Document:

Exhibit
10.18

 

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.

 

SECOND
AMENDED AND RESTATED

REALD SYSTEM LICENSE AGREEMENT (2010)

 

This Second Amended and Restated RealD System
License Agreement (2010) (the “Agreement”)
is entered into as of May 9, 2010 and is effective as of April 7,
2010 (the “Effective Date”), by and between RealD Inc., a company incorporated
under the laws of the State of Delaware, and having a principal place of
business at 100 North Crescent Drive, Suite 120, Beverly Hills, California
90210 (“RealD”), and American
Multi-Cinema, Inc., a company incorporated under the laws of the State of
Missouri and having a principal place of business at 920 Main Street, Kansas
City, Missouri 64105 (“Licensee”).

 

RECITALS

 

WHEREAS, RealD 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 RealD projector add-ons, the related equipment, software and
other proprietary rights described on Schedule A hereto, and certain
upgrades described herein (collectively, and inclusive where applicable
hereunder of the RealD XL Cinema System and the lens assembly for use in the
single projection system described further in and subject to Schedule A
hereto, the “RealD System”);

 

WHEREAS, Licensee,
through itself and its subsidiaries, is the operator of theatre venues
primarily in the United States, Canada and the European Union (collectively,
the “Territory”), and wishes to
obtain the right to use the RealD System in certain of such theatre venues; and

 

WHEREAS, Licensee and
RealD previously entered into that certain RealD 1.0 System License Agreement
dated as of September 2005 (the “Prior
License Agreement”), Restated RealD System License Agreement (2009)
dated February 20, 2009 (the “First
Restated Agreement”), Amendment to Restated RealD System License
Agreement (2009) and Prior License Agreement dated July 20, 2009 (the “Amendment”), Second Amendment to Restated
RealD System License Agreement (2009) dated February 18, 2010 (the “Second Amendment”) and the Proposal dated April 7,
2010 (the “Proposal”), and now,
subject to certain conditions precedent contained below, wish to terminate the
Prior License Agreement, the First Restated Agreement, the Amendment, the
Second Amendment and the Proposal and enter into the Agreement as provided
herein.

 

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

 

1

 

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 RealD Equipment.  Subject to the terms and conditions provided
herein (including the consideration payable pursuant to Section 5
hereof), RealD leases to Licensee the RealD 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 “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 RealD  System. [***] in each
case conditioned by proprietary RealD software (or other software approved by
RealD) (“Ghostbusting”).  RealD and Licensee agree to use commercially
reasonable efforts to ensure that all such 3D Shows have been conditioned by
such Ghostbusting software or another method of RealD conditioning in the
projector, server or separate processor approved in each case by RealD.  For purposes of (a) above, “feature
presentation” means content that is exhibited more than three (3) showings per
day, and for a period in excess of one (1) week. 

 

1.5           [***]

 

2.             INSTALLATION, MAINTENANCE,
SUPPORT AND UPGRADES

 

2.1           Installation.  After the Screen and the Port Glass have been
installed pursuant to Section 1.3 above, RealD shall install, or
designate a qualified contractor to install (in each case at the sole cost and
expense of RealD), the RealD Systems and Equipment at each Auditorium at such
times as mutually agreed by the parties. 
Any third party contractor selected by RealD 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, RealD, or its
designated contractor, 

 

2

 

shall, in coordination with,
and under the supervision of, Licensee’s technical services personnel, test the
RealD System to ensure the operability of the RealD System in accordance with
the applicable specifications of the RealD System.

 

2.2           Maintenance, Support and
Upgrades.  RealD
shall, during mutually agreed hours (and at the sole cost and expense of
RealD), maintain and support the RealD System at each Auditorium to ensure that
the RealD System is fully functional and operational.  RealD shall promptly respond to Licensee’s
request for maintenance and support in a timely manner.  RealD shall promptly perform all software
Upgrades as such Upgrades are released and shall promptly notify Licensee of
hardware Upgrades, if any, and promptly perform 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 RealD 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 set from time to time by the industry group Digital Cinema
Initiatives, LLC.

 

2.3           Obligations of Licensee.  Licensee shall at all times operate the RealD
System in substantial compliance with the instructions and training (if
necessary) provided by RealD, and shall use each item of Equipment (other than
Screens) solely in connection with the RealD System and solely for its intended
purpose.  Licensee shall not make any
alterations, additions or improvements to the RealD System without the prior
written consent of RealD (which may be withheld in its sole and absolute
discretion).  Licensee shall not remove
any labels or notices of ownership placed on the RealD System by RealD without
the prior written consent of RealD, which may be withheld in its sole and
absolute discretion.  Licensee shall not
move or otherwise relocate the RealD System without the prior written consent
of RealD, which shall not be unreasonably withheld or delayed.  Programming decisions shall remain exclusively
with Licensee, and nothing in this Agreement shall create an obligation on
Licensee to exhibit all or any theatrical releases available in 3D.

 

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

 

3.             RELATED PRODUCTS AND
SERVICES

 

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

 

3

 

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

 

4.             MARKETING

 

4.1           Press Launch.  RealD may engage in a press launch approved
by Licensee, such approval not to be unreasonably withheld, for the opening of
the RealD System at each Location, and Licensee agrees to cooperate with RealD
(at the sole cost and expense of RealD), 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 RealD, in a form and
substance that has been mutually agreed to by RealD and Licensee, in connection
with each significant event related to the transactions contemplated by this
Agreement.

 

4.2           Ongoing Promotion.  Each party may promote its relationship with
the other party in advertising, promotional and marketing materials approved by
the other party, [***].  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 intellectual property of the other party, except as provided in
this Agreement or with the prior written consent of the other party.

 

4.3           Marketing Cooperation.  Licensee and RealD shall endeavor to mutually
agree on the marketing and promotional efforts for the 3D Shows and the RealD
System.  RealD acknowledges that Licensee
has no obligation to engage in any specific promotional activities, and that
both in-theatre or on-screen advertising will be subject to Licensee’s
pre-existing agreement with National CineMedia, L.L.C.

 

5.             FINANCIAL TERMS

 

5.1           Royalties and License Fees.

 

(a)           [***] For each paid admission to a 3D
Show at each Auditorium [***] that is then using the RealD System, excluding
any paid admission for which Licensee refunds the price therefore (each, a “[***]”),
Licensee will pay to RealD a royalty [***]

 

(b)           With respect to each Location [***]
which has [***] Auditoriums that is then using a RealD System (each such
Location, an [***]

 

4

 

[***]

 

(c)           [***]

 

(1)           [***]

 

(2)           [***]

 

(d)           [***] Each of Licensee and RealD acknowledges and agrees that, in no event, and
at no time, shall [***]

 

5

 

5.2           Reports and Payments.  Within [***] (“Play Month”), Licensee shall provide RealD with a report showing
the number of [***].  Within [***] days thereafter, RealD shall invoice Licensee for such Play Month [***] in
accordance with such report.  Payment in
full of any amounts due 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
reports which may give rise to a payment obligation under this Agreement during
the [***] immediately preceding calendar
years.  RealD shall have the right to
inspect, at RealD’s expense (except as provided below) and 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, RealD shall be
permitted to exercise the foregoing inspection right not more than one time per
calendar year.  Any information obtained
by RealD as a result of such inspection shall be held in strict confidence by
RealD, except in litigation between the parties. In the event such audit
reveals an underpayment to RealD, then Licensee shall promptly pay RealD the
amount of such underpayment. [***]

 

5.4           Duties and Taxes. 
[***]

 

5.5           Transmission of Payments.  All payments to be made to RealD pursuant to
this Agreement shall be transmitted by electronic funds transfer (“EFT”) to an account designated by
RealD.  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 RealD under this Agreement.

 

5.6           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 [***] of the payment then due may be added to such payment by RealD and shall be
paid concurrently with the overdue payment.

 

5.7           Stock Option Grant.  Upon execution of this Agreement, RealD shall
provide documentation (in the form of Exhibit A) to Licensee that
evidences the amended grant, pursuant to this Section 5.7, to Licensee
of an option to purchase 815,187 shares of Common Stock of RealD previously
granted to Licensee pursuant to that certain Nonqualified Stock Option Grant
dated March 20, 2009 and 

 

6

 

related
stock option agreement (the “Option”).  The Option shall have an exercise price of
U.S. $0.01 per share, and shall have a term of ten (10) years.  [***]

 

5.8           [***]

 

6.             OWNERSHIP AND PROPRIETARY RIGHTS

 

6.1           Ownership of RealD System.  Notwithstanding anything to the contrary
expressed or implied in this Agreement or otherwise, and regardless of whether
the RealD System may become affixed or attached at the Auditorium or other
property, RealD retains all right, title and interest in and to the RealD
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 RealD System or the Equipment, or any
intellectual property or other rights associated therewith or any developments
or improvements arising therefrom, other than those that are expressly licensed
pursuant to the terms of this Agreement. 
While the RealD System and the Equipment is within its possession, Licensee
shall keep the RealD System, including the Equipment, free and clear of all
liens, encumbrances and charges of any nature caused by Licensee.  Upon request of RealD and at RealD’s cost,
Licensee shall mark the RealD System and the Equipment to indicate the nature
of Licensee’s interest therein.  The
RealD System and the Equipment is, and at all times shall remain, the personal
property of RealD.  Licensee shall not
permanently affix or attach the RealD System or the Equipment to any real
property or permanent improvement thereon. 
For the avoidance of doubt, the RealD 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, RealD grants, and Licensee obtains, no rights, title or other
interest, express, implied, or by estoppel, in the RealD System, the Equipment
or any proprietary rights of RealD, 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 RealD System, the Equipment or any part or 

 

7

 

component
of either, (ii) decompile, decrypt, reverse engineer, disassemble or
otherwise determine, attempt to determine or reduce the software contained in
the RealD System to human-readable form; (iii) modify or create derivative
works of any portion of the RealD System; (iv) except as provided in Section 10.1,
sublease, sublicense, transfer or assign any part of the RealD System or the
Equipment; or (v) modify or remove any part of the RealD System, or use
any firmware, middleware or software included in the Equipment or the RealD
System or otherwise provided by RealD, other than solely with the RealD 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 RealD System by
operation of law or otherwise, Licensee hereby assigns all such rights to RealD
for a consideration of U.S. $1.00, the receipt of which is hereby acknowledged
by Licensee.

 

6.3           Protection of Proprietary Information.  Licensee agrees and acknowledges that (i) RealD
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 RealD System, (ii) Licensee will take commercially
reasonable steps to preserve the proprietary information contained in the RealD
System and the Equipment, and (iii) Licensee will take commercially
reasonable steps to assist RealD’s efforts to prevent any theft, unauthorized
use, or misappropriation of the RealD System and the Equipment, by, among other
things, at all times maintaining the RealD System and the Equipment at a locked
and secured location, with access restricted to persons employed by Licensee
with a need to access the RealD System and the Equipment or such location.  Licensee agrees that it will promptly notify
RealD of any loss, theft, unauthorized use, or misappropriation of the RealD
System.

 

6.4           Right to Inspect Locations.  Licensee shall permit RealD, or RealD’s
agents, to enter Licensee’s Locations at mutually agreed 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, RealD shall be
permitted to exercise the foregoing inspection right not more than twice per
calendar year.  Any information obtained
by RealD as a result of such inspection shall be held in strict confidence by
RealD, except in litigation between the parties.

