Document:

Exhibit
10.24

 

Confidential treatment has been requested for
portions of this exhibit. The copy filed herewith omits the information subject
to the confidentiality request. Omissions are designated as [***]. A complete
version of this exhibit has been filed separately with the Securities and
Exchange Commission.

 

RealD
Inc.

 

AMENDED
AND RESTATED NONQUALIFIED STOCK OPTION GRANT

 

May 9,
2010

 

RealD Inc. (the “Company”)
previously granted American Multi-Cinema, Inc. (the “Optionee”) a
nonqualified stock option (the “Option”) to purchase shares of the Company’s
Common Stock pursuant to that certain Nonqualified Stock Option Grant dated March 20,
2009 (the “Original Option Grant”) and stock option agreement attached
thereto.  Company and Optionee wish to
amend the vesting schedule of the Original Option Grant and enter into this
Amended and Restated Nonqualified Stock Option Grant (the “Amended Option Grant”)
and the Amended and Restated Stock Option Agreement attached hereto. The Option
is subject to all the terms and conditions set forth in the Amended Option
Grant, as well as the attached Amended and Restated Stock Option Agreement (the
“Agreement”) and the Joinder to the Third Amended and Restated Shareholders
Agreement attached as Exhibit A to the Agreement (the “Joinder”), each of
which is incorporated into this Grant in its entirety.

 

	
  Optionee:

  	
   

  	
  American
  Multi-Cinema, Inc.

  
	
   

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
  March 20,
  2009

  
	
   

  	
   

  	
   

  
	
  Number of Shares Subject to Option:

  	
   

  	
  815,187

  
	
   

  	
   

  	
   

  
	
  Exercise Price (per Share):

  	
   

  	
  $0.01

  
	
   

  	
   

  	
   

  
	
  Option Expiration Date:

  	
   

  	
  The
  Ten (10) year anniversary of the Grant Date (subject to earlier
  termination in accordance with the terms of the Agreement)

  
	
   

  	
   

  	
   

  
	
  Type of Option:

  	
   

  	
  Nonqualified
  Stock Option

  
	
   

  	
   

  	
   

  
	
  Vesting Commencement; Vesting and Exercisability Schedule:

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For
  purposes of the foregoing, the word “installation” shall have the meaning
  ascribed to it in that certain 

  

 

 

	
   

  	
   

  	
  Second
  Amended and Restated RealD System License Agreement dated as of May 9,
  2010, and effective as of April 7, 2010, between the Company and the
  Optionee, which meaning is incorporated into this Grant by this reference.

  

 

Additional
Terms/Acknowledgement: The undersigned Optionee acknowledges receipt
of, and understands and agrees to, the terms and conditions of this Amended Option
Grant and the attached Agreement and Joinder attached thereto.  Optionee further acknowledges that, as of the
Grant Date, this Amended Option Grant, the Agreement, the Joinder and the
Second Amended and Restated RealD System License Agreement (2010), between the
Company and Optionee, dated on even date herewith and as may be amended from
time to time, set forth the entire understanding between Optionee and the
Company regarding the Option and supersede all prior oral and written
agreements on the subject, including the Original Option Grant and stock option
agreement attached thereto.

 

	
  RealD
  Inc.

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Michael V. Lewis

  	
   

  	
  /s/ Frank Rash

  
	
  Name:

  	
  Michael
  V. Lewis

  	
   

  	
  Name:

  	
  Frank Rash

  
	
  Title:

  	
  CEO

  	
   

  	
  Title:

  	
  SVP, Strategic
  Partnerships

  
	
   

  	
   

  	
   

  	
   

  
	
  Attachments:

  	
   

  	
   

  
	
  1.

  	
  Amended and Restated
  Stock Option Agreement

  
	
  2.

  	
  Joinder to Third
  Amended and Restated Shareholders Agreement, attached as Exhibit A to
  the Amended and Restated Stock Option Agreement

  
							

 

2

 

RealD
Inc.

