Document:

Exhibit 10.21

 

TRANSLATION FOR REFERENCE
ONLY

 

SUPPLEMENTARY AGREEMENT

 

OF

 

PROPERTY LEASE CONTRACT

 

Party A
(Lessor): Finance Bureau of Dalian High-Tech Industrial Zone

 

Party B
(Lessee): HiSoft Technology (Dalian) Co., Ltd.

 

1.      Party A and Party B entered
into a Property Lease Contract on April 30, 2010. According to the
Property Lease Contract, Party A agrees to lease the floors from the 11th to the 18th (physical
floors) of the Minghui Building and the “Further Leasing Area” further agreed
upon by both parties to Party B as its office and agrees to waive all the rent
for the leasing premises during the leasing term.

 

2.      After reaching unanimous
agreement through consultation, Party A and Party B agree to make amendments to
the following clauses of the Property Lease Contract as follows:

 

(1)     Clause 2.1 of Clause II Term
of Lease:

 

Before amendment: 2.1   The
term of lease for the floors from the 11th to the 18th is five (5) years commencing from
May 1, 2010 (hereinafter, the “Commencing Date”).

 

After amendment:  2.1   The term of lease for
the floors from the 11th to the 18th is four
(4) years and four (4) months commencing from May 1, 2010
(hereinafter, the “Commencing Date”).

 

(2)     Clause 2.2 of Clause II Term
of Lease:

 

Before amendment: 2.2    In the event that Party B
raises the request to lease the Further Leasing Area according to the
provisions of Section 1.2.4 above, Party A shall agree to lease the
Further Leasing Area to Party B for its use on the same conditions hereunder.  The validity period of the leasing
arrangement for the Further Leasing Area is five (5) years commencing from
the delivery date of such Further Leasing Area to Party B.

 

After amendment:  2.2     In the event that Party B raises the request to
lease the Further Leasing Area according to the provisions of
Section 1.2.4 above, Party A shall agree to lease the Further Leasing Area
to Party B for its use on the same conditions hereunder.  The validity period of the leasing
arrangement for the Further Leasing Area is four (4) years and four
(4) months commencing from the delivery date of such Further Leasing Area
to Party B.

 

(3)     Add Clause 2.4 to Clause II
Term of Lease as follows:

 

2.4    Upon expiration of the
leasing term provided hereunder, both parties will consult

 

1

 

with each other to agree on
the subsequent leasing arrangement of the Leasing Premises provided hereunder.

 

3.      Both parties hereby agree
that except for the aforesaid clauses which have been amended, the other
clauses of the Property Lease Contract shall remain the same.

 

4.      Upon the effectiveness of
this agreement, the Property Lease Contract shall be deemed amended as agreed
hereby and shall take effect and be legally binding on both Party A and Party B
as expression of consensus of both parties.

 

5.      This agreement shall become
effective upon execution by both parties.

 

6.      This agreement shall become
effective upon execution and affixing company seals by both Party A and Party
B.  This agreement is executed in two
(2) original copies.  Party A and
Party B shall each hold one (1) copy, and each has the same legal effect.

 

 

Party A: Finance Bureau of Dalian High-Tech Industrial Zone

 

[GOVERNMENT
SEAL]

 

 

Party B: HiSoft Technology (Dalian) Co., Ltd.

 

[COMPANY
SEAL]

 

 

Execution
Date: July 25, 2010

 

2Exhibit
4.1

 

	
  

  	
  SPECIMEN COMMON
  STOCK COMMON STOCK FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK,
  $0.0000056 PAR VALUE PER SHARE, OF SemiLEDs Corporation transferable on the
  books of the Corporation by the holder hereof in person or by duly authorized
  attorney upon surrender of this Certificate properly endorsed. This
  Certificate shall not be valid until countersigned and registered by the
  Transfer Agent and Registrar. WITNESS the facsimile signatures of the
  Corporation's duly authorized officers. Dated: CHIEF EXECUTIVE OFFICER CHIEF
  FINANCIAL OFFICER COUNTERSIGNED AND REGISTERED: AMERICAN STOCK TRANSFER &
  TRUST COMPANY, LLC (NEW YORK, N.Y.) TRANSFER AGENT AND REGISTRAR BY
  AUTHORIZED SIGNATURE INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE
  REVERSE FOR STATEMENTS RELATING TO RIGHTS, PREFERENCES, PRIVILEGES AND
  RESTRICTIONS, IF ANY CUSIP 816645 10 5 THIS CERTIFIES THAT IS THE RECORD
  HOLDER OF SLDExhibit 10.39

 

October 18, 2010

 

Craig Gatarz

c/o RealD Inc.

100 N. Crescent Dr., Suite 120

Beverly Hills, CA 90210

 

Dear Craig:

 

On behalf of RealD Inc., a Delaware corporation  (the “Company”), I am pleased to provide you
with this letter setting forth the terms and conditions of your continued
employment with the Company (the “Agreement”).

