Document:

Exhibit 10.14

 

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.

 

REAL
D SYSTEM LICENSE AGREEMENT (U.S. 2008)

 

This REAL D System
License Agreement (the “Agreement”) is entered into as of October 15,
2008, by and between REAL D, a company incorporated under the laws of the State
of California, and having a principal place of business at 100 North Crescent
Drive, Suite 120, Beverly Hills, California 90210 (“REAL D”), and REGAL
CINEMAS, Inc., a company incorporated under the laws of the State of
Tennessee and having a principal place of business at 7132 Regal Lane,
Knoxville, Tennessee 37918 (“Licensee”).

 

RECITALS

 

WHEREAS,
REAL D owns
certain equipment and related proprietary rights evidenced by, associated with,
embodied in, or related to, a 3-D cinema system for the delivery of premium 3-D
content, including REAL D projector add-ons, the related equipment, software
and other proprietary rights described on Schedule A hereto, and certain
upgrades described herein (collectively, the “REAL
D System”); and

 

WHEREAS,
Licensee is the
operator of theatre venues and wishes to obtain the right to use the REAL D
System in such theatre venues.

 

AGREEMENT

 

NOW,
THEREFORE, in
consideration of the mutual promises set forth herein and for other good and
adequate consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.   GRANT OF
RIGHTS

 

1.1        License of REAL D System. Subject
to the terms and conditions provided herein (including the consideration
payable pursuant to Section 5 hereof), REAL D hereby grants to Licensee
the right and license to use a REAL D System at each auditorium listed on Schedule
1.1 hereto, as updated by the parties from time to time to reflect
additional installations of REAL D Systems (individually an “Auditorium” and, collectively, the “Auditoriums”). The theatre venues (e.g., a multiplex theatre) at which the
Auditoriums are located (“Location”)  are also specified on Schedule 1.1. More than
one Auditorium may be located at one Location. When the installation of a REAL
D System at an Auditorium is complete in accordance with Section 2.1 (“Installation
Date”), Schedule 1.1 shall he updated by the parties
to reflect such Installation Date. The parties may add additional REAL D System(s) under
the terms of this Agreement, by mutual agreement, by adding the Auditorium(s),
Location(s) and other information required by Schedule 1.1 for the
additional Auditorium(s) to Schedule 1.1, and initialing and dating
such updated Schedule 1.1 as of the applicable Installation Date(s) for
such Auditorium(s).

 

1.2        Lease of REAL D Equipment.
Subject to the terms and conditions provided herein (including the
consideration payable pursuant to Section 5 hereof), REAL D leases to
Licensee the REAL D equipment and personal property described on Schedule A
(together with any replacement parts, replacements, additions, modifications
and repairs incorporated therein and/or affixed thereto, individually or
collectively, from time to time (the

 

1

 

“Equipment”). For purposes of clarification, the
Equipment shall specifically also include each upgrade to the software and
hardware described on Schedule A that a reasonable person would
determine affects the viewing experience of the general public or that
otherwise enhances the reliability or operation of the Equipment (“Upgrade(s)”).

 

1.3        Licensee Requirements. [***]

 

 

1.4        Limitations on Use of REAL D System.
[***]

 

 

(collectively, “3D Shows”) that have been conditioned by proprietary REAL D
software (or other software approved by REAL D) (“Ghostbusting”)
may be exhibited using the REAL D System. Real D and Licensee agree to use
commercially reasonable efforts to ensure that all such 3D Shows have been
conditioned by such Ghostbusting software.

 

1.5        [***]

 

 

2.   INSTALLATION, MAINTENANCE, SUPPORT AND
UPGRADES

 

2.1        Installation. After the Digital
Projection Condition (as defined in Section 9.1) has been satisfied and
the Screen and the Port Glass have been installed pursuant to Section 1.3
above, REAL D shall install, or designate a qualified contractor to install (in
each case at the sole cost and expense of REAL D), the REAL D Systems and
Equipment at each Auditorium at such times as mutually agreed by the parties.
Any third party contractor selected by REAL D to perform such installation
shall be subject to the approval of Licensee, which approval shall not be
unreasonably withheld. Upon completion of the installation of the Equipment at
an Auditorium, REAL D, or its designated contractor, shall, in coordination
with, and under the supervision of, Licensee’s technical services personnel,
test the REAL D System to ensure the operability of the REAL D System in
accordance with the applicable specifications of the REAL D System.