 

AMENDED
AND RESTATED STOCK OPTION AGREEMENT

 

Pursuant to the Amended and
Restated Nonqualified Stock Option Grant (the “Grant”) and this Amended and
Restated Stock Option Agreement (the “Agreement”), RealD Inc. has granted
Optionee a Nonqualified Stock Option to purchase the number of shares of the
Company’s Common Stock (the “Shares”) at the exercise price indicated in the
Grant.

 

Certain definitions used in
this Agreement are as defined in Section 15 of this Agreement.

 

The details of the Option are
as follows:

 

1.             Vesting and
Exercisability.  Subject to Section 10
of this Agreement and the other limitations contained herein, the Option will
vest and become exercisable as provided in the Grant, and the vested portion of
the Option shall be exercisable at any time and from time to time until the
Option Expiration Date set forth in the Grant.

 

2.             Securities
Law Compliance.  Notwithstanding
any other provision of this Agreement, Optionee may not exercise the Option
unless the Shares issuable upon exercise are registered under the Securities
Act of 1933, as amended (the “Securities Act”) or, if such Shares are not then
so registered, the Company has determined that such exercise and issuance would
be exempt from the registration requirements of the Securities Act.  The exercise of the Option must also comply
with other applicable laws and regulations governing the Option, and Optionee
may not exercise the Option if the Company determines that such exercise would
not be in material compliance with such laws and regulations.

 

3.             Method of
Exercise.  Optionee may
exercise the Option, in whole or in part, and to the extent then vested, by
giving written notice to the Company, in form and substance satisfactory to the
Company, which will state Optionee’s election to exercise the Option and the
number of Shares for which Optionee is exercising the Option.  The written notice must be accompanied by
full payment of the exercise price for the number of Shares Optionee is purchasing.  Optionee may make this payment in any
combination of the following: (a) by cash; or (b) by check or wire
transfer acceptable to the Company.

 

4.             No Right to
Damages.  Optionee will have no right
to bring a claim or to receive damages if any portion of the Option is
cancelled or expires unexercised.  The
loss of existing or potential profit in any unvested portion of the Option, or
any unexercised portion of the vested portion of the Option, will not
constitute an element of damages for any reason.

 

5.             No Rights
as Shareholder.  Optionee shall
have no rights as a shareholder of any shares of Common Stock of the Company
covered by the Option until the date of issuance of a stock certificate to
Optionee.  The Company will make no
adjustment for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date the stock certificate is issued.

 

3

 

6.             Joinder to
Third Amended and Restated Shareholders Agreement.  Upon Optionee’s exercise of
the Option, in whole or in part, the Company will, at the time of such
exercise, require Optionee to execute and deliver to the Company that certain
Joinder to Third Amended and Restated Shareholders Agreement (the “Shareholders
Agreement”), in the form attached to this Agreement as Exhibit A
(the “Joinder”), pursuant to which Optionee will agree that the Shares acquired
by it upon exercise of the Option will be subject to, among other things, the
Company’s Rights of First Refusal, Right of Co-Sale and Put Right; Drag-Along
Right as contained therein.  Optionee
acknowledges and agrees that it has previously been provided, for its review, a
current form of the Shareholders Agreement, and will have reviewed such
Shareholders Agreement, with its counsel, prior to its execution of the Grant.

 

7.             Nontransferability
of Option.  The rights of
the Optionee under this Option may not be assigned or transferred.  This Option shall be exercisable only by the
Optionee.  Any attempt to assign or
transfer this Option, in any manner, in contravention of this Option shall be
void and shall have no effect.

 

8.             Adjustment
of Shares.  In the event,
at any time or from time to time, a stock dividend, stock split, spin-off,
combination or exchange of shares, recapitalization, merger, consolidation, a
statutory share exchange, distribution to shareholders other than a normal cash
dividend, or other change in the Company’s corporate or capital structure
results in (a) the outstanding shares of Common Stock, or any securities
exchanged therefor or received in their place, being exchanged for a different
number or kind of securities of the Company or any other company, or (b) new,
different or additional securities of the Company or any other company being
received by the holders of shares of Common Stock, then the Company shall make
proportional adjustments in the number and kind of securities that are subject
to this Option and the related exercise price, without any change in the
aggregate price to be paid therefor.  The
determination by the Company as to the terms of any of the foregoing
adjustments shall be conclusive and binding.

