummation of the Arrow Transaction; and

 

3.             the Borrowers anticipate the completion of the Arrow Transaction and terminate the Loan Agreement and other Loan Documents in accordance with the terms of the Loan Agreement on or about January 3, 2011.

 

The foregoing certifications are made and delivered this day of December 31, 2010.

 

	
 
  	
Very truly yours,
  
	
 
  	
 
  
	
 
  	
NU HORIZONS ELECTRONICS CORP.
  
	
 
  	
 
  
	
 
  	
By:
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
Title:
  	
 
  

 

 

Exhibit B

to

Amendment No. 1 to Loan and Security Agreement

 

Termination Agreement

 

See attached.

 

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[Execution]

 

TERMINATION AGREEMENT

 

January 3, 2011

 

Nu Horizons Electronics Corp.

70 Maxess Road

Melville, New York 11747

Attention: Kurt Freudenberg, Chief Financial Officer

 

Dear Mr. Freudenberg:

 

This Termination Agreement (“Agreement”) refers to the financing arrangements by and among Wells Fargo Capital Finance, LLC, successor by merger to Wachovia Capital Finance Corporation (New England), in its capacity as agent (in such capacity, “Existing Agent”) for the Existing Lenders (as hereinafter defined), the parties to the Loan Agreement (as hereinafter defined) as lenders (each individually an “Existing Lender” and collectively, “Existing Lenders”), Nu Horizons Electronics Corp., a Delaware corporation (“Administrative Borrower”); NIC Components Corp., a New York corporation (“NIC”); Nu Horizons International Corp., a New York corporation (“International”); Razor Electronics, Inc., a New York corporation (“RAZ”); Titan Supply Chain Services Corp., a New York corporation (“TUS”, and together with Administrative Borrower, NIC, International, and RAZ, individually each a “US Borrower” and, collectively, “US Borrowers”), Nu Horizons Electronics Limited, a company incorporated in England and Wales with registration number 02181478 (“NEE-UK”), NIC Components Europe Limited, a company incorporated in England and Wales with registration number 03495816 (“NIC-UK”, and together with NEE-UK, individually each a “UK Borrower” and, collectively, “UK Borrowers” and together with US Borrowers, each individually, a “Borrower” and collectively, “Borrowers”), Nu Horizons Electronics Asia Pte Ltd, a company organized under the laws of Singapore (“Nu Horizons Asia”), NIC Components Asia Pte Ltd, a company incorporated under the laws of Singapore (“NIC Asia”), Titan Supply Chain Services Pte Ltd, a company organized under the laws of Singapore (“TSA”), Nu Horizons Electronics Europe Limited, a company incorporated in England and Wales with registration number 03507689 (“NU-UK”), Titan Supply Chain Services Limited, a company incorporated in England and Wales with registration number 04930783 (“TSE”), NuXchange B2B Services, Inc., a Delaware corporation (“NUX” and together with NU-UK, Nu Horizons Asia, NIC Asia, TSA, and TSE, each individually, a “Guarantor” and collectively “Guarantors”), as set forth in the Loan and Security Agreement, dated as of June 28, 2010, by and among Borrowers, Guarantors, Existing Agent and Existing Lenders, as heretofore amended (together with all related agreements, documents and instruments, collectively, the “Financing Agreements”) pursuant to which Existing Agent and Existing Lenders have made loans and advances and provided other financial accommodations to Borrowers (the “Loans”).  Capitalized terms used herein and not otherwise defined herein shall have the meaning given to such terms in the Loan Agreement.

 

 

Administrative Borrower has entered into an Agreement and Plan of Merger with Arrow Electronics, Inc. (“Arrow”) and Neptune Acquisition Corp. (“Neptune”) dated as of September 19, 2010 (the “Merger Agreement” and the transaction contemplated thereby, the “Merger”), pursuant to which Administrative Borrower will be merged with and into Neptune with Administrative Borrower continuing as the surviving corporation.  As a result of the Merger, Administrative Borrower will become a wholly-owned subsidiary of Arrow.  Contemporaneous with the consummation of the Merger, (a) the parties will enter into this Agreement and (b) Arrow will remit payment to Existing Agent, in accordance with Paragraph 1 of this Agreement, in full satisfaction of all of the Obligations of the Borrowers and Guarantors under the Financing Agreements.

 

In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned hereby agrees as follows:

 

1.             Repayment.  Borrowers shall pay or cause to be repaid to Existing Agent, at Borrowers’ cost and expense, on the date hereof by federal funds wire transfer the amount of $26,416,681.04 (the “Payoff Amount”) which reflects the total amount of the Obligations of Borrowers owing to Existing Agent and Existing Lenders under the Financing Agreements on January 3, 2011.  The Payoff Amount shall be sent to:

 

Wells Fargo Bank, N.A.

420 Montgomery Street

San Francisco, CA

ABA # 121-000-248

Account Name: Wells Fargo Capital Finance, LLC

A/C # 4124923707

Ref: Nu Horizons Payoff

Swift: WFBIUS6S

 

If the Payoff Amount is not received by Existing Agent by 2:00 p.m. New York City time on January 3, 2011, the condition precedent set forth in Section 6(a) below will not be deemed satisfied.