 

6.5           Additional Filings; Cooperation.  Licensee shall execute such documents, render
such reasonable assistance, and take such other action as RealD may reasonably
request, at RealD’s expense, to apply for, register, perfect, confirm and
protect RealD’s rights in the Equipment and/or the RealD System.  Licensee acknowledges that the trade names,
trademarks and service marks used by RealD in relation to the Equipment and the
RealD System which are listed on Schedule A are the exclusive property
of RealD (the “RealD Trademarks”).  Licensee agrees that it shall not file any
trademark or service mark applications which are confusingly similar to the
RealD Trademarks, and will not hold itself out as having acquired any
proprietary right or goodwill to any of the RealD Trademarks by virtue of its
use pursuant to this Agreement.

 

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.  RealD further
represents and warrants that (a) RealD owns or has the right to use and
sublicense all necessary intellectual property rights in the RealD System,
including all necessary patents and trademarks; and (b) the RealD System
does not, and will not, infringe on the intellectual property rights of any
third party.  RealD shall defend,
indemnify, and hold harmless Licensee and its affiliates from and against any
and all losses, obligations, risks, costs, 

 

8

 

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 RealD.

 

7.2           DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND WARRANTIES.  EXCEPT AS SPECIFICALLY SET FORTH
HEREIN, REALD MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
WITH RESPECT TO THE REALD SYSTEM, AND DISCLAIMS ALL OTHER REPRESENTATIONS AND
WARRANTIES, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS AND WARRANTIES OF
MERCHANTABILITY.

 

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, REALD’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
AGREEMENT, OR FOR LOSS OF USE OF THE EQUIPMENT OR THE REALD SYSTEM OR FOR ANY
INTERRUPTION IN BUSINESS CAUSED BY LOSS OF USE OF THE EQUIPMENT OR THE REALD
SYSTEM FOR ANY REASON WHATSOEVER; PROVIDED THAT, IN ACCORDANCE WITH THE LAST
SENTENCE OF SECTION 7.1, REALD SHALL INDEMNIFY LICENSEE FOR ALL
COSTS OF ANY NATURE REFERRED TO THEREIN.

 

7.4           [***]

 

9

 

[***]

 

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 terms and provisions of this Agreement
(including without limitation, Section 5.7 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 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, mediation 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; (ii) is or becomes public
knowledge other than by disclosure by a party in violation of this Section 8.1;
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
and continue until the latest termination date set forth on an Equipment
Schedule, unless terminated earlier as provided under this Agreement.  The Initial Term as to a specific Location
shall be [***] years from the Installation Date
for that Location (the “Initial Term”).  Licensee shall have the right to renew as to
a Location for successive [***] year
terms (“Renewal Term(s)”) by
providing written notice to RealD of such renewal for a Location at least [***]) days prior to the expiration of the Initial Term
or, thereafter, [***] days prior to the
expiration of the Initial Renewal Term or then current Renewal Term as to such
Location.  For purposes of Section 5.8
and this Section 9.1, the “Initial
Renewal Term” means the first [***] term immediately after the Initial Term. The Initial Term, the Initial
Renewal Term and any Renewal Term(s) shall be collectively referred to as
the “Term”.

 

9.2           Events of Default.  The occurrence of any of the following events
shall constitute an “Event of Default”
hereunder:

 

(a)           if any party fails to make any payment due hereunder, within ten (10) days
of notice of failure to make such payment;

 

(b)           a material breach by the other party of any representation or warranty or
any of its obligations hereunder, including but not limited to Section 2.2,
other than a breach of a party’s payment obligations which is governed by Section 9.2(a),
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, 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;

 

10

 

(c)                                  the making of an assignment by a party for the benefit of their respective
creditors or the admission by a party in writing of its inability to pay its
debts as they become due, or the filing by a party of a voluntary petition in
bankruptcy, or the adjudication of a party as bankrupt or insolvent, or the
filing by a party of any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or the filing of any answer by a party admitting, or the failure by
a party to deny, the material allegations of a petition filed against it for
any such relief, or the seeking or consenting by a party to, or acquiescence by
a party in, the appointment of any trustee, receiver or liquidator of either
party or of all or any substantial part of the properties or assets of a party;
and

 

(d)                                 within ninety (90) days after the commencement of any proceedings against a
party seeking reorganization, arrangement, composition, readjustment,
liquidation or similar relief under the federal bankruptcy laws or any similar
federal or state statute, law or regulation, such proceedings shall not have
been dismissed, or if within ninety (90) days after the appointment without a
party’s consent or acquiescence of any trustee, custodian, receiver or
liquidator for the RealD Systems, such party or any substantial part of a party’s
assets or properties, such appointment shall not have been vacated.

 

9.3                                 Remedies. 
Upon the occurrence and during the continuation of any Event of Default,
the non-defaulting party may, at its option, declare this Agreement to be in
default, and may exercise any remedy available to it, at law or in equity,
including the remedies below, as such non-defaulting party in its sole and
absolute discretion may elect, it being the intention of both parties that all
of such remedies are cumulative and will not limit any other rights or remedies
a non-defaulting party may have hereunder, at law or in equity:

 

(a)                                  proceed by appropriate court action, either at law or in equity, to recover
any and all damages and expenses, including reasonable attorney’s fees and
costs, which the non-breaching party will have sustained by reason of such
Event of Default or on account of such party’s enforcement of its remedies
hereunder; or

 

(b)                                 terminate this Agreement in its entirety or only with respect to one or
more Locations (in which event, if RealD is the party exercising this remedy,
it may retake possession of the RealD Systems affected thereby).

 

9.4                                 Effect of Termination.  In the event that this Agreement is
terminated pursuant to Section 9.2(a) or (b), 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 required hereunder.  Sections
5.1 and 5.2 (as they pertain to Play Months ending on or before the
termination date) 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 6, 7, 8 and 10 and this Section 9
shall survive termination of this Agreement under Section 9.2 (a) or
(b).

 

9.5                                 Surrender. 
At the expiration or earlier termination of this Agreement, Licensee
shall relinquish possession and control of the RealD System, including the
Equipment (but excluding the Screen). 
Upon the expiration of the Initial Term or a Renewal Term, as
applicable, or the earlier termination of this Agreement, RealD shall have the
right, at its sole cost and expense, to retake possession of any or all of the
RealD Systems (but excluding the Screen), and for such purpose RealD shall have
the right to enter upon any premises where any or all of the RealD Systems is
located at 

 

11

 

mutually
agreed upon times by RealD and Licensee and remove same.  Such removal must be performed under
supervision of Licensee.  RealD shall
repair all damage to the Auditoriums or the Location, digital projectors and/or
pedestals caused by RealD’s removal of such RealD System.  If RealD fails to remove the RealD System
within thirty (30) days of the expiration or earlier termination of the
applicable Equipment Schedule, Licensee may remove and store such RealD System
and any expenses incurred by Licensee as a result of such removal shall be paid
by RealD to Licensee within thirty (30) days of RealD’s receipt of an
invoice.  If RealD fails to reclaim such
RealD System within ninety (90) days of expiration or earlier termination of
the applicable Equipment Schedule, Licensee may sell or destroy such RealD
System without any further liability or obligation to RealD.  This provision shall survive the expiration
or earlier termination of this Agreement or the applicable Equipment Schedule.

 

9.6                                 Termination of Prior License Agreement, First Restated Agreement, the
Amendment, the Second Amendment and the Proposal, and Treatment of RealD
Systems Currently Installed in the Pre-Existing Auditoriums.  Each of Licensee and RealD
acknowledges and agrees that, on the Effective Date, the Prior License
Agreement, the First Restated Agreement, the Amendment, the Second Amendment
and the Proposal (each of which are defined in the third recital of this
Agreement) shall be terminated and of no further force or effect; provided,
that, notwithstanding the foregoing: (a) [***]

 

10.                               GENERAL

 

10.1                           Assignment. 
Neither party may assign or transfer its rights and obligations under
this Agreement without the other party’s prior written consent, which consent
shall not be unreasonably withheld; provided, however, that (a) either party
may assign all of its right, title and interest under this Agreement to any (i) person
or entity with which such party is merged or consolidated, or (ii) person
or entity that acquires all or substantially all of the assigning party’s
assets or equity securities of whatever type, (b) Licensee may assign its
right, title and interest under this Agreement to any affiliate of Licensee
that becomes the primary operating entity of substantially all of Licensee’s
theatres, and (c) RealD may assign its right, title and interest under
this Agreement to any entity that provides debt or equity financing to RealD,
as full or partial security to such entity in connection with such
financing.  Each party shall give the
other party written notice of any assignment permitted under this Section 10.1.  This Agreement shall bind, inure to the
benefit of and be enforceable by the successors and permitted assigns
hereto.  Notwithstanding anything to the
contrary contained herein, RealD may assign and transfer this Agreement and its
right, title, and interest hereunder without the written consent of, or notice
to, Licensee in connection with any transaction effected solely to change RealD’s
state of incorporation.

 

12

 

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 RealD System at the
Locations in accordance with the terms of this Agreement.

 

10.5                           Infringement Notification.  Licensee shall promptly give notice to RealD
of any allegation, claim or challenge that Licensee’s use of the RealD System
infringes on the intellectual property rights of a third party.  In the event of a claim of infringement
against Licensee relating to the RealD System, RealD shall, at its option (i) secure
for Licensee, at the sole cost and expense of RealD, the rights necessary to
continue to use and operate the RealD System under this Agreement, (ii) assume
control of the defense or settlement of such claim, at the sole cost and
expense of RealD, 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 may be inadequate, and that the non-breaching party
will therefore be entitled to seek timely injunctive relief from a court of
competent jurisdiction 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.  The parties expressly agree that the United
Nations Convention on Contracts for the International Sale of Goods or the
Uniform Computer Information Transactions Act shall not apply to this
Agreement.

 

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 below by personal delivery, by
registered or certified mail (postage pre-paid), by an internationally
recognized overnight courier, 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.

 

	
  RealD:

  	
  RealD Inc.

  100 N. Crescent Dr., Suite 120

  Beverly Hills, CA 90210

  Attn: Craig S. Gatarz, Executive Vice President and
  General Counsel

  

 

13

 

	
  With copies to:

  	
  Sheppard Mullin Richter & Hampton LLP

  1111 Chapala Street, Third Floor

  Santa Barbara, CA 93101

  Attn: C. Thomas Hopkins, Esq.

  
	
   

  	
   

  
	
  Licensee:

  	
  American Multi-Cinema, Inc.

  920 Main Street

  Kansas City, Missouri 64105

  Attn:
  Frank Rash, Senior Vice President, Strategic Development & Marketing

  
	
   

  	
   

  
	
  With copies to:

  	
  American Multi-Cinema, Inc.

  920 Main Street

  Kansas City, Missouri 64105

  Attn: General Counsel

  

 

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
and Equipment Schedules hereto, all of which are hereby incorporated by
reference, constitutes the entire agreement of the parties regarding its
subject matter. The release on page 4 of the Proposal shall remain in full
force and effect notwithstanding this Agreement, which otherwise supersedes,
except as set forth in Section 9.6, all prior or contemporaneous
understandings, agreements, or other communications between the parties, oral
or written, regarding such subject matter, including without limitation the
Prior License Agreement, First Restated Agreement, the Amendment, the Second
Amendment and the Proposal. 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.  Any waiver of any provision of
this Agreement must be in writing and executed by the party waiving such
provision.

