Document:

Exhibit 10.22

 

SECOND
AMENDMENT TO CREDIT AND SECURITY AGREEMENT

 

This
Second Amendment to Credit and Security Agreement (“Amendment”) is entered into
as of November 6, 2009, by and between REAL
D, a California corporation (“Borrower”) and City National Bank, a national banking
association (“CNB”).

 

RECITALS

 

A.           Borrower and CNB are parties
to that certain Credit and Security Agreement, dated as of July 26, 2007,
as amended by that certain First Amendment to Credit and Security Agreements
dated as of August 18, 2009 (collectively, the “Credit Agreement”).

 

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

 

NOW, THEREFORE,  the parties agree as
follows:

 

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

 

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

 

2.1                                 Section 1.47
is amended in its entirety to provide as follows:

 

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

 

2.2                                 New Sections
1.61 and 1.62 are added to the Credit Agreement to provide as follows:

 

“1.61  ‘Term Loan Fee’ is
$100,000.00.

 

1.62   ‘Term Loan Commitment’ is
$10,000,000.00.”

 

2.3                                 Section 2.1
is amended in its entirety to provide as follows:

 

“2.1                           Revolving Credit Loans.  Subject to the
terms of this Agreement, CNB agrees to make loans (“Revolving Credit Loans”)
from time to time to Borrower, from the date of this Agreement up to but not
including the Termination Date, at such times as Borrower may request, up to
the amount of the Borrowing Base. The Revolving Credit Loans may be repaid and
reborrowed at any time up to the Termination Date; provided, however, that the
aggregate unpaid principal amount of outstanding Revolving Credit Loans will at
no time exceed the Borrowing Base.

 

2.1.1                        Interest.  The Revolving Credit
Loans will bear interest from

 

1

 

disbursement
until due (whether at stated maturity, by acceleration on otherwise) at an
annual rate equal to, at Borrower’s option, either (a) for a Revolving
LIBOR Loan (as defined below), the LIBOR Interest Rate plus four and
one-quarter percent (4.25%), or (b) for a Revolving Prime Loan (as defined
below), the fluctuating Prime Rate plus two and three-quarters percent (2.75%).
Interest on the Loans and other charges incurred under this Agreement will
accrue daily and be payable (a) except in respect of a Revolving LIBOR
Loan, quarterly in arrears, commencing on October 1, 2009, and on the
first day of January, April and July thereafter; (b) if a
Revolving LIBOR Loan, on the last day of each Interest Period therefore and
upon any prepayment thereof (to the extent accrued on the amount prepaid); and (c) at
the Termination Date. A Revolving Credit Loan tied to the LIBOR Interest Rate
is called a “Revolving LIBOR Loan,” and a Revolving Credit Loan tied to the
Prime Rate is called a “Revolving Prime Loan.” A Revolving Credit Loan will be
a Revolving Prime Loan any time it is not a Revolving LIBOR Loan.

 

2.1.3                        Payment for
Amounts Exceeding Borrowing Base.  Borrower will,
immediately upon demand, repay the amount by which the unpaid principal amount
of Borrower’s Loan Account exceeds the amount CNB has agreed to lend under Section 2.1.
The portion of the Revolving Credit Loans exceeding the Borrowing Base (“Overadvance”)
will bear additional interest of three percent (3.0%) per year over the rate
set forth in Section 2.1.1 for Revolving Prime Loans.”

 

2.4                                 Sections 2.2.1
and 2.2.2 of the Credit Agreement are amended in their entirety to provide  as follows:

 

“2.2.1                  Procedure
for LIBOR Loans.  Borrower may
request that a Loan be a LIBOR Loan, if herein allowed (including conversion of
a Prime Loan to a LIBOR Loan, or continuation of a LIBOR Loan as a LIBOR Loan
upon the expiration of the Interest Period). Borrower’s request will be irrevocable,
will be made to CNB, orally or in writing, no earlier than two (2) Business
Days before and no later than 1:00 p.m. Pacific Time on the date the LIBOR
Loan is to be made, and will specify the Interest Period, the amount of the
LIBOR Loan, and such other information as CNB requests. If Borrower fails to
select a LIBOR Loan in accordance herewith, the Loan will be a Prime Loan, and
any LIBOR Loan will be deemed a Prime Loan upon expiration of the Interest
Period.