 

Notwithstanding the
foregoing, the issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services rendered, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, this Option.  Also
notwithstanding the foregoing, a dissolution or liquidation of the Company or a
Company Transaction (as defined in Section 15) shall not be governed by
this Section 8, but shall be governed by Section 9 and Section 10,
respectively.

 

9.             Dissolution
or Liquidation.  To the extent
not previously exercised or settled, and unless otherwise determined by the
Company in its sole discretion, this Option, to the extent it then remains
unexercised, shall terminate immediately prior to the dissolution or
liquidation of the Company.

 

10.           Company
Transaction.

 

(a)           Effect of a
Company Transaction.  Notwithstanding
any other provision of the Grant or this Agreement to the contrary (including Section 1
of this Agreement), in the 

 

4

 

event of a Company
Transaction that is not a Related Party Transaction (as defined in Section 15),
this Option, to the extent it then remains unexercised, subject to the Company’s
compliance with Section 10(b) below, and unless the Option is
assumed, converted or substituted for by the Successor Company (as defined in Section 15),
shall become fully and immediately exercisable immediately prior to such
Company Transaction, and then terminate upon the effectiveness of such Company
Transaction.  Notwithstanding the
foregoing, the Company, in its sole discretion, may instead provide that this
Option shall terminate upon consummation of such Company Transaction that is
not a Related Party Transaction, but that Optionee shall receive, in exchange
for such terminated Option, a cash payment equal to the amount (if any) by
which (a) the Acquisition Price (as defined in Section 15) multiplied
by the number of shares of Common Stock then subject to such outstanding Option
(and whether or not then exercisable) exceeds (b) the respective aggregate
exercise price for such Option (the “Option Cash Out”).

 

(b)           Notification.  The Company will provide
Optionee with notice of any pending Company Transaction that is not a Related
Party Transaction at least ten (10) business days prior to the anticipated
effectiveness thereof.  Upon notification
in accordance with this Section 10(b), the Option will be treated in
accordance with Section 10(a) above, and if the Option is not
assumed, converted or substituted for by the Successor Company, or subject to
the Option Cash Out, all as provided in Section 10(a), then Optionee may
exercise this Option for all of the Shares then subject to the Option, at any
time before the occurrence of such Company Transaction (but subject to
occurrence thereof), regardless of whether the Option is then fully vested and
exercisable in full.

 

(c)           Assumption,
Conversion or Substitution.  For the
purposes of this Section 10, the Option shall be considered assumed,
converted or substituted for if, following the Company Transaction, the option
or right confers the right to purchase or receive, for each share of Common
Stock subject to the Option immediately prior to the Company Transaction, the
consideration (whether stock, cash, or other securities or property) received
in the Company Transaction by holders of Common Stock for each share held at
the effective time of the Company Transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if such
consideration received in the Company Transaction is not solely common stock of
the Successor Company, the Company may, with the consent of the Successor
Company, provide for the consideration to be received upon the exercise or
settlement of the Option, for each share of Common Stock subject to the Option,
to be solely common stock of the Successor Company substantially equal in fair
market value to the per share consideration received by holders of Common Stock
in the Company Transaction.  The
determination of such substantial equality of value of consideration shall be
made by the Company in good faith, and its determination shall be conclusive
and binding.  The Company agrees that in
all Company Transactions that are Related Party Transactions, the Company will
assume, convert or substitute this Option as provided this Section 10(c).

 

(d)           No
Limitations.  The Grant shall
in no way affect the Company’s right to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

 

5

 

(e)           Fractional
Shares.  In the event of any
adjustment in the number of shares covered by the Option, the Option shall
cover only the number of full shares resulting from such adjustment.

 

11.           Issuance of
Shares.  Notwithstanding any other
provision of the Grant or this Agreement, the Company shall have no obligation
to issue or deliver any shares of Common Stock upon exercise of the Option or
make any other distribution of benefits upon exercise of the Option unless, in
the opinion of the Company’s counsel, such issuance, delivery or distribution
would comply with all applicable laws (including, without limitation, the
requirements of the Securities Act or the laws of any state or foreign
jurisdiction) and the applicable requirements of any securities exchange or
similar entity.

