Document:

Exhibit 10.1

 

REALD INC.

2010 STOCK INCENTIVE PLAN

 

NONSTATUTORY STOCK OPTION AGREEMENT

 

The Company previously granted the Option to purchase Shares to the Optionee named below on May 8, 2012.  As of June 20, 2013 (the “Amendment Date”), the Company and the Optionee have agreed to amend the terms and conditions of the Option as set forth in this cover sheet, in the attached Nonstatutory Stock Option Agreement and in the RealD Inc. 2010 Stock Incentive Plan as it may be amended from time to time (the “Plan”).  This cover sheet and the attached Appendix A are incorporated into and is a part of the attached Nonstatutory Stock Option Agreement (together, the “Agreement”).  This Agreement supersedes and replaces in its entirety the previous agreement provided to and accepted by the Optionee on June 17, 2012.

 

	
Participant name:
    	
Michael Lewis
    
	
 
    	
 
    
	
Issue Date:
    	
08-May-2012
    
	
 
    	
 
    
	
Grant Price:
    	
$11.34 USD
    
	
 
    	
 
    
	
Total quantity granted:
    	
450,000
    
	
 
    	
 
    
	
Vesting Schedule:
    	
See Appendix A
    

 

 

By signing this cover sheet, you agree to all of the terms and conditions described in this Agreement and in the Plan and the Plan’s prospectus.  You are also acknowledging receipt of this Agreement and a copy of the Plan and the Plan’s prospectus and that this Agreement replaces and supersedes any prior agreement relating to this Option.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Company:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

Attachments

 

Appendix A

 

 

Nonstatutory Stock Option Agreement

 

APPENDIX A

 

VESTING SCHEDULE

 

Subject to the terms of this Agreement, the Plan and your continued Service (as defined in the Plan), your right to purchase Shares under this Option shall vest as follows:

 

1.            Performance-Based Vesting—Measurement Dates: On the last business day of each calendar quarter that occurs on or following the three-year anniversary of the Amendment Date and on or prior to the five-year anniversary of the Amendment Date (each of such business dates, a “Measurement Date”), this Option shall become vested and exercisable based on the Company TSR as measured versus the Index TSR on such Measurement Date as follows:

 

·                 If the Company TSR is in the 70th Percentile or higher of the Index TSR, the Shares shall vest to the extent necessary so that 100% of the Shares subject to the Option shall be vested as of the Measurement Date;

·                 If the Company TSR is in the 60th Percentile of the Index TSR, the Shares shall vest to the extent necessary so that 88% of all of the Shares subject to the Option shall be vested as of the Measurement Date (provided that no Shares shall vest if 88% or more of the Shares have previously vested prior to such Measurement Date);

·                 If the Company TSR is in the 50th Percentile of the Index TSR, the Shares shall vest to the extent necessary so that 75% of the all of the Shares subject to the Option shall be vested as of the Measurement Date (provided that no Shares shall vest if 75% or more of the Shares have previously vested prior to such Measurement Date);

·                 If the Company TSR is in the 45th Percentile of the Index TSR, the Shares shall vest to the extent necessary so that 63% of all of the Shares subject to the Option shall be vested as of the Measurement Date (provided that no Shares shall vest if 63% or more of the Shares have previously vested prior to such Measurement Date);

·                 If the Company TSR is in the 40th Percentile of the Index TSR, the Shares shall vest to the extent necessary so that 50% of the Shares subject to the Option shall be vested as of the Measurement Date (provided that no Shares shall vest if 50% or more of the Shares have previously vested prior to such Measurement Date); or

·                 If the Company TSR is below the 40th Percentile of the Index TSR, no Shares shall vest on the Measurement Date.

 

2.

 

Linear interpolation will be used to calculate vesting for Company TSR between the percentiles indicated above.

 

Example: If the Company TSR is at the 50th Percentile of the Index TSR as of the first Measurement Date, 337,500 Shares shall vest on the first Measurement Date.  If the Company TSR is in the 60th Percentile of the Index TSR as of the second Measurement Date, 58,500 Shares shall vest on the second Measurement Date so that as of the second Measurement Date a total of 88% of the Shares underlying the Option are vested.  If the Company TSR is in the 60th Percentile of the Index TSR as of the third Measurement Date, no Shares shall vest on the third Measurement Date.  If the Company TSR is in the 70th Percentile of the Index TSR as of the fourth Measurement Date, the remaining 54,000 Shares subject to the Option shall vest on the fourth Measurement Date and no further Measurement Dates shall occur.

 

2.            Determination of Vesting:  As soon as practicable after each Measurement Date, a widely recognized outside and independent valuation firm selected by the Board or the Committee will determine and will certify the applicable percentile level of the Company TSR as measured versus the Index TSR.  The Option shall continue to be eligible to vest on each of the Measurement Dates specified herein, provided that in the event that the Option becomes fully vested there shall be no further Measurement Dates.  Any portion of the Option that does not vest as of the five-year anniversary of the Amendment Date will immediately terminate and be forfeited on the date of certification following the last Measurement Date prior to such five-year anniversary of the Amendment Date.

 

3.            Change In Control.  In the event of a Change In Control prior to the five-year anniversary of the Amendment Date:

 

a.             Two trading days before the date of the consummation of the Change In Control shall be considered a Measurement Date and you shall, subject to the provisions of this Paragraph 3, be entitled to acquire pursuant to the exercise of the Option the number of Shares as would have vested under the calculations indicated in Paragraph 1above, as applicable, except that for purposes of such calculations, the closing price of the Company’s common stock on the NYSE on such Measurement Date shall be used in lieu of Company TSR (the number of Shares which would have vested under Paragraph 1 above will be referred to collectively as the “Earned Shares”).  Following such Measurement Date, there shall be no further Measurement Dates.

 

b.            If the Option is assumed, continued or substituted into comparable equity incentives of the acquirer in the Change In Control, the Earned Shares shall vest

 

3.

 

on either (i) the last business day of the calendar quarter during which the three-year anniversary of the Amendment Date occurs (if the Change in Control occurs prior to the three-year anniversary of the Amendment Date) or (ii) the last business day of the calendar quarter during which the effective date of the Change In Control occurs (if the Change In Control occurs after the three-year anniversary of the Amendment Date but prior to the five-year anniversary of the Amendment Date).

 

Notwithstanding anything to the contrary herein: (i) in the event that your Service is terminated without Cause (and other than as a result of your death or Disability) or if you resign for Good Reason during the time period that commences on the date that is ninety (90) days before the Change In Control or at any time prior to the five-year anniversary of the Amendment Date the Option with respect to the Earned Shares will become fully vested and immediately exercisable as of such date of termination or resignation; and (ii) in the event that (A) the Option is not assumed, continued or substituted into comparable equity incentives of the acquirer in a Change In Control, or (B) on or after a Change in Control, the acquirer’s shares (into which the Earned Shares are or would be converted or substituted) are not publicly-traded on an Established Securities Market, then in either case the Option with respect to the Earned Shares will become fully vested and exercisable as of immediately before such Change In Control (or, if later, as of immediately before the date on which the acquirer’s shares are no longer so publicly traded).