 

2.             Releases.

 

(a)           Upon the satisfaction of the conditions set forth in Section 6 hereof, (i) the Financing Agreements relating to the Loans as among Borrowers, Guarantors, Existing Agent and Existing Lenders pursuant to the Financing Agreements are terminated, cancelled and of no further force and effect (except for those provisions which by their terms expressly survive the termination thereof) and Existing Agent and Existing Lenders shall have no further obligation to make any Loans or any other obligations, duties or responsibilities in connection with the Financing Agreements and (ii) all security interests and liens upon any and all properties and assets of Borrowers and Guarantors heretofore granted or pledged by Borrowers and Guarantors to Existing Agent pursuant to the Financing Agreements are released and terminated.

 

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(b)           Each Borrower and Guarantor hereby releases, discharges and acquits Existing Agent, Existing Lenders, and their respective officers, directors, agents and employees and its and their respective successors and assigns, from all obligations to any Borrower or Guarantor (and their respective successors and assigns) and from any and all claims, demands, debts, accounts, contracts, liabilities, actions and causes of actions, whether in law or in equity, that any Borrower or Guarantor at any time had or has, or that its successors and assigns hereafter can or may have against Existing Agent, Existing Lenders and their respective officers, directors, agents or employees and its and their respective successors and assigns in connection with its Financing Agreements and the transactions arising thereunder through and including the date hereof.

 

(c)           Existing Agent and each Existing Lender hereby releases, discharges and acquits each Borrower and each Guarantor, and their respective officers, directors, agents and employees and its and their respective successors and assigns, from all obligations to Existing Agent and any Existing Lender (and their respective successors and assigns) and from any and all claims, demands, debts, accounts, contracts, liabilities, actions and causes of actions, whether in law or in equity, that Existing Agent and any Existing Lender at any time had or has, or that its successors and assigns hereafter can or may have against any Borrower or any Guarantor and their respective officers, directors, agents or employees and its and their respective successors and assigns in connection with its Financing Agreements and the transactions arising thereunder through and including the date hereof; provided, however, that this Section 2(c) shall not release, limit, impair or otherwise affect the obligations of Borrowers and Guarantors under those provisions of the Financing Agreements that by their terms survive the termination of the Financing Agreements.

 

3.             Indemnification for Returned Items and Related Expenses.

 

(a)           Each Borrower and Guarantor agrees jointly and severally to indemnify Existing Agent and Existing Lenders from any and all reasonable losses, costs, damages or expenses (including reasonable attorneys’ fees and legal expenses) which Existing Agent or any Existing Lender may suffer or incur at any time as a result of: (i) any non-payment, claim, refund or dishonor of any checks or other similar items which have been credited by Existing Agent to the account of any Borrower with Existing Agent and (ii) any bookkeeping, accounting or other errors in calculation of any amount to be paid to Existing Agent hereunder requiring an adjustment thereto, together with any reasonable expenses or other charges incident thereto.  In addition, each Borrower and Guarantor agrees, jointly and severally to pay Existing Agent with reasonable promptness on demand all reasonable costs and expenses (including reasonable attorneys’ fees and legal expenses) incurred in connection with this Agreement (including Sections 7, 8, 9 and 10 hereof) and any instruments or documents contemplated hereunder.

 

(b)           Notwithstanding anything to the contrary contained herein, in no event shall Administrative Borrower, any Borrower or any Guarantor (or any of their respective successors or assigns), be required or obligated to indemnify Existing Agent or Existing Lenders for any losses, costs, damages or expenses (including any attorneys’ fees and legal expenses) suffered or incurred by Existing Agent or Existing Lenders as a result of such party’s gross negligence, willful misconduct or fraud, as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

 

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4.             Rights in Instruments.  Notwithstanding anything to the contrary contained herein, Existing Agent reserves all of its rights in and to any checks or similar instruments for payment of money heretofore received by Existing Agent in connection with its arrangements with any Borrower or Guarantor, and all of its rights to any monies due or to become due under said checks or similar instruments and/or all of its claims thereon.

 

5.             Reinstatement.  Notwithstanding anything to the contrary contained herein, in the event any payment made to, or other amount or value received by, Existing Agent or any Existing Lender from or for the account of any Borrower or Guarantor is avoided, rescinded, set aside or must otherwise be returned or repaid by Existing Agent or any Existing Lender whether in any bankruptcy, reorganization, insolvency or similar proceeding involving any Borrower or Guarantor or otherwise, the indebtedness intended to be repaid thereby shall be reinstated (without any further action by any party) and shall be enforceable against each Borrower and Guarantor.  In such event, each Borrower and Guarantor shall be and remain jointly and severally liable to Existing Agent and Existing Lenders for the amount so repaid or recovered to the same extent as if such amount had never originally been received by Existing Agent and Existing Lenders.

 

6.             Conditions Precedent.  The effectiveness of the termination and release contained in Section 2(a) above and any UCC Financing Statement Amendments providing for the termination of financing statements between Existing Agent, as secured party, and any Borrower or Guarantor, as debtor, or other release documents delivered in connection herewith (and any authorization to file such termination statements or release documents) is subject to and conditioned upon the receipt by Existing Agent of each of the following:

 

(a)           cash or other immediately available funds in the amount set forth in Section 1 above by 2:00 p.m. New York City time; and

 

(b)           an original of this Agreement (or a photocopy of an original counterpart of this Agreement by facsimile or other electronic delivery) duly authorized, executed and delivered by the parties hereto.