 

2

 

2.2        Maintenance, Support and Upgrades.
REAL D shall, during mutually agreed hours (and at the sole cost and expense of
REAL D), maintain and support the REAL D System at each Auditorium to ensure
that the REAL D System is fully functional and operational. REAL D shall
promptly respond to Licensee’s request for maintenance and support in a timely
manner. REAL D shall promptly provide Licensee with all software Upgrades as
such Upgrades are released and shall promptly notify Licensee of hardware
Upgrades, if any, and provide Licensee with such hardware Upgrades at such
times as are mutually agreeable to the parties. For purposes of this Section 2.2,
the parties acknowledge and agree that (a) a service response by REAL D
within four (4) hours of receipt of a service call from Licensee shall be
deemed to be response in a timely manner, and (b) response in a timely
manner may change as a result of the standards to be set by the Digital Cinema
Initiative.

 

2.3        Obligations of Licensee. Licensee
shall at all times operate the REAL D System in substantial compliance with the
instructions and training (if necessary) provided by REAL D, and shall use each
item of Equipment solely in connection with the REAL D System and solely for
its intended purpose. Licensee shall not make any alterations, additions or
improvements to the Equipment or the REAL D System without the prior written
consent of REAL D (which may be withheld in its sole and absolute discretion).
Licensee shall not remove any labels or notices of ownership placed on the
Equipment by REAL D without the prior written consent of REAL D, which may be
withheld in its sole and absolute discretion. Licensee shall not move or
otherwise relocate any of the Equipment or the REAL D System without the prior
written consent of REAL D, which shall not be unreasonably withheld or delayed.

 

2.4        Approval of Location. Licensee
shall not use all or any part of the REAL D system or the Equipment at any
Location or Auditorium that is not approved by REAL D, which approval shall not
be unreasonably withheld or delayed.

 

3.   RELATED PRODUCTS AND SERVICES

 

3.1        REAL D Glasses. Licensee
acknowledges and understands that an integral part of the REAL D System is the
stereoscopic glasses sold or approved by REAL D to be worn for viewing the 3D
Shows and only in conjunction with the REAL D System. Licensee shall not
distribute to patrons glasses, or other stereoscopic viewing materials, other
than REAL D Glasses (as defined below), for use with the REAL D System. [***]

 

 

“REAL D
Glasses”).
Licensee acknowledges and understands that each pair of [***] shall be
distributed to patrons for only one exhibition of a 3D Show, and will not
redistribute or reuse such [***] at any time after their first use. In the
event that Licensee determines to purchase [***], REAL D shall provide Licensee
with guidelines for the care of such [***] (“Guidelines”),
and Licensee shall comply with such Guidelines in all material respects,
including the Guidelines included therein relating to the washing and care of
such [***]. For purchases of REAL D Glasses by Licensee, (a) Licensee
shall [***]

 

3

 

[***]

 

(b) Licensee shall
place orders for REAL D Glasses as soon as practicable prior to the required
delivery date, and (c) REAL D shall use its best efforts to deliver all
orders of REAL D Glasses in accordance with the Licensee’s requirements;
provided, that REAL D shall not be responsible for delays or failures of
delivery due to circumstances not within the reasonable control of REAL D.
Licensee may return surplus generic REAL D Glasses (in their original unopened
packaging) to REAL D, in return for a credit in the amount paid by Licensee for
such glasses.

 

4.   MARKETING

 

4.1        Marketing Efforts. Licensee and
REAL D shall cooperate in the marketing of 3D Shows, and each party agrees to
use its commercially reasonable efforts to market and promote the 3D Shows and
the REAL D System. Without limiting the foregoing, Licensee agrees to: (a) [***]

 

 

In connection with the
foregoing, Licensee shall only use marketing materials provided by REAL D in
accordance with guidelines reasonably established by REAL D, and Licensee shall
use its commercially reasonable efforts to abide by all brand guidelines
provided to Licensee by REAL D.

 

4.2        Press Launch. REAL D may engage
in a press launch for the opening of the REAL D System at each Location, and
Licensee agrees to cooperate with REAL D (at the sole cost and expense of REAL
D), in connection with such press launch, including making each Location
available for press conferences and related events at mutually agreed times.
Licensee agrees to issue a joint press release with REAL D, in a form and
substance that has been mutually agreed to by REAL D and Licensee, in connection
with each significant event related to the transactions contemplated by this
Agreement.

 

4.3        Ongoing Promotion. Each party may
promote its relationship with the other party in advertising, promotional and
marketing materials approved by the other party, including without limitation
the inclusion of the other party’s name and logo in a list of a party’s
partners or associates; provided, however, that any use of such other party’s
logos or name in any materials shall require the other party’s prior written
consent, which consent shall be granted or withheld at such other party’s sole
discretion. Each party agrees to comply with the other party’s guidelines,
which the other party may reasonably request from time to time with respect to
the use of the other party’s name or logo. Each party agrees (i) that it
will not acquire rights to any of the other party’s trade names, trademarks,
logos (other than as set forth herein), goodwill or other form of intellectual
property of the other party, and (ii) not to use the other party’s
trademarks, trade names, logos (other than as set forth herein), goodwill or
other form of

 

4

 

intellectual property of
the other party, except as provided in this Agreement or with the prior written
consent of the other party.