 

c.             If you are not anticipated to be the Chief Executive Officer or a member of the Board of the Company as of the date on which the Change In Control or the date on which the acquirer’s shares are no longer traded on an Established Securities Market is intended to take effect, as applicable, the Company shall provide you with written notice of the anticipated transaction or event at least ten (10) business days prior to the closing date of such transaction or event, so as to enable you to exercise the Option with respect to the Earned Shares subject to the terms of this Paragraph 3.

 

4.            Termination without Cause or Resignation for Good Reason.  In the event of your termination of Service without Cause (and other than as a result of your death or Disability) or your resignation for Good Reason at any time more than ninety (90) days prior to a Change In Control and prior to the five-year anniversary of the Amendment Date:

 

a.             If such termination or resignation occurs prior to the three-year anniversary of the Amendment Date, the Qualifying Termination Date shall be considered a

 

4.

 

Measurement Date and you shall vest in the number of Shares (i) that would have vested under the calculations indicated under Paragraph 1 above, based on the Company TSR as measured versus the Index TSR as of such date, multiplied by the following fraction (which shall not exceed 1.0): (ii) the (A) sum of the number of days you provided Service to the Company from the Amendment Date to the Qualifying Termination Date plus 730 days, divided by (B) 1,095 days.  Following such Measurement Date, there shall be no further Measurement Dates.

 

b.            If such termination or resignation occurs on or after the three-year anniversary of the Amendment Date and prior to the five-year anniversary of the Amendment Date, the Qualifying Termination Date shall be considered a Measurement Date and you shall vest in the number of Shares that would have vested under the calculations indicated under Paragraph 1 above, based on the Company TSR as measured versus the Index TSR as of such date.  Following such Measurement Date, there shall be no further Measurement Dates.

 

c.             The number of Shares subject to the Option that have vested pursuant to this Paragraph 4 shall be exercisable by you until the earliest to occur of (x) the close of business at Company headquarters on the first anniversary of the Qualifying Termination Date; (y) the scheduled expiration date of the Option (i.e., May 8, 2022); or (z) the date on which the Option is canceled (and not substituted or assumed) pursuant to a Change In Control or merger or acquisition or similar transaction involving the Company.

 

5.            Death or Disability.  In the event of your death or Disability at any time before the five-year anniversary of the Amendment Date, the Shares subject to the Option will become 100% vested and exercisable.

 

6.            Definitions:

a.             “Cause” will have the meaning set forth in the Employment Agreement.  In addition, all notice, cure, procedural and other provisions relating to the determination of Cause shall apply in the precise manner set forth in the Employment Agreement, and not based on the default rules set forth in the Plan.

b.            “Change In Control” will have the meaning set forth in the Employment Agreement.

c.             “Company TSR” means the Company’s total stockholder return, which is the Company’s stock price appreciation from the Amendment Date to the applicable Measurement Date, plus dividends and distributions made or declared (assuming such dividends or distributions are reinvested in the common stock of the Company), expressed as a percentage return.   The stock price at the Amendment Date will be the average closing price of the Company’s common stock on the

 

5.

 

New York Stock Exchange (“NYSE”) over the 30 trading days ending on the Amendment Date, and the stock price at the applicable Measurement Date will be the average closing price of the Company’s common stock on the NYSE over the 30 trading days ending on such Measurement Date, adjusted for stock splits or similar changes in capital structure.

d.           “Disability” will have the meaning set forth in the Employment Agreement.

e.             “Employment Agreement” means the employment letter between you and the Company dated May 25, 2010.

f.              “Established Securities Market” will be defined in the same manner as Treasury Regulation Section 1.897-1(m), except that an Established Securities Market shall not include listing or quotations on the OTC Bulletin Board or any similar quotation service or medium.

g.            “Good Reason” will have the meaning set forth in the Employment Agreement.

h.            “Index TSR” means the average total stockholder return, which is the average stock price appreciation for the companies in the Media Index from the Amendment Date to the applicable Measurement Date plus dividends and distributions made or declared (assuming such dividends or distributions are reinvested in the common stock of the Company), expressed as a percentage return.  The stock price at the Amendment Date will be the average closing price of common stock of the companies in the Media Index as reported on the NYSE, NASDAQ or other publicly-traded stock exchange for the 30 trading days ending on the Amendment Date, and the stock price at a Measurement Date will be the average closing price of common stock of the companies in the Media Index as reported on the NYSE, NASDAQ or other publicly-traded stock exchange for the 30 trading days ending on such Measurement Date, adjusted for stock splits or similar changes in capital structure.

i.                “Media Index” means the 40 members of the NASDAQ US Small Cap Media Index listed below, provided that:

i.                In the event that before a Measurement Date one of the member companies (a) stops actively trading on an Established Securities Market for any reason unrelated to bankruptcy (e.g., going private transaction, etc.); or (b) has been acquired by another company (whether by a peer company or otherwise, but not including internal reorganizations), it shall be removed from the Media Index from inception and shall not be included in the calculation of the Index TSR for such Measurement Date or for any subsequent Measurement Dates;

ii.            In the event that following the Amendment Date any additional company is added by NASDAQ to the NASDAQ US Small Cap Media Index, such company shall not be included in the Media Index or in the calculation of the Index TSR; and

 

6.

 

iii.        TSR for an Media Index company will be deemed to be -100% for any Measurement Date if, on or before such Measurement Date, the Media Index company: (A) files for bankruptcy, reorganization, or liquidation under any chapter of the U.S. Bankruptcy Code; (B) is the subject of an involuntary bankruptcy proceeding that is not dismissed within 30 days; (C) is the subject of a stockholder approved plan of liquidation or dissolution; or (iv) ceases to conduct substantial business operations.

	
 
    	
21.  Fisher Communications
    
	
1.     Acxion
    	
22.  Harte-Hanks
    
	
2.     Angie’s List
    	
23.  Journal Communications
    
	
3.     Arbitron
    	
24.  Meredith Corporation
    
	
4.     Ascent Capital Group
    	
25.  National CineMedia
    
	
5.     Avid Technology
    	
26.  The New York Times
    
	
6.     Bankrate
    	
27.  Outdoor Channel Hldgs
    
	
7.     Belo
    	
28.  Pandora Media
    
	
8.     Central European Media
    	
29.  QuinStreet
    
	
9.     Clear Channel Outdoor Hldgs
    	
30.  ReachLocal
    
	
10.  comScore
    	
31.  Schawk
    
	
11.  Constant Contact
    	
32.  Scholastic Corporation
    
	
12.  CSS Industries
    	
33.  Sinclair Broadcast Group
    
	
13.  Cumulus Media
    	
34.  TechTarget
    
	
14.  Demand Media
    	
35.  The E. W. Scripps Co.
    
	
15.  Digital Generation
    	
36.  Valassis Communications
    
	
16.  Dolby Laboratories
    	
37.  ValueClick
    
	
17.  DreamWorks Animation
    	
38.  WebMD Health
    
	
18.  Entercom Communications
    	
39.  XO Group
    
	
19.  Envivio
    	
40.  Yelp
    
	
20.  Epocrates
    	
 
    

 

j.                “Qualifying Termination Date” will have the meaning set forth in the Employment Agreement.

k.            “Termination Date” will have the meaning set forth in the Employment Agreement.