 

7.             Documents.  Upon written confirmation from Existing Agent to Administrative Borrower of the satisfaction of the conditions precedent set forth in Section 6 above, Existing Agent shall deliver to Administrative Borrowers (at the Borrowers’ expense):

 

(a)           those promissory notes and guarantees previously delivered to Existing Agent (as Existing Agent may be able to obtain) each marked “paid in full” or “cancelled” as applicable;

 

(b)           a release of the Trademark Collateral Assignment and Security Agreement by Administrative Borrower in favor of Existing Agent;

 

(c)           all stock certificates and stock powers previously delivered by Administrative Borrower or any other Borrower to Existing Agent and such other assignments related thereto as reasonably requested to Administrative Borrower; and

 

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(d)           deeds of release, satisfactions or similar agreements with respect to grant of a security interest in, and pledge of shares and ownership interests of, each Borrower and each Guarantor incorporated under the laws of England or Singapore.

 

8.             Termination of Lockboxes.  Upon written confirmation from Existing Agent to Administrative Borrower of the satisfaction of the conditions precedent set forth in Section 6 above, Existing Agent agrees to send written notification, upon the request of Administrative Borrower and at the expense of Borrowers, to any bank or institution with which Existing Agent or any Existing Lender has blocked accounts, lockbox accounts or other arrangements for the receipt or transfer to Existing Agent or such Existing Lender of remittances or proceeds from customers of Borrowers of any of their subsidiaries or affiliates, to the effect that all such arrangements with Existing Agent or Existing Lenders are terminated and to the extent any such arrangements are in effect with Existing Agent or any Existing Lender, such arrangements are hereby terminated.

 

9.             Authorization to File Termination Statements.  Upon written confirmation from Existing Agent to Administrative Borrower of the satisfaction of the conditions precedent set forth in Section 6 above, any Borrower may file UCC Financing Statement Amendments to terminate all existing financing statements between Existing Agent, as secured party, and any Borrower or Guarantor, as debtor, that are currently filed of record and for which Existing Agent has the recording information.

 

10.           Further Assurances .  At the request of Administrative Borrower, at Borrowers’ expense, Existing Agent agrees to execute and deliver such other and further documents and instruments reasonably acceptable to Existing Agent, as may be reasonably requested in order to effect or evidence more fully the matters covered hereby.

 

11.           Governing Law.  The validity, construction and effect of this Agreement shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

 

[Remainder of Page Intentionally Left Blank]

 

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10.  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original hereof and submissible into evidence and all of which together shall be deemed to be a single instrument.  Delivery of an executed counterpart of this Agreement by telecopier shall have the same force and effect as delivery of an original executed counterpart of this Agreement.

 

	
 
  	
Very truly yours,
  
	
 
  	
 
  
	
 
  	
WELLS FARGO CAPITAL FINANCE, LLC, successor by merger to Wachovia Capital Finance Corporation (New England), as Agent
  
	
 
  	
 
  
	
 
  	
By:
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
Title:
  	
 
  

 

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NU HORIZONS ELECTRONICS CORP.
  	
 
  
	
 
  	
 
  
	
By:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Title:
  	
 
  	
 
  
	
 
  	
 
  
	
NIC COMPONENTS CORP.
  	
 
  
	
 
  	
 
  
	
By:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Title:
  	
 
  	
 
  
	
 
  	
 
  
	
NU HORIZONS INTERNATIONAL CORP.
  	
 
  
	
 
  	
 
  
	
By:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Title:
  	
 
  	
 
  
	
 
  	
 
  
	
RAZOR ELECTRONICS, INC.
  	
 
  
	
 
  	
 
  
	
By:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Title:
  	
 
  	
 
  
	
 
  	
 
  
	
TITAN SUPPLY CHAIN SERVICES, CORP.
  	
 
  
	
 
  	
 
  
	
By:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Title:
  	
 
  	
 
  
	
 
  	
 
  
	
NU HORIZONS ELECTRONICS LIMITED
  	
 
  
	
 
  	
 
  
	
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NIC COMPONENTS EUROPE LIMITED
  	
 
  
	
 
  	
 
  
	
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NU HORIZONS ELECTRONICS ASIA PTE LTD
  	
 
  
	
 
  	
 
  
	
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NIC COMPONENTS ASIA PTE LTD
  	
 
  
	
 
  	
 
  
	
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NU HORIZONS ELECTRONICS EUROPE LIMITED
  	
 
  
	
 
  	
 
  
	
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NUXCHANGE B2B SERVICES, INC.
  	
 
  
	
 
  	
 
  
	
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TITAN SUPPLY CHAIN SERVICES LIMITED
  	
 
  
	
 
  	
 
  
	
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TITAN SUPPLY CHAIN SERVICES PTE LTD
  	
 
  
	
 
  	
 
  
	
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Title:EXHIBIT 10.1

 

NOTE: THIS DOCUMENT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. PORTIONS OF THIS DOCUMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAVE BEEN REDACTED AND ARE MARKED HEREIN BY “[***]”. SUCH REDACTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST.

 

SECOND AMENDMENT TO

EXHIBITOR SERVICES AGREEMENT

 

This SECOND AMENDMENT TO EXHIBITOR SERVICES AGREEMENT (this “Amendment”), dated as of October 1, 2010, is between REGAL CINEMAS, INC., a Tennessee corporation (“FM”), and NATIONAL CINEMEDIA, LLC, a Delaware limited liability company (“LLC”).

