Exhibit 10.1

 

REALD INC.

2011 EMPLOYEE STOCK PURCHASE PLAN

 

1.                                      Establishment of Plan.

 

The Company proposes to grant options for purchase of the Company’s Common Stock
to Eligible Employees of the Company and its Participating Subsidiaries pursuant
to this Plan. The Company intends this Plan to qualify as an “employee stock
purchase plan” under Section 423 of the Code (including any amendments to or
replacements of such Code Section 423), and this Plan shall be so construed. Any
term not expressly defined in this Plan but defined for purposes of Section 423
of the Code shall have the same definition herein.

 

2.                                      Definitions.

 

(a)           “Board” means the Board of Directors of the Company, as
constituted from time to time.

 

(b)           “Change in Control” means any of the following:

 

(i)            A merger or consolidation of the Company with or into any other
company or other entity;

 

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

 

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

 

(iv)          Commencing as of the First Offering Date, during any period of 24
consecutive months, individuals, who at the beginning of such period constitute
the Board, and any new director whose election by the Board, or whose nomination
for election by the Company’s stockholders, was approved by a vote of at least
one-half (1/2) of the directors then in office (other than in connection with a
contested election), cease for any reason to constitute at least a majority of
the Board.

 

A transaction shall not constitute a Change in Control if it is a Related Party
Transaction or if its sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities
immediately before such transactions.

 

(c)           “Code” means the Internal Revenue Code of 1986, as amended, and
the regulations and interpretations promulgated thereunder.

 

(d)           “Committee” means the Compensation Committee of the Board or such
other committee or subcommittee of the Board, if any, duly appointed to
administer the Plan and having such powers in each instance as shall be
specified by the Board and as specified in Section 5 of this Plan.

 

(e)           “Common Stock” means the Company’s common stock, $0.0001 par value
per share.

 

(f)            “Company” means RealD Inc., a Delaware corporation.

 

(g)           “Compensation” means all Form W-2 cash compensation, including,
but not limited to, base salary, wages, bonuses, incentive compensation,
commissions, overtime, shift premiums, plus draws against commissions; provided,
however that Compensation shall not include any long term disability or workmens
compensation payments, car allowances, relocation payments or expense
reimbursements and

 

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provided further that for purposes of determining a Participant’s Compensation,
any election by such Participant to reduce his or her regular cash remuneration
under Sections 125 or 401(k) of the Code shall be treated as if the Participant
did not make such election.

 

(h)           “Eligible Employee” means an Employee who meets the requirements
set forth in Section 6 for eligibility to participate in the Plan.

 

(i)            “Employee” means any individual who is an employee of the Company
or a Participating Subsidiary. Whether an individual qualifies as an Employee
shall be determined by the Committee, in its sole discretion. The Committee
shall be guided by the provisions of Treasury Regulation Section 1.421-1 and
Section 3401(c) of the Code and the Treasury Regulations thereunder, with the
intent that the Plan cover all “employees” within the meaning of those
provisions other than those who are not eligible to participate in the Plan;
provided, however, that any determinations regarding whether an individual is an
Employee shall be prospective only, unless otherwise determined by the
Committee. Unless the Committee makes a contrary determination (except as
otherwise provided in Section 14), the Employees of the Company shall, for all
purposes of this Plan, be those individuals who are carried as employees of the
Company or a Participating Subsidiary for regular payroll purposes.

 

(j)            “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(k)           “Fair Market Value” means the market price of a Share, determined
by the Committee as follows:

 

i.              If the Shares were traded on a stock exchange (such as the New
York Stock Exchange, the NYSE Amex, the NASDAQ Global Market or NASDAQ Capital
Market) at the time of determination, then the Fair Market Value shall be equal
to the regular session closing price for such stock as reported by such exchange
(or the exchange or market with the greatest volume of trading in the Shares) on
the date of determination, or if there were no sales on such date, on the last
date preceding such date on which a closing price was reported;

 

ii.             If the Shares were traded on the OTC Bulletin Board at the time
of determination, then the Fair Market Value shall be equal to the last-sale
price reported by the OTC Bulletin Board for such date, or if there were no
sales on such date, on the last date preceding such date on which a sale was
reported; and

 

iii.            If neither of the foregoing provisions in (i) or (ii) is
applicable, then the Fair Market Value shall be determined by the Committee in
good faith using a reasonable application of a reasonable valuation method as
the Committee deems appropriate.