 

7.

 

Attachment

 

REALD INC.

 

2010 STOCK INCENTIVE PLAN

 

NONSTATUTORY STOCK OPTION AGREEMENT

 

1.            THE PLAN AND OTHER AGREEMENTS

 

The text of the Plan is incorporated in this Agreement by reference.  Certain capitalized terms used in this Agreement and not defined herein are defined in the Plan.

 

The cover sheet to which this Agreement is attached is considered part of and incorporated into this Agreement.  This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option.  Any prior agreements, commitments or negotiations concerning this Option are superseded.  For the avoidance of doubt, the terms of the Agreement, including the vesting terms contained on the cover sheet, supersede and replace the terms of the employment letter between you and the Company dated May 25, 2010 (the “Employment Agreement”) as they could relate to this Option.

 

2.            NONSTATUTORY STOCK OPTION

 

This Option is not intended to be an Incentive Stock Option under section 422 of the Code and will be interpreted accordingly.

 

This Option is not intended to be an Incentive Stock Option under section 409A of the Code and will be interpreted accordingly.

 

3.            VESTING

 

The Option is only exercisable before it expires and only with respect to the vested portion of the Option.  This Option will vest according to the Vesting Schedule described in the cover sheet of this Agreement.

 

4.            TERM

 

 

Your Option will expire in all cases no later than the Expiration Date, as shown on the cover sheet.  Your Option will expire earlier if your Service terminates, as described in Sections 5 and 6 below.

 

If the Expiration Date specified in the attached cover sheet falls on a day on which the New York Stock Exchange (“NYSE”) is open for trading, then any unexercised portion of this Option that is outstanding shall be forfeited without consideration as of 3:45 P.M. New York time on the Expiration Date.  However, if the Expiration Date specified in the attached cover sheet falls on any day on which the NYSE is not open for trading, then your ability to exercise this Option will terminate as of 3:45 P.M. New York time on the last day in which the NYSE is open for trading that occurs immediately prior to the Expiration Date.

 

5.            TERMINATION OF SERVICE - GENERAL

 

If, while the Option is outstanding, your Service terminates for any reason (including, but not limited to, death and Disability) other than being terminated by the Company for Cause or by you without Good Reason and your Termination Date occurs prior to the end date of the six month notice period required under Section 4(g) of the Employment Agreement, then, after taking into effect any vesting acceleration that may occur pursuant to the terms of the Agreement, any unvested portion of your Option shall be forfeited without consideration and shall immediately expire on your Termination Date and the vested portion of your Option will expire at the earlier of (i) the close of business at Company headquarters on the first anniversary of your Termination Date, (ii) the Expiration Date set forth in the attached cover sheet and further described in Section 4 above, or (iii) the date on which the Option is cancelled (and not substituted or assumed) pursuant to a Change in Control or merger or acquisition or similar transaction involving the Company.  In no event is the Option exercisable after the Expiration Date.  Moreover, the Option will terminate on an earlier date if the Option expires earlier as provided herein.

 

6.            TERMINATION OF SERVICE — FOR CAUSE OR WITHOUT GOOD REASON

 

If your Service is terminated by the Company for Cause, in accordance with the Employment Agreement governing such a termination, then you shall immediately forfeit all rights to your Option without consideration, including the vested portion of the Option, and the entire Option shall immediately expire, and any rights, payments and benefits with respect to the Option shall be subject to reduction or recoupment in accordance with the Clawback Policy and Section 13(d) of the Plan.

 

In the event that, while the vested portion of the Option is outstanding, the Company provides you with written notice of its intention to terminate you for Cause in accordance with

 

2.

 

Section 4(b) of the Employment Agreement, you shall be given the right to cure any such Cause event if and to the extent you are provided a cure right under Section 4(b) of the Employment Agreement (the “Cure Period”), any right you have to exercise the vested portion of the Option shall be suspended, and if the actions or inactions giving rise to such a termination for Cause are not timely cured by you during the Cure Period, then the entire Option, including the vested portion of the Option, shall immediately expire, as described in the paragraph above.  In the event that you timely cure the circumstances giving rise to such a termination for Cause within the Cure Period, the Company shall effective immediately remove the suspension and reinstate your right to exercise the vested portion of the Option.

 

If your employment with the Company is terminated by you without Good Reason and your Termination Date occurs prior to the end date of the six month notice period required under Section 4(g) of the Employment Agreement, then your Option, including any vested portion, shall be forfeited without consideration and the entire Option shall immediately expire on your Termination Date.  If your employment with the Company is terminated by you without Good Reason and your Termination Date occurs on or after the end date of the six month notice period required under Section 4(g) of the Employment Agreement, any vested portion of your Option shall remain exercisable by you in accordance with Section 5 above and any unvested portion of your Option shall immediately expire on your Termination Date.

 

7.            LEAVES OF ABSENCE

 

For purposes of this Option, your Service does not terminate when you go on a bone fide leave of absence that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law.  Your Service terminates in any event when the approved leave ends unless you immediately return to active work.

 

The Company determines which leaves count for this purpose (along with determining the effect of a leave of absence on vesting of the Option), and when your Service terminates for all purposes under the Plan.

 

8.            NOTICE OF EXERCISE

 

When you wish to exercise this Option, you must notify the Company by filing a “Notice of Exercise” form at the address given on the form.  Your notice must specify how many Shares you wish to purchase.  Your notice must also specify how your Shares should be registered (in your name only or in your and your spouse’s names as community property or as joint tenants with right of survivorship).  The notice will be effective when it is received by the Company.

 

3.

 

If someone else wants to exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to so.

 

9.            FORM OF PAYMENT

 

When you submit your notice of exercise, you must include payment of the exercise price of the Shares you are purchasing.  Payment may be made in one (or a combination) of the following forms:

 

	
·
    	
Cash,   your personal check, a cashier’s check or a money order.
    
	
 
    	
 
    
	
·
    	
Shares   which have already been owned by you for more than six (6) months and   which are surrendered to the Company. The Fair Market Value of the Shares,   determined as of the effective date of the option exercise, will be applied   to the Exercise Price.
    
	
 
    	
 
    
	
·
    	
To   the extent a public market for the Shares exists as determined by the   Company, by Cashless Exercise through delivery (on a form prescribed by the   Company) of an irrevocable direction to a securities broker to sell Shares   and to deliver all or part of the sale proceeds to the Company in payment of   the aggregate Exercise Price.
    

 

10.         WITHHOLDING TAXES

 

You will be solely responsible for payment of any and all applicable taxes associated with this Option.

 

You will not be allowed to exercise this Option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise or sale of Shares acquired under this Option.