 

RECITALS

 

WHEREAS, FM and LLC have entered into the Exhibitor Services Agreement dated as of February 13, 2007, as amended by the Amendment to Exhibitor Services Agreement dated as of November 5, 2008 (collectively, the “Agreement”); and

 

WHEREAS, FM and LLC desire to provide for certain amendments to the Agreement specified herein.

 

NOW, THEREFORE, in consideration of the premises made hereunder, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Section 1.                    Definitions.  Unless otherwise expressly defined herein, all capitalized terms used herein and defined in the Agreement shall be used herein as so defined.

 

Section 2.                    Amendments to Article 1 — Definitions.

 

(a)          Section 1.01 of the Agreement is hereby amended by adding the following definitions of “3D”, “3D Advertising Services”, “3D Digital Programming Services”, “3D Glasses”, “3D Meeting Services” and “3D Services” before “4.03 Revenue”:

 

“3D” means a digital format that is three dimensional and creates the illusion of depth perception.

 

“3D Advertising Services” means any of the Digital Carousel, the Pre-Feature Program, the Policy Trailer and the Event Trailer portions of the Advertising Services

 

 

that are viewed by theatre patrons in 3D by using the Digital Cinema Equipment and 3D Glasses.

 

“3D Digital Programming Services” means the Digital Programming Services that are viewed by theatre patrons in 3D by using the Digital Cinema Equipment and 3D Glasses.

 

“3D Glasses” means glasses worn by theatre patrons to enable them to view content in 3D that meet or exceed 3D Equipment supplier’s specifications and are approved by Exhibitor.

 

“3D Meeting Services” means the Meeting Services that are viewed by theatre patrons in 3D by using the Digital Cinema Equipment and 3D Glasses distributed through LLC’s Digital Content Network.

 

“3D Services” means collectively, any of the 3D Advertising Services, the 3D Meeting Services and the 3D Digital Programming Services.

 

(b)         Section 1.01 of the Agreement is hereby amended by adding the following definition of “ACE Solution” immediately after the definition of “Acceptance Notice” contained therein:

 

“ACE Solution” means a delivery system in which the DCN screen player is eliminated, and the ACE (also referred to as an alternative content engine) interfaces directly with the digital cinema theatre management server (also referred to as “TMS”), as illustrated on Schedule 2.  The ACE Solution is also known as “fully integrated”.

 

(c)          Section 1.01 of the Agreement is hereby amended by adding the following definitions of “DCI Spec Compliance” and “DCIP” immediately after the definition of “Creative Services” contained therein:

 

“DCI Spec Compliance” means compliance with (i) the Digital Cinema Specification Version 1.2 released on March 7, 2008 by Digital Cinema Initiatives, LLC and its errata; (ii) the DCI Stereoscopic Digital Cinema Addendum Version 1.0 released on July 11, 2007 and its errata; and (iii) any applicable specifications formally approved and adopted by SMPTE DC28, each as of March 10, 2010.

 

“DCIP” means Digital Cinema Implementation Partners, LLC, a Delaware limited liability company.

 

(d)         Section 1.01 of the Agreement is hereby amended by adding the following definitions of “Digital Cinema Equipment” and “Digital Cinema Screen” immediately after the definition of “Digital Carousel” contained therein:

 

“Digital Cinema Equipment” has the meaning assigned to it in Section 3.06(a).

 

2

 

“Digital Cinema Screen” means a screen in an auditorium in a Theatre that is equipped with Digital Cinema Equipment and such Digital Cinema Equipment is operational to provide the Services.

 

(e)          Section 1.01 of the Agreement is hereby amended by adding the following definition of “Dual Interface Architecture” immediately after the definition of “Disposition” contained therein:

 

“Dual Interface Architecture” means a delivery system in which the SMS and the DCN screen player connect to the same digital cinema projector (one projector with two play-back servers), as illustrated on Schedule 3.

 

(f)            Section 1.01 of the Agreement is hereby amended by adding the following definition of “Low Resolution Projection System” immediately after the definition of “Loews Theatres” contained therein:

 

“Low Resolution Projection System” means a digital projection system deployed in Theatres that (i) is not DCI Spec Compliant, (ii) has a maximum resolution less than 2K (i.e., a resolution of less than 2048×1080), and (iii) is similar in functionality to the low resolution projection systems currently deployed in Theatres, as illustrated on Schedule 4.

 

(g)         Section 1.01 of the Agreement is hereby amended by adding the following definition of “LLC Confirmation” immediately after the definition of “LLC Agreement” contained therein:

 

“LLC Confirmation” has the meaning assigned to it in Section 3.06(a).

 

(h)         Section 1.01 of the Agreement is hereby amended by adding the following definition of “Non-LLC 3D Content” immediately after the definition of “Non-Digitized Theatres” contained therein:

 

“Non-LLC 3D Content” has the meaning assigned to it in Section 4.16(c).

 

(i)             Section 1.01 of the Agreement is hereby amended by adding the following definition of “PDA” immediately after the definition of “Party” contained therein:

 

“PDA” has the meaning assigned to it in Section 3.06(a).