 

4.4        Marketing Cooperation. Licensee
and REAL D shall endeavor to mutually agree on the marketing and promotional
efforts for the 3D Shows and the REAL D System.

 

5.   FINANCIAL TERMS

 

5.1        Royalties. For each paid
admission to a 3D Show at each Auditorium per calendar year (“Paid Admissions”), Licensee will pay a royalty (“Royalty”) to REAL D [***]

 

	
  [***]

  	
   

  	
  [***]

  

 

 

[***]

 

5

 

In addition, for purposes
of calculating the number of Paid Admissions upon which the Royalties are
based, the calculation shall start at zero on January 1 of each calendar
year.

 

[***]

 

 

5.2        Reports and Payments. Within
[***]

(“Play Week”),
Licensee shall provide REAL D with a report showing the number of Paid
Admissions for all REAL D shows for the immediately preceding Play Week and the
calculation of Royalties due to REAL D. REAL D shall send Licensee an invoice
which shall set forth the amount of the Royalties due to REAL D, plus any sales
taxes due on such Royalties. Payment in full of any amounts set forth on such
invoice will be made within [***] days of the date of such invoice.

 

5.3        Audit Rights. Licensee shall
maintain for [***] years after the expiration of each calendar year during the Term
and for [***] years after termination of this Agreement, complete and accurate
records of all attendance reports which may give rise to a payment obligation
under this Agreement during the [***] immediately preceding calendar years.
REAL D shall have the right to inspect, upon reasonable prior written notice to
Licensee and during normal business hours, the records of Licensee upon which
Licensee’s Paid Admissions and Royalty calculations are based. Such inspection
shall be conducted in a manner that does not interfere with Licensee’s
operations. Notwithstanding the foregoing, REAL D shall be permitted to
exercise the foregoing inspection right not more than one time per calendar
year. Any information obtained by REAL D as a result of such inspection shall
be held in strict confidence by REAL D, except in litigation between the
parties.

 

5.4        Underreporting of Royalty. [***]

 

 

5.5        Duties and Taxes. [***]

 

6

 

[***]

 

5.6        Transmission of Payments. All
payments to be made to REAL D pursuant to this Agreement shall be transmitted
by electronic funds transfer (“EFT”) to an
account designated by REAL D. Any EFT, wire transfer or other transaction fees
incurred in connection with the payment or transmittal of funds by Licensee
shall be paid by Licensee and shall not be deducted from amounts payable to
REAL D under this Agreement.

 

5.7        Late Fee. In the event that any
payment required under this Agreement is not paid within [***] days after the
date when such payment is due, a late charge equal to [***] percent [***] of
the payment then due may be added to such payment by REAL D and shall be paid
concurrently with the overdue payment.

 

5.8        Stock Option Grant. Upon
execution of this Agreement, REAL D shall provide documentation (in the form of
Exhibit A) to Licensee that evidences the grant to Licensee of an option
to purchase 815,187 shares of Common Stock of REAL D. Such stock option shall
have an exercise price of US $0.01 per share, and shall have a term of ten (10) years.
REAL D represents and warrants to Licensee that such stock option shall be
exercisable for a number of shares of Common Stock of REAL D equal to [***]

 

 

6.   OWNERSHIP AND PROPRIETARY RIGHTS

 

6.1        Ownership of REAL D System.
Notwithstanding anything to the contrary expressed or implied in this Agreement
or otherwise, and regardless of whether the Equipment or anything else may
become affixed or attached at the Auditorium or other property, REAL D retains
all right, title and interest in and to the REAL D System and the Equipment,
including without limitation all intellectual property rights associated
therewith and any developments or improvements arising therefrom. Licensee
shall have no right, title or interest in the REAL D System or the Equipment, or
any intellectual property or other rights associated therewith or any

 

7

 

developments or
improvements arising therefrom, other than those that are expressly licensed or
leased pursuant to the terms of this Agreement. While the Real D System and
Equipment is within its possession, Licensee shall keep the REAL D System,
including the Equipment, free and clear of all liens, encumbrances and charges
of any nature. Upon request of REAL D and at REAL D’s cost, Licensee shall mark
the Equipment to indicate the nature of Licensee’s interest therein. The
Equipment is, and at all times shall remain, the personal property of REAL D,
notwithstanding that the Equipment or any component or item thereof may now be,
or hereafter become, in any manner affixed or attached to, or embedded in, or
permanently resting upon real property or any improvement thereon. For the
avoidance of doubt, the REAL D System does not include the Screen, the Port
Glass or any digital projection system to which it may be attached.