 

11.         RESTRICTIONS ON EXERCISE AND RESALE

 

By signing this Agreement, you agree not to (i) exercise this Option (“Exercise Prohibition”), or (ii) sell, transfer, dispose of, pledge, hypothecate, make any short sale of, or otherwise effect a similar transaction of any Shares acquired under this Option (each a “Sale Prohibition”) at a time when applicable laws, regulations or Company or underwriter trading policies prohibit the exercise or disposition or Shares.  The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation.  The Company shall have the right to designate one or more periods of time, each of which

 

4.

 

generally will not exceed one hundred eighty (180) days in length (provided, however, that such period may be extended in connection with the Company’s release (or announcement of release) or earnings results or other material news or events), and to impose an Exercise Prohibition and/or Sale Prohibition, if the Company determines (in its sole discretion) that such limitation(s) is needed in connection with a public offering of Shares or to comply with an underwriter’s request or trading policy, or could in any way facilitate a lessening of any restriction on transfer pursuant to the Securities Act or any state securities laws with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws, or facilitate laws, or facilitate the perfection of any exemption from the registration or qualification requirements of the Securities Act or any applicable state securities laws for the issuance or transfer of any securities.  The Company may issue stop/transfer instructions and/or appropriate legend any stock certificates issued pursuant to this Option in order to ensure compliance with the foregoing.  Any such Exercise Prohibition shall not alter the vesting schedule set forth in this Agreement other than to limit the periods during this Option shall be exercisable.

 

If the sale of Shares under the Plan is not registered under the Securities Act, but an exemption is available which requires an investment or other representation, you shall represent and agree at the time of exercise that the Shares being acquired upon exercise of this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as we deemed necessary or appropriate by the Company and its counsel.

 

You may also be required, as a condition of exercise of this Option, to enter into any Company stockholder agreement or other agreements that are applicable to stockholders.

 

12.         TRANSFER OF OPTION

 

Prior to your death, only you may exercise this Option.  You cannot transfer, assign, alternate, pledge, attach, sell, or encumber this Option.  If you attempt to do any of these things, this Option will immediately become invalid.  You may, however, dispose of this Option in your will or it may be transferred by the laws of descent and distribution.  Regardless of any marital property settlement agreement, the Company is not obligated to recognize your spouse’s interest in your Option in any other way.

 

13.         RETENTION RIGHTS

 

Your Option or this Agreement does not give you the right to be retained by the Company (or any Parent or any Subsidiaries or Affiliate) in any capacity; provided, however, the foregoing statement shall not limit any of your rights under the Employment Agreement.

 

5.

 

Subject to the Employment Agreement, the Company (or any Parent and any Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason.

 

This Option and the Shares subject  to the Option are not intended to constitute or replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represent any portion of your salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

14.         STOCKHOLDER RIGHTS

 

You, or your estate or heirs, have no rights as a stockholder of the Company with regard to the Option until a certificate for your Option’s Shares has been issued.  No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in the Plan.

 

15.         ADJUSTMENTS

 

In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of Shares covered by this Option (rounded down to the nearest whole number) and the Exercise Price per Share may be adjusted pursuant to the Plan.  Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity, subject, if applicable, to the Change In Control vesting provisions described in the Vesting Schedule.

 

16.         LEGENDS

 

All certificates representing the Shares issued upon exercise of this Option may, where applicable, have endorsed thereon the following legends and any other legend the Company determines appropriate.

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST.  A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE

 

6.

 

SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE”

 

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED”

 

17.         APPLICABLE LAW

 

This Agreement will be interpreted and enforced under the laws of the State of California without reference to the conflicts of law provisions thereof.

 

18.         VOLUNTARY PARTICIPANT

 

You acknowledge that you are voluntarily participating in the Plan.

 

19.         NO RIGHTS TO FUTURE AWARDS

 

Subject to the Employment Agreement, your rights, if any, in respect of or in connection with this Option or any future Awards are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary future Award. By accepting this Option, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you or benefits in lieu of Options or any other Awards even if Options have been granted repeatedly in the past. All decisions with respect to future Awards, if any, will be at the sole discretion of the Committee.

 

20.         FUTURE VALUE

 

The future value of the underlying Shares is unknown and cannot be predicted with certainty. If the underlying Shares do not increase in value after the Date of Option Grant, the Option will have little or no value. If you exercise the Option and obtain Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price.

 

21.         NO RIGHT TO DAMAGES

 

You will have no right to bring a claim or to receive damages if any portion of the Option is cancelled or expires unexercised. The loss of existing or potential profit in the Option will not

 

7.

 

constitute an element of damages in the event of the termination of your Service for any reason, even if the termination is in violation of an obligation of the Company or a Parent or a Subsidiary or an Affiliate to you.

 

22.         NO ADVICE REGARDING GRANT

 

The Company has not provided any tax, legal or financial advice, nor has the Company made any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.

 

23.         OTHER PLAN PROVISIONS

 

The Company agrees that the following sections of the Plan shall not apply to this Agreement or the Option granted hereunder: (a) Section 15(b)(ii) of the Plan; and (b) the provisions in the first sentence of Section 4(d) of the Plan relating to rights of first refusal and rights of repurchase.

 

24.         DATA PRIVACY

 

You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by the Company for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that the Company holds certain personal information about you, including, but not limited to, name, home address and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, exercised, vested, unvested or outstanding in your favor for the purpose of implementing, managing and administering the Plan (“Data”). You understand that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country or elsewhere and that the recipient country may have different data privacy laws and protections than your country. You may request a list with the names and addresses of any potential recipients of the Data by contacting the Committee. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data, as may be required to a broker or other third party with whom you may elect to deposit any Shares acquired under the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage participation in the Plan. You understand

 

8.

 

that you may view your Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Committee in writing. You understand that refusing or withdrawing consent may affect your ability to participate in the Plan. For more information on the consequences of refusing to consent or withdrawing consent, you may contact the Committee and and/or the Board.

 

25.         OTHER INFORMATION

 

You agree to receive stockholder information, including copies of any annual report, proxy statement and periodic report, from the Company’s website at www.reald.com if the Company wishes to provide such information through its website. You acknowledge that copies of the Plan, Plan prospectus, Plan information and stockholder information are also available upon written or telephonic request to the Committee and for the Board.

 

By signing this Agreement, you agree to all of the terms and conditions described above and in the Plan and Plan prospectus.

 

9.Exhibit 10.2

 

REALD INC.
 2010 STOCK INCENTIVE PLAN
 PERFORMANCE STOCK UNIT AGREEMENT

 

The Company hereby awards Stock Units to the Participant named below.  The terms and conditions of the Award are set forth in this cover sheet, in the attached Appendix A, in the attached Stock Unit Agreement and in the RealD Inc. 2010 Stock Incentive Plan as it may be amended from time to time (the “Plan”).  This cover sheet and the attached Appendix A are incorporated into and a part of the attached Stock Unit Agreement (collectively these documents are the “Agreement”).  Capitalized terms used in the Agreement but not defined in the Agreement have the same meaning as in the Plan.