 

Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported by the applicable exchange or the OTC Bulletin
Board, as applicable, or a nationally recognized publisher of stock prices or
quotations (including an electronic on-line publication). Such determination
shall be conclusive and binding on all persons.

 

(l)            “First Purchase Period” means the first (and only) Purchase
Period within the First Offering Period, established by the Committee under the
Plan in accordance with Section 7.

 

(m)          “First Offering Date” means the Offering Date for the First
Offering Period.

 

(n)           “First Offering Period” means the first Offering Period
established by the Committee under the Plan in accordance with Section 7.

 

(o)           “Foreign Plan” means a substantially similar plan as this Plan for
Employees resident outside the United States which the Board or the Committee
may implement at such time as it deems necessary. For clarification, each
Foreign Plan shall be a sub-plan of this Plan and not a separate plan. Unless
otherwise determined by the Committee, the Employees eligible to participate in
each Foreign

 

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Plan will participate in separate Offering Periods from Employees participating
in the Plan (and who are not participating in the Foreign Plan).

 

(p)           “Maximum Share Amount” means the maximum aggregate number of
Shares which may be purchased by any Employee during any single Offering Period,
as specified by the Committee, in its sole discretion.

 

(q)           “New Exercise Date” means a new Purchase Date if the Committee
shortens any Offering Period then in progress.

 

(r)            “Notice Period” means the period that is within two (2) years
from the Offering Date or within one (1) year from the Purchase Date on which
Shares were purchased pursuant to this Plan.

 

(s)           “Offering Period” means a period, established by the Committee in
accordance with Section 7, during which an offering of Common Stock pursuant to
the Plan is outstanding. For purposes of this Plan, the Committee may designate
separate Offering Periods under the Plan (the terms of which need not be
identical) in which Employees of one or more of the Company or any Participating
Subsidiaries may participate, even if the dates of the applicable Offering
Periods are identical.

 

(t)            “Offering Date” means the first business day of each Offering
Period.

 

(u)           “Parent” means the same as “parent corporation” in
Section 424(e) of the Code.

 

(v)           “Participant” means an Eligible Employee who has become a
Participant in an Offering Period in accordance with Section 8 and remains a
Participant in accordance with the Plan.

 

(w)          “Participating Subsidiary” is a Parent or Subsidiary that the Board
designates from time to time as a corporation that shall participate in this
Plan.

 

(x)            “Plan” means this RealD Inc. 2011 Employee Stock Purchase Plan as
it may be amended from time to time.

 

(y)           “Purchase Date” means, for any Offering Period, the last business
day of each Purchase Period occurring within such Offering Period.

 

(z)            “Purchase Period” means a period, established by the Committee in
accordance with Section 7, included within an Offering Period. If the Committee
determines that there will only be one Purchase Period within an Offering Period
then such Purchase Period shall have the same beginning and ending dates as that
Offering Period.

 

(aa)         “Purchase Price” means the price at which a Share may be purchased
under the Plan, as determined in accordance with Section 10.

 

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

 

(cc)         “SEC” means the Securities and Exchange Commission.

 

(dd)         “Securities Act” means the Securities Act of 1933, as amended.

 

(ee)         “Share” means one share of Common Stock.

 

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(ff)           “Share Limit” means the total number of shares of Common Stock
reserved and available for issuance pursuant to this Plan as specified in
Section 3 of this Plan, subject to adjustments effected in accordance with
Section 16 of this Plan.

 

(gg)         “Subsidiary” means the same as “subsidiary corporation” in
Section 424(f) of the Code.

 

(hh)         “Successor Company” means the surviving company, the successor
company, the acquiring company or its parent, as applicable, in connection with
a Change in Control.

 

3.                                      Number of Shares.

 

The Share Limit shall be 500,000 Shares, subject to adjustments effected in
accordance with Section 16 of this Plan. The Board or the Committee may at such
time as it deems necessary implement a Foreign Plan, in which case the Share
Limit shall be reduced by the number of Shares issued under the Foreign Plan.
Shares issued under this Plan may consist, in whole or in part, of authorized
and unissued Shares or treasury shares reacquired in private transactions or
open market purchases, but all Shares issued under this Plan and the Foreign
Plan shall be counted against the Share Limit.

 

4.                                      Purpose.

 

The purpose of this Plan is to provide Eligible Employees of the Company and
Participating Subsidiaries with a convenient means of acquiring an equity
interest in the Company through payroll deductions, to enhance such Employees’
sense of participation in the affairs of the Company and Participating
Subsidiaries, and to provide an incentive for continued employment.