 

2.2.2                        Availability of LIBOR Loans.  Notwithstanding
anything herein to the contrary, each LIBOR Loan must be in the minimum amount
of $500,000.00 and increments of $100,000.00. Borrower may not have more than
five (5) Revolving LIBOR Loans outstanding and five (5) Term LIBOR
Loans outstanding at any one time under this Agreement. Borrower may have Prime
Loans and LIBOR Loans outstanding simultaneously.”

 

2.5                                 Section 2.3.2
of the Credit Agreement is amended in its entirety to provide as follows:

 

“2.3.2.
Mandatory Prepayment.  Subject to the provisions of Section 2.6,
Borrower agrees that on the Initial Public Offering Date, or in the event of a

 

2

 

Change
in Control, Borrower will repay in full the Obligations. In addition, if at any
time the Backlog is less than three (3) times the outstanding aggregate
principal balance of the Loans, Borrower shall prepay to CNB fifty percent
(50%) of each Paid Admission Based Payment, Release Based Payment and Scheduled
License Payment due and received by Borrower under License Agreements until
such time as the Backlog equals or exceeds three (3) times the outstanding
aggregate principal balance of the Revolving Credit Loans. All prepayments
under this section shall be applied first to the Revolving Credit Loans
outstanding and then to the outstanding balance of the Term Loan.”

 

2.6                                 A new Section 2.7
is added to the Credit Agreement to provide as follows:

 

“2.7                           Term Loan.  No later than November 6,
2009, CNB agrees to make, upon Borrower’s request, a term loan (“Term Loan”) to
Borrower in the amount of the Term Loan Commitment, the proceeds of which Term
Loan shall be used by Borrower for working capital, capital expenditures and
general corporate purposes, as well as to refinance existing indebtedness. The
Term Loan will be evidenced by a promissory note (“Term Note”), consistent with
the terms of this Agreement, in the form attached hereto as Exhibit B.

 

2.7.1                        Interest on
Term Loan.  The Term Loan
will bear interest from disbursement until due (whether at stated maturity, by
acceleration on otherwise) at a rate equal to, at Borrower’s option, either (a) for
a Term LIBOR Loan (as defined below), the LIBOR Interest Rate plus seven and
one-half percent (7.5%) per year, or (b) for a Term Prime Loan (as defined
below), the fluctuating Prime Rate plus five percent (5.0%) per year. Interest
on the Term Loan will accrue daily and be payable (a) except in respect of
a Term LIBOR Loan, quarterly in arrears, commencing on January 1, 2010,
and on the first day of April, July and October thereafter; (b) if
a Term LIBOR Loan, on the last day of each Interest Period therefore and upon
any prepayment thereof (to the extent accrued on the amount prepaid); and (c) at
the Termination Date. That portion of the Term Loan tied to the LIBOR Interest
Rate is called a “Term LIBOR Loan,” and that portion of the Term Loan tied to
the Prime Rate is called a “Term Prime Loan.” The Term Loan will be a Term
Prime Loan any time it is not a Term LIBOR Loan.

 

2.7.2                        Payment of
Term Loan.  Subject to the
Mandatory Prepayment in Section 2.3.2 hereof, all unpaid principal and
interest will be due and payable in full on December 31, 2010, or on the
Termination Date, whichever first occurs.”

 

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

 

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

 

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

 

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

 

4.3                                 CNB shall have
received the Term Loan Fee equal to $100,000.00.

 

3

 

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

 

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

 

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

 

	
  “Borrower”

  	
  REAL
  D,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael V. Lewis

  
	
   

  	
   

  	
  Michael V. Lewis, Chairman and Chief

  
	
   

  	
   

  	
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  “CNB”

  	
  City
  National Bank, a
  national

  
	
   

  	
  banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aaron Cohen

  
	
   

  	
   

  	
  Aaron Cohen, Senior Vice President

  

 

4

 

EXHIBIT
B

 

TERM
NOTE

 

[SEE
EXHIBIT NUMBER 10.26]Exhibit
10.25

 

 

May
17, 2010

 

Mr. P. Gordon Hodge

650 Hayne Road

Hillsborough, CA 94010

 

Re:  RealD Inc.