 

Date of Award:

 

Name of Participant: Michael V. Lewis

 

Target Number of Stock Units Awarded:

 

Maximum Number of Stock Units Awarded:

 

Fair Market Value of a Share on Date of Award:  $

 

Vesting:  The number of Stock Units that may vest will be determined based on the Company’s actual performance against the performance goals specified in the Award Determination, Vesting and Issuance Criteria attached as Appendix A hereto (the “Vesting and Issuance Criteria”), subject to the Participant’s satisfaction of the service vesting conditions set forth therein. The Target Number of Stock Units Awarded represent the number of Stock Units that would vest if the Participant satisfies the service vesting conditions set forth in the Vesting and Issuance Criteria and the Company achieves exactly 100% of the Company’s target performance goal specified in the Vesting and Issuance Criteria.

 

By signing this cover sheet, you agree to all of the terms and conditions described in the Agreement and in the Plan and the Plan’s prospectus.  You are also acknowledging receipt of this Agreement and a copy of the Plan and the Plan’s prospectus.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Company:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

Attachments

 

Appendix A

 

Stock Unit Agreement

 

1.

 

APPENDIX A

 

AWARD DETERMINATION, VESTING AND ISSUANCE CRITERIA

(2013 PERFORMANCE STOCK UNITS)

 

A.            Performance Period.  The performance period commences April 1, 2013, and ends on March 31, 2015 (the “Performance Period”).

 

B.            Performance Metric and Target.  The performance metric is total licensing revenue received by the Company (“TLR”) during the Performance Period.  The performance target is               in TLR during the Performance Period (the “Performance Target”).

 

C.            Performance and Award Determination Procedures.  As soon as practicable within the 45-day period following completion of the Performance Period, the Committee will determine and will certify the applicable level of achievement of the Company’s TLR during the Performance Period. The date of the Committee’s determination and certification is the “Certification Date.”   Based upon the Committee’s determination of the applicable TLR attainment level, the number of Stock Units that may vest will generally be determined as follows:

 

·                  The number of Stock Units that may vest is capped at              of the Target Number of Stock Units including any additional Stock Units credited as dividend equivalents. Subject to such maximum, the actual number of Stock Units that will be finally determined and awarded and may vest will be determined as set forth in the following chart based upon the indicated TLR performance levels with linear interpolation between performance levels (such determined number of Stock Units are the “Finalized Awarded Units”:

 

 

 

·                  Any Stock Units that are not determined to be Finalized Awarded Units pursuant to the foregoing criteria will immediately terminate and be forfeited on the Certification Date.

 

·                  Except as specifically provided below in the event of a termination of Service due to death or Disability or a Change in Control in each case that occurs prior to the Certification Date, if the Company’s actual TLR as determined on the Certification Date is less than        of the Performance Target, no Stock Units subject to the Award will be determined as Finalized Awarded Units or may vest, and the entire Award will be forfeited on the Certification Date.

 

·                  Except as specifically provided below, if the Participant’s Service terminates prior to the Certification Date, the Award will immediate terminate and be forfeited on such termination date.

 

D.            Vesting and Issuance Schedule.  Except as specifically provided below, 2/3rds of the total number of Finalized Awarded Units (“Certification Date Units”) will vest on the Certification Date, subject to the Participant’s Service through such date.  Except as specifically provided below, the remaining 1/3rd of the Finalized Awarded Units (the “Anniversary Date Units”) will vest on March 31, 2016 (the “Anniversary Date”), subject to the Participant’s Service through such date.  Except as specifically provided below, Shares will be issued in settlement of Finalized Awarded Units as follows:

 

·                  As soon as practicable within the 30-day period following the Certification Date, Shares will be issued in settlement of the Certification Date Units that vested on such date.

·                  As soon as practicable within the 30-day period following the Anniversary Date, Shares will be issued in settlement of the number of Anniversary Date Units that vested on such date.

 

2.

 

E.            Definitions.

 

1.             “Cause” will have the meaning set forth in the Employment Agreement.  In addition, all notice, cure, procedural and other provisions relating to the determination of Cause shall apply in the precise manner set forth in the Employment Agreement, and not based on the default rules set forth in the Plan.

 

2.             “Disability” will mean will mean that the Participant has become disabled within the meaning of Section 409A of the Code.

 

3.             “Employment Agreement” means the employment letter between the Participant and the Company dated May 25, 2010.

 

4.             “Good Reason” will have the meaning set forth in the Employment Agreement.

 

5.             “Qualifying Termination” means a termination without Cause or resignation for Good Reason, in each case subject to the Participant’s provision to the Company following such termination of an executed waiver and general release of claims in a form reasonably acceptable to the Company (the “Release”) no later than 45 days following such termination, and permitting such Release to become effective in accordance with its terms.

 

F.            Effect of Qualifying Termination; Death or Disability; Change In Control; Other Termination.

 

1.           Pro-Rata Vesting of Finalized Awarded Units in Connection with a Qualifying Termination Preceding the Certification Date.  Subject to Section G.2 below, in the event of a Qualifying Termination of the Participant that precedes the Certification Date, the entire Award will remain in effect through the Certification Date.  On the Certification Date, the number of Stock Units subject to the Award that will become Finalized Awarded Units and will vest on the Certification Date will be determined as a pro-rata portion of the number of Finalized Awarded Units that would have been determined if the Participant had continued in Service through the Certification Date.  Such pro-rata portion will be determined by taking the number of Finalized Awarded Units that would have vested had the Participant remained in Service through the Anniversary Date (the “Default Number of Units”) and multiplying it by the percentage determined by taking the number of full calendar months of Service that the Participant completed from the commencement of the Performance Period through the date of the Qualifying Termination plus an additional 24 months, and dividing such resulting number by 36; provided, however, that in no event will the pro-rata allocation be a percentage greater than 100%.  The pro-rata allocation will apply to the Certification Date Units and Anniversary Date Units portions of the Finalized Awarded Units as allocated pursuant to the 2/3rds and 1/3rd allocation method set forth in Section D.  Shares will be issued in respect of the pro-rata number of vested Certification Date Units during the 30-day period following the Certification Date.  Shares will be issued in respect of the pro-rata number of vested Anniversary Date Units during the 30-day period following the Anniversary Date. Any portion of the Award that is not determined as Finalized Awarded Units and vested on the Certification Date will immediately terminate and be forfeited.

 

2.           Pro-Rata Vesting of Anniversary Date Units in Connection with a Qualifying Termination Following the Certification Date and Preceding the Anniversary Date.  In the event of a Qualifying Termination of the Participant that follows the Certification Date but precedes the Anniversary Date, 100% of the determined Anniversary Date Units will vest on the date of such Qualifying Termination. Shares will be issued in respect of the vested Anniversary Date Units during the 30-day period following the Anniversary Date.

 

3.             Impact of Death or Disability.  Upon the Participant’s termination due to death or Disability that occurs prior to the expiration of the Performance Period and prior to any Change In Control, the Award shall immediately vest with respect to the Target Number of Stock Units Awarded.  Shares will be issued in settlement of

 

3.