 

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.

 

10.13                     Publicity. 
Neither party will, without securing the prior written consent of the
other, publicly announce the existence of this Agreement hereunder (except as
may be required by law or any national securities exchange) or advertise or
release any publicity in regard hereto.

 

10.14                     Auditorium Closures or Changes.  Notwithstanding Section 10.1
above, if at any time during the Term of this Agreement, Licensee discontinues
operations, through a sale, closure or 

 

14

 

otherwise,
at any Auditorium with respect to which it has executed an Equipment Schedule
or elects for whatever reason to move the RealD System from such Auditorium to
another Auditorium in the Territory, Licensee shall have the option to
terminate the Equipment Schedule with respect to such RealD System and return
the RealD System to RealD or alternatively utilize the RealD System located at
such Auditorium in any other Auditorium operated by Licensee or its Affiliates
which does not have a RealD System in the Territory.  If Licensee elects to move the RealD System
in accordance with the above, Licensee and RealD shall execute a new Equipment
Schedule for the remaining balance of the Term of such terminated Equipment
Schedule for the Location in which the RealD System is installed in accordance
with the terms of this Agreement. 
Licensee shall pay the reasonable costs for the installation of the
RealD System at the new Auditorium pursuant to this Section 10.14.

 

10.15                     Location Sales. 
Notwithstanding Section 10.1 above, if during the Term of
this Agreement, Licensee or its Affiliates sell, transfer, convey or assign to
a third party their respective interest in any particular Location with respect
to which Licensee has executed an Equipment Schedule, Licensee or its
Affiliates may elect to terminate the Equipment Schedule with respect to such
RealD System and return the RealD System to RealD or transfer the RealD System
in such transaction; provided, in the case of a transfer, that such acquirer or
transferee (i) is approved by RealD (such approval not to be unreasonably
withheld), and (ii) executes and delivers to RealD an agreement approved
by RealD containing terms and conditions comparable to the then prevailing
RealD agreement for similar companies and an Equipment Schedule for the
remaining Term applicable to such RealD System. 
Upon such transfer, Licensee shall have no further obligation under this
Agreement or the Equipment Schedule for such Location.

 

10.16                     Choice of Language.  The parties have requested that this
Agreement and the documents relating hereto be drawn up in the English
language.  The English language text and
American usage thereof shall control the interpretation and construction of
this Agreement and all other writings between the parties.  Each party agrees and acknowledges that it
fully understands all of the terms and consequences of this Agreement and that
it has had the opportunity to consult with an attorney of its own choosing
regarding this Agreement.

 

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

 

	
  RealD Inc.

  	
   

  	
  American
  Multi-Cinema, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Michael V. Lewis

  	
   

  	
  By:

  	
  /s/
  Frank Rash

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Michael V.
  Lewis

  	
   

  	
  Name:

  	
  Frank
  Rash

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  	
  Title:

  	
  SVP,
  Strategic Partnerships

  

 

15

 

SCHEDULE A

 

EQUIPMENT

 

A.                                   RealD Cinema System Control Module

 

B.                                     In each Auditorium, either (i) RealD Cinema System Z-Screen and RealD
Cinema System Z-Screen Mounting Hardware, or (ii) RealD Cinema
System XL and RealD Cinema System XL Mounting Hardware, or (iii) a
lens assembly including three lenses for use in a single projection system
using a projector manufactured exclusively for RealD by Sony Electronics for
the projection of 3D images from such projector, which lenses are further
identified as follows:  models LKRL-A002,
LKRL-A003, and any subsequently released new product of Sony Electronics in the
same product line or for essentially the same purpose; in each case as
determined and designated by RealD in its sole judgment.

 

GLASSES

 

The RealD System requires
circular polarized glasses, manufactured exclusively for, and distributed by,
RealD, 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 RealD Cinema System Control Module
contains embedded software, which is an integral part of the RealD System and
is proprietary to RealD.

 

The RealD 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

 

UPGRADES

 

For purposes of
clarification, this Schedule shall specifically include each upgrade to the
software and hardware described on this 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 listed
above.

 

REPLACEMENTS

 

All replacement parts,
replacements, additions, modifications and repairs incorporated into the above
equipment and software and/or affixed thereto.

 

 

SCHEDULE 1.1 to the Second Amended
and Restated RealD System License Agreement (2010),

between RealD Inc. and American Multi-Cinema, Inc. dated May 9, 2010

 

Equipment Schedule No.     
dated as of           

 

1.

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

SCHEDULE 5.1(b) to
the Second Amended and Restated RealD System License Agreement (2009),

between RealD Inc. and
American Multi-Cinema, Inc.  dated
May 9, 2010

 

[***]

 

For [***]

 

For each
paid admission to a 3D Show at each Auditorium [***] that is
then using the RealD System, excluding any paid admission for which Licensee
refunds the price therefore, Licensee will pay to RealD a royalty in an amount
equal to U.S. [***].

 

For [***]

 

	
  [***]

  	
   

  	
  (A)

  [***]Auditorium

  at a Location

  	
   

  	
  (B)

  [***]

  Auditoriums

  at a Location

  	
   

  	
  (C)

  [***]Auditorium

  at a Location

  (1)

  	
   

  	
  (D)

  [***]

  Auditoriums

  at a Location

  (2)

  	
   

  	
  (E)

  [***] (at

  Effective

  Date)

  	
   

  	
  (F)

  [***]

  Auditorium

  at a Location

  in [***]

  (3)

  	
   

  	
  (G)

  [***]

  Auditoriums

  at a Location

  in [***] (4)

  	
   

  	
  (H)

  [***]

  Auditorium

  at a Location

  in [***] (5)

  	
   

  	
  (I)

  [***]

  Auditoriums

  at a Location

  in [***]

  (6)

  	
   

  	
  (J)

  [***] paid

  to RealD

  	
   

  
	
  None.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(1) [***]

(2) [***]

(3) In no event shall the [***]

(4) In no event shall the [***]

(5) In no event shall the [***]

(6) In no event shall the [***]

 

 

SCHEDULE 5.1(c) to the Second Amended and Restated
RealD System License Agreement (2010),

between RealD Inc. and American Multi-Cinema, Inc. dated May 9, 2010

 

[***]

(Updated as of May 9, 2010)

 

	
  Location

  	
   

  	
  Number of Screens

  
	
  None

  	
   

  	
  None

  

 

 

SCHEDULE 9.6 to the Second Amended and Restated RealD System
License Agreement (2010),

between RealD Inc. and American Multi-Cinema, Inc. dated May 9, 2010

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

[***]

 

 

EXHIBIT A to the Second Amended and Restated RealD
System License Agreement (2010),

between RealD Inc. and American Multi-Cinema, Inc.  dated May 9, 2010

 

Form of Amended and Restated Nonqualified Stock Option
Grant

 

[See Exhibit
Number 10.24]Exhibit 10.19

 

OPERATING
AGREEMENT

OF

DIGITAL
LINK II, LLC

 

THIS OPERATING AGREEMENT
(this “Agreement”),  is
made and entered into as of March 2, 2007, by Digital Link II, LLC, a
Delaware limited liability company (the “Company”), REAL D, a California
corporation (“REAL D”), and Ballantyne of Omaha, Inc.,
a Delaware corporation (“Ballantyne”).  REAL D and Ballantyne are referred to herein
collectively as the “Members,”
and each individually as a “Member.”

 

A.            The Members formed the
Company for purposes of commercializing certain 3D technology developed and
owned by REAL D.

 

B.             Ballantyne is a manufacturer
and reseller of projectors and other equipment necessary to the deployment of
REAL D’s technology in theatres.

 

C.             REAL D will license certain
of its technology to the Company pursuant to a non-exclusive license agreement,
pursuant to which the Company will have the right to use and sublicense such
technology in connection with the Company’s sale of digital cinema projection
systems (“Cinema Systems”)  to
certain operators of theatre venues (“License”).

 

D.            The Company will purchase
projectors and accessories from Ballantyne at the prices specified in Exhibit A
hereto and servers from [                          ]
at the prices specified in Exhibit A hereto.

 

E.             The Company shall (i) initially
transfer a limited right to use the Cinema Systems to certain theatre venues,
and (ii) install the Cinema Systems against virtual print fees payable by
the studios on such terms and conditions as will be provided in separate
Digital Cinema System Transfer Agreements in substantially the form attached
hereto as Exhibit B (“Transfer Agreement”).

 

F.             Subject to the successful
negotiation of service contracts with the operators of the theatre venues, on
terms acceptable to Ballantyne, Ballantyne will be responsible for the service
and maintenance of such Cinema Systems.

 

G.             REAL D will initially be
responsible for the management and operations of the Company, for which it will
be paid a management fee of ten percent (10%) of the virtual print fees
collected by the Company, not to exceed $2,500 per fiscal year, plus expenses
incurred in connection with such management services, as specified in this
Agreement.

 

In consideration of the
premises and the mutual covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound the parties hereby agree as follows:

 

 

ARTICLE 1:
DEFINITIONS

 

The following terms have the
following respective meanings (unless the context otherwise requires). The
singular shall include the plural, and the masculine gender shall include the
feminine and neuter, and conversely, as the context requires.

 

1.1          “Act”  means the
Delaware Limited Liability Company Act, codified in Title 6 of the Delaware
Code, Section 18-101 et seq., as amended from time to time.

 

1.2          “Affiliate”
as applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person.

 

1.3          “Agreement”
means this Limited Liability Company Operating Agreement, as amended
from time to time.

 

1.4          “Assignee”
means a Person who is a permitted transferee of a Membership Interest in
accordance with Article 10.2 below.

 

1.5          “Available Cash”  means cash and cash equivalents of the Company on
hand from time to time after (i) provision for payment of all outstanding
and unpaid current obligations of the Company as of such time; and (ii) provision
for reserves for working capital expenditures, contingent obligations and other
future requirements in excess of reasonably anticipated revenues, such reserves
equal to such amount as shall be approved by a majority of the Board.

 

1.6          “Board”  means the Board
of Managers of the Company.

 

1.7          “Business Day”  means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of California are authorized or
required by law or executive order to close.

 

1.8          “Capital Account”  means the separate Capital Account maintained by the
Company for each Member in accordance with Regulations Section 1.704-l(b)(2)(iv).

 

1.9          “Chief Executive Officer”  means the Chief Executive
Officer of the Company or such other person as shall be designated by the Board
to serve the function as the Chief Executive Officer for purposes of this
Agreement.

 

1.10        “Code”  means the
Internal Revenue Code of 1986, as amended from time to time. All references
herein to Sections of the Code shall include any corresponding provision or
provisions of succeeding law.

 

1.11        “Company”  has the meaning
set forth in the preamble hereto.

 

1.12        “Confidential Information”  has the meaning assigned to
that term in Section 15.1 hereof.

 

2

 

1.13        “Distribution(s)”  means any cash or property distributed to a Member
(or Members) with respect to such Member’s Membership Interest but does not
include (a) any management or other fees or expense reimbursement paid to
a Member, or (b) the repayment of any loans or interest thereon made by
any Member, or Person or Affiliate to the Company.