 

The Company shall be under
no obligation to Optionee to register for offering or resale or to qualify for
exemption under the Securities Act, or to register or qualify under the laws of
any state or foreign jurisdiction, any shares of Common Stock, security or
interest in a security paid or issued upon exercise of the Option.

 

As a condition to the
exercise of the Option, the Company may require (a) Optionee to represent
and warrant at the time of any such exercise or receipt that such shares are
being purchased or received only for Optionee’s own account and without any
present intention to sell or distribute such shares, and (b) such other
action or agreement by Optionee as may from time to time be necessary to comply
with the federal, state and foreign securities laws.  At the option of the Company, a stop-transfer
order against any such shares may be placed on the official stock books and
records of the Company, and a legend indicating that such shares may not be
pledged, sold or otherwise transferred, unless an opinion of counsel is
provided (concurred in by counsel for the Company) stating that such transfer
is not in violation of any applicable law or regulation, may be stamped on
stock certificates to ensure exemption from registration.  The Company may also require Optionee to
execute and deliver to the Company a purchase agreement or such other agreement
as may be in use by the Company at such time that describes certain terms and
conditions applicable to the shares.

 

Upon exercise of the Option,
the issuance of shares of Common Stock may be effected on a noncertificated
basis, to the extent not prohibited by applicable law or the applicable rules of
any stock exchange.

 

12.           Severability.  If any provision of the
Grant, this Agreement or the Joinder is determined to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person, such provision shall be
construed or deemed amended to conform to applicable laws, or, if it cannot be
construed or deemed amended without, in the Company’s determination, materially
altering the intent of the Grant, this Agreement or the Joinder, such provision
shall be stricken as to such jurisdiction or person, and the remainder of the
Grant, this Agreement or the Joinder, as applicable, and the Option, shall
remain in full force and effect.

 

13.           Choice of
Law.  The Grant, this Agreement
and the Joinder, and the Option granted pursuant to the Grant, and all
determinations made and actions taken pursuant thereto, to the extent not
otherwise governed by the laws of the United States, shall be governed by the
laws of the State of California, without giving effect to principles of
conflicts of law.

 

6

 

14.           Legal
Requirements.  The Grant and
the issuance of the Shares pursuant thereto is subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

15.           Definitions.

 

“Acquired Entity” means any entity acquired by
the Company or a Related Company or with which the Company or a Related Company
merges or combines.

 

“Acquisition Price” means the fair market value
of the securities, cash or other property, or any combination thereof,
receivable upon consummation of a Company Transaction in respect of a share of
Common Stock.

 

“Company Transaction” means consummation of

 

(a)           a merger or consolidation of
the Company with or into any other company or other entity,

 

(b)           a statutory share exchange
pursuant to which the Company’s outstanding shares are acquired or a sale in
one transaction or a series of transactions undertaken with a common purpose of
at least 80% of the Company’s outstanding voting securities, or

 

(c)           a sale, lease, exchange or
other transfer, in one transaction or a series of related transactions,
undertaken with a common purpose of all or substantially all of the Company’s
assets.

 

Where a series of transactions
undertaken with a common purpose is deemed to be a Company Transaction, the
date of such Company Transaction shall be the date on which the last of such
transactions is consummated.

 

“Related Company” means any entity that,
directly or indirectly, is in control of, is controlled by or is under common
control with the Company.

 

“Related Party Transaction” means (a) a merger or
consolidation of the Company, or a statutory share exchange pursuant to which
the Company’s outstanding shares are acquired, in which the holders of the
outstanding voting securities of the Company immediately prior to the merger or
consolidation hold at least a majority of the outstanding voting securities of
the Successor Company immediately after the merger, consolidation or statutory
share exchange; (b) a sale, lease, exchange or other transfer of all or
substantially all of the Company’s assets to a majority-owned subsidiary
company; or (c) a transaction undertaken for the principal purpose of
restructuring the capital of the Company, including, but not limited to,
reincorporating the Company in a different jurisdiction, converting the Company
to a limited liability company, or creating a holding company.