 

6.2        License Restrictions. Except as
otherwise expressly provided in this Agreement, REAL D grants, and Licensee
obtains, no rights, title or other interest, express, implied, or by estoppel,
in the REAL D System, the Equipment or any proprietary rights of REAL D, and
Licensee shall have no right, and specifically agrees not to (i) copy,
display, transfer, adapt, modify, distribute or reproduce, in any manner, and
whether in tangible or intangible form, the REAL D System, the Equipment, or
any part or component of either, (ii) decompile, decrypt, reverse
engineer, disassemble or otherwise determine, attempt to determine or reduce
the software contained in the REAL D System to human-readable form; (iii) modify
or create derivative works of any portion of the REAL D System; (iv) except
as provided in Section 10.1, sublease, sublicense, transfer or assign any
part of the Equipment or the REAL D System; or (v) modify or remove any
part of the Equipment or the REAL D System, or use any firmware, middleware or
software included in the Equipment or the REAL D System or otherwise provided
by REAL D, other than solely with the REAL D System, and agrees not to permit
or authorize anyone else to do any of the foregoing. To the extent that
Licensee owns any rights to any modification or improvement of the REAL D
System by operation of law or otherwise, Licensee hereby assigns all such
rights to REAL D for a consideration of US $1.00, the receipt of which is
hereby acknowledged by Licensee.

 

6.3        Protection of Proprietary Information.
Licensee agrees and acknowledges that (i) REAL D has expended and will
continue to expend substantial time, money and effort developing the
proprietary rights evidenced by, associated with or embodied in or related to
the REAL D System, (ii) Licensee will take reasonable steps to preserve
the proprietary information contained in the REAL D System and the Equipment,
and (iii) Licensee will take reasonable steps to assist REAL D’s efforts
to prevent any theft, unauthorized use, or misappropriation of the REAL D
System and the Equipment, by, among other things, at all times maintaining the
REAL D System and the Equipment at a locked and secured location, with access
restricted to persons employed by Licensee with a need to access the REAL D
System and the Equipment or such location.

 

6.4        Right to Inspect Locations.
Licensee shall permit the right, for REAL D or REAL D’s agents, to enter
Licensee’s Locations at reasonable times to determine Licensee’s adherence to
the terms and conditions of this Agreement. Such inspection shall be conducted
in a manner that does not interfere with Licensee’s operations. Notwithstanding
the foregoing, REAL D shall be permitted to exercise the foregoing inspection
right not more than twice per calendar year. Any information obtained by REAL D
as a result of such inspection shall be held in strict confidence by REAL D,
except in litigation between the parties.

 

8

 

6.5        Additional Filings; Cooperation.
Licensee shall execute such documents, render such reasonable assistance, and
take such other action as REAL D may reasonably request, to apply for,
register, perfect, confirm and protect REAL D’s rights in the Equipment and/or
the REAL D System. Licensee acknowledges that the trade names, trademarks and
service marks used by REAL D in relation to the Equipment and the REAL D System
are the exclusive property of REAL D. Licensee agrees that it shall not file
any competing or interfering patent or trademark applications related to marks,
logos, designs, systems or methods embodied in the REAL D System or Upgrades,
or marks, logos, designs, systems or methods which utilize the REAL D System or
any component thereof, and will not hold itself out as having acquired any
proprietary right or goodwill to any trade name, trademark or service mark of
REAL D by virtue of its use thereof or anything herein.

 

7.   REPRESENTATIONS AND WARRANTIES

 

7.1        Representations. Each party
represents and warrants to the other party that: (i) such party is duly
organized and validly existing under the laws of the state of its incorporation
or formation and has full power and authority to enter into this Agreement and
to carry out the provisions hereof; (ii) this Agreement is a legal and
valid obligation of such party, binding upon such party and enforceable against
such party in accordance with the terms of this Agreement; and (iii) it
has the right to enter into this Agreement and grant the rights granted herein.
REAL D further represents and warrants that (a) REAL D owns or has the
right to use and sublicense all necessary intellectual property rights in the
REAL D System and the Equipment, including all necessary patents and
trademarks; and (b) the REAL D System and the Equipment does not, and will
not, infringe on the intellectual property rights of any third party. REAL D
shall defend, indemnify, and hold harmless Licensee and its affiliates from and
against any and all losses, obligations, risks, costs, claims, liabilities, settlements,
damages, liens, judgments, awards, fines, penalties, expenses and other
obligations whatsoever (including, without limitation, the reasonable fees and
disbursements of attorneys and of any consultants or experts and their expenses
of investigation) (“Costs”)
suffered or incurred by Licensee or its affiliates in connection with, as a
result of, based upon, or relating to, any infringement, violation,
misappropriation, or misuse of any third-party intellectual property rights by
REAL D.