 

(j)             Section 1.01 of the Agreement is hereby amended by adding the following definition of “Projection System” immediately after the definition of “Pre-Feature Programming Schedule” contained therein:

 

“Projection System” means, collectively, a digital projection system including at least the following components: a digital projector with a minimum resolution of 2K, a digital cinema playout system (server or media block) and a screen management system for the relevant Screen.

 

3

 

(k)          Section 1.01 of the Agreement is hereby amended by adding the following definition of “Theatre Maintenance Fee per Digital Cinema Screen” immediately after the definition of “Theatre Advertising” contained therein:

 

“Theatre Maintenance Fee per Digital Cinema Screen” has the meaning assigned to it in Schedule 1.

 

Section 3.                    Amendment to Article 2 -  Participation and Fees.  Article 2 of the Agreement is hereby amended by adding the following Section 2.05(b)(iv) immediately after Section 2.05(b)(iii):

 

(iv)  Theatre Maintenance Fee per Digital Cinema Screen. If applicable, LLC shall pay FM the Theatre Maintenance Fee per Digital Screen, as set forth in Schedule 1, along with and at the same time as the Theatre Access Fee, beginning with the first month in which a LLC Confirmation (as defined in Section 3.06(a)) is delivered to FM.

 

Section 4.                    Amendment to Article 3 — Equipment.  Article 3 of the Agreement is hereby amended by deleting Section 3.06 in its entirety and substituting the following:

 

Section 3.06.  Conversion of Theatres to Digital Cinema Equipment.

 

(a)                                  Conversion of Digitized Theatres.  During the Term and at its sole option, FM may choose to install a Projection System in one or more auditoriums in any Digitized Theatre.  As between FM and LLC, FM will be responsible for purchasing, installing and maintaining the Projection Systems selected by FM.  After the installation of a Projection System in an auditorium in a Digitized Theatres, FM, at its sole option, may elect to convert the manner in which the Services are exhibited in such auditorium from the existing Low Resolution Projection System to either a Dual Interface Architecture or the ACE Solution; provided that equipment capable of exhibiting live Digital Programming Services need not be provided by FM to an extent greater than that hereafter set forth in this Section 3.06(a) required by this Agreement. Upon such conversion, such Projection Systems shall constitute FM Equipment under this Agreement (the “Digital Cinema Equipment”), including, but not limited to, the Equipment set forth on Schedule A. Notwithstanding the foregoing, LLC shall not be permitted to use the Digital Cinema Equipment for Digital Programming Services or Meeting Services unless (i) LLC has entered into a participating distributor agreement (a “PDA”) with DCIP or, under certain circumstances (including without limitation, upon the expiration or termination of the PDA with DCIP), with FM, (ii) such PDA has not been terminated and is not in default  and (iii) for Meeting Services, all content utilizing the Digital Cinema Equipment is distributed through LLC’s Digital Content Network.  FM will ensure that such conversion of the Services will not lessen the number of auditoriums in such Digitized Theatre which are required by the Agreement to exhibit live Digital Programming Services; provided that (i) LLC shall ensure that such live Digital Programming Services are delivered to such Digital Cinema Equipment in a format that is compatible with such Digital Cinema Equipment without any additional equipment, software or licenses unless such additional equipment, software or licenses

 

4

 

are purchased by LLC and does not render such Digital Cinema Equipment not DCI Spec Compliant.  During such conversion, FM shall be responsible for connecting the Equipment, including LLC Equipment, to the FM Equipment in a functional manner as mutually agreed by FM and LLC.  LLC shall be responsible for providing specifications and process instructions to FM for such connectivity in advance of the scheduled conversion; provided that such specifications and process instructions shall not require FM to acquire any additional equipment or software in order to effectuate such connectivity unless such additional equipment or software is purchased by LLC and does not render such Digital Cinema Equipment not DCI Spec Compliant. Once LLC receives notice from FM that a Projection System has been installed in a given auditorium and that FM has elected to convert the Services to such Projection System, LLC and FM shall have the responsibility to jointly test such conversion to ensure that the Digital Cinema Equipment is operational to provide the Services.  LLC and FM hereby agree that the Auditoriums listed on Schedule 3.06(a) have Digital Cinema Equipment operational to provide Services as of the date of this Amendment.  If the conversion is operational to provide the Services, LLC shall notify FM in writing (the “LLC Confirmation”). If the conversion is not operational to provide the Services, LLC and FM shall cooperate to make the system operational to provide the Services. The Parties agree that LLC shall have 60 days, which shall include all testing, following receipt of notice from FM that a Projection System has been installed and is capable of receiving the Services in a given auditorium to complete the conversion in such auditorium.  Until the testing of the conversion has been completed and approved, FM shall not be permitted to remove the Low Resolution Projection System from such auditorium.  After a conversion of an auditorium has been completed and approved, FM may, in certain limited circumstances, replace the Digital Cinema Equipment with 35mm projection.  In such event FM shall reinstall Low Resolution Projection Systems in order to deliver the Services in such auditoriums and FM will no longer be required to exhibit 3D Services in such auditoriums.