 

“Successor Company” means the surviving company,
the successor company, the acquiring company or its parent, as applicable, in
connection with a Company Transaction.

 

7

 

16.           “Market
Stand-Off” Agreement.  Optionee hereby
agrees that, during the period of duration specified by the underwriter of
Common Stock or other securities of the Company following the effective date of
a registration statement of the Company filed under the Securities Act relating
to a public offering of the Company’s Common Stock, it shall not, to the extent
requested in writing by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period, except
Common Stock included in such registration; provided, however, that such market
stand-off time period shall not exceed 180 days.

 

In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Common Stock of Optionee (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such
period.

 

Notwithstanding the
foregoing, the obligations described in this Section 16 shall not apply to
a registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms which may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or
similar forms which may be promulgated in the future.

 

17.           Notices. Any notice or
other communications relating to this Agreement shall be in writing and
delivered personally or mailed by certified mail, return receipt requested or
sent by overnight courier, to the party concerned at the address set forth
below:

 

	
  If to the Company:

  	
   

  	
  RealD
  Inc.

  
	
   

  	
   

  	
  100
  N. Crescent Drive, Suite 120

  
	
   

  	
   

  	
  Beverly
  Hills, CA 90210

  
	
   

  	
   

  	
  Attn:

  	
  Craig
  S. Gatarz, Executive Vice President

  
	
   

  	
   

  	
   

  	
  and
  General Counsel

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Sheppard
  Mullin Richter & Hampton LLP 

  
	
   

  	
   

  	
  1111
  Chapala Street, Third Floor 

  
	
   

  	
   

  	
  Santa
  Barbara, CA 93101

  
	
   

  	
   

  	
  Attn:
  C. Thomas Hopkins, Esq.

  
	
   

  	
   

  	
   

  
	
  if to Optionee:

  	
   

  	
  American
  Multi-Cinema, Inc.

  
	
   

  	
   

  	
  920
  Main Street

  
	
   

  	
   

  	
  Kansas
  City, MO 64105

  
	
   

  	
   

  	
  Attn:
  Frank Rash

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  American
  Multi-Cinema, Inc.

  
	
   

  	
   

  	
  920
  Main Street

  
	
   

  	
   

  	
  Kansas
  City, MO 64105

  
	
   

  	
   

  	
  Attn:
  General Counsel

  

 

8

 

Either party may change the
address for the giving of notices at any time by notice given to the other
party under the provisions of this Section 17.

 

9

 

Exhibit A to the Amended and Restated Stock
Option Agreement

 

THIS JOINDER TO THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT,
dated as of
              
      , 20      
(this “Joinder”)
is made by American Multi-Cinema, Inc. (“AMC”), and RealD Inc., a Delaware
corporation (the “Company”).  Reference is made to that certain Third
Amended and Restated Shareholders Agreement, dated as of December 24, 2007
and as amended on October 1, 2008 and on May 1, 2009 (the “Agreement”), by and
among the Company, the Investors, the Founders and the other parties signatory
thereto.  Capitalized terms used herein
without definition shall have the respective meanings ascribed thereto in the
Agreement.

 

Concurrently herewith, AMC has exercised a stock option to purchase
shares of the Common Stock of the Company and the Company has requested that
AMC execute this Joinder as a condition to the issuance of such shares upon
Shareholder’s exercise of such option. Accordingly, the Company and AMC agree
as follows.

 

1.             AMC, by its
signature below, agrees to become a “Shareholder” under the Agreement, with the
same force and effect as if originally named therein as a Shareholder, and AMC
hereby agrees to all of the terms and provisions of the Agreement applicable to
it as a Shareholder thereunder including without limitation the provisions of Section 3
(Right of First Refusal), Section 4 (Right of Co-Sale) and Section 6
(Put Right; Drag Along Right) shall apply to AMC to the same extent as such
provisions apply to all of the other Shareholders, and each reference to a
Shareholder in each such section in the Agreement shall be deemed to include
AMC.  Each reference to a “Shareholder”
in the Agreement shall be deemed to include AMC. AMC, by its signature below,
further acknowledges and agrees that AMC is neither an “Investor” nor a “Founder”
as those terms are defined in the Agreement. 
The Agreement is hereby incorporated herein by reference.  Except as expressly supplemented hereby, the
Agreement shall remain in full force and effect.