 

the Target Number of Stock Units that vest on the 60th date following the date of the Participant’s death or Disability.  Any portion of the Award that does not vest will immediately terminate and be forfeited on such date.  Upon the Participant’s termination due to death or Disability that occurs after the expiration of the Performance Period but before the Certification Date, the number of Stock Units that vest will be determined on the Certification Date as the number of Finalized Awarded Units that would have been determined if the Participant had remained in Service through the Certification Date and that would have vested had the Participant remained in Service through the Anniversary Date, and Shares will be issued to the Participant in settlement of such fully vested Finalized Awarded Units within the 30-day period following such Certification Date.

 

4.             Impact of Other Termination.  Except as specifically otherwise provided herein with respect to a Participant’s Qualifying Termination or termination due to death or Disability, no Stock Units will vest after the Participant’s Service has terminated for any reason and the Participant will forfeit to the Company without consideration on the Termination Date all of the unvested Stock Units subject to this Award and the Participant shall cease to have right or entitlement to receive any Shares under such canceled Stock Units.

 

G.  Impact of Change In Control.

 

1.             Impact of Change In Control.  In the event of a Change In Control that occurs before the scheduled end of the Performance Period, the number of Stock Units that will be determined to be Finalized Awarded Units that may potentially vest will be calculated and determined as provided in Section C, but based upon the greater of the following TLR performance levels: (1) assuming that the Company exactly met the Performance Target, or (2) the Company’s actual TLR performance level during the portion of the Performance Period that precedes the effective date of the Change In Control, as determined immediately prior to such date (the greater of such achievement levels is the “CIC Achievement Level”). For avoidance of doubt, this provision is intended to result in determination of a number of Finalized Awarded Units that may potentially vest that will correspond to the CIC Achievement Level, without Committee certification (such determined Finalized Awarded Units are the “CIC Finalized Units”).  The CIC Finalized Units will be allocated as Certification Date Units and Anniversary Date Units in the same manner as provided in Section D with respect to Finalized Awarded Units.  Any portion of the Award that is not determined to be CIC Finalized Units based upon the CIC Achievement Level will immediately terminate and be forfeited upon the Change In Control.

 

2.             Impact of Qualifying Termination Followed By Change In Control.  In the event a Qualifying Termination is followed by a Change In Control that precedes the scheduled end of the Performance Period, the number of Finalized Awarded Units that will vest upon the Change In Control will be determined on a pro-rata basis in the same manner as calculated in Section F.1 above, except that a number of Finalized Awarded Units as determined based upon the CIC Achievement Level (as defined in Section G.1) will be substituted for the Default Number of Units. Any portion of the Award that does not vest upon the Change In Control will immediately terminate and be forfeited on such date.

 

3.             Issuance of Shares in Connection with a Change in Control.  If the Change in Control is also a 409A CIC, then Shares will be issued immediately prior to the Change In Control in settlement of the vested number of Finalized Awarded Units.  If the Change in Control is not a 409A CIC, then the Award must be assumed, continued or substituted by the Successor Company and Shares will be issued in settlement of any Certification Date Units on the scheduled expiration date of the Performance Period and Shares will be issued in settlement of any Anniversary Date Units upon the Anniversary Date (subject, in each case, to earlier issuance upon the Participant’s subsequent death or Disability, as further specified below).  If the Change in Control is not a 409A CIC, and prior to the expiration date of the Performance Period or prior to the Anniversary Date there is a termination due to death or Disability, the vested number of Finalized Awarded Units will be issued in settlement of the Award on the 60th date following the date of the Participant’s death or Disability. “409A CIC” means a Change in Control that is also a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company as described in Code Section 409A(a)(2)(A)(iv).

 

4.

 

H.            Application of Section 409A.

 

The Award is intended to comply with the requirements of Section 409A of the Code as providing for payment in the form of issuance of Shares in settlement of any vested portion of the Award in all cases within the same taxable year during which the earliest of the following Section 409A permitted payment dates and events occur: (i) with respect to Certification Date Units, the scheduled expiration date of the Performance Period, (ii) with respect to Anniversary Date Units, the Anniversary Date (iii) with respect to all Finalized Awarded Units, the sixtieth (60th) day following the Participant’s death, (iv) with respect to all Finalized Awarded Units, the sixtieth (60th) day following the Participant’s Disability, and (v) with respect to all Finalized Awarded Units, upon a 409A CIC.  Accordingly, the following provisions shall apply and shall supersede anything to the contrary set forth herein, in the Agreement and in the Plan to the extent required for the Award to comply with the requirements of Section 409A of the Code.  Upon a 409A CIC the Award may not be assumed, continued or substituted by the Successor Company and any Shares scheduled to be issued in settlement of Certification Date Units upon the scheduled expiration date of the Performance Period and Shares scheduled to be issued in settlement of Anniversary Date Units on the Anniversary Date will be earlier issued in settlement upon the 409A CIC.  Upon a Change in Control that is not a 409A CIC, then the Award must be assumed, continued or substituted by the Successor Company so that Shares will be issued in settlement of any Certification Date Units on the scheduled expiration date of the Performance Period and Shares will be issued in settlement of any Anniversary Date Units upon the Anniversary Date, in each case unless the Shares are earlier issued in connection with the Participant’s death or Disability.

 

The Company also retains the right to provide for earlier issuance of Shares in settlement of any vested portion of the Award to the extent permitted by Section 409A of the Code.

 

5.

 

REALD INC.
 2010 STOCK INCENTIVE PLAN

 

STOCK UNIT AGREEMENT

 

	
The Plan and Other Agreements
    	
 
    	
The   text of the Plan is incorporated in this Agreement by reference. The cover   sheet to which this Agreement is attached is considered part of and   incorporated into this Agreement. You and the Company agree to execute such   further instruments and to take such further action as may reasonably be   necessary to carry out the intent of this Agreement. Unless otherwise defined   in this Agreement or the attached cover sheet, certain capitalized terms used   in this Agreement are defined in the Plan.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
This   Agreement and the Plan constitute the entire understanding between you and   the Company regarding this Award of Stock Units. Any prior agreements,   commitments or negotiations are superseded.
    
	
 
    	
 
    	
 
    
	
Award of Stock Units
    	
 
    	
The   Company awards you the Target Number of Stock Units shown on the cover sheet   of this Agreement, with the potential to earn up to the Maximum Number of   Stock Units shown on the cover sheet of this Agreement. Each Stock Unit   represents the right to potentially be issued one Share on a future date. The   Award is subject to the terms and conditions of this Agreement and the Plan.
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
The   Stock Units subject to this Award shall become vested pursuant to the Vesting   and Issuance Criteria described on Appendix A to the cover sheet. Only vested   Stock Units shall be eligible for settlement. With respect to the   Participant, the Agreement shall supersede any individually negotiated   agreement with Company (or an Affiliate) and any generally applicable   severance or change-in-control plan, policy, or practice, whether written or   unwritten, of the Company (or an Affiliate) to the extent that such   agreement, plan, policy or practice provides for vesting acceleration of   equity awards.
    