 

5.                                      Administration.

 

This Plan shall be administered by the Committee. Subject to the provisions of
this Plan and the limitations of Section 423 of the Code or any successor
provision in the Code, all questions of interpretation or application of this
Plan shall be determined by the Committee and its decisions shall be final and
binding upon all persons. Additionally, any inquiries regarding eligibility to
participate in the Plan shall be directed to the Committee, whose decision shall
be final. Notwithstanding any provision to the contrary in this Plan, the
Committee may adopt rules or procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local
laws and procedures for jurisdictions outside of the United States. Without
limiting the generality of the foregoing, the Committee is specifically
authorized to:

 

i.              determine eligibility to participate in the Plan

 

ii.             determine the Offering Periods, Purchase Periods, Purchase Price
and any discount from the Fair Market Value in setting the Purchase Price;

 

iii.            determine the minimum and maximum rate of payroll deductions
accumulated for the Purchase Price of Shares;

 

iv.            limit the frequency and/or number of changes in the amount
withheld during an Offering Period;

 

v.             permit payroll withholding in excess of the amount designated by
a Participant in order to adjust for delays or mistakes in the Company’s
processing of properly completed withholding elections;

 

vi.            establish reasonable waiting and adjustment periods and/or
accounting and crediting procedures to ensure that amounts applied toward the
purchase of Common Stock for each Participant properly correspond with amounts
withheld from the Participant’s Compensation;

 

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vii.           establish rules and procedures regarding the definition of
Compensation, handling of payroll deductions, the submission of contributions to
the Plan (including, without limitation, in forms other than payroll
deductions), establishment of bank or trust accounts to hold payroll deductions,
payment of interest, conversion of local currency, obligations to pay payroll
tax, determination of beneficiary designation requirements, and withholding
procedures and handling of stock certificates which vary with local
requirements; and

 

viii.          establish such other limitations or procedures as the Committee
determines in its sole discretion advisable which are consistent with the Plan.

 

Members of the Committee shall receive no compensation for their services in
connection with the administration of this Plan, other than standard fees as
established from time to time by the Board for services rendered by Board
members serving on Board committees. All expenses incurred in connection with
the administration and carrying out of this Plan shall be paid by the Company.

 

6.                                      Eligibility.

 

(a)           Any Employee of the Company or Participating Subsidiaries who,
together with any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code, owns stock or holds options to purchase
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or any of its Participating
Subsidiaries or who, as a result of being granted an option under this Plan with
respect to such Offering Period, would own stock or hold options to purchase
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or any of its Participating
Subsidiaries shall not be permitted to participate in any Offering Period under
the Plan.

 

(b)           Subject to Section 6(a), any Employee of the Company or the
Participating Subsidiaries is eligible to participate in an Offering Period
under this Plan except the following may be excluded by the Company with respect
to any particular Offering Period:

 

i.                                          Employees who are not employed by
the Company or a Participating Subsidiary prior to the beginning of such
Offering Period or prior to such other time period as specified by the
Committee;

 

ii.                                       Employees who have been employed for
less than two (2) years;

 

iii.                                    Employees who are customarily employed
for twenty (20) hours or less per week;

 

iv.                                   Employees who are customarily employed for
five (5) months or less in a calendar year;

 

v.                                      Highly compensated employees as defined
in section 414(q) of the Code and within the limitations described in Treasury
Regulation Section 1.423-2(e)(2)(ii); and

 

vi.                                   Employees who reside in countries for whom
such Employees’ participation in the Plan would result in a violation under any
applicable laws of such country of residence or if compliance with such other
laws would cause the Plan (or any offering under the Plan) to violate the
requirements of Code Section 423.

 

(c)           The Company shall determine in good faith and in the exercise of
its discretion whether an individual has become or has ceased to be an Employee
or an Eligible Employee and the effective date of such individual’s attainment
or termination of such status, as the case may be. For purposes of an
individual’s participation in or other rights, if any, under the Plan as of the
time of the Company’s determination of whether or not the individual is an
Employee, all such determinations by the Company shall be final, binding and
conclusive as to such rights, if any, notwithstanding that the Company or any
court of law or governmental agency subsequently makes a contrary determination
as to such individual’s status as an Employee.

 

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7.                                      Offering Dates.