 

1.14        “Fiscal Year”  except as provided under the Code, means a twelve
(12) month period ending on December 31st.

 

1.15        “Gross Asset Value”  of any assets contributed to
the Company shall be the gross fair market value of such asset as determined in
good faith by the Board.

 

1.16        “Membership Interest”  means the entire legal and
equitable ownership interest in the Company of a Member at any particular time.

 

1.17        “Manager”  means a member
of the Board.

 

1.18        “Member Loan Minimum Gain”  has the meaning assigned to
the term “partner nonrecourse debt minimum gain” in Regulations Section 1.704-2(i)(2).

 

1.19        “Member Loan Nonrecourse Debt”  has the meaning assigned to
the term “Partner Nonrecourse Debt” in Regulations Section 1.704-2(b)(4).

 

1.20        “Member Loan Nonrecourse Deduction”  has the meaning assigned to
the term “Partner Nonrecourse Deduction” in Regulations Section 1.704-2(i)(2).

 

1.21        “Members”  means
Ballantyne and/or REAL D, and their Assignees.

 

1.22        “Minimum Gain”  has the meaning set forth in Regulations Sections
1.704-2(b)(2) and 1.704-2(d).

 

1.23        “Nonrecourse Deduction”  has the meaning set forth in
Regulations Section 1.704-2(b)(l).

 

1.24        “Nonrecourse Liability”  has the meaning set forth in
Regulations Section 1.704-2(b)(3).

 

1.25        “Offeree”  has the meaning
assigned to that term in Section 10.3 hereof.

 

1.26        “Person”  means any
individual, partnership, joint venture, corporation, limited liability company,
trust, or other association or entity.

 

1.27        “Regulations”  means the regulations promulgated by the United
States Department of the Treasury pursuant to and in respect of provisions of
the Code. All references herein to Sections of the Regulations shall include
any corresponding provision or provisions of succeeding, similar, substitute,
proposed or final Regulations.

 

1.28        “Securities Act” means the
Securities Act of 1933, as amended from time to time.

 

3

 

ARTICLE 2:
ORGANIZATION AND FORMATION

 

2.1           Formation.   Ballantyne and REAL D hereby form the
Company as a limited liability company under the Act.

 

2.2           Certificate of Formation. In
furtherance of the foregoing, the Members shall promptly cause a certificate of
formation substantially in the form of Exhibit C hereto (as amended
from time to time, the “Certificate”) to be filed with the
Secretary of State of Delaware as required by the Act.

 

2.3           Name of the Company. The name of
the Company shall be Digital Link II, LLC, and all business and affairs of the
Company shall be conducted under such name.

 

2.4           Principal Office of the
Company. The Company’s principal office shall be at such place as the Board
shall from time to time designate.

 

2.5           Business of the Company. The Company
is being formed for the purpose of (i) marketing and selling the Systems
and related products to operators of theatre venues, and the provision of
related products and services (activities described in this clause (i) being
referred to as the “Business”),  (ii) performing any and all other activities
which may be necessary, incidental or convenient to carry on the Business, and (iii) engaging
in any other business which it is lawful for a limited liability company to
engage pursuant to the Act. This Agreement shall not be deemed to create a
partnership or joint venture between the Members, for any purposes other than
federal, state and local tax purposes.

 

2.6           Term. The term of
the Company shall commence effective as of the close of business on the date of
filing of the Certificate with the Secretary of State of Delaware and shall
have perpetual existence, unless terminated as provided in this Agreement or by
the Act. No Member shall have the right, and each Member hereby agrees not to
withdraw from the Company, nor to dissolve, terminate or liquidate, or to petition
a court for the dissolution, termination or liquidation of the Company, except
as expressly permitted in this Agreement, and no Member at any time shall have
the right, without the consent of the Company, to petition or to take any
action to subject the Company assets, or any part thereof, to the authority of
any court of bankruptcy, insolvency, receivership or similar proceeding.

 

2.7           Registered Agent and Office. The
registered agent for the Company in the State of Delaware shall be Corporation
Trust Center, or such other Person as the Board may designate. The registered
office of the Company shall be 1209 Orange Street, Wilmington, County of New
Castle, or such other place as the Board shall designate.

 

ARTICLE 3:
MEMBERS

 

3.1           Members. Ballantyne and REAL D
shall be the initial Members. As of the date of this Agreement, there are no
other Members of the Company and no other Person has any right to take part in
the ownership of the Company. Additional members of the Company may be added (i) pursuant
to Section 3.6 below in connection with the transfer of any Membership
Interest, or (ii) as determined by the Board and approved by the Members
pursuant to Section 3.6 below.

 

4

 

3.2          Membership Interests. The Membership
Interest of each Member in and to the Company and its assets, including each
Member’s interest in the income, gains, deductions, credits, allowances,
expenses, profits, losses and distributions realized or incurred from the
operation of the Company, and the initial Capital Account of each initial
Member, shall be based on the value of the business or other assets contributed
by or on behalf of each Member as follows:

 

	
   

  	
   

  	
  Membership Interest

  	
   

  	
  Initial Capital Account

  	
   

  
	
  Ballantyne

  	
   

  	
  44.4

  	
  %

  	
  $

  	
  39,000

  	
   

  
	
  REAL D

  	
   

  	
  55.6

  	
  %

  	
  $

  	
  49,000

  	
   

  
	
  TOTAL

  	
   

  	
  100

  	
  %

  	
  $

  	
  88,000

  	
   

  

 

Upon the admission of a new Member, the Membership Interests of all
Members shall be proportionately reduced to reflect the Membership Interest of
such new Member (whose Membership Interest shall be based on the relative value
which such new Member’s capital contribution bears to the value of the existing
Members’ Membership Interests).

 

3.3           Voting Rights.

 

(a)              In addition to voting rights
required by law or by other provisions of this Agreement, the Members shall be
entitled to vote on all matters submitted to a vote of the Members based on
their relative Membership Interests.

 

(b)              The affirmative vote of
sixty-six and two-thirds percent (66 2/3%) of the Membership Interests shall be
necessary to authorize: (i) amend or waive any provision of this Agreement
in a manner that would materially and adversely affect a Member; (ii) enter
into a Company sale transaction by way of merger, sale of the Membership
Interests, or sale of all or substantially all of the assets; or (iii) authorize
the issuance of securities having a preference over or on parity with the
Membership Interests.

 

3.4           Liability of Members. No Member shall be liable
for the debts, obligations or liabilities of the Company, including under a
judgment decree or order of a court. No Member shall be liable to any other
Member or to the Company by reason of the actions or inactions of such Member
in connection with the Company unless such actions or omissions are not done or
made in good faith or constitute (a) actual fraud, or (b) willful
misconduct with the intent to harm the Company or any Member.

 

3.5           Inspection Rights. On written request stating
the purpose, a Member may examine and copy in person, at such times as
reasonably determined by the Board, and at that Member’s sole expense, records
required to be maintained under the Act and such other information regarding
the business, affairs and financial condition of the Company as is reasonable
for the Member to examine and copy, to the extent that such information is
being sought for a purpose reasonably related to the Member’s ownership
interest in the Company.

 

5

 

3.6           Admission of New Members. New Members
may be admitted to the Company, subject to executing an appropriate supplement
to this Agreement and such other documents as the Board of Managers deems
necessary or advisable.

 

ARTICLE 4: MANAGEMENT OF THE
COMPANY

 

4.1           Authority of the Board. The Company
shall be managed by the Board which shall have the full and exclusive power and
authority to represent the Company, to act in its name, and to manage the
Company business.

 

4.2           Number and Appointment of Managers. The Board
shall initially be comprised of two (2) managers (each a “Manager”),  of which one (1) Manager shall
be elected by Ballantyne, so long as Ballantyne remains a Member holding at
least a 40% Membership Interest (“Ballantyne Manager”), and one
Manager shall be elected by REAL D, so long as REAL D remains a Member holding
at least a 50% Membership Interest (“REAL D Managers”).  The Ballantyne
Member may only be removed or replaced, and any vacancy may only be filled, by
Ballantyne, and a Manager elected by REAL D may only be removed or replaced,
and any vacancy may only be filled, by REAL D, so long as Ballantyne or REAL D,
respectively, are entitled to elect Managers pursuant to the preceding
sentences. Managers shall continue to serve until their death, resignation or
removal or replacement in accordance with the terms of this Agreement. The
initial Managers are Michael V. Lewis and John P. Wilmers .

 

4.3           Officers. Officers and employees of
the Company shall conduct the operations of the Company and related business
activities at the direction of and in a manner consistent with the policies
adopted from time to time by the Board. The officers of the Company may
include, without limitation, a Chief Executive Officer and President, Vice
President, Secretary and Treasurer. Each officer shall have such authority and
perform such duties in the management of the property and affairs of the
Company as specified by the Board.

 

4.4           Management Agreement with REAL D. REAL D shall
manage and be responsible for the Company’s day-to-day operations, and,
accordingly, shall be vested with all the powers normally vested in the
executive officers of a company, in exchange for a management fee equal to ten
percent (10%) of the virtual print fees collected by the Company, not to exceed
$2,500 per fiscal year, payable at the end of each month. The Company shall also
reimburse REAL D for its reasonable expenses incurred in connection with such
management services; provided, that any reimbursements in excess of $10,000 in
any fiscal year shall require the consent of Ballantyne.

 

4.5           Place of Meetings. Meetings of the Board may
be held at whatever place in the United States specified in the call of the
meeting, or such other place as agreed to by the Board. In the absence of
specific designation, the meetings shall be held at the principal office of the
Company. Any member of the Board shall be permitted to attend any meeting of
the Board (or any committee thereof) in person or by conference call or other
means of communications which provides such member of the Board an opportunity
to actively participate in such meeting.

 

6

 

4.6           Regular Meetings. The Board
shall meet at least quarterly. No notice need be given to members of the Board
of regular meetings for which the members have previously designated a time and
place for the meeting.

 

4.7           Special Meetings. Special
meetings of the Board may be held at any time upon the request of the Chief
Executive Officer and President of the Company or any Member. Written notice of
any special meeting shall be sent (by facsimile, e-mail, regular mail or any
other reasonable method) to the last known address of each member of the Board
at least five (5) business days before the meeting. Notice of such meeting
may be waived in writing before or after such meeting, and shall be equivalent to
the giving of notice. Attendance at such meeting shall also constitute a waiver
of notice thereof, except where such member of the Board attends for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
need be specified in the notice or waiver of notice of such meeting.

 

4.8           Quorum of and Action by the
Board of Managers. The presence of a majority of the Managers shall
constitute a quorum for the transaction of business at any meeting of the
Board. Any action to be taken or approved by the Board hereunder must be taken
or approved by majority vote of the members of the Board present at a meeting
of the Board at which a quorum is present and any action so taken or approved
shall constitute the act of the Board.

 

4.9           Resignation. Any Manager
may resign at any time. Such resignation shall be made in writing and shall
take effect at the time specified therein, or if no time is specified, at the
time of its receipt by the Company.

 

4.10         Action by Written Consent. Any action
that may be taken at a meeting of the Board may be taken without a meeting if a
consent in writing, setting forth the action to be taken, shall be signed by
all of the Managers entitled to vote at that meeting, and such consent shall
have the same force and effect as a unanimous vote of the Board at a meeting
duly called and held. No notice shall be required in connection with the use of
a written consent.