 

(b)                                  Non-Digital Theatres.  During the Term and at its sole option, FM may choose to install a Projection System in one or more auditoriums in any Non-Digitized Theatre.  As between FM and LLC, FM will be responsible for purchasing, installing and maintaining the Projection Systems selected by FM.  After the installation of a Projection System in an Auditorium in a Non-Digitized Theatre, FM, at its sole option, may elect to convert such Non-Digitized Theatre to a Digitized Theatre; provided that LLC shall not be permitted to use the Digital Cinema Equipment for Digital Programming Services or Meeting Services unless (i) LLC has entered into a PDA with DCIP or, under certain circumstances (including without limitation, upon the expiration or termination of the PDA with DCIP), with FM, (ii) such PDA has not been terminated and is not in default and (iii) for Meeting Services, all content utilizing the Digital Cinema Equipment is distributed through LLC’s Digital Content Network. Upon such conversion, such Projection Systems shall constitute Digital Cinema Equipment under this Agreement. During such conversion, FM shall be responsible for connecting the Equipment, including LLC Equipment, to the FM Equipment in a functional manner as mutually agreed by FM and LLC.  LLC shall be responsible for providing specifications and process instructions to FM for such connectivity in advance of the scheduled conversion; provided that such specifications and process instructions shall not require FM to acquire

 

5

 

any additional equipment or software in order to effectuate such connectivity.  Once LLC receives notice from FM that a Projection System has been installed in a given auditorium and that FM has elected to convert such Non-Digitized Theatre to a Digitized Theatre, LLC and FM shall have the responsibility to jointly test such conversion to ensure that the Equipment is operational to provide the Services.  If the conversion is operational to provide the Services, LLC shall provide FM with a LLC Confirmation.  If the conversion is not operational to provide the Services, LLC and FM shall cooperate to make the system operational to provide the Services.  The Parties agree that LLC shall have 60 days, which shall include all testing, following receipt of notice from FM that a Projection System has been installed and is capable of receiving the Services in a given auditorium to complete the conversion in such auditorium.  After a conversion of an auditorium has been completed and approved, FM may, in certain limited circumstances, replace the Digital Cinema Equipment with 35mm projection.  In such event FM shall install Low Resolution Projection Systems in order to deliver the Services in such auditoriums and FM will no longer be required to exhibit 3D Services in such auditoriums.

 

(c)                                  Maintenance Obligations.  At the time any Digital Cinema Equipment is used to deliver Services hereunder, whether using a Dual Interface Architecture or the ACE Solution, LLC shall have no further obligation to maintain the Low Resolution Projection System in that auditorium or to remove or dispose of such projection system.  LLC shall continue to be responsible for maintaining the Equipment, including the LLC Equipment and any remaining Low Resolution Projection Systems in use at such Digitized Theatre, pursuant to the terms of this Agreement, as identified on Schedules 2, 3 and 4.  FM shall continue to be responsible for maintaining all FM Equipment, including the Digital Cinema Equipment.

 

(d)                                  Dual Interface Architecture or ACE Solution.  Subject to the requirements and procedures set forth in Section 3.06(a) or (b) as applicable nothing in this Section 3.06 shall prohibit FM from implementing either a Dual Interface Architecture or the ACE Solution or from switching from a Dual Interface Architecture to the ACE Solution or vice-versa.  In addition, in certain limited circumstances, FM may replace the Digital Cinema Equipment with 35mm projection in specific auditoriums and, in such circumstances, FM shall reinstall Low Resolution Projection Systems in order to deliver the Services in such auditoriums on the same terms and conditions as existed prior to the initial conversion to either a Dual Interface Architecture or ACE Solution, as applicable.  For any auditorium converted to the ACE Solution, LLC shall be responsible for all costs necessary to provide the Services for each digital cinema playlist in the SMPTE format described in Section 4.01(a), and FM will be responsible for all costs necessary to receive the Services content into FM’s TMS and append the digital cinema playlist to provide LLC substantially the same functionality that existed before the conversion to the ACE Solution.

 

(e)                                  Conversion Reporting.  FM will provide LLC with a weekly report setting forth (i) a list of the auditoriums in each Digitized Theatre that FM intends to convert the Services to Dual Interface Architecture or ACE Solution and the time frame thereof, (ii) a list of the auditoriums in each Non-Digitized Theatre that FM intends to convert to

 

6

 

auditoriums in a Digitized Theatre using a Dual Interface Architecture or ACE Solution and the time frame thereof, and (iii) a list of the auditoriums in each Theatre as to which Digital Cinema Equipment is being used for Services.

 

(f)                                    Integration.  The Parties shall cooperate in good faith during the conversion process contemplated by this Section 3.06.  Once LLC receives notice from FM that a Projection System has been installed in a given auditorium and FM has elected to convert the Services to such Projection System, LLC shall reimburse FM for incremental costs incurred by FM resulting from delays by LLC in completing the integration within 60 days following receipt of notice from FM that a Projection System has been installed in a given auditorium.

 

Section 5.                    Amendments to Article 4 — Delivery of the Service.