 

Except as otherwise provided below, an Offering Period shall be of a six
(6) month duration commencing on or about April and October of each year,
respectively (or at such other time or times as may be determined by the Board
or the Committee), or such other duration as the Committee shall determine.
Within each Offering Period, there may be one or more consecutive Purchase
Periods each of such number and duration as may be determined by the Board or
the Committee and which shall cover the entire duration of the Offering Period.
Notwithstanding the foregoing, unless the Committee determines otherwise, the
First Offering Period and First Purchase Period shall each commence on
October 3, 2011 and the First Offering Period and First Purchase Period shall
each end on March 30, 2012. The Committee shall have the power to establish
additional or alternative sequential or overlapping Offering Periods, a
different duration for one or more Offering Periods or Purchase Periods, or
different Offering Dates and Purchase Dates without stockholder approval if such
change is implemented prior to the relevant Offering Period or Purchase Period
(as applicable) or prior to such other time period as specified by the
Committee. Notwithstanding anything to the contrary, the duration of any
Offering Period shall not exceed twenty-seven (27) months.

 

8.                                      Participation in this Plan.

 

(a)           Eligible Employees may become Participants in an Offering Period
under this Plan on the Offering Date, after satisfying the eligibility
requirements, by delivering a subscription agreement to the Company prior to
such Offering Date, or such other time period as specified by the Committee.
Enrollment will become effective upon the first day of an Offering Period. An
Eligible Employee who does not deliver a subscription agreement to the Company
after becoming eligible to participate in an Offering Period shall not
participate in that Offering Period or any subsequent Offering Period unless
such Employee enrolls in this Plan by delivering a subscription agreement with
the Company prior to such Offering Period, or such other time period as
specified by the Committee. Once an Employee becomes a Participant in an
Offering Period, such Employee shall automatically participate in the Offering
Period commencing immediately following the last day of the prior Offering
Period unless the Employee withdraws or is deemed to withdraw from this Plan or
terminates further participation in the Offering Period as set forth in
Section 13 below. Such Participant is not required to file any additional
subscription agreement in order to continue participation in this Plan.

 

(b)           To the extent permitted by applicable laws or as otherwise
provided by the Committee, if the Fair Market Value of a Share on any Offering
Date is less than the Fair Market Value of a Share for the immediately preceding
Offering Period’s Offering Date, then all Participants in the immediately
preceding Offering Period shall, after purchasing Shares on the applicable
Purchase Date for such immediately preceding Offering Period, be automatically
enrolled in the immediately following Offering Period (and removed from the
immediately preceding Offering Period).

 

9.                                      Grant of Option on Enrollment.

 

Enrollment by an Eligible Employee in this Plan with respect to an Offering
Period shall constitute the grant (as of the Offering Date) by the Company to
such Employee of an option to purchase on the Purchase Date up to that whole
number of Shares determined by a fraction, the numerator of which is the amount
accumulated in such Employee’s payroll deduction account during such Purchase
Period and the denominator of which is the per share Purchase Price provided
under Section 10. The number of Shares subject to any option granted pursuant to
this Plan shall not exceed the lesser of the purchase limits specified in
Sections 12(a), 12(b) and 12(c) below. Notwithstanding the foregoing, in the
event of a change in generally accepted accounting principles which would
adversely affect the accounting treatment applicable to any current Offering
Period, the Committee may make such changes to the number of Shares purchased at
the end of the Purchase Period or the Purchase Price paid as are

 

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allowable under generally accepted accounting principles and as it deems
necessary in the sole discretion of the Committee to avoid or minimize adverse
accounting consequences.

 

10.                               Purchase Price.

 

The Purchase Price per share at which a share of Common Stock shall be sold in
any Purchase Period shall be established by the Committee; provided, however,
that the Purchase Price on each Purchase Date shall not be less than eighty-five
percent (85%) of the lesser of the Fair Market Value of a Share on the
(i) Offering Date or (ii) Purchase Date (but in no event less than the par value
of a Share). Unless otherwise provided by the Committee, the Purchase Price for
each Purchase Period shall be eighty-five percent (85%) of the lesser of the
Fair Market Value of a Share on the (i) Offering Date or (ii) Purchase Date (but
in no event less than the par value of a Share).

 

11.                               Payment Of Purchase Price; Changes In Payroll
Deductions; Issuance Of Shares.

 

(a)           The Purchase Price of the Shares will be paid by accumulated
regular payroll deductions made by a Participant during each Purchase Period.
Payroll deductions are made as a percentage of the Participant’s Compensation in
one percent (1%) increments, not less than one percent (1%), nor greater than
twenty percent (20%), or such lower limit set by the Committee. Except as
otherwise provided in this Plan, payroll deductions shall commence on the first
payday of the Offering Period and shall continue to the end of the Offering
Period unless sooner altered or terminated as provided in this Plan.