 

4.11         Other Business. Subject to
confidentiality obligations and any fiduciary duties described below, any
Manager may engage in or possess an interest in  other business
ventures (unconnected with the Company) of every kind and description,
independently or with others. Neither the Company nor the Members shall have
any rights in or to such independent ventures of the members of the Board or
the income or profits therefrom by virtue of this Agreement.

 

4.12         Fiduciary Duties.

 

(a)              The fiduciary duties of any
Manager shall be limited to making decisions in good faith and with due care.

 

(b)              No Member or Manager shall
be obligated to offer or present any particular investment opportunity to the
Company, even where such opportunity is of a character which, if presented to
the Company, could be taken and exploited by the Company but rather such
Members and Managers shall have the right to take for the account of such
Member or to recommend to others any such particular investment opportunity.

 

7

 

4.13         No Liability for Monetary
Damages.   No Manager shall be liable
for any monetary damages to the Company for any breach of such duties except
for receipt of a financial benefit to which such member is not entitled, voting
for or assenting to a distribution to Members in violation of this Agreement or
the Act, or a knowing violation of the law.

 

4.14         Committees. Upon the
affirmative vote of a majority of the members of the Board, committees of the
Company may be formed, consisting of one or more members of the Board, which
committees may exercise any or all of the powers of the Board.

 

ARTICLE 5:
REPRESENTATIONS AND WARRANTIES OF BALLANTYNE

 

Ballantyne hereby represents and warrants the
following to REAL D and the Company:

 

5.1           Organization and Authority;
Ownership. Ballantyne is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and assets and to conduct its business as now being conducted.
Ballantyne has the full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder.

 

5.2           No Violation. The
execution, delivery and performance by Ballantyne of this Agreement and the
transactions contemplated hereby do not and will not conflict with or result in
any violation of or constitute a breach or default under any term of the
certificate of incorporation or by-laws of Ballantyne, of any agreement, permit
or other instrument to which Ballantyne is a party or by which Ballantyne is
bound or to which the assets or business of Ballantyne or any of its
subsidiaries is subject, or any order, judgment or decree of any court or other
governmental or regulatory authority to which any of the same is bound or
subject, or any law, statute or regulation of any governmental or regulatory
body.

 

ARTICLE 6:
REPRESENTATIONS AND WARRANTIES OF RTMS

 

REAL D hereby represents and warrants the following
to Ballantyne:

 

6.1           Organization and Authority. REAL D is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to own, lease and operate their properties and assets and to conduct
its business as now being conducted. REAL D has full corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder.

 

6.2           No Violation. The execution, delivery
and performance by REAL D of this Agreement and the transactions contemplated
hereby do not and will not conflict with or result in any violation of or
constitute a breach or default under any term of the articles of incorporation
or by-laws of REAL D, of any agreement, permit or other instrument to which
REAL D or any of its subsidiaries is a party or by which REAL D or any of its
subsidiaries is bound or to which the assets or businesses are subject, or any
order, judgment or decree of any court or other governmental or regulatory
authority to which any of the same is bound or subject, or any law, statute or
regulation of any governmental or regulatory body.

 

8

 

ARTICLE 7:
CAPITAL CONTRIBUTIONS, ASSUMPTIONS OF LIABILITIES AND FINANCING.

 

7.1           Initial Capital
Contributions; Assumption of Liabilities. As of the date hereof,
Ballantyne and REAL D are contributing to the Company the amounts specified in Section 3.2
above.

 

7.2           Additional Capital
Contributions. Members are liable for only the amount of the
capital contributions made as of the date hereof. Any additional capital
contribution by a Member requires the prior written consent of the other
Member. The Members agree that for each additional Cinema System acquired by
the Company, which purchase shall be unanimously approved by the Managers, REAL
D shall be obligated to pay 55.6% of the cost and Ballantyne 44.4% of the cost.
The Members shall make their respective capital contributions simultaneously.

 

7.3           Interest and Withdrawals. No interest
shall be paid by the Company on capital contributions or on the balance in any
Capital Account. No Member shall have the right to withdraw its capital
contribution or to demand or receive a return of its capital contribution
except as herein expressly set forth or in the Act in the event of dissolution.

 

7.4           Loans from Members. Loans by a
Member to the Company shall not be considered capital contributions. If any
Member shall advance funds to the Company, the making of such advances shall
not result in any increase in the amount of the Capital Account of such Member.
The amounts of any such advances shall be a debt of the Company to such Member
and shall be payable or collectible only out of the Company funds or assets in
accordance with the terms and conditions upon which such advances are made.

 

7.5           Creditors. The foregoing
provisions of this Section 7 are not intended to be for the benefit of any
creditor (other than a Member) of, or any Person to whom any debts, liabilities
or obligations are owed by (or who otherwise has a claim against) the Company
or any of the Members, and no such creditor or other Person shall obtain any
rights under such provisions or shall by reason of such provisions make any
claim in respect of any of the aforesaid debts, liabilities or obligations (or
otherwise) against the Company or any of the Members.

 

ARTICLE 8: ALLOCATION AND TAX
ACCOUNTING MATTERS

 

8.1           Allocation of Net Profits or Losses.

 

(a)              Allocation of Net Profits or
Losses. Subject to any special allocations pursuant to Section 8.2
hereof, each item of income, gain, loss, deduction or credit of the Company
shall be allocated to and among the Members in proportion to their relative
Membership Interests.

 

(b)              Allocations in Case of
Transfers. The items of Company income, gain, loss, deduction
or credit allocable to any Member whose Membership Interest has been
transferred in whole or in part, during any fiscal year, shall be allocated
among the Persons who were the holders of such Membership Interest during such
year in proportion to their respective

 

9

 

holding periods, measured in days, without any requirement for the
attempted separate determination of the results of Company operations during
such separate periods.

 

8.2           Special Allocations.

 

(a)              Minimum Gain Chargeback.
Notwithstanding any other provision of this Agreement, if there is a net
decrease in Company minimum gain (as defined in Section 1.704-2(d)(2) of
the Regulations), items of income and gain shall be allocated to all Members in
accordance with Regulations Section 1.704-2(f), and such allocations are
intended to comply with the minimum gain chargeback requirements of Regulations
Section 1.704-2 and shall be interpreted consistently therewith.

 

(b)              Section 704(c) Allocation. Solely for
Federal, state, and local income tax purposes and not for book or Capital
Account purposes, depreciation, amortization, gain, or loss with respect to
property that is properly reflected on the Company’s books at a value that
differs from its adjusted basis for federal income tax purposes shall be
allocated in accordance with the principles and requirements of 704(c) of
the Code and the Regulations promulgated thereunder, and in accordance with the
requirements of the relevant provisions of the Regulations issued under Code Section 704(b).
The Company will use the traditional method with curative allocations as
described in Regulation Section 1.704-3(c) to take into account
income, gain, loss and deduction with respect to property described herein. For
Capital Account purposes, depreciation, amortization, gain, or loss with
respect to property that is properly reflected on the Company’s books at a
value that differs from its adjusted basis for tax purposes shall be determined
in accordance with the rules of Regulations Section 1.704-l(b)(2)(iv)(g).

 

(c)              Risk of Loss Allocation. Any item of
Member Nonrecourse Deduction (as defined in Regulation Section 1.704-2(i)(2))
with respect to a Member Nonrecourse Debt (as defined in Regulation Section 1.704-2(b)(4))
shall be allocated to the Member or Members who bear the economic risk of loss
for such Member Nonrecourse Debt in accordance with Regulations Section 1.704-2(i)(l).

 

(d)              Allocation of Excess Nonrecourse Liabilities. For the
purpose of determining each Member’s share of Company nonrecourse liabilities
pursuant to Regulations Section 1.752-3(a)(3), and solely for such
purpose, each Member’s interest in Company profits is hereby specified to be
such Member’s Membership Interest.

 

(e)              Unexpected Allocations and Distributions. No allocation
may be made to a Member to the extent such allocation causes or increases a
deficit balance in such Member’s Adjusted Capital Account. Notwithstanding any
other provision of this Agreement except Sections 8.2(i) and 8.2(iii) above,
in the event that a Member unexpectedly receives an adjustment, allocation or
distribution described in Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5) or
(6) which results in such Member having a negative Adjusted Capital
Account balance (as determined above), then such Member shall be allocated
items of income and gain in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, such negative balance in such Member’s
Adjusted Capital Account as quickly as possible. This provision is intended to
satisfy the “qualified income offset” requirements of the Regulations.

 

10

 

8.3           Capital Accounts of Transferred Company Interest. Upon the
transfer of all or any part of a Membership Interest as permitted by this
Agreement, the Capital Account (or portion thereof) of the transferor that is
attributable to the transferred interest (or portion thereof) shall carry over
to the transferee, as prescribed by Regulations Section 1.704-1(b)(2)(iv)(l).

 

8.4           Time of Allocation. The allocations set forth
above shall be made as of the end of each Fiscal Year. All items of income,
gain, loss and deduction shall be allocated, for federal income tax purposes,
among the Members in the same manner as such items are allocated pursuant to
Sections 8.1 and 8.2.

 

8.5           Right to Use Alternative Method of Calculations.
Notwithstanding anything else in this Section 8 (other than Section 8.6),
the Company shall have the right to use a different method of allocating
Company income gain, loss and deduction if it is advised by the Company
accountant or tax counsel that the method of allocation provided herein violates
the Code or Regulations. The Board shall notify each Member of any change in
the method of allocating Company income or loss in accordance with this
paragraph promptly after the occurrence thereof.

 

8.6           Adjustment of Capital Accounts. After all
allocations for a taxable year are made, Capital Accounts shall be adjusted by
the Company to the extent necessary to comply with applicable laws, regulations
and administrative pronouncements. The tax allocation provisions of this
Agreement are intended to produce final Capital Account balances that are at
levels (“Target Final Balances”)  which
permit liquidating distributions that are made in accordance with such final
Capital Account balances to be equal to the distributions that would occur
under Section 9 hereof if such liquidating proceeds were distributed
pursuant to Section 9. To the extent that the tax allocation provisions of
this Agreement would not produce the Target Final Balances, the Members agree
to take such actions as are necessary to amend such tax allocation provisions
to produce such Target Final Balances. Notwithstanding the other provisions of
this Agreement, allocations of income, gain, loss and deduction (including
items of gross income, gain, loss and deduction) shall be made prospectively as
necessary to produce such Target Final Balances (and, to the extent such
prospective allocations would not effect such result, the prior tax returns of
the Company shall be amended to reallocate items of gross income, gain, loss
and deductions to produce such Target Final Balances).

 

8.7           Change in Economic Arrangement; Membership Interest.
Notwithstanding any other provision of this Agreement, if the Membership
Interest of any Member is adjusted at any time pursuant to the terms of this
Agreement, the Member whose Membership Interest is increased pursuant to such
adjustment shall have the right to amend this Agreement to take into account
the revised economic arrangement of the Members, but only to the extent
required to satisfy the tax allocation rules of Section 704 of the
Code and the Regulations thereunder based on the opinion of legal counsel
selected by such Member.