	
 
    	
 
    	
 
    
	
Settlement
    	
 
    	
To   the extent a Stock Unit and Dividend Equivalents (defined in the section   below) becomes vested and subject to your satisfaction of any tax withholding   obligations as discussed below, each vested Stock Unit and each vested   Dividend Equivalent will entitle you to receive one Share which will be   distributed to you on the scheduled issuance date specified in the Vesting   and Issuance Criteria.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Issuance   of Shares shall be in complete satisfaction of such vested Stock Units and Dividend   Equivalents. Such settled Stock Units and Dividend Equivalents shall be   immediately canceled and no longer outstanding and you shall have no further   rights or entitlements related to those settled Stock Units and Dividend   Equivalents.
    
	
 
    	
 
    	
 
    
	
Dividend Equivalents
    	
 
    	
If   the Company declares and pays a dividend on the Shares, you shall be credited   with dividend equivalents equal to the dividends you would have received if   you had been the owner of a number of Shares (as opposed to Stock Units) on   such dividend payment date (the “Dividend Equivalents”). Any Dividend   Equivalents deriving from a cash dividend shall be converted into additional   Stock Units based on the Fair Market Value of Common Stock on the dividend   payment date, 
    

 

1.

 

	
 
    	
 
    	
rounded   down to the nearest full Share. Any Dividend Equivalents deriving from a   dividend of Shares shall be converted into additional Stock Units on a   one-for-one basis. You shall continue to be credited with Dividend Equivalents   until the settlement date (as described in the preceding Settlement section).   The Dividend Equivalents so credited shall be subject to the same terms and   conditions as this Award, and they shall vest (or, if applicable, be   forfeited) and be settled, without interest thereon, in the same manner and   at the same time as this Award, as if they had been granted at the same time   as such Award. Any Dividend Equivalents so credited which do not vest shall   be forfeited and retained, without consideration, by the Company. Your rights   to Dividend Equivalents shall cease upon forfeiture or settlement of the   Stock Units.
    
	
 
    	
 
    	
 
    
	
No Assignment
    	
 
    	
Stock   Units shall not be sold, anticipated, assigned, attached, garnished,   optioned, transferred or made subject to any creditor’s process, whether   voluntarily, involuntarily or by operation of law. However, this shall not   preclude a transfer of vested Stock Units by will or by the laws of descent   and distribution. In addition, pursuant to Company procedures, you may   designate a beneficiary who will receive any outstanding vested Stock Units   in the event of your death. Regardless of any marital property settlement   agreement, the Company is not obligated to recognize your spouse’s interest   in your Award in any way.
    
	
 
    	
 
    	
 
    
	
Leaves of Absence
    	
 
    	
For   purposes of this Award, your Service does not terminate when you go on a bona   fide leave of absence that was approved by the Company (or its Parent,   Subsidiary or Affiliate) in writing, if the terms of the leave provide for   continued Service crediting, or when continued Service crediting is required   by applicable law. Your Service terminates in any event when the approved   leave ends, unless you immediately return to active work.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The   Company determines which leaves count for this purpose (along with   determining the effect of a leave of absence on vesting of the Award), and   when your Service terminates for all purposes under the Plan.
    
	
 
    	
 
    	
 
    
	
Voting and Other Rights
    	
 
    	
A   holder of Stock Units shall have no rights other than those of a general creditor   of the Company. Subject to the terms of this Agreement, a holder of   outstanding Stock Units has none of the rights and privileges of a   stockholder of the Company, including no right to vote. Subject to the terms   and conditions of this Agreement, the Stock Units create no fiduciary duty of   the Company to you and only represent an unfunded and unsecured contractual   obligation of the Company. The Stock Units shall not be treated as property   or as a trust fund of any kind.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
You,   or your estate or heirs, have no rights as a stockholder of the Company until   Shares have been issued to you.
    
	
 
    	
 
    	
 
    
	
Restrictions on Issuance
    	
 
    	
The   Company will not issue any Shares if the issuance of such Shares at that time   would violate any law or regulation.
    
	
 
    	
 
    	
 
    
	
Taxes and Withholding
    	
 
    	
You   will be solely responsible for payment of any and all applicable taxes,   including without limitation any penalties or interest based upon such tax   obligations, associated with this Award.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The   delivery to you of any Shares underlying vested Stock Units will not be 
    

 

2.

 

	
 
    	
 
    	
permitted   unless and until you have satisfied any withholding or other taxes that may   be due. Any such tax withholding obligations may be settled in the Company’s   discretion by the Company withholding and retaining a portion of the Shares   from the Shares that would otherwise be deliverable to you under the vesting   Stock Units as provided in the next two sentences. Such withheld Shares will   be applied to pay the withholding obligation by using the aggregate Fair   Market Value of the withheld Shares as of the date of vesting. You will   be delivered the net amount of vested Shares after the Share withholding has   been effected and you will not receive the withheld Shares. The Company will   not deliver any fractional number of Shares.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
To   the extent applicable, each payment provided to you shall be considered a   separate payment and not one of a series of payments for purposes of Code   Section 409A. It is intended that payments under this Agreement will be   exempt from or comply with Code Section 409A but the Company makes no   representation or covenant to ensure that the payments under this Agreement   are exempt from, or compliant with, Code Section 409A, and will have no   liability to you or any other party if a payment under this Agreement that is   intended to be exempt from, or compliant with, Code Section 409A is not   so exempt or compliant.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notwithstanding   anything to the contrary, if, upon your Separation From Service, you are then   a Specified Employee, then to the extent necessary to comply with Code   Section 409A, the Company shall defer payment of certain of the amounts   owed to you under this Agreement until the earlier of (i) ten   (10) days after the Company receives written confirmation of your death   or (ii) the first business day of the seventh month following your   separation from service. Any such delayed payments shall be made to you (or   your beneficiaries) without interest.
    
	
 
    	
 
    	
 
    
	
Restrictions on Resale
    	
 
    	
By   signing this Agreement, you agree not to sell, transfer, dispose of, pledge,   hypothecate, make any short sale of, or otherwise effect a similar   transaction of any Shares acquired under this Award (each a “Sale   Prohibition”) at a time when applicable laws, regulations or Company or   underwriter trading policies prohibit the disposition of Shares. The Company   shall have the right to designate one or more periods of time, each of which   generally will not exceed one hundred eighty (180) days in length   (provided however, that such period may be extended in connection with the   Company’s release (or announcement of release) of earnings results or other   material news or events), and to impose a Sale Prohibition, if the Company   determines (in its sole discretion) that such limitation(s) is needed in   connection with a public offering of Shares or to comply with an   underwriter’s request or trading policy, or could in any way facilitate a   lessening of any restriction on transfer pursuant to the Securities Act or   any state securities laws with respect to any issuance of securities by the   Company, facilitate the registration or qualification of any securities by   the Company under the Securities Act or any state securities laws, or   facilitate the perfection of any exemption from the registration or   qualification requirements of the Securities Act or any applicable state   securities laws for the issuance or transfer of any securities. The Company   may issue stop/transfer instructions and/or appropriately legend any stock   certificates issued pursuant to this Award in order to ensure compliance with   the foregoing. Any such Sale Prohibition shall not alter the vesting schedule   set forth in this Agreement.
    