 

Dear Gordon:

 

We are very pleased to offer you a position as a
member of the Board of Directors (the “Board”) of RealD Inc. (the “Company”).  This offer, which is subject to the approval
of each of the current members of our Board, is based on the following terms
and conditions:

 

	
  Start Date:  

  	
   

  	
  March 29, 2010 (the “Effective Date”).  You will serve as a member of the Board
  until the annual meeting for the year in which your term expires or until
  your successor has been elected and qualified, subject however, to your prior
  death, resignation, retirement, disqualification or removal from office. 

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  Your initial term on the Board shall be three (3) years.

  
	
   

  	
   

  	
   

  
	
  Committees:

  	
   

  	
  You acknowledge and agree that, in order to
  meet SEC and NYSE rules, you will be required to serve on one or more of the
  Board’s Audit Committee, Compensation Committee and Nominating and Governance
  Committee, and that such committee assignments will be as agreed between you
  and the Company, and that you will be compensated for service on any
  committee as provided herein.

  
	
   

  	
   

  	
   

  
	
  Compensation:

  	
   

  	
  In consideration of your services as a member of the Board, you will
  receive: (i) a one-time $25,000 cash retainer to be paid within thirty (30)
  days of your appointment to the Board; and (ii) a $30,000 annual cash
  retainer to be paid in equal quarterly installments for so long as you remain
  a member of the Board.  Your initial
  annual cash retainer will be pro rated for service from the date of the
  Company’s initial public offering through its first annual stockholder
  meeting.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In consideration for your services as Chair
  of the Audit Committee, if applicable, you will receive a $15,000 annual cash
  retainer to be paid in equal quarterly installments for so long as you remain
  the Audit Committee Chair.

  

 

100 N. Cresent Drive, Suite 120   Beverly Hills, CA 90210

(310) 385-4000   www.reald.com

 

 

	
   

  	
   

  	
  In consideration for your services as Chair
  of the Compensation Committee, if applicable, you will receive a $10,000
  annual cash retainer to be paid in equal quarterly installments for so long
  as you remain the Compensation Committee Chair.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In consideration for your services as Chair
  of the Nominating and Governance Committee, if applicable, you will receive a
  $7,500 annual cash retainer to be paid in equal quarterly installments for so
  long as you remain the Nominating and Governance Committee Chair.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All or a portion of your annual cash retainer may be deferred in an
  amount equal to at least fifty percent (50%) of your annual cash retainer
  into a restricted stock unit account. The election for deferring your annual
  cash retainer must be made prior to the beginning of the annual Board cycle,
  which shall initially be July 1, or earlier as necessary to comply with
  Internal Revenue Code §409A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For each in-person Board and committee meeting you attend, you will
  receive: (A) $1,500 per meeting that you attend in person or (B) 1,000 per
  meeting that you attend by telephone. For each telephonic Board and committee
  meeting you attend, you will receive: (1) $1,500 per meeting or (2) $1,000
  per meeting that last less than 30 minutes.

  
	
   

  	
   

  	
   

  
	
  Restricted Stock Units:

  	
   

  	
  On the day prior to the Company’s initial public offering, in
  connection with your commencement of service as a member of the Board, you
  will be granted a one-time restricted stock unit award under the RealD Inc.
  2010 Stock Incentive Plan (“2010 Plan”) for the number of shares equal to
  $25,000 at a price per share equal to the Company’s initial public offering
  opening price which will vest at the rate of 1/24th per month on
  the 1st day of each of the 24 months following the
  month of the grant date, subject to your continued service as a member of the
  Board.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Within fifteen (15) days after the Company’s annual meeting of
  stockholders, in connection with your continuing service as a member of the
  Board, you will be granted an annual restricted stock unit award under the
  2010 Plan for the number of shares equal to $120,000 at a price per share
  equal to the Company’s stock price on the grant date which will vest at the
  rate of 1/12h per
  month on the 1st day of each of the 12 months following the
  month of the grant date, subject to your continued service as a member of the
  Board. The annual restricted stock unit award will be pro-rated for service
  if a director joins mid-year, which is measured from annual stockholder
  meeting to annual stockholder meeting. 
  Your initial annual restricted stock unit award will be pro-rated for
  service from the date of the Company’s initial public offering through its
  first annual stockholder meeting.