 

2.             This Joinder
may be executed in counterparts, each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.  Delivery of an executed signature page to
this Joinder by facsimile or e-mail transmission shall be as effective as
delivery of a manually executed counterpart of this Joinder.

 

3.             This Joinder
shall be governed by, and construed in accordance with the laws of the State of
California without regard to principles and conflicts of laws.

 

4.             All
communications and notices hereunder shall be in writing and given as provided
in Section 10.1 of the Agreement. 
All communications and notices hereunder to AMC shall be given to it at
the address set forth under its signature below.

 

5.             The parties
shall, at any time and from time to time following the execution of this
Joinder, execute and deliver all such further instruments and other documents
and take all such further actions as may be necessary or appropriate to carry
out the provisions of this Joinder.

 

6.             AMC agrees to
be bound by the Agreement as it may be further amended, modified or supplemented
from time to time to the same extent as to all of the other Shareholders.

 

10

 

IN WITNESS WHEREOF, AMC and the Company have duly executed this Joinder
to the Agreement as of the day and year first above written.

 

 

	
   

  	
  AMERICAN MULTI-CINEMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REALD INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   Title:Exhibit 4.1

 

This is a Registered Global
Security within the meaning of the Indenture hereinafter referred to and is
registered in the name of a depositary or a nominee thereof. This security may
not be exchanged in whole or in part for a note registered, and no transfer of
this security in whole or in part may be registered, in the name of any person
other than such depositary or a nominee thereof, except in the limited
circumstances described in the Indenture. Unless this certificate is presented
by an authorized representative of The Depository Trust Company, a New York
corporation (“DTC”), to Assured Guaranty Municipal Holdings Inc. or its agent
for registration of transfer, exchange or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), any transfer, pledge or other use hereof for value or
otherwise by or to any person is wrongful inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

 

No. 1

Cusip
No. 04623A205

 

4,000,000 Quarterly Interest

Bond Securities (QUIBS),

$25 principal amount each

 

ASSURED GUARANTY MUNICIPAL
HOLDINGS INC.

 

67/8% Quarterly Interest Bond Security due 2101

 

Assured Guaranty Municipal
Holdings Inc., formerly known as Financial Security Assurance Holdings Ltd., a
New York corporation (the “Issuer”), for value received, hereby promises to pay
to Cede & Co. or registered assigns, at the office or agency of the
Issuer in the Borough of Manhattan, the City of New York, the principal sum of
One Hundred Million Dollars on December 15, 2101, in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, and to pay interest, quarterly on March 15,
June 15, September 15 and December 15 of each year commencing March 15,
2002, on said principal sum at said office or agency in like coin or currency,
at the rate per annum specified in the title of this Bond from the March 15,
June 15, September 15 or December 15, as the case may be, next
preceding the date of this Bond to which interest has been paid, unless the
date hereof is a date to which interest has been paid, in which case from the
date of this Bond, or unless no interest has been paid on these Bonds, in which
case from December 19, 2001, until payment of said principal sum has been
made or duly provided for; provided, that payment of interest may be
made at the option of the Issuer by check mailed to the address of the person
entitled thereto as such address shall appear on the security register and provided
further, that if the Issuer shall default in the payment of interest due on
such March 15, June 15, September 15 or December 15, then
this Bond shall bear interest from the next preceding March 15, June 15,
September 15 or December 15, to which interest has been paid or, if
no interest has been paid on these Bonds, from December 19, 2001. The
interest so payable on any March 15, June 15, September 15 or December 15
will, subject to certain exceptions provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Bond is 

 

 

registered
at the close of business on the last day of the month preceding such March 15,
June 15, September 15 or December 15.

 

Reference is made to the
further provisions of this Bond set forth on the reverse hereof.  Such further provisions shall for all purposes
have the same effect as though fully set forth at this place.

 

This Bond shall not be valid
or become obligatory for any purpose until the certificate of authentication
hereon shall have been signed by the Trustee under the Indenture referred to on
the reverse hereof.