 

8.8           Calculation of Income, Gain, Loss and Deductions. For purposes
of this Agreement, the income, gain, loss and deductions for each Company
fiscal year or other period shall be equal to the Company’s taxable income,
gain, loss and deductions, as the case may be, for such year or period,
determined in accordance with Section 703(a) of the Code, with the
following adjustments:

 

11

 

(a)              Any income of the Company
described in Section 705(a)(1)(B) of the Code that is exempt from
Federal income tax and not otherwise taken into account shall be added to such
taxable income or subtracted from such taxable loss, as the case may be.

 

(b)              Any expenditures of the
Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures
pursuant to Section 1.704-l(b)(2)(iv)(i) of the Regulations)and not
otherwise taken into account shall be subtracted from taxable income or added
to such taxable loss, as the case may be.

 

(c)              In the event the value at
which any Company asset is reflected in Capital Accounts is adjusted pursuant
to Section 1.704-l(b)(2)(iv)(f) of the Regulations, the amount of
such adjustment shall be taken into account as gain or loss from the
disposition of such asset.

 

(d)              Gain or loss resulting from
any disposition of an asset with respect to which gain or loss is recognized
for Federal income tax purposes shall be computed by reference to the value at
which the asset disposed of is properly reflected in the Capital Accounts of
the Members pursuant to Section 1.704-l(b)(2)(iv) of the Regulations.

 

(e)              In lieu of depreciation,
amortization and other cost recovery deductions taken into account in computing
taxable income or loss, there shall be taken into account depreciation, cost
recovery or amortization computed in accordance with Section 1.704-l(b)(2)(iv)(g)(3) of
the Regulations.

 

8.9           Income Tax Returns. The Treasurer of the
Company shall cause income tax returns for the Company to be prepared and filed
with the appropriate authorities; provided, that copies thereof shall be
provided to each Member for review and comment not less than 30 days prior the
first to occur of the due date for such filing and the actual date of filing.
As soon as practicable, after the close of each fiscal year of the Company, the
Treasurer of the Company shall send to each Person who was a Member at any time
during such fiscal year such information as will be sufficient to prepare
documents which may be required to be filed under federal income tax laws. The
Company shall be an accrual method taxpayer.

 

8.10         Tax Matters Member. REAL D shall be the “tax
matters partner” of the Company pursuant to Section 6231(a)(7) of the
Code. The Company shall indemnify and reimburse the tax matters partner for all
reasonable expenses, including legal and accounting fees, claims, liabilities,
losses and damages incurred in connection with its actions as tax matters
partner. Any Member may take such action as permitted under the Code to cause
such Member to become a “notice partner” within the meaning of Section 6223
of the Code. The tax matters partner shall inform each other Member of all
significant matters that may come to the tax matter member’s attention in its
capacity as tax matters member by giving notice thereof and, within a
reasonable time, shall forward to each other Member copies of all significant
written communications it may receive as tax matters partner. The tax matters
partner shall immediately notify, as soon as practicable, each other Member of
any communication received from the Internal Revenue Service. Each Member shall
have the full right to participate in any tax audit or administrative or court
proceeding involving the Company. The tax matter partner shall consult in good
faith with, and shall consider the views of, each other Member, regarding such
matters and shall make a good faith attempt to reach a consensus on all issues.
Except as may be required by law, the

 

12

 

tax matters partner shall not take any action
contemplated by Section 6222 through 6232 of the Code without the consent
of all other Members, but this sentence shall not limit the right of the tax
matters partner to take an action on its own behalf left to the determination
of the individual Member under Sections 6222 through 6232 of the Code.

 

8.11        Accounts and Accounting.

 

(a)              Capital Accounts. There shall
be established a capital account for each Member (a “Capital Account”),  which shall be determined and
maintained throughout the full term of the Company in accordance with the
capital accounting rules of Regulations Section 1.704-1(b) from
time to time in effect. In no event shall any adjustment in the Capital
Contributions or Membership Interest of any Member be made on account of any
adjustment having been made to the Capital Account of such Member.

 

(b)              Account Balances. Except as
otherwise provided in this Agreement, whenever it becomes necessary to
ascertain the balance of any Member’s Capital Account, such determination shall
be made after giving effect to all allocations of Company income, gain, loss
and deductions for the current year, and all distributions for such year, in
each case in respect of transactions effected prior to the date as of which
such determination is being made.

 

(c)              Dispute Resolution. Any dispute
or disagreement among the Members with respect to the determination of Capital
Account balances or otherwise with respect to the manner or method of
accounting by the Company may be submitted by any Member to, and resolved by,
an independent certified public accounting firm which shall be jointly chosen
by the Members who have the dispute and which shall not be the Company’s
independent certified public accountants, whose determinations as so made shall
be conclusive and binding upon the Members.

 

(d)              Basis Information. Each Member
shall provide to the Company all information for the Company to determine the
tax basis for federal income tax purposes of its interest in any property
contributed to the Company.

 

8.12        Section 754 Election. In the event
of a distribution of property made in the manner provided in Section 734
of the Code, or in the event of a transfer of any Membership Interest permitted
by this Agreement made in the manner provided in Section 743 of the Code,
the Board may, but shall not be required to, instruct one of the Company’s
officers to file an election under Section 754 of the Code in accordance
with the procedures set forth in the applicable Treasury Regulations.

 

8.13        Income Tax Liability. Each Member
shall be solely responsible for all taxes as may be applicable to any funds
paid or credited to such Member or income deemed taxable to such Member under
this Agreement and no Member shall be liable to any extent in connection with
such taxes payable by any other Member.

 

ARTICLE 9:
DISTRIBUTIONS

 

9.1           Distribution of Cash Flow. Except as
otherwise provided herein, distributions shall be made to the Members in such
amounts and at such intervals as the Board, in its

 

13

 

discretion, shall determine. Distributions, to the
extent made, shall be made pro rata according to each Member’s Membership
Interest.

 

9.2           Priority and Distribution of
Assets. No Member shall have priority over any other Member either as to the
return of capital or as to distributions.

 

9.3           Minimum Distributions.
Notwithstanding the foregoing, if any Member is allocated income which exceeds,
on a cumulative basis, the amount of losses previously allocated to such Member
for tax purposes (the “Excess Income Allocation”),  then the Company shall distribute
amounts in accordance with Membership Interests so that each Memer receives at
least the “Minimum Distribution”. The Minimum Distribution is the amount, if
any, by which (i) the Excess Income Allocation multiplied by the combined
maximum federal and state income tax rates applicable to such Member (reduced
to reflect the maximum federal tax benefit from the deduction of state income
taxes), exceeds (ii) the amount previously distributed to such Member with
respect to the Fiscal Year for which such taxes are payable.

 

9.4           Distribution in Kind. If any assets
of the Company are to be distributed in kind (other than a distribution which
is a liquidating distribution to a redeemed Member), each Member receives such
interest therein as a tenant-in-common with all other Members so entitled in
the same proportions as they would have shared in a cash distribution equal to
the value of such property at the time of such distribution. Any difference
between the fair market value and the amount at which such assets are carried
on the books of the Company is to be recorded as income or loss, as the case
may be, and allocated to the Members immediately prior to such distribution as
set forth in Section 8.1 or 8.2, as applicable, and allocated to each
Member’s Capital Account as required by Regulations Section 1.704-1(b)(2)(iv)(e).
Such assets are to be distributed on the basis of the fair market value
thereof.

 

ARTICLE 10:
RESTRICTIONS ON TRANSFER OF MEMBERSHIP INTERESTS;

ADMISSION
OF MEMBERS

 

10.1         Prohibition on Transfer. Except as
expressly permitted herein, no Member shall sell, assign, transfer, pledge,
encumber or otherwise dispose of (collectively referred to as “Transfer”)
all or any portion of its Membership Interests and any attempt to do so
shall be null and void.

 

10.2         Permitted Transfers. Members shall have the
unrestricted right to transfer (including, without limitation, by foreclosure)
Membership Interest (a) to any lender as collateral security, or (b) to
any Subsidiary of such Member, or any Person of which the Member is a
Subsidiary or any Subsidiary of such Person, (c) to a transferee in
connection with a sale of a Member by way of merger, stock sale, or asset sale.

 

10.3         Buy/Sell Rights. If any Member desires to
sell its Membership Interest (the “Offeror”)
then the Offeror shall present a written offer (“Sale
Proposal”) to sell its Membership Interest at a specified
price to the other Member (the “Offeree”).
If the Offeree accepts the Sale Proposal, then the parties
shall proceed to close on the sale and purchase of such Membership Interest. If
the Offeree is interested in purchasing the Membership Interest but believes
the valuation is different from the price specified in the Sale Proposal, the
Offeree may

 

14

 

request, at its expense, a Final Market Valuation of the Company, in
which case the Offeror and Offeree shall cooperate and take all efforts
necessary to obtain such Final Market Valuation pursuant to Section 10.3(a),
and following which the Offeror and Offeree shall undertake in good faith the
sale procedures described in Section 10.3(c) below.

 

(a)              Procedures for Market Valuation. In the event
a market valuation of the Company is required to be completed pursuant to this
Agreement, the Offeror and the Offeree shall select two investment bankers or
qualified appraisers of national reputation (“Appraiser”) by
mutual agreement or, if they cannot agree, each of Ballantyne and REAL D shall
select one Appraiser, to provide an appraisal of the fair market value of the
Company net of outstanding liabilities (“Market Valuation”).  Each of the Appraisers appointed by
the Offeror and the Offeree shall be directed to provide, within 30 business
days following the receipt by the Offeree of the Offeror’s Sale Proposal, each
of the Offeror and the Offeree with a written report of the Appraisers’
respective Market Valuations (the date of the later submission being referred
to herein as the “Submission Date”).  If the lower of the two Market
Valuations is greater than or equal to 85% of the higher Market Valuation, the
final aggregate Market Valuation (the “Final Market Valuation”)  shall be the average of the two
Market Valuations submitted by such Appraisers. If the lower of the two Market
Valuations does not equal 85% or more of the higher Market Valuation, within
ten business days following the Submission Date the two Appraisers selected by
the Offeror and Offeree shall jointly select a third Appraiser to perform a
third Market Valuation and submit it to the Offeror and Offeree within 20
business days following its selection to provide such valuation. The Final
Market Valuation shall be the average of the two Market Valuations provided by
the Appraisers which are closest in value to each other, and such average shall
constitute the Final Market Valuation and shall be final and conclusive. Each
of the Company and the Members agree to make reasonably available any such
books or records as any of the parties involved in the valuation process
described in this Section 10.1(a) may reasonably require in order to
reach a Market Valuation.

 

(b)              Sale by a Member. (a) If
the Final Market Valuation is performed, and it is at least 85% of the price
contained in the Sale Proposal, the Offeree can purchase the Offeror’s
Membership Interest at the Sale Proposal price or elect to sell the Company. If
the Final Market Valuation is less than 85% of the Sale Proposal Price, the
Offeror can elect to sell its Membership Interest at the Final Market Valuation
Price, if the Offeree is still willing to purchase the Membership Interest or
the Offeror can revoke its offer. If the Final Valuation Prices is more than
the price contained in the Sale Proposal, the Offeree has the option to
purchase the Offeror’s Membership Interest for the Fair Market Valuation, or
initiate a sale of the Company.