 

(b)           A Participant may increase or decrease the rate of payroll
deductions during an Offering Period (but not below one percent (1%) of
Compensation or not above any maximum percentage of Compensation established by
the Committee, which limits may be subsequently changed by the Committee in its
sole discretion) by filing with the Company a new authorization for payroll
deductions, in which case the new rate shall become effective for the next full
payroll period commencing five (5) business days after the Company’s receipt of
the authorization (unless the Committee, in its sole discretion, elects to
process a given change in payroll deduction rate more quickly) and shall
continue for the remainder of the Offering Period unless changed as described
below. Such increase or decrease in the rate of payroll deductions may be made
at any time during an Offering Period, but not more than one (1) change to
increase and one (1) change to decrease deductions may be made effective during
any Offering Period; provided however that a change to decrease payroll
deductions to zero shall be governed by Section 11(d) below. A Participant may
increase or decrease the rate of payroll deductions for any subsequent Offering
Period by filing with the Company a new authorization for payroll deductions
prior to the beginning of such Offering Period, or such other time period as
specified by the Committee. If a Participant has not followed such procedures to
change the rate of payroll deductions, the rate of his or her payroll deductions
will continue at the originally elected rate throughout the Offering Period and
future Offering Periods (unless correctly changed as provided in this
Section 11(b) or terminated as provided in Section 13).

 

(c)           Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 12(a), the Committee may decrease
a Participant’s payroll deductions to zero percent (0%) at any time during a
Purchase Period. Subject to Section 423(b)(8) of the Code and Section 12(a),
payroll deductions which have been decreased to zero percent (0%) pursuant to
this Section 11(c) will recommence at the rate originally elected by the
Participant effective as of the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 13.

 

(d)           A Participant may reduce his or her payroll deduction percentage
to zero during an Offering Period by filing with the Company a request for
cessation of payroll deductions. Such reduction shall be effective beginning
with the next payroll period after the Company’s receipt of the request and no

 

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further payroll deductions shall be made for the duration of the Offering
Period. Payroll deductions credited to the Participant’s account prior to the
effective date of the request shall be used to purchase Shares in accordance
with Section 11(f) below. A Participant may not resume making payroll deductions
during the Offering Period in which he or she reduced his or her payroll
deductions to zero.

 

(e)           All payroll deductions made for a Participant are credited to his
or her account under this Plan and are deposited with the general funds of the
Company. No interest accrues on the payroll deductions, except as may be
required by applicable law, as determined by the Committee, and if so required
by the laws of a particular jurisdiction. All payroll deductions received or
held by the Company may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

 

(f)            On each Purchase Date, for so long as this Plan remains in effect
and provided that the Participant has not submitted a signed and completed
withdrawal form before that date (which notifies the Company that the
Participant wishes to withdraw from that Offering Period under this Plan and
have all payroll deductions accumulated in the account maintained on behalf of
the Participant, as of that date returned to the Participant), the Company shall
apply the funds then in the Participant’s account to the purchase of whole
Shares reserved under the option granted to such Participant with respect to the
Offering Period to the extent that such option is exercisable on the Purchase
Date. The Purchase Price per Share shall be as specified in Section 10 of this
Plan. Any cash remaining in a Participant’s account after such purchase of
Shares shall be refunded to such Participant in cash, without interest;
provided, however, that any amount remaining in such Participant’s account on a
Purchase Date which is less than the amount necessary to purchase a full Share
shall be carried forward, without interest, into the next Purchase Period, as
the case may be. In the event that this Plan has been oversubscribed, all funds
not used to purchase Shares on the Purchase Date shall be returned to the
Participant, without interest. No Common Stock shall be purchased on a Purchase
Date on behalf of any Employee whose participation in this Plan has terminated
prior to such Purchase Date.

 

(g)           As soon as reasonably practicable after the Purchase Date, the
Company will arrange the delivery to each Participant of the Shares purchased
upon exercise of his or her option in a form determined by the Committee (in its
sole discretion) and pursuant to rules established by the Committee. The Company
may permit or require that the Shares be deposited directly with a broker
designated by the Company or to a designated agent of the Company, and the
Company may utilize electronic or automated methods of share transfer. The
Company may require that the Shares be retained with such broker or agent for a
designated period of time and/or may establish other procedures to permit
tracking of disqualifying dispositions of such Shares.