 

2

 

IN
WITNESS WHEREOF, Assured Guaranty Municipal Holdings Inc. has caused this
instrument to be signed by facsimile by its duly authorized officers and has
caused a facsimile of its corporate seal to be affixed hereunto or imprinted
hereon.

 

Dated: April 19,
2010

 

	
   

  	
  ASSURED
  GUARANTY MUNICIPAL HOLDINGS INC.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Dominic J. Frederico

  
	
   

  	
   

  	
   

  	
  Name:
  

  	
  Dominic
  J. Frederico

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman,
  President and Chief Executive Officer

  
	
  [Corporate
  Seal]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  James M. Michener

  
	
   

  	
   

  	
   

  	
  Name:
  

  	
  James
  M. Michener

  
	
   

  	
   

  	
   

  	
  Title:

  	
  General Counsel and
  Secretary

  

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This
is one of the Bonds of the series designated therein referred to in the
within-mentioned Indenture.

 

	
   

  	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as successor to Wachovia Bank, National
  Association, as successor by merger to First Union National Bank, as Trustee,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Katherine Esber

  
	
   

  	
   

  	
   

  	
  Authorized
  Officer

  

 

3

 

REVERSE OF BOND

 

ASSURED GUARANTY MUNICIPAL HOLDINGS INC.

 

67/8% Quarterly Interest Bond Security due 2101

 

This Bond is one of a duly
authorized issue of debentures, notes, bonds or other evidences of indebtedness
of the Issuer (hereinafter called the “Bonds”) of the series hereinafter
specified, all issued or to be issued under and pursuant to the Amended and
Restated Trust Indenture dated as of February 24, 1999, as supplemented by
a Supplemental Indenture, dated as of August 26, 2009 (herein collectively
called the “Indenture”), duly executed and delivered by the Issuer to U.S. Bank
National Association, as successor to Wachovia Bank, National Association, as
successor by merger to First Union National Bank, as Trustee (herein called the
“Trustee”), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Issuer and the Holders of the Bonds. This Bond is issued in amendment,
restatement and replacement of (but not in extinguishment of) the Bond issued
by the Issuer dated December 19, 2001 (the “Original Bond”) and evidences
the same debt evidenced by the Original Bond. 
The Bonds may be issued in one or more series, which different series
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest (if any) at different rates, may be subject to
different redemption provisions (if any), may be subject to different sinking,
purchase or analogous funds (if any) and may otherwise vary as in the Indenture
provided. This Bond is one of a series designated as the 67/8% Quarterly Interest Bond
Securities due 2101 of the Issuer, initially limited in aggregate principal
amount to $100,000,000.

 

In case an Event of Default,
as defined in the Indenture, with respect to the 67/8% Quarterly Interest Bond
Securities due 2101 shall have occurred and be continuing, the principal hereof
may be declared, and upon such declaration shall become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.

 

The Indenture contains
provisions permitting the Issuer and the Trustee, (a) without the consent
of the Holders, to execute certain supplemental indentures and (b) with
the consent of the Holders of more than 50% in aggregate principal amount of
the Bonds at the time Outstanding (as defined in the Indenture) of all series
to be affected (voting as one class), evidenced as in the Indenture provided,
to execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the Holders of the
Bonds of each such series; provided, however, that no such
supplemental indenture shall (i) extend the final maturity of any Bond, or
reduce the principal amount thereof or any premium thereon, or reduce the rate
or extend the time of payment of any interest thereon, or impair or affect the
rights of any Holder to institute suit for the payment thereof, without the
consent of the Holder of each Bond so affected or (ii) reduce the
aforesaid percentage of Bonds, the consent of the Holders of which is required
for any such supplemental indenture, without the consent of the Holder of each
Bond affected. It is also provided in the Indenture that, with respect to
certain defaults or Events of Default regarding the Bonds of any series, prior
to any declaration 

 

 

accelerating
the maturity of such Bonds, the Holders of a majority in aggregate principal
amount Outstanding of the Bonds of such series (or, in the case of certain
defaults or Events of Default, all or certain series of the Bonds) may on
behalf of the Holders of all the Bonds of such series (or all or certain series
of the Bonds, as the case may be) waive any such past default or Event of
Default and its consequences. The preceding sentence shall not, however, apply
to a default in the payment of the principal of or premium, if any, or interest
on any of the Bonds. Any such consent or waiver by the Holder of this Bond
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Bond and any
Bonds which may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Bond or such other Bonds.