 

7.2        DISCLAIMER OF ADDITIONAL
REPRESENTATIONS AND WARRANTIES. EXCEPT AS SPECIFICALLY SET FORTH HEREIN,
REAL D MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE REAL D SYSTEM OR EQUIPMENT OR ANY RELATED PRODUCTS AND SERVICES
PROVIDED UNDER THIS AGREEMENT, AND DISCLAIMS ALL OTHER REPRESENTATIONS AND
WARRANTIES, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS AND WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND/OR UNINTERRUPTED USE.

 

7.3        LIMITATION OF LIABILITY. WITHOUT
LIMITING THE GENERALITY OF SECTION 7.2, BUT SUBJECT TO THE OTHER TERMS OF
THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, REAL D’S OBLIGATION TO INDEMNIFY
LICENSEE FOR ALL INDEMNIFIABLE COSTS UNDER SECTION 7.1 OF WHATEVER
CHARACTER), AND APPLICABLE LAW, NEITHER PARTY SHALL BE LIABLE OR RESPONSIBLE
FOR ANY INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGE TO PERSONS OR PROPERTY
RESULTING FROM A BREACH OF THIS

 

9

 

AGREEMENT, OR FOR LOSS OF
USE OF THE EQUIPMENT OR THE REAL D SYSTEM OR FOR ANY INTERRUPTION IN BUSINESS
CAUSED BY LOSS OF USE OF THE EQUIPMENT OR THE REAL D SYSTEM FOR ANY REASON
WHATSOEVER; PROVIDED THAT, IN ACCORDANCE WITH THE LAST SENTENCE OF SECTION 7.1,
REAL D SHALL INDEMNIFY LICENSEE FOR ALL COSTS OF ANY NATURE REFERRED TO
THEREIN. LICENSEE EXPRESSLY AGREES THAT THE PAYMENT OF ROYALTIES HEREUNDER
SHALL NOT BE SUBJECT TO ANY OFFSET OR DEDUCTION.

 

7.4        [***]

 

 

8.
  CONFIDENTIALITY

 

8.1        Confidential Information. By
virtue of this Agreement, each party may have access to certain confidential
information of the other party (“Confidential Information”). In
particular, each party acknowledges, understands and agrees that the fact that
the parties have entered into this Agreement, as well as the terms and provisions
of this Agreement (including without limitation, Section 5.8 contained
herein), shall constitute Confidential Information for all purposes of this Section 8.1
and of all other terms and provisions of this Agreement. Each party agrees to
hold the other party’s Confidential Information in strict confidence, using the
same

 

10

 

degree of care it uses
with its own confidential information of a similar type (but in no event using
less than a reasonable degree of care) and not to publish, disclose or
otherwise make available, directly or indirectly, the other party’s
Confidential Information or any part thereof to any third party, or use the
other party’s Confidential Information for any purpose other than in accordance
with this Agreement, except as required by law, or in connection with any
litigation or arbitration between the parties, without the other party’s prior
written consent. Each party shall disclose confidential information to
employees and agents only on a “need to know” basis. Each party shall take all
reasonable steps to ensure that the other party’s Confidential Information is
not disclosed or distributed by the receiving party’s agents or employees in
violation of the provisions of this Agreement. Confidential Information does
not include any information that: (i) was in a party’s possession or known
to such party, without an obligation to keep it confidential, before such
information was disclosed to such party by the other party; (ii) lawfully is
or becomes public knowledge through a source other than a party and through no
fault of such party; or (iii) is or becomes lawfully available to a party
from a source other than the other party, which to such party’s knowledge was
not bound by any duty or obligation of confidentiality.

 

9.   TERM AND TERMINATION

 

9.1        Term. This Agreement shall
commence and become effective on the Effective Date (as defined in this Section 9.1
below) and continue until the earlier of (i) the [***] year anniversary of
the Effective Date and (ii) the [***] year anniversary of the Installation
Date of the [***] REAL D System that has been installed pursuant to the terms
and provisions of this Agreement and the Prior License Agreement (as defined in
Section 9.8), unless terminated earlier as provided under this
Agreement (the “Initial Term”), and shall automatically renew for
successive [***] terms (“Renewal Term(s)”), unless a party
provides written notice to the other party of non-renewal at least sixty (60)
days prior to the expiration of the Initial Term or, thereafter, sixty (60)
days prior to the expiration of the then current Renewal Term, if any. The
Initial Term and any Renewal Term(s) shall be collectively referred to as
the “Term”. Notwithstanding the date of its execution by Licensee and REAL
D, [***]

 

 

9.2        Termination for Nonpayment. REAL
D may terminate this Agreement on ten (10) days prior written notice to
Licensee if Licensee fails to make any payment due hereunder, within ten (10) days
of notice of failure to make such payment from REAL D; provided, however, that
such termination shall not affect Licensee’s obligation to make past due
payments of Royalties.