 

(h)           During a Participant’s lifetime, his or her option to purchase
Shares hereunder is exercisable only by him or her. The Participant shall have
no interest or voting, dividend or other stockholder rights with respect to the
Shares covered by his or her option until such option has been exercised and the
Shares underlying such option have been delivered to the Participant.

 

12.                               Limitations on Shares to be Purchased.

 

(a)           No Participant shall be permitted to purchase stock under this
Plan at a rate which, when aggregated with his or her rights to purchase stock
under all other employee stock purchase plans of the Company or any Parent or
Subsidiary, exceeds $25,000 in Fair Market Value, determined as of the Offering
Date (or such other limit as may be imposed by the Code) for each calendar year
in which such option is outstanding at any time. The Company shall automatically
suspend the payroll deductions of any Participant as necessary to enforce such
limit provided that when the Company automatically resumes such payroll
deductions, the Company must apply the rate in effect immediately prior to such
suspension.

 

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(b)           No Participant shall be permitted to purchase on a Purchase Date
an amount of Shares that would cause the Maximum Share Amount for the applicable
Offering Period to be exceeded by such Participant and the number of Shares that
the Participant can purchase shall be limited solely to the extent necessary so
that the Maximum Share Amount is not exceeded. Prior to the commencement of any
Offering Period or prior to such time period as specified by the Committee, the
Committee may, in its sole discretion, set a Maximum Share Amount or change the
Maximum Share Amount. Unless the Committee provides otherwise, the Plan’s
initial Maximum Share Amount for the First Offering Period shall equal 2,500
Shares. If a new Maximum Share Amount is set, then all Participants must be
notified of such Maximum Share Amount prior to the commencement of the next
Offering Period. The Maximum Share Amount shall continue to apply with respect
to all succeeding Offering Periods unless revised by the Committee as set forth
above.

 

(c)           If the number of Shares to be purchased on a Purchase Date by all
Employees participating in this Plan exceeds the number of Shares then available
for issuance under this Plan, then the Committee shall make a pro rata
allocation of the remaining Shares in as uniform a manner as shall be reasonably
practicable and as the Committee in its sole discretion shall determine to be
equitable, and either continue all Offering Periods then in effect or terminate
all Offering Periods then in effect pursuant to Section 28. In such event, the
Company shall give written notice of such reduction of the number of Shares to
be purchased under a Participant’s option to each Participant affected.

 

(d)           Any payroll deductions accumulated in a Participant’s account
which are not used to purchase Common Stock due to the limitations in this
Section 12 shall be returned to the Participant as soon as practicable after the
end of the applicable Purchase Period, without interest.

 

13.                               Withdrawal.

 

(a)           Each Participant may withdraw from an Offering Period under this
Plan by signing and delivering to the Company a written notice to that effect on
a form provided for such purpose. Such withdrawal may be elected at any time at
least five (5) days prior to the end of an Offering Period, or such other time
period as specified by the Committee.

 

(b)           Upon withdrawal from this Plan, all of the accumulated payroll
deductions shall be returned to the withdrawn Participant, without interest, and
his or her interest in this Plan shall automatically terminate and no further
payroll deductions for the purchase of Shares will be made for such Offering
Period. In the event a Participant voluntarily elects to withdraw from this
Plan, he or she may not resume his or her participation in this Plan during the
same Offering Period, but he or she may participate in any Offering Period under
this Plan which commences on a date subsequent to such withdrawal by filing a
new authorization for payroll deductions in the same manner as set forth in
Section 8 above for initial participation in this Plan.

 

14.                               Termination of Employment.

 

Termination of a Participant’s employment for any reason, including retirement,
death or the failure of a Participant to remain an Eligible Employee of the
Company or of a Participating Subsidiary, shall immediately terminate his or her
participation in this Plan and the Participant’s option to purchase will
automatically terminate. In such event, the payroll deductions credited to the
Participant’s account shall be returned to him or her or, in the case of his or
her death, to his or her legal representative, without interest. For purposes of
this Section 14, an Employee shall not be deemed to have terminated employment
or failed to remain in the continuous employ of the Company or of a
Participating Subsidiary in the case of sick leave, military leave, or any other
leave of absence approved by the Board or the Committee; provided, however that
such leave is for a period of not more than three (3) months or reemployment
upon the expiration of such leave is guaranteed by contract or statute.

 

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15.                               Return of Payroll Deductions.