 

No reference herein to the
Indenture and no provision of this Bond or of the Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to
pay the principal of and any premium and interest on this Bond in the manner,
at the respective times, at the rate and in the coin or currency herein prescribed.

 

The Bonds are issuable in
registered form without coupons in denominations of $25 and any multiple of $25
at the office or agency of the Issuer in the Borough of Manhattan, The City of
New York, and in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge Bonds may be exchanged
for a like aggregate principal amount of Bonds of other authorized
denominations.

 

The Bonds may be redeemed at
the option of the Issuer without premium or penalty, as a whole, or from time
to time in part, on any date on or after December 19, 2006 and prior to
maturity, upon mailing a notice of such redemption not less than 20 nor more
than 60 days prior to the date fixed for redemption to the Holders of Bonds at
their last registered addresses, all as further provided in the Indenture, at
100% of the principal amount thereof.

 

The Bonds may be redeemed in
whole but not in part, at any time, at the option of the Issuer without premium
or penalty at a redemption price of 100% of their principal amount, plus
accrued and unpaid interest up to but not including the redemption date, upon a
mailing of a notice of such redemption not less than 20 nor more than 60 days
prior to the date fixed for redemption to the Holders of Bonds at their last
registered addresses, all as further provided in the Indenture if on or after December 19,
2001, a change in the U.S. tax laws results in a substantial likelihood that
the Internal Revenue Service (“IRS”) would take the position that the Issuer
will not be able to deduct the full amount of interest accrued on the Bonds for
U.S. federal income tax purposes.

 

A change in the U.S. tax
laws includes any actual or proposed change in or amendment to the laws of the
U.S. or regulations or rulings promulgated under those laws; any change in the
way those laws, rulings or regulations are interpreted, applied or enforced;
any action taken by a taxing authority; any court decision, whether or not in a
proceeding involving the Issuer; or any technical advice memorandum, letter
ruling or administrative pronouncement issued by the U.S. Internal Revenue
Service.

 

If interest on the Bonds is
not, or within 90 days of an opinion of counsel will not be, deductible in
whole or in part by the Issuer for U.S. federal income tax purposes, the Issuer
will 

 

2

 

have
the right to accelerate the stated maturity of the Bonds to the minimum extent
required so that interest on the Bonds will be deductible for U.S. federal
income tax purposes. In no event may the resulting maturity of the Bonds be
less than 15 years from the date of the original issuance, however.

 

The Issuer may only
accelerate the stated maturity if the Issuer has received an opinion of
nationally recognized independent counsel experienced in such matters to the
effect that after the acceleration, interest paid on the Bonds will be
deductible for U.S. federal income tax purposes and the holders of Bonds will
not recognize income, gain or loss for U.S. federal income tax purposes as a
result of the acceleration.

 

Upon due presentment for
registration of transfer of this Bond at the office or agency of the Issuer in
the Borough of Manhattan, The City of New York, a new Bond or Bonds of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in exchange therefor, subject to the limitations provided in
the Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.

 

The Issuer, the Trustee and
any authorized agent of the Issuer or the Trustee may deem and treat the
registered Holder hereof as the absolute owner of this Bond (whether or not
this Bond shall be overdue and notwithstanding any notation of ownership or
other writing hereon), for the purpose of receiving payment of, or on account
of, the principal hereof and premium, if any, and, subject to the provisions on
the face hereof, interest hereon, and for all other purposes, and neither the
Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.

 

No recourse under or upon
any obligation, covenant or agreement of the Issuer in the Indenture or any
indenture supplemental thereto or in any Bond, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance hereof and as part of the consideration for the issue hereof.

 

Terms used herein which are
defined in the Indenture shall have the respective meanings assigned thereto in
the Indenture.

 

3

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