 

9.3        Termination for Breach. Either
party may terminate this Agreement due to a material breach by the other party
of any representation or warranty or any of its obligations hereunder, other
than a breach by Licensee of its payment obligations which is governed by Section 9.2,
upon thirty (30) days’ prior written notice to the breaching party if such
breaching

 

11

 

party fails to remedy
such breach within such thirty (30) days, or, in the event such breach cannot
be remedied within such thirty (30) days, if such breaching party has not
undertaken substantial good faith efforts to remedy such breach within such
thirty (30) day period and is continuing in good faith with such efforts.

 

9.4        Partial Termination for Breach.
If this Agreement relates to more than one Auditorium, then, in addition to the
rights under Section 9.3, either party may terminate this Agreement with
respect to an Auditorium only due to a material breach by the other party of
any of its obligations hereunder with respect to such Auditorium, upon thirty
(30) days’ prior written notice to the breaching party if such breaching party
fails to remedy such breach within such thirty (30) days, or, in the event such
breach cannot be remedied within such thirty (30) days, or, in the event such
breach cannot be remedied within such thirty (30) days, if such breaching party
has not undertaken substantial good faith efforts to remedy such breach within
such thirty (30) day period and is continuing in good faith with such efforts.

 

9.5        Effect of Termination. In the
event that this Agreement is terminated pursuant to Section 9.2, 9.3 or
9.4, the duties and obligations of the breaching party which have accrued prior
to termination shall not be released or discharged by such termination. Any
licenses or other rights granted the non-breaching party shall continue in effect
at the option of the non-breaching party as long as the non-breaching party
abides by the terms of the surviving provisions of this Agreement, including
but not limited to the obligation to make payments under Section 5.
Sections 5, 6, 7, 8, 9 and 10 shall survive termination or expiration of this
Agreement under Sections 9.1, 9.2 or 9.3. If this Agreement is terminated with
respect to one or more Auditoriums under Section 9.4, this Agreement shall
continue in full force and effect with respect to all other Auditoriums.

 

9.6        Surrender. At the expiration or
earlier termination of this Agreement, Licensee shall relinquish possession and
control of the REAL D System, including the Equipment (in the case of a
termination under Section 9.4, only with respect to the Auditorium(s) subject
to termination). Upon the expiration of the Initial Term or a Renewal Term, as
applicable, or the earlier termination of this Agreement, REAL D shall have the
right, at its sole cost and expense, to retake possession of any or all of the
Equipment, and for such purpose REAL D shall have the right to enter upon any
premises where any or all of the Equipment is located at mutually agreed upon
times by REAL D and Licensee and remove same.

 

9.7        Cumulative Remedies. No right or
remedy conferred herein is exclusive of any other right or remedy conferred
herein, any other agreement between the parties hereto, or by law. All such
remedies are cumulative of every other right or remedy conferred hereunder,
pursuant to any other agreement, or at law or in equity, by statute or
otherwise, and may be exercised concurrently or separately from time to time.

 

9.8        Termination of Prior License
Agreement and Treatment of REAL D Systems Currently Installed in the
Pre-Existing Auditoriums. Each of Licensee and REAL D acknowledges and
agrees that, upon the execution and delivery of this Agreement by each of
Licensee and REAL D, that certain Amended and Restated REAL D 1.0 System
License Agreement previously entered into as of March 1, 2007 by and between
REAL D and Licensee (as amended to date, the “Prior License Agreement”) shall
be terminated and of no further force or effect; provided, that,
notwithstanding the foregoing, [***]

 

12

 

[***]

 

10.
GENERAL

 

10.1         Assignment. Neither party may
assign any of its rights and obligations under this Agreement without the prior
written consent of the other party hereto, which consent shall not be
unreasonably withheld; provided, however, that either party shall have the
right to assign all of its right, title and interest under this Agreement to (a) any
successor-in-interest to substantially all of the assets of such party, (b) any
affiliate or subsidiary, or (c) with respect to Licensee, any
successor-in-interest with respect to the Location that operates movie theatres
at the Locations; provided, further, that any such assignment shall not release
the assignor from liability hereunder with respect to License Periods
commencing prior to such assignment. Each party shall give the other party
notice of any assignment permitted without the consent of the other party under
this Section 10.1.

 

10.2         Relationship of Parties. The
parties to this Agreement are independent contractors, and this Agreement shall
not establish any relationship of partnership, joint venture, employment,
franchise, or agency between the parties. This Agreement does not give either
party the power to bind the other or incur obligations on the other’s behalf
without the other’s prior written consent.

 

10.3         Counterparts; Facsimile Signatures.
This Agreement and any amendment hereto may be executed in counterparts, and by
using facsimile signature pages, each of which when executed and delivered
shall be deemed an original and all of which taken together shall constitute
one and the same instrument.