 

In the event a Participant’s interest in this Plan is terminated by withdrawal,
termination of employment or otherwise, or in the event this Plan is terminated
by the Board or the Committee, the Company shall deliver to the Participant all
payroll deductions credited to such Participant’s account. Except as may be
required by applicable law, no interest shall accrue on the payroll deductions
of a Participant in this Plan.

 

16.                              Capital Changes.

 

Subject to any required action by the stockholders of the Company, the number
and type of shares of common stock covered by each option under this Plan which
has not yet been exercised, the number and type of shares of Common Stock which
have been authorized for issuance under this Plan but have not yet been placed
under option, and the Shares subject to the Annual Increase, the Share Limit and
Maximum Share Amount, as well as the Purchase Price per share of Common Stock
covered by each option under this Plan which has not yet been exercised, shall
be proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock of the Company resulting from a stock
split or the payment of a stock dividend (but only on the Common Stock), any
other increase or decrease in the number of issued and outstanding shares of
Common Stock effected without receipt of any consideration by the Company or
other change in the corporate structure or capitalization affecting the
Company’s present Common Stock; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the
Committee, whose determination shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option.

 

In the event of a proposed dissolution or liquidation of the Company, any
Offering Period then in progress will be shortened by setting a New Exercise
Date, and will terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Committee. The New
Exercise Date will be before the date of the Company’s proposed dissolution or
liquidation. The Committee will notify each Participant in writing or
electronically prior to the New Exercise Date, that the Purchase Date for the
Participant’s option has been changed to the New Exercise Date and that the
Participant’s option will be exercised automatically on the New Exercise Date,
unless the Participant has withdrawn from the Offering Period prior to the New
Exercise Date as provided in Section 13.

 

In the event of a merger or Change in Control, each outstanding option will be
assumed or an equivalent option substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. However, in the event that
the successor corporation refuses to assume or substitute for the Plan’s
outstanding options, the Offering Periods with respect to which such options
relate will be shortened by setting a New Exercise Date on which such Offering
Period shall end. The New Exercise Date will occur before the date of the
Company’s proposed merger or Change in Control. The Committee will notify each
Participant in writing or electronically prior to the New Exercise Date, that
the Purchase Date for the Participant’s option has been changed to the New
Exercise Date and that the Participant’s option will be exercised automatically
on the New Exercise Date, unless the Participant has withdrawn from the Offering
Period prior to the New Exercise Date as provided in Section 13.

 

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17.                               Withholding of Taxes.

 

At the time the option is exercised, in whole or in part, or at the time some or
all of the Common Stock issued under the Plan is disposed of, the Participant
must make adequate provision for the Company’s or Participating Subsidiary’s
federal, state, or any other tax liability payable to any authority, national
insurance, social security or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company or the Participating Subsidiary may, but will not be
obligated to, withhold from the Participant’s Compensation or Shares issued to a
Participant in the amount necessary for the Company or the Participating
Subsidiary to meet applicable withholding obligations, including any withholding
required to make available to the Company or the Participating Subsidiary any
tax deductions or benefits attributable to sale or early disposition of Common
Stock by the Participant.

 

18.                               Nonassignability.

 

Neither payroll deductions credited to a Participant’s account nor any rights
with regard to the exercise of an option or to receive Shares under this Plan
may be assigned, transferred, pledged or otherwise disposed of in any way (other
than by the laws of descent and distribution or as provided in Section 25 below)
by the Participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be void and without effect, except that the Company may treat
such an act as an election to withdraw from an Offering Period in accordance
with Section 13.

 

19.                               Reports.

 

Individual accounts shall be maintained for each Participant in this Plan. Each
Participant shall receive, at least annually, a report of his or her account
setting forth the total payroll deductions accumulated, the number of Shares
purchased, the per Share price thereof and the remaining cash balance, if any.

 

20.                               Notice of Disposition.

 

Each Participant shall notify the Company in writing if the Participant disposes
of any of the Shares purchased in a Purchase Period pursuant to this Plan if
such disposition occurs within the Notice Period. The Company may, at any time
during the Notice Period, place a legend or legends on any certificate
representing Shares acquired pursuant to this Plan requesting the Company’s
transfer agent to notify the Company of any transfer of the Shares. The
obligation of the Participant to provide such notice shall continue
notwithstanding the placement of any such legend on the certificates.

 

21.                               No Rights to Continued Employment.

 

Neither this Plan nor the grant of any option hereunder shall confer any right
on any Employee to remain in the employ of the Company or any Participating
Subsidiary, or restrict the right of the Company or any Participating Subsidiary
to terminate such Employee’s employment.