  

 

2

 

	
  Holding Period for Restricted Stock Units and Stock Ownership
  Guidelines:

  	
   

  	
  In order to promote long-term alignment of
  directors and stockholders interests, the Company requires that the
  restricted stock units granted to you be held for five (5) years from the
  grant date. You are also required to own the Company’s common stock in an
  amount equal to five (5) times the annual cash retainer you receive for your
  services as a member of the Board. Until the stock ownership guidelines are
  satisfied, all net after-tax profit shares must be held after the restricted
  stock units have vested. Once the restricted stock units have vested, this
  mandatory retention requirement for all net after-tax profit shares no longer
  applies.

  
	
   

  	
   

  	
   

  
	
  Responsibilities:

  	
   

  	
  As a director of the Company, your duties
  and responsibilities will be those reasonably and customarily associated with
  such position, including, without limitation, attendance at all regular and special meetings of the
  Board and, if you are a member of a committee of the Board, attendance at all
  regular and special meetings of such committee.

  
	
   

  	
   

  	
   

  
	
  Expenses:

  	
   

  	
  The Company will reimburse you for all reasonable, out-of-pocket
  costs and expenses incurred by you in connection with attending Board
  meetings and, if you are a member of a committee of the Board,  committee meetings.

  
	
   

  	
   

  	
   

  
	
  Confidentiality:

  	
   

  	
  As a condition of this offer, you will be required to preserve the
  Company’s proprietary and confidential information and you must comply with
  the Company’s policies and procedures. 
  Accordingly, as a pre-condition to your appointment to the Board, you
  are required to execute the Nondisclosure Agreement enclosed herewith.  This agreement will be effective as of the
  Effective Date.

  
	
   

  	
   

  	
   

  
	
  Indemnification:

  	
   

  	
  In the interest of retaining and attracting qualified individuals to
  provide services to the Company, the Company has or will enter into an
  Indemnification Agreement with each of its directors and executive
  officers.  An Indemnification Agreement
  will be provided to you to sign upon your acceptance.

  

 

Your engagement as a member of the Board is
contingent on all of the following:  (a) formal
acceptance of this offer, (b) completion of a background, credit and reference
check satisfactory to the Board.  This
offer to serve as a member
of the Board shall be at the will of
the Board, which means that this relationship can be terminated at any time by
either party.  Upon accepting our offer
to join the Board you agree we will have the right to mention your name and
other customary information in documents we file with the Securities and Exchange
Commission press releases and other business documentation as appropriate,
including, inclusion of such information in our registration statement and the
related prospectus naming you as a person about to become a member of the Board
and such other information regarding you as is required 

 

3

 

to be included therein under the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

To accept this offer, please sign the acknowledgment
at the end of this letter acknowledging and agreeing to the terms and
conditions of your service as a member of the Board of the Company.

 

[Signature
page follows.]

 

4

 

We sincerely hope that you decide to join the Board of Directors of the
Company.  Please contact me with any
questions regarding the foregoing.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  REALD
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Michael V. Lewis

  
	
   

  	
   

  	
  Michael V. Lewis

  
	
   

  	
   

  	
  Chief Executive Officer and

  
	
   

  	
   

  	
  Chairman of the Board

  

 

ACKNOWLEDGED AND AGREED TO BY:

 

	
  /s/
  P. Gordon Hodge

  	
   

  	
   

  
	
  P.
  Gordon Hodge

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: May 24, 2010

  	
   

  	
   

  

 

I hereby consent to the inclusion in the Registration Statement on Form
S-1 of RealD Inc. (SEC File No. 333-165988), any amendments thereto, and in the
related Prospectus, of (i) a reference naming me as a person about to become a
member of the Board of Directors of RealD Inc. and (ii) such other information
regarding me as is required to be included therein under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.

 

5

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