 

10.4         Compliance with Laws. Licensee
shall, at its own expense, procure all necessary approvals, licenses, permits,
permissions, waivers, certificates and consents that may be required from any
governmental authorities (and any lessees or landlords) for the installation
and use of the REAL D System at the Locations in accordance with the terms of
this Agreement.

 

10.5         Infringement Notification.
Licensee shall promptly give notice to REAL D of any allegation, claim or
challenge that Licensee’s use of the REAL D System infringes on the
intellectual property rights of a third party. In the event of a claim of
infringement against Licensee relating to the REAL D System, REAL D may, at its
option (i) secure for Licensee, at the sole cost and expense of REAL D,
the rights necessary to continue to use and operate the REAL D System under
this Agreement, (ii) assume control of the defense or settlement of such

 

13

 

claim, at the sole cost
and expense of REAL D, or (iii) terminate this Agreement upon not less
than thirty (30) days prior written notice.

 

10.6         Injunctive Relief. It is
understood and agreed that, notwithstanding any other provision of this
Agreement, any breach of Section 6 or Section 8 by either party may
cause irreparable damage for which recovery of money damages would be
inadequate, and that the non-breaching party will therefore be entitled to seek
timely injunctive relief from a court of competent jurisdiction without the
requirement of posting a bond to protect such party’s rights under this
Agreement in addition to any and all remedies available at law.

 

10.7         Applicable Law; Venue. This
Agreement is to be governed by and construed in accordance with the internal
laws of the State of California, excluding that body of law pertaining to
conflict of laws. Any action or proceeding arising out of or relating to this
Agreement may be brought in the state or federal courts located within Los
Angeles County in the State of California, and the parties irrevocably agree to
the jurisdiction and venue of such courts for such purposes.

 

10.8         Notices. All notices, consents,
waivers, and other communications intended to have legal effect under this
Agreement must be in writing, must be delivered to the other party at the
address set forth on the signature page hereof by personal delivery, by
registered or certified mail (postage pre-paid), by an internationally
recognized overnight courier or via facsimile with verified receipt of
transmission, or via email, and will be effective upon receipt (or when
delivery is refused). Each party may change its address for receipt of notices
by giving notice of the new address to the other party.

 

10.9         Severability. If any provision
of this Agreement is unenforceable or invalid under any applicable law or is so
held by applicable court decision, such unenforceability or invalidity will not
render this Agreement unenforceable or invalid as a whole, and such provision
will be changed and interpreted so as to best accomplish the objectives of such
unenforceable or invalid provision within the limits of applicable law or
applicable court decisions.

 

10.10         Jointly Drafted; Review by Counsel.
The parties have participated jointly in the negotiation and drafting of this
Agreement and have had the opportunity to review this Agreement with counsel of
their choosing. In the event an ambiguity or question of intent or
interpretation arises, no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions
of this Agreement.

 

10.11         Entire Agreement; Waiver. This
Agreement, together with the Schedules hereto, all of which are hereby
incorporated by reference, constitutes the entire agreement of the parties
regarding its subject matter. It supersedes all prior or contemporaneous
understandings, agreements, or other communications between the parties, oral
or written, regarding such subject matter, including without limitation both
the Prior License Agreement, as well as that certain Letter of Intent
previously entered into by and between REAL D and Licensee in May 2008.
Neither this Agreement nor the Schedules can be altered, amended or modified
except in writing executed by both parties. The failure of a party to enforce
any provision of this Agreement shall not be construed to be a waiver of the
right of such party to thereafter enforce that provision or any other provision
or right.

 

14

 

10.12       Headings. The captions to the
several Sections of this Agreement are not a part of this Agreement, but are
included merely for convenience of reference only and shall not affect its
meaning or interpretation.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

15

 

IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed by their authorized
representatives as of the Effective Date.

 

	
  Real D

  	
  REGAL
  CINEMAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Andrew A. Skarupa

  	
   

  	
  By:

  	
  /s/ Amy Miles

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Andrew A. Skarupa

  	
   

  	
  Name:

  	
  Amy Miles

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  October 16, 2008

  	
   

  	
  Date:

  	
  10/23/08

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ MICHAEL L. CAMPBELL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  MICHAEL L. CAMPBELL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
  10/23/08

  

 

16

 

SCHEDULE A

 

EQUIPMENT

 

A.    REAL D Cinema System Control
Module

 

B.    REAL D Cinema System Z-Screen

 

C.    REAL D Cinema System
Z-Screen Mounting Hardware

 

D.    REAL D Cinema System XL,
where applicable 

 

GLASSES

 

The
REAL D System requires circular polarized glasses, manufactured exclusively
for, and distributed by, REAL D, which glasses will be purchased separately by
Licensee or a third party, as set forth at Section 3 of the Agreement.