 

(c)              Procedures for Sale of the Company. If the
Offeree elects to initiate a sale of the Company pursuant to Section 10.1(b) above,
the Board shall select and retain an investment banking firm of national
reputation to arrange such sale at a target price (“Target Price”) equal
to (x) the price contained in the Sale Proposal if the Final Market
valuation was at least 85% of such price, or (y) the Final Market
Valuation if the Final Market Valuation was less than 85% of the price
contained in the Sale Proposal. If at least one bona fide offer to purchase the
Company for cash and/or Freely Tradeable Securities on customary terms is
received from a buyer at a price of at least 85% of the Target Price (excluding
for these purposes, any earn-out payments, amounts held in escrow or other forms
of contingent payments) such offer shall be

 

15

 

accepted
and the parties shall proceed to consummate the sale. [If the highest price
offer to purchase the Company is for a price less than 85% of the Target Price (“Best
Offer Price”),  the
Offeror may (a) revoke the Sale Proposal and abandon the process of
selling the Company pursuant to this Section 10.1(c), or (b) notify
the Offeree that it desires to accept the Best Offer Price within 30 days of
receipt thereof. If the Offeror elects (b), the Offeree shall then notify the
Offeror, within 15 days of receiving such notice described in (b), whether it (x) will
purchase the Offeror’s Membership Interest for the Best Offer Price or (y) desires
to proceed with a sale of the Company to the third party who offered the Best
Offer Price. For the purposes hereof, “Freely Tradable Securities” shall mean
securities listed on the New York Stock Exchange or eligible for trading on the
Nasdaq National Market, and which are not subject to restriction on
transferability, whether pursuant to Rule 144, Rule 145, other
provisions under the Securities Act of 1933, as amended, any contractual
restriction or otherwise.

 

(d)              Closing; Payment of Purchase
Price. The closing of the sale of the Offerer’s Membership Interest to the
Offeree (the “Closing”) shall take place within 60
days after the Offeree agrees to such sale as set forth in this Section 10;
unless the Offeror and Offeree mutually agree to hold the Closing at a
different time. The purchase price for such sale shall be payable in cash by
check or wire transfer of funds at the Closing.

 

(e)              Deadlock by the
Board/Members. In the event any of the following has occurred and
is continuing, the Members shall initiate the sale procedures specified in 10.3
above:

 

(i)            A deadlock by the Board regarding any matter; or

 

(ii)           the failure of either any
Member to approve any matter pursuant to Section 3.3(b) which was
approved by the Board.

 

10.4        Involuntary Transfer. In the event
any of the Membership Interests of a Member are acquired by any Person other
than the other Member(s) by “involuntary transfer” (i.e., any transfer or
disposition of such interests by judicial order, foreclosure, legal process,
execution, attachment or other similar procedure or process), then the other
Member(s) (or Member designee) shall have the option for one year after
receipt of actual notice of such involuntary transfer (or otherwise becoming
aware of such involuntary transfer) to exercise the remedy such Member would
have had under Sections 11.2(a) or 11.2(b), below, as the case may be, had
there been an Event of Disassociation and such Member was not the
Disassociating Member. The option set forth herein shall be exercisable by
providing the transferee with 10 days’ notice. Each Member shall use its best
efforts to prevent any involuntary transfer of its Membership Interests. An
involuntary transfer shall not release any Membership Interests held or
previously held by any Member from the provisions of this Agreement or release
any Member from its obligations hereunder or from any default created by such
transfer.

 

ARTICLE 11:
EVENTS OF DISASSOCIATION AND REMEDIES

 

11.1        Definitions and Cure Periods. The
occurrence of any of the following events shall constitute an event of
disassociation (“Event of Disassociation”) on
the part of the Member with respect to whom such event occurs (“Disassociating
Member”), if
within 30 days following

 

16

 

notice
of such disassociation from another Member, the Disassociating Member fails to
commence substantial efforts to cure such disassociation or thereafter fails
within a reasonable time to prosecute to completion with diligence and
continuity the curing of such disassociation; provided, however, that at the
election (without any obligation to give notice) of the non-disassociating
Member(s), occurrence of any of the events described in subparagraphs
(i) - (iv) below shall constitute an Event of Disassociation
immediately upon such occurrence without any requirement of notice or passage
of time except as specifically set forth in any such subparagraph:

 

(i)            such Member shall
(a) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (b) make a general assignment for
the benefit of its creditors, (c) commence a voluntary case under any
bankruptcy or similar law (as now or hereafter in effect), (d) file a petition seeking
to take advantage of any other law providing for the relief of debtors, (e) fail
to controvert in a timely manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under any bankruptcy or similar law,
(f) admit its inability to pay its debts generally as such debts become
due, (g) take any action under the laws of its jurisdiction of
organization analogous to any of the foregoing, or (h) take any requisite
action for the purpose of effecting any of the foregoing;

 

(ii)           a proceeding or case shall
be commenced against such Member in any court of competent jurisdiction,
seeking (a) the liquidation, reorganization, dissolution, winding up or
composition or readjustment of its debts, (b) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all of any substantial
part of its assets, or (c) similar relief in respect of it, under any
bankruptcy or similar law and such proceeding or case shall continue
undismissed, or unstayed and in effect, for a period of 30 days; or any action
under the laws or the jurisdiction of organization of such entity analogous to
any of the foregoing shall be taken with respect to such entity and shall
continue undismissed, or unstayed and in effect, for a period of 30 days;

 

(iii)          all or substantially all of
the assets of such Member or any material portion thereof, is attached, seized,
subject to a writ of distress warrant, or levied upon, or comes into the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors, and the same is not vacated, stayed, dismissed or set aside within
30 days after the occurrence thereof;

 

(iv)          dissolution of Member; or

 

(v)           assignment by a Member of
its Membership Interest in contravention of this Agreement.

 

11.2        Remedies of Non-Disassociating Member

 

(i)            Upon the occurrence of an Event of Disassociation by
any Member, the non-disassociating Member (or its designee) shall have the
right to acquire the Membership Interests of the Disassociating Member for cash
at a price equal to: (a) if such Event of Disassociation constitutes an
Event of Disassociation under Section 11.1(v), 75% of the

 

17

 

fair market value of the Disassociating Member’s Membership Interests,
as determined in the same manner as provided in
Section 10.3(a) (except that the Disassociating Member shall pay for
the costs related to the appraisal); and (b) if such Event of
Disassociation constitutes an Event of Disassociation under any other subsections
of Section 11, 100% of the fair market value of the Disassociating
Member’s Membership Interests, as determined in the same manner as provided in
Section 10.3(a), in either case such value to be determined as of the time
immediately following such Event of Disassociation. In furtherance of such
right, the non-disassociating Member may notify the Disassociating Member at
any time following an Event of Disassociation of the election to institute the
procedure set forth herein. Upon receipt of notice of determination of the
purchase price for such disassociating member’s Membership Interests, the
non-disassociating Member shall notify the Disassociating Member of the
election to purchase the interests of the Disassociating Member.

 

(ii)           The non-disassociating Member shall have the right
to purchase a Disassociating Member’s Membership Interests by payment of
one-seventh of the purchase price (as determined by the procedure pursuant to
this Section 11.2(i)) at closing, with the balance to be paid in equal annual
installments over a seven-year period, the unpaid balance to bear interest at
the then Applicable Federal Rate, with the right of prepayment of any amount at
any time without premium or penalty.

 

(ii)           If neither the
non-disassociating Member nor its designee elects to acquire the entire
interest of the Disassociating Member as set forth in this
Section 11.2(i), the non-disassociating Member may elect to dissolve and
terminate the Company by written notice to the Members within 30 days of such disassociation.
The right of the non-disassociating Member institute the procedures for
purchase of the Disassociating Member’s Membership Interests as set forth in
this Section shall continue until the non-disassociating Member elects to
exercise the right to terminate the Company.

 

11.3        Priority. Any option
exercised by a Member under this Section 11 shall supersede and have
priority over any other option exercised by a Member under this Agreement,
regardless of when either option was exercised, unless the purchase under
another Section has been consummated.

 

ARTICLE 12:
DISSOLUTION

 

12.1        Dissolution. The Company
shall be dissolved and terminated upon the first to happen of:

 

(a)           The agreement of all of the
Members to dissolve the Company;

 

(b)           The sale or other disposition
of all or substantially all of the Company’s assets, unless all of the Members
otherwise agree;

 

(c)           Any time at which there are
no Members; provided that the Company is not dissolved and is not required to
be wound up if, within 90 days after the occurrence of the event that
terminated the continued membership of the last remaining member.

 

(d)           The entry of a decree of
judicial dissolution under the Act.

 

18

 

ARTICLE 13:
DISTRIBUTIONS UPON TERMINATION

 

13.1        Distribution upon
Dissolution. Upon dissolution or termination of the Company
under Section 12 the affairs of the Company shall be wound down by the
Board in an orderly fashion. During the period of the winding down of the
affairs of the Company, the rights and obligations of the Members with respect
to the management of the Company shall continue. The Members shall continue to
share income and losses during the period of liquidation in the same proportions
as prior to said dissolution. Any gain or loss on disposition of the Company’s
properties in the process of liquidation shall be credited or charged to the
Members’ respective Capital Accounts in proportion to their Membership
Interests. The proceeds from liquidation shall be applied to the payment of
debts of the Company and to establishing any reserve which the Board shall
reasonably deem necessary to provide for any contingent or unforeseen
liabilities or obligations of the Company and to the payment of all expenses of
liquidation; and with any remaining proceeds being paid to the Members first,
in proportion to their Capital Accounts, until all Capital Accounts have a zero
balance, and thereafter in proportion to their Membership Interests.

 

13.2        Nothing contained herein
shall prevent the Company from distributing its assets in kind in accordance
with the above provisions. Any property distributed in kind shall be valued and
treated, for purposes of accounting to and between the Members, as though the property
were sold for cash at its fair value and the cash proceeds were distributed. No
Member shall have any claim or recourse against any other Member in the event
the net assets of the Company are insufficient to repay any capital
contribution. In order to minimize any losses attendant upon liquidation and
winding up, a reasonable time shall be allowed for completion of all such
activities.

 

ARTICLE 14:
INDEMNIFICATION

 

14.1         Mandatory
Indemnification. The Company shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action, suit or proceeding
by or in the right of the company), whether civil, criminal, administrative or
investigative, by reason of the fact that he, she or it is or was a Member,
Manager, or executive officer of the Company, against expenses (including
reasonable attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him, her or it in connection with such
action, suit or proceeding to the fullest extent permitted by the Act and
Delaware law. The Company may indemnify its other officers, employees and
authorized agents, acting within the scope of their duties as such, to the same
extent as Members, Managers and officers hereunder.

 

14.2         Advances of Expenses. Expenses (including
reasonable attorneys’ fees) incurred by a Manager, Member or executive officer
in defending any civil, criminal, administrative or investigative action, suit
or proceeding shall be paid by the Company in advance of the final disposition of such action suit or
proceeding upon receipt of an undertaking by or on behalf of such manager of
Member to repay such amount if it shall ultimately be determined that he, she
or it is not entitled to be indemnified by the Company pursuant to this Section 14.1
or 14.2. Such expenses (including attorneys’ fees) incurred by other officers,
employees and agents shall be so paid upon such terms and conditions, if any,
as the Board deems appropriate.