 

(a)          Article  4  of  the  Agreement  is  hereby  amended  by  adding  the  following  sentences  to  the  end  of  Section  4.01(a):

 

If FM elects to use the ACE Solution to deliver the Services which use Digital Cinema Equipment, LLC shall ensure that such Services that are not live are provided to FM as specified in the SMPTE draft, as of March 10, 2010, named Proposed 430-8, D-Cinema Operations Show Playlist (which addresses provision of show playlist and showpack by a third party to a DCI compliant TMS) and, with respect to the Digital Carousel, the Pre-Feature Program, the Policy Trailer and the Event Trailer, in the format of the film exhibited on the FM Equipment which follows the Services. The Parties further agree that any Digital Programming Services provided by LLC which use Digital Cinema Equipment will meet the following standards with respect to digital and projection format: JPEG 2000 encoded, MXF wrapped and in the flat format (1:1.85 aspect ratio) or such other requirements as are adopted by motion picture distributors as the appropriate standards for the exhibition of motion pictures.  LLC and FM agree to cooperate in good faith to deliver in the future live broadcast services to FM by IP stream if so requested by FM.  Notwithstanding the foregoing, the Parties agree that from the date hereof through the earlier of (i) the date that the ACE Solution has been installed with respect to 1,000 total Digital Screens (including Digital Screens operated by the other Founding Members of LLC and Network Affiliates), or (ii) December 31, 2011, LLC may deliver the Services to Theatres requiring the JPEG 2000 format via disc drives rather than via satellite.

 

(b)         Article 4 of the Agreement is hereby amended by adding Section 4.16 as follows:

 

Section 4.16. 3D Services.

 

(a)                                  Access to Projection Systems for 3D Digital Programming Services and 3D Meeting Services.  Subject to the terms and conditions of this Agreement, including, without limitation Exhibit B hereof and this Section 4.16, if and to the extent that FM has the capability to exhibit full-length motion pictures using a Projection System in 3D in one or more auditoriums in any Theatre, LLC shall have the right to exhibit 3D Digital

 

7

 

Programming Services or 3D Meeting Services using such Projection System in the minimum number of auditorium(s) specified in Exhibit B provided such auditoriums have the equipment necessary to exhibit Digital Programming Services; provided that prior to any such exhibition, (i) LLC shall have entered into a PDA with DCIP, or under certain circumstances (including without limitation, upon the expiration or termination of the PDA with DCIP), with FM, (ii) such PDA shall not have been terminated and is not in default, (iii) all 3D content has been properly conditioned to meet the specifications of FM D equipment provider and (iv) in addition to the amounts payable to FM pursuant to the terms of this Agreement, LLC shall have agreed to reimburse FM for a percentage of any third party licensing fees (the “3D Licensing Fees,” which are currently deemed to be $[***] per each patron who attends the relevant exhibition) incurred by FM related to use of the 3D equipment for the exhibition of such 3D Digital Programming Services or 3D Meeting Services equal to the percentage of revenue LLC retains for each ticket sale for such exhibition.  For example, in the case of Digital Programming Services for which FM retains [***]% of Net Ticket Revenue for tickets sold pursuant to Exhibit B, LLC will reimburse FM for [***]% of the third party licensing fees and FM shall pay the remaining [***]%.  Thus, based on the current 3D Licensing Fee of $[***] per patron the amount reimbursed by LLC would be $[***] per patron, based on the just preceding example.  The parties acknowledge, however, that FM may, from time to time and in its discretion, renegotiate the amount of the 3D Licensing Fee with respect to alternative content in the United States with the relevant 3D equipment provider.  If so, then the renegotiated 3D Licensing Fee shall be used to calculate the amounts reimbursable by LLC pursuant to the preceding clause (iv). LLC (i) acknowledges that FM is currently negotiating certain licensing fees with its 3D equipment provider for use of certain technology and hardware necessary to stream live 3D content and (ii) agrees that such negotiations, or resulting amendment, shall not cause the preceding sentence to become operative.  To the extent such Projection System has not become Digital Cinema Equipment in accordance with Section 3.06, LLC shall be responsible for providing such 3D Digital Programming Services and 3D Meeting Services in a form and format to be reasonably requested by FM.  In the event that LLC requests FM to ingest and play 3D Digital Programming Services or 3D Meeting Services on FM’s Player, if there are incremented costs that are going to be received beyond FM’s normal operating procedures then FM and LLC must meet and agree on the appropriate reimbursement to be paid by LLC to FM to offset such FM incremental costs necessary to accommodate LLC’s request.

 

(b)           Access to Projection Systems for 3D Advertising Services.  Subject to the terms and conditions of this Agreement, including, without limitation this Section 4.16, if and to the extent that FM has the capability to exhibit full-length motion pictures using a Projection System in 3D in one or more auditoriums in any Digitized Theatre, LLC shall have the right to exhibit 3D Advertising Services using such Projection System in such auditoriums, in the following instances (i) after the Services have been converted to such Projection System in accordance with Section 3.06, (ii) prior to the presentation of a 3D motion picture or other 3D content that is not distributed by LLC (“Non-LLC 3D Content”) or (iii) in conjunction with Digital Programming Services; in each case, such 3D Advertising Services, (x) will be properly conditioned to meet the specifications of FM 3D equipment providers, and (y) LLC shall pay or reimburse FM for any and all third

 

8

 

party licensing fees incurred by FM related to use of the 3D equipment in conjunction with 3D Advertising Services. Notwithstanding the foregoing, to the extent such Projection System has not become Digital Cinema Equipment in accordance with Section 3.06, LLC shall be responsible for providing such 3D Advertising Services in a form and format to be reasonably requested by FM. In the event that LLC requests FM to ingest and play 3D Advertising on FM’s player, if there are incremental costs that are going to be incurred beyond FM’s normal operating procedures then FM and LLC must meet and agree on the appropriate reimbursement to be paid by LLC to FM to offset such FM incremental costs necessary to accommodate LLC’s request.