 

1.             Title;
Duties; Reporting.  You will continue
to serve as the Company’s Executive Vice President, General Counsel and
Secretary and shall report directly to the Chief Executive Officer of the
Company.  You shall be a member of the
Company’s senior management team and shall have such duties and
responsibilities as shall be consistent with your position.  You shall work out of the Company’s
headquarters in Beverly Hills, California. 
You will also devote your full time, efforts, abilities, and energies to
promote the general welfare and interests of the Company and any related
enterprises of the Company.  You will
loyally, conscientiously, and professionally do and perform all duties and
responsibilities of your position, as well as any other duties and
responsibilities as will be reasonably assigned to you by the Company,
consistent with your position.  You will
strictly adhere to and obey all Company rules, policies, procedures,
regulations and guidelines including, but not limited to, those contained in
the Company’s employee handbook, as well as any others that the Company may
establish.  You will strictly adhere to
all applicable state and/or federal laws and/or regulations relating to your
employment with the Company.

 

(a)           No
Conflicting Obligations.  By signing
this Agreement, you confirm to the Company that you have no contractual
commitments or other legal obligations that would prohibit you from performing
your duties for the Company.

 

(b)           Effective
Date.  The effective date of this
Agreement shall be October 18, 2010 (the “Effective Date”).

 

(c)           Outside
Activities.  Notwithstanding anything
to the contrary contained herein, you may (i) serve as a director or member
of a committee or organization 

 

 

involving
no actual or potential conflict of interest with the Company and its
subsidiaries and affiliates; (ii) deliver lectures and fulfill speaking
engagements; (iii) engage in charitable and community activities; and (iv) invest
your personal assets in such form or manner that will not violate this
Agreement; provided, however, that the
activities described in clauses (i), (ii), (iii) or (iv) do not
materially affect or interfere with the performance of your duties and
obligations to the Company and further provided that the Company’s Chief
Executive Officer must provide its advance written consent with respect to the
items referenced in clause (i).

 

2.             Term.

 

(a)           Length of Term.  The term of this Agreement shall extend from
the Effective Date through March 31, 2012 (“Term”) unless
terminated earlier in accordance with the terms herein.  On April 1, 2011, and on each subsequent
April 1st through and including April 1, 2015, the end date of the
Term shall automatically be extended by one (1) additional year, unless
either party has previously provided written notice to the other party to not
so extend the Term.  Once such notice has
been provided, then the Term shall no longer be extended on any following April 1st.  Notwithstanding anything to the contrary,
this Agreement shall in all cases expire no later than (and cannot be extended
beyond) March 31, 2017.  Upon
expiration of the Term due to either parties’ providing written notice to not
extend the Term then, except as provided in Section 2(c) below, your
employment with the Company shall terminate (if not terminated earlier in
accordance with the terms herein) as of the end of the Term.   The terms of Sections 6 through 13
shall survive any termination or expiration of this Agreement or of your
employment.

 

(b)           Resignation.  Upon termination of your employment for any
reason, you shall be deemed to have immediately resigned from all positions as
an employee, officer and/or director with the Company, and any of its affiliates,
as of your last day of employment.

 

(c)           At-Will Status.  If the Term ends on March 31, 2017 and
if you are then still employed by the Company, then your employment shall
thereafter continue on an “at will” basis and during such at-will period either
party can terminate your employment without obligation (including without
limitation any obligation to provide severance payments or benefits) and/or the
Company can change any or all of the terms of your employment at any time for
any reason or no reason by providing written notice of the same.  For the avoidance of doubt, no advance
written notice will be required to effectuate a termination of your employment
after the expiration of the Term.

 

(d)           No Eligibility for Severance.  For the avoidance of doubt, the act of either
party providing written notice of its intention to not extend the Term, or the
expiration of the Term either on March 31, 2017 or as a result of a party
providing such written notice to not extend the Term, shall not trigger any
rights to or eligibility for severance, 

 

2

 

including without
limitation those payments and benefits described under Sections 3(d)(i) or
3(d)(ii).

 

3.             Compensation.

 

(a)           Base
Salary.

 

(i)            Effective as of July 21,
2010, the closing date of the Company’s initial public offering, your base
salary is $290,000 per year, payable in accordance
with the Company’s standard payroll procedures.  No later
than twenty (20) days after the date of execution of this Agreement, the
Company shall pay you a one-time catch-up payment in an amount equal to the
excess of the $290,000 base salary payable under this Agreement commencing as
of July 21, 2010, over the base salary actually paid to you during such
period.

 

(ii)           For all purposes of
this Agreement, the term “Base Salary” shall refer to the base salary in
effect from time to time.  During the
Term, your Base Salary will be reviewed annually and is subject to increase
(but not decrease) at the discretion of the Board.