 

3.

 

	
 
    	
 
    	
If   the sale of Shares under the Plan is not registered under the Securities Act,   but an exemption is available which requires an investment or other   representation, you shall represent and agree at the time of settlement of   vested Stock Units that the Shares being acquired under this Award are being   acquired for investment, and not with a view to the sale or distribution   thereof, and shall make such other representations as are deemed necessary or   appropriate by the Company and its counsel.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
You   may also be required, as a condition of this Award, to enter into any Company   stockholder agreement or other agreements that are applicable to   stockholders.
    
	
 
    	
 
    	
 
    
	
No Retention Rights
    	
 
    	
Your   Award or this Agreement does not give you the right to be retained by the   Company (or any Parent or any Subsidiaries or Affiliates) in any capacity; provided, however, the foregoing statement shall not limit   any of your rights under the Employment Agreement. Subject to the Employment   Agreement, the Company (or any Parent and any Subsidiaries or Affiliates)   reserves the right to terminate your Service at any time and for any reason.
    
	
 
    	
 
    	
 
    
	
Extraordinary Compensation
    	
 
    	
This   Award and the Shares subject to the Award are not intended to constitute or   replace any pension rights or compensation and are not to be considered   compensation of a continuing or recurring nature, or part of your normal or   expected compensation, and in no way represent any portion of your salary,   compensation or other remuneration for any purpose, including but not limited   to calculating any severance, resignation, termination, redundancy,   dismissal, end of Service payments, bonuses, long-service awards, pension or   retirement benefits or similar payments.
    
	
 
    	
 
    	
 
    
	
Adjustments
    	
 
    	
In   the event of a stock split, a stock dividend or a similar change in the Company   stock, the number of outstanding Stock Units covered by this Award may be   adjusted (and rounded down to the nearest whole number) pursuant to the Plan.   Your Stock Units shall be subject to the terms of the agreement of merger,   liquidation or reorganization in the event the Company is subject to such   corporate activity, subject, if applicable, to the Change in Control vesting   and issuance provisions described on Appendix A.
    
	
 
    	
 
    	
 
    
	
Legends
    	
 
    	
All   certificates representing the Shares issued under this Award may, where   applicable, have endorsed thereon the following legends and any other legend   the Company determines appropriate:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“THE   SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON   TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT   BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN   INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE   COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE   COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS   CERTIFICATE.”
    

 

4.

 

	
 
    	
 
    	
“THE   SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT   OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE   TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN   OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH   REGISTRATION IS NOT REQUIRED.”
    
	
 
    	
 
    	
 
    
	
Notice
    	
 
    	
Any   notice to be given or delivered to the Company relating to this Agreement   shall be in writing and addressed to the Company at its principal corporate   offices. Any notice to be given or delivered to you relating to this   Agreement shall be in writing and addressed to you at such address of which   you advise the Company in writing. All notices shall be deemed effective upon   personal delivery or upon deposit in the U.S. mail, postage prepaid and   properly addressed to the party to be notified.
    
	
 
    	
 
    	
 
    
	
Applicable Law
    	
 
    	
This   Agreement will be interpreted and enforced under the laws of the State of   California.
    
	
 
    	
 
    	
 
    
	
Voluntary Participant
    	
 
    	
You   acknowledge that you are voluntarily participating in the Plan.
    
	
 
    	
 
    	
 
    
	
No Rights to Future Awards
    	
 
    	
Subject   to your Employment Agreement, your rights, if any, in respect of or in   connection with this Award or any other Award are derived solely from the   discretionary decision of the Company to permit you to participate in the   Plan and to benefit from a discretionary Award. By accepting this Award, you   expressly acknowledge that there is no obligation on the part of the Company   to continue the Plan and/or grant any additional Awards to you or benefits in   lieu of any other Awards even if Awards have been granted repeatedly in the   past. All decisions with respect to future Awards, if any, will be at the   sole and absolute discretion of the Committee.
    
	
 
    	
 
    	
 
    
	
Future Value
    	
 
    	
The   future value of the underlying Shares is unknown and cannot be predicted with   certainty. If the underlying Shares do not increase in value after the Date of   Award, the Award will have less value (or even no value) than it may have on   the Date of Award.
    
	
 
    	
 
    	
 
    
	
No Right to Damages
    	
 
    	
You   will have no right to bring a claim or to receive damages if any portion of   the Award is cancelled or expires. The loss of existing or potential profit   in the Award will not constitute an element of damages in the event of the   termination of your Service for any reason, even if the termination is in   violation of an obligation of the Company or a Parent or a Subsidiary or an   Affiliate to you.
    
	
 
    	
 
    	
 
    
	
No Advice Regarding Award
    	
 
    	
The   Company has not provided any tax, legal or financial advice, nor has the   Company made any recommendations regarding your participation in the Plan, or   your acquisition or sale of the underlying Shares. You are hereby advised to   consult with your own personal tax, legal and financial advisors regarding   your participation in the Plan before taking any action related to the Plan   or this Award.
    
	
 
    	
 
    	
 
    
	
Data Privacy
    	
 
    	
You   hereby explicitly and unambiguously consent to the collection, use and 
    

 

5.

 

	
 
    	
 
    	
transfer,   in electronic or other form, of your personal data as described in this   document by the Company for the exclusive purpose of implementing,   administering and managing your participation in the Plan. You understand   that the Company holds certain personal information about you, including, but   not limited to, name, home address and telephone number, date of birth,   social security or insurance number or other identification number, salary,   nationality, job title, any shares of stock or directorships held in the   Company, details of all Awards or any other entitlement to Shares awarded,   canceled, purchased, exercised, vested, unvested or outstanding in your favor   for the purpose of implementing, managing and administering the Plan   (“Data”). You understand that the Data may be transferred to any third   parties assisting in the implementation, administration and management of the   Plan, that these recipients may be located in your country or elsewhere and   that the recipient country may have different data privacy laws and   protections than your country. You authorize the recipients to receive,   possess, use, retain and transfer the Data, in electronic or other form, for   the purposes of implementing, administering and managing your participation   in the Plan, including any requisite transfer of such Data, as may be   required to a broker or other third party with whom you may elect to deposit   any Shares acquired under the Plan.
    
	
 
    	
 
    	
 
    
	
Other Plan Provisions
    	
 
    	
The   Company agrees that the following sections of the Plan shall not apply to   this Agreement or the Award of Stock Units granted hereunder:   (a) Section 15(b)(ii) of the Plan; and (b) the provisions   in the first sentence of Section 4(d) of the Plan relating to   rights of first refusal and rights of repurchase.
    
	
 
    	
 
    	
 
    
	
Other Information
    	
 
    	
You   agree to receive stockholder information, including without limitation copies   of any annual report, proxy statement and/or any current/periodic report,   from the Company’s website at www.reald.com, if the Company wishes to provide   such information through its website.
    

 

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above, and in the Plan and Plan prospectus.

 

6.

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