 

(c)           3D Glasses.  LLC agrees that FM will bear no expense with respect to 3D Glasses provided to theatre patrons to view 3D Services.  If 3D Services are to be exhibited prior to a stand-alone Digital Programming Services or Meeting Services, whether in 3D or not, LLC will pay all costs for 3D Glasses and will arrange for the delivery of the 3D Glasses to appropriate theatres. In the case of 3D Services distributed prior to the presentation of Non-LLC 3D Content, LLC shall obtain any and all necessary consents to allow theatre patrons to use the 3D Glasses delivered to FM by the provider of such Non-LLC 3D Content; provided that LLC shall be liable for, and, if necessary, reimburse FM for, any and all costs imposed by such provider on either LLC or FM for the use of 3D Glasses to view the 3D Services; provided, further, that if FM agrees with such provider to purchase 3D Glasses in order to provide them to theatre patrons to view such Non-LLC 3D Content, then the Parties will negotiate in good faith a reasonable allocation of such costs between FM and LLC, which costs shall include additional payroll or general and administrative costs incurred by FM for inventory and storing such 3D Glasses for LLC.  LLC will not interfere with the rights of Real D to advertise its business, products or services on storage bins for 3D Glasses, as set in the current agreement(s) between FM and Real D, or between Real D and any distributor.

 

(d)           Applicability of ESA Provisions.  All provisions of this Agreement, including the revenue provisions of Article 2 and the content standards set forth in Section 4.03, will apply to any advertising on 3D Glasses, packaging for 3D Glasses and 3D Glasses recycling bins used by LLC in connection with the distribution of 3D Services.  Advertising on 3D Glasses and packaging for 3D Glasses will be permitted only as approved by FM in its sole and absolute discretion.

 

Section 6.       Amendment to Schedule 1 — Calculation of Exhibitor Allocation, Theatre Access Fee and Run-Out Obligations.  Schedule 1 of the Agreement is hereby amended by adding the following definition of “Theatre Maintenance Fee per Digital Cinema Screen” immediately after the definition of “Theatre Advertising”:

 

“Theatre Maintenance Fee per Digital Cinema Screen” means, (i) beginning in the month in which the conversion of any screen in any auditorium in any Theatre to a Digital Cinema Screen (either through Dual Interface Architecture or the ACE Solution) is initially completed and is operational for the exhibition of the Pre-Feature Program and LLC has delivered the LLC Confirmation with respect to such Digital Cinema Screen or (ii) beginning in the month in which a new-build auditorium with a Digital Cinema Screen is initially operational for the exhibition of the Pre-Feature Program as confirmed

 

9

 

by LLC, a monthly payment in addition to the Theatre Access Fee per Digital Screen shall be made from LLC to FM in the amount of $[***] per month through the end of LLC’s 2011 fiscal year which additional amount shall increase [***]% annually thereafter, with payment for (y) the first month to be pro rata based upon the number of days in such month in which the converted screen is operational and (z) the last month in the term of this Agreement (or the last month in which the Digital Cinema Equipment is not removed from such Digital Cinema Screen) to be [***]% of the applicable monthly payment then due.  The amount of the Theatre Maintenance Fee per Digital Cinema Screen shall be the same regardless of whether the Dual Interface Architecture or the ACE Solution is chosen to deliver Services in any auditorium; provided that if FM removes the Digital Cinema Equipment in any Digital Cinema Screen as permitted by Section 3.06, LLC shall no longer be liable to pay FM the Theatre Maintenance Fee with respect to such Digital Cinema Screen until such time as Projection System is reinstalled in such Screen.

 

Section 7.       Limited Effect.  This Amendment relates only to the specific matters expressly covered herein, shall not be considered to be a waiver of any rights or remedies either Party may have under the Agreement, and shall not be considered to create a course of dealing or to otherwise obligate in any respect either Party to execute similar or other amendments under the same or similar or other circumstances in the future.  Except as expressly amended hereby, the Agreement shall remain in full force and effect, and is hereby ratified and confirmed.

 

Section 8.       Miscellaneous.  The Parties agree that Article 15 of the Agreement shall apply mutatis mutandis to this Amendment and is incorporated by reference herein.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

 

	
 
  	
REGAL CINEMAS, INC.
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/ Amy Miles
  
	
 
  	
Name:
  	
Amy Miles
  
	
 
  	
Title:
  	
CEO
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
NATIONAL CINEMEDIA, LLC
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
National CineMedia, Inc., its Manager
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/ Kurt C. Hall
  
	
 
  	
Name:
  	
Kurt C. Hall
  
	
 
  	
Title:
  	
Chairman and Chief Executive 
 Officer
  

 

11

 

SCHEDULE 3.06(a)

 

[***]

 

12

 

SCHEDULE A

DCN Advertising

Equipment List for Separate Systems

 

[***]

 

DCN Advertising

Equipment List for Dual Interface

 

[***]

 

DCN Advertising

Equipment List for Full Integration

 

[***]

 

DBN Fathom

Equipment List using LCD Projector

 

[***]

 

DBN Fathom

Equipment List using Digital Cinema Projector

 

[***]

 

13

 

SCHEDULE 2

“ACE Solution” Architecture

 

[***]

 

14

 

SCHEDULE 3

“Dual Interface” Architecture

 

[***]

 

15

 

SCHEDULE 4

“Low Resolution Projection System”

 

[***]

 

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