 

22.                               Equal Rights and Privileges.

 

All Eligible Employees shall have equal rights and privileges with respect to
this Plan so that this Plan qualifies as an “employee stock purchase plan”
within the meaning of Section 423 or any successor provision of the Code and the
related regulations. Any provision of this Plan which is inconsistent with
Section 423 or any successor provision of the Code shall, without further act or
amendment by the Company, the Committee or the Board, be reformed to comply with
the requirements of Section 423. This Section 22 shall take precedence over all
other provisions in this Plan.

 

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23.                               Notices.

 

All notices or other communications by a Participant to the Company under or in
connection with this Plan shall be deemed to have been duly given when received
in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.

 

24.                               Term; Stockholder Approval.

 

This Plan was originally adopted by the Board on June 8, 2011 conditioned on and
subject to obtaining Company stockholder approval on or before September 30,
2011. This Plan will be terminated as of September 30, 2011 and be null and void
with no Share issuances if Company stockholders have not approved this Plan on
or before September 30, 2011. Provided that this Plan is timely approved by the
stockholders of the Company then this Plan shall become effective on October 1,
2011 and shall continue until the earliest to occur of (a) termination of this
Plan by the Board or the Committee (which termination may be effected by the
Board or the Committee at any time), (b) issuance of all of the Shares reserved
for issuance under this Plan, or (c) September 30, 2031.

 

25.                               Designation of Beneficiary.

 

(a)           A Participant may file a written designation of a beneficiary who
is to receive any Shares and cash, if any, from the Participant’s account under
this Plan in the event of such Participant’s death subsequent to the end of a
Purchase Period but prior to delivery to him of such Shares and cash. In
addition, a Participant may file a written designation of a beneficiary who is
to receive any cash from the Participant’s account under this Plan in the event
of such Participant’s death prior to a Purchase Date.

 

(b)           Such designation of beneficiary may be changed by the Participant
at any time by written notice. In the event of the death of a Participant and in
the absence of a beneficiary validly designated under this Plan who is living at
the time of such Participant’s death, the Company shall deliver such Shares or
cash to the executor or administrator of the estate of the Participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such Shares or cash to the
spouse or to any one or more dependents or relatives of the Participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

 

26.                               Conditions Upon Issuance of Shares; Limitation
on Sale of Shares.

 

Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such Shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
or automated quotation system upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

 

As a condition to the exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
applicable provisions of law.

 

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27.                               Applicable Law.

 

The Plan shall be governed by the substantive laws (excluding the conflict of
laws rules) of the State of Delaware.

 

28.                               Amendment or Termination.

 

(a)           The Board or the Committee may at any time amend, terminate or
extend the term of this Plan, except that any such termination cannot affect
options previously granted under this Plan, nor may any amendment make any
change in an option previously granted which would adversely affect the right of
any Participant, nor may any amendment be made without approval of the
stockholders of the Company within twelve (12) months of the adoption of such
amendment (or earlier if required by Section 24) if such amendment would:

 

i.                                          increase the number of Shares or
change the type of Shares that may be issued under this Plan;

 

ii.                                       expand the designation of the
Employees (or class of Employees) eligible for participation in this Plan; or

 

iii.                                    otherwise require stockholder approval
under applicable law or the requirements of any stock exchange or consolidated
listing system on which the Company’s stock is then listed.

 

(b)           Notwithstanding the foregoing, the Board or the Committee may make
such amendments to the Plan as the Board or the Committee determines to be
advisable and which do not cause unfavorable accounting treatment, including
termination of or changes with respect to current Offering Periods, if the
continuation of the Plan or any Offering Period would result in financial
accounting treatment for the Plan that is different from the financial
accounting treatment in effect on the date this Plan is adopted by the Board.

 

29.                               Rule 16b-3.

 

Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or any successor provision under the Securities
Exchange Act of 1934, as amended. If any provision of the Plan or action by the
Board or the Committee fails to so comply, it shall be deemed null and void to
the extent permitted by law and deemed advisable by the Board or the Committee.
Moreover, in the event the Plan does not include a provision required by
Rule 16b-3 to be stated herein, such provision (other than one relating to
eligibility requirements, or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan.

 

30.                               Successor Provisions.

 

Any reference to a statute, rule or regulation, or to a section of a statute,
rule or regulation, is a reference to that statute, rule, regulation, or section
as amended from time to time, both before and after the effective date of this
Plan and including any successor provisions.

 

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