 

SOFTWARE

 

System
Software: The REAL D Cinema System Control Module contains embedded software,
which is an integral part of the REAL D System and is proprietary to REAL D.

 

The
REAL D authorized installers will install configuration files in the projector
which are necessary for the 3D projector formats.

 

TRADEMARKS

 

THE
PREMIER DIGITAL 3D EXPERIENCE (US) -- 78/915, 774

 

THE
NEW REALITY (US) -- 78/904, 792

 

REAL
D (US) -- 78/318, 006

 

17

 

SCHEDULE 1.1 to REAL D System License Agreement, between REAL D and REGAL,
dated as of October 15, 2008

 

[***]

 

(updated as of 5/7/10)

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

SCHEDULE 9.8 to REAL D System License Agreement (U.S. 2008), between
REAL D and

REGAL CINEMAS, Inc., dated as of October 15, 2008

 

[***]

 

	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

Confidential
Treatment Requested by RealD Inc.

 

EXHIBIT “A”

 

REAL D

 

NONQUALIFIED STOCK OPTION GRANT

 

[SEE EXHIBIT NUMBER 10.15]Exhibit 10.15

 

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.

 

REAL D

 

NONQUALIFIED
STOCK OPTION GRANT

 

OCTOBER
15, 2008

 

REAL D (the “Company”)
hereby grants to Optionee (as defined below) a nonqualified stock option (the “Option”)
to purchase shares of the Company’s Common Stock. The Option is subject to all
the terms and conditions set forth in this Stock Option Grant (this “Grant”),
as well as in the Stock Option Agreement (the “Agreement”) and the Joinder to
the Third Amended and Restated Shareholders Agreement (the “Joinder”), each of
which is attached to and incorporated into this Grant in its entirety.

 

	
  Optionee:

  	
  REGAL CINEMAS, INC.

  
	
   

  	
   

  
	
  Grant Date:

  	
  October 15, 2008

  
	
   

  	
   

  
	
  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:

  	
  [***]

  	
  [***]

  
	
   

  	
   

  	
   

  
	
   

  	
  [***]

  	
  [***]

  
	
   

  	
   

  	
   

  
	
   

  	
  [***]

  	
  [***]

  

 

Additional Terms/Acknowledgement: The
undersigned Optionee acknowledges receipt of, and understands and agrees to,
the terms and conditions of this Grant and the attached Agreement and Joinder.
Optionee further acknowledges that, as of the Grant Date, this Grant, the
Agreement and the Joinder set forth the entire understanding between Optionee
and the Company regarding the Option and supersede all prior oral and written
agreements on the subject.

 

	
  REAL
  D

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Andrew A. Skarupa

  
	
  BY:

  	
  /s/
  Andrew A. Skarupa

  	
   

  	
  Signature

  
	
   

  	
  Andrew
  A. Skarupa

  	
   

  	
   

  
	
   

  	
  Chief
  Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
  Attachments:

  	
   

  	
  7132 Regal Lane

  
	
  1.   Stock
  Option Agreement

  	
   

  	
  Knoxville, Tennessee
  37918

  
	
  2.   Joinder
  to Shareholders Agreement

  	
   

  	
   

  
	
   

  	
   

  	
  Taxpayer ID: 02-0556934

  

 

 

REAL
D

 

STOCK
OPTION AGREEMENT

 

Pursuant to the Stock
Option Grant (the “Grant”) and this Stock Option Agreement (this “Agreement”),
REAL D (the “Company”) has granted REGAL CINEMAS, INC. (“Optionee”) a Nonqualified
Stock Option (the “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 upon the
advice of outside counsel has determined, or otherwise has received from Optionee
an opinion of counsel, 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 upon the advice
of outside counsel 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, except in the event the Company refuses to permit the rightful
exercise of the Option upon satisfaction of all requirements of exercise set
forth in this Agreement. 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, except in the event

 

 

the Company refuses to
permit the rightful exercise of the Option upon satisfaction of all
requirements of exercise set forth in this Agreement.

 

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
Optionee exercises the Option and satisfies all requirements of exercise set
forth in this Agreement. 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
Optionee exercises the Option and satisfies all requirements of exercise set
forth in this Agreement.

 

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 Optionee under this Option
may not be assigned or transferred. This Option shall be exercisable only by
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

 

2

 

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 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

 

3

 

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.

 

(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 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. To the extent the issuance of shares of Common Stock upon
exercise of the Option does not comply with applicable law, the Company and
Optionee shall negotiate in good faith to determine an alternative distribution
of benefits to Optionee upon exercise of the Option.

 

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

 

4

 

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. 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 upon the advice of outside
counsel, 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.

 

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

 

5

 

(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.

 

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

 

6

 

Commission Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the
future.

 

7

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