 

19

 

14.3         Non-Exclusive. The
indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 14 shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any by-law, agreement, vote of Members or disinterested Managers or
otherwise, both as to action in an official capacity and as to action in
another capacity while holding such office.

 

14.4         Successors and Assigns. For purposes
of this Section 14, any reference to the “Company” shall include, in
addition to the resulting or surviving corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, managers, members, employees,
representatives or agents, so that any Person who is or was a director,
officer, manager, member, employee, representative or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, manager, employee, representative or agent
of another corporation, limited liability company, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Section 14 with respect to the resulting or surviving
corporation as he or she would have with respect to such constituent corporation
if its separate existence had continued.

 

14.5         Change of Status. The
indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 14 shall continue as to a Person who has ceased to be a
manager, Member, Manager, officer, employee, representative or agent and shall
inure to the benefit of the heirs, executors and administrators of such Person.

 

14.6         Indemnitee Initiated Actions.
Notwithstanding anything in this Article to the contrary, the Company will
not have the obligation of indemnifying any Person with respect to proceedings,
claims or actions initiated or brought voluntarily by such Person and not by
way of defense.

 

14.7         Enforceability. Any Member,
Manager, officer, employee or agent of the Company may apply to any court of
competent jurisdiction in the State of Delaware for indemnification to the
extent otherwise permissible under this Section 14. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the member, member of the Manager, member of any committee
of the Company or officer or employee is proper in the circumstances because
such person has met the applicable standards of conduct set forth in the
applicable provision of this Section 14. Neither a contrary determination
nor the absence of a determination in a specific case shall be a defense to
such application or create a presumption that the person seeking
indemnification has not met any applicable standard of conduct.

 

14.8         Insurance. The Company
shall purchase and maintain insurance in an amount of not less than $5,000,000
or another arrangement on behalf of any Person who is or was a Manager, Member,
officer, employee or agent of the Company against liability asserted against
such Person or incurred by such Person in such capacity or arising out of the
status of such a Person, whether or not the Company would have the power to
indemnify such Person against that liability hereunder.

 

20

 

ARTICLE 15:
MISCELLANEOUS PROVISIONS

 

15.1         Confidentiality.

 

(a)   The Members agree to refrain from disclosing
Confidential Information about the Company and any of its Affiliates (except to
such Member’s partners, representatives, attorneys, employees, accountants and
other advisors (collectively, the “Advisors”) of
such holders who are legally or ethically obligated to refrain from disclosing
the Confidential Information; provided however, that such Member shall be
responsible for the disclosure of such Confidential Information in violation of
the terms hereof by the Advisors) for so long as such Member is a Member of the
Company and for a period of two (2) years thereafter. This provision shall
not restrict any Member from disclosing Confidential Information to prospective
investors in the Company (including prospective Assignees) or potential
acquirers.

 

(b)   Notwithstanding the foregoing, the Confidential
Information may be disclosed as may be required (i) by a Member to its
Affiliates and advisors for the purpose of providing return and performance
information on internal portfolio investments, consistent with past practice
and as otherwise required by governmental regulatory agencies or
self-regulating bodies, and (ii) by the a Member’s Affiliates to their
Affiliates and advisors for the purpose of providing return and performance
information on internal portfolio investments, consistent with past practice
and as otherwise may be required by governmental regulatory agencies or
self-regulating bodies, provided, that, the Members and their Affiliates and
advisors shall require that any transferee of such Confidential Information
keep the Confidential Information confidential, consistent with this Section 15.1.

 

(c)   “Confidential Information” means any
information regarding the business of the Company or any of its Affiliates,
including its operations, operating plans, customers, customer lists,
advertisers, advertiser lists, members, interests, the identity of any holder
of, or amount of, any interests, proposed or current ventures, business plans,
past agreements, potential agreements, private or proprietary conversations,
trade secrets, as well as information relating to their financial performance,
condition or valuation; provided, that “Confidential Information” does not include
information which: (i) is now, or hereafter becomes, through no act or
failure to act on the part of the receiving party, generally known or available
to the public; (ii) was acquired by the receiving party before receiving
such information from the Company and without restriction as to use or
disclosure; (iii) is hereafter rightfully furnished to the receiving party
by a third party, without restriction as to use or disclosure; (iv) is
information which the receiving party can document was independently developed
by the receiving party without breach of any obligation of confidentiality; (v) is
required to be disclosed pursuant to law, provided the receiving party uses
reasonable efforts to give the Company reasonable advance notice of such
required disclosure; or (vi) is disclosed with the prior written consent
of the Company.

 

15.2         Accounting Basis for Tax and
Reporting Purposes. The books and records of the Company for tax
purposes, for purposes of this Agreement and for the purpose of reports to the Members
shall be kept in accordance with such method as the Board shall determine.

 

21

 

15.3        Books and Records. The books and
records of the Company shall be maintained at the office of the Company. Each
Member shall have reasonable access to inspect the accounting records of the
Company during regular business hours of the Company at the office of the
Company.

 

15.4        Reports. (a) Within
forty-five (45) days after the end of each Fiscal Year, the Chief Executive
Officer shall send to each Person who was a Member at the end of the Fiscal Year
then ended the balance sheet of the Company as of the end of such year and
statements of operations, changes in Members’ capital and cash flow of the
Company for such year, all of which shall be prepared in accordance with
accounting principles consistently applied. Any Member may request audited
financial statements for the Company. The audit shall be performed by the
accounting firm for the Member requesting the audit. The Member requesting the
audit, shall pay for the cost of the audit.

 

(b)           Within seventy five (75)
days after the end of each Fiscal Year, the Chief Executive Officer shall send
to each Person who was a Member at any time during the year then ended such tax
information relating to the Company as shall be necessary for the preparation
by such Member of its federal income tax return and required state income and
other tax returns.

 

(c)           Within 10 days after the end
of each quarter, the Chief Executive Officer shall send to each person who is a
member an unaudited balance sheet of the Company and statements of operations,
changes in Members’ capital and cash flow of the Company for such quarter or
allow them access to the necessary financial information to prepare such
reports. Each Member shall have unlimited access to all the financial
information of the Company and may, at its expense, request that an audit of
the Company be prepared by such Member’s accounting firm.

 

15.5        Termination of Certain
Provisions. All the provisions of this Agreement shall be
deemed terminated upon an initial public offering of the Company. This
Agreement, or any portion hereof may be terminated with the written agreement
of the Company and each Member.

 

15.6        Notices. Any notice
required or permitted to be sent hereunder shall be delivered personally or
mailed, registered or certified mail, return receipt requested, or delivered by
overnight courier service, to the intended recipient’s address set forth below
or to such other address as the intended recipient designates by written notice
to the Company, and shall be deemed to have been given upon delivery, if
delivered personally, three days after mailing, if mailed, or one Business Day
after delivery to the courier, if delivered by overnight courier service. Any
such notice shall be mailed as follows:

 

(i)            if to the Company, to:

 

 

 

(ii)           if to any other Member, to
its address set forth on the signature page hereto.

 

22

 

15.7         Entire Agreement. This Agreement, including
the exhibits and schedules attached hereto, is the entire agreement among the
parties hereto relating to the subject matter hereof. It supersedes all prior
agreements pertaining to the subject matter hereof and may not be amended
except as provided in Section 15.10 hereof.

 

15.8         Severability. Whenever possible, each
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.

 

15.9         Descriptive Headings. The descriptive headings
of this Agreement are inserted for convenience of reference only and do not
constitute a part of and shall not be utilized in interpreting this Agreement.

 

15.10       Consent to Amendments; Waivers. Except as
otherwise expressly provided herein, the provisions of this Agreement may be
amended or waived at any time by the written agreement of the Company and each
Member. Any waiver, permit, consent or approval of any kind or character on the
part of any such Member of any provisions or conditions of this Agreement must
be made in writing and shall be effective only to the extent specifically set
forth in such writing.

 

15.11       Successors and Assigns. Except as
otherwise expressly provided herein, all covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto.

 

15.12       Third Party Rights. The provisions of this
Agreement are for the exclusive benefit of the Company and the Members and no
other person (including, without limitation, any creditor of the Company) shall
have any right or claim against the Company or the Members by reason of these
provisions or be entitled to enforce any of these provisions against the
Company or the Members.

 

15.13       Governing Law; Jurisdiction. All questions
concerning the construction, validity, and interpretation of this Agreement,
and the performance of the obligations imposed by this Agreement, shall be
governed by the laws of the State of Delaware.

 

15.14       Remedies. The parties hereto shall
have all rights and remedies set forth in this Agreement and all rights and
remedies available under any applicable law. The parties hereto agree and
acknowledge that money may not be an adequate remedy for any breach of the provisions
of this Agreement and that any party may, in its sole discretion, apply to any
court of law or equity of competent jurisdiction for specific performance or
injunctive relief (without posting bond or other security) in order to enforce,
or prevent any violations of, the provisions of this Agreement.

 

15.15       Waiver of Partition. Except as may be otherwise
provided by law in connection with the winding-up, liquidation and dissolution
of the Company, each Member hereby

 

23

 

irrevocably
waives any and all rights that it may have to maintain an action for partition
of any of the Company’s property.

 

15.16       Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts together shall
constitute one instrument.

 

[Balance
of Page Left Blank; Signature Pages Follow]

 

24

 

	
   

  	
  Members:

  
	
   

  	
   

  
	
   

  	
  REAL D

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael V. Lewis

  
	
   

  	
   

  	
  Name: Michael V.
  Lewis

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
  Address: 100 North
  Crescent Drive

  
	
   

  	
   

  	
  Suite
  120

  
	
   

  	
   

  	
  Beverly
  Hills, CA 90210

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BALLANTYNE OF OMAHA,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John P. Williams

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
  Address: 4350 Mckinley St

  
	
   

  	
   

  	
  Omaha NE 68112

  

 

 

Exhibit A

Balantyne Price List

 

Intentionally Omitted

 

2

 

Exhibit B

Digital Cinema System Transfer Agreement

 

Intentionally Omitted

 

3

 

Exhibit C

Certificate of Formation

 

See Attached

 

4

 

 

	
  State of Delaware

  	
   

  	
   

  
	
  Secretary of State

  	
   

  	
   

  
	
  Division of Corporations

  	
   

  	
   

  
	
  Delivered 11:41 PM 03/01/2007

  	
   

  	
   

  
	
  FILED 11:17 PM 03/01/2007

  	
   

  	
   

  
	
  SRV 070269937 - 4310084 FILE

  	
   

  	
   

  

 

CERTIFICATE OF FORMATION

OF

DIGITAL LINK II, LLC

 

This
Certificate of Formation of Digital Link II, LLC (the “Company”), dated
as of March 1, 2007, is being duly executed and is being filed by the
undersigned, as an authorized person, to form a limited liability company under
the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et
seq.).

 

FIRST:
The name of the limited liability company formed hereby is Digital Link II,
LLC.

 

SECOND:
The name and address of the registered agent for service of process on the
Company in the State of Delaware is The Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware
19801.

 

THIRD:
The limited liability company is to have perpetual existence.

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as
of the date first above written.

 

	
   

  	
  /s/ Lars E. Johansson

  
	
   

  	
  Lars E. Johansson

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