 

(b)           Bonus.

 

(i)            Special Bonus.  Upon the commencement of your employment with
the Company in February 2010, the Company paid you, in advance and in
full, a special bonus (“Special Bonus”) in the total amount of $100,000,
less all applicable withholdings and deductions.  This Special Bonus shall be earned by you
monthly in 1/12th increments on the first day of the month
following each full month of completed employment, such that the first 1/12th increment was earned on April 1,
2010 and the final 1/12th increment shall be earned on March 1,
2011 subject to your continued employment. 
If your employment is terminated by the Company for Cause (as defined
below) or by you without Good Reason (as defined below) prior to March 1,
2011, then you will be obligated to return the unearned, pre-tax portion of the
Special Bonus to the Company within fifteen (15) days of your Termination Date
(as defined below).  In all other cases,
you shall be entitled to keep the Special Bonus in full.

 

(ii)           IPO Bonus.  As a result of your efforts which contributed
to the Company’s successful July 2010 initial public offering, the Company
shall pay you a special, one-time cash bonus award in the amount of $50,000
within twenty (20) days of the execution of this Agreement.

 

(iii)          Performance Bonus.  During each fiscal year of the Term,
beginning with the fiscal year ending March 31, 2011, you will annually be
eligible to earn a cash performance bonus (“Performance Bonus”) with a
target amount of eighty percent (80%) of your Base Salary.  Your actual bonus for fiscal 

 

3

 

year 2011, if any, shall be based on your
successful completion of the performance objectives (“MBO Goals”) prescribed and established by the Company.  Thereafter, the MBO Goals will continue to be prescribed and
established by the Company and you may have input into the development of such
MBO Goals (provided that MBO Goals may be replaced
with a successor incentive plan for you (and/or other employees) at the
direction of a compensation committee of the Board acting in good faith).  The Performance Bonus shall be paid to you no
later than the 15th day of the third month immediately following
the fiscal year with respect to which the Performance Bonus relates.  To earn any Performance Bonus, you must
remain employed by the Company through the end of the fiscal year(s) with
respect to which the Performance Bonus relates, except in the event a “Pro-Rated
Bonus” (defined below) is payable pursuant to Section 3(d)(i)(B) below
(Qualifying Termination), Section 4(d) below (death) or Section 4(e) below
(Disability).

 

(c)           Company-Sponsored
Benefits.

 

As a member of the senior
management team of the Company, you will also be eligible to receive all
employee benefits pursuant to the Company’s standard benefit plans that the
Company generally provides to the other members of the senior management team
that may be in effect from time to time. 
These currently include, without limitation, paid vacation, group health
benefits, 401(k) retirement benefits, business expense reimbursements,
PTO, sick time and Company paid holidays. 
The Company may, in its sole discretion and from time to time, amend or
eliminate any of these benefits.

 

(d)           Severance
and Other Termination Benefits.

 

(i)            Qualifying Termination.  If your employment is terminated during the Term
without Cause (as defined below) by the Company or by you for “Good Reason” (as
defined below) (each, a “Qualifying Termination”), the Company shall pay
you (or cause to occur, as applicable) each of the following:

 

(A)          cash severance installment payments in
an aggregate amount equal to one hundred percent (100%) of your annual Base
Salary as in effect on your Termination Date (“Cash Severance”) being
paid in ten monthly pro-rata installments with the first installment of Cash
Severance being paid on the 90th day after your “separation from service”
(within the meaning of Internal Revenue Code (“Code”) Section 409A)
from the Company (“Termination Date”) and the last installment being
paid on the first anniversary of the Termination Date;

 

(B)           a pro-rated cash Performance Bonus,
calculated as follows:  the product of (x) the
Performance Bonus that would have been earned during the fiscal year in which
the Qualifying Termination occurred, 

 

4

 

assuming that the
Qualifying Termination had not occurred and that you remained as General
Counsel of the Company through the end of such fiscal year, which Performance
Bonus, if any, shall be based on the extent to which the Company achieved the
MBO Goals (or the performance standards set forth in any successor incentive
plan) during such fiscal year, multiplied by (y) a fraction, the numerator
of which is the number of days of the Company’s fiscal year prior to the Termination
Date and the denominator of which is 365 days. 
This pro-rated Performance Bonus (a “Pro-Rated Bonus”) shall be
paid to you no later than the 15th day of the third month immediately following
the fiscal year in which the Qualifying Termination has occurred;

 

(C)           the Company will continue to pay the cost (to the
same extent that the Company was doing so immediately before the Termination
Date) for all group employee benefit coverage continuation under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to the
same extent provided by the Company’s group plans immediately before the
Termination Date for twelve (12) months after the Termination Date or until you
become eligible for group insurance benefits from another employer, whichever
occurs first, provided that you timely elect COBRA coverage (“COBRA Benefits”).  You agree (i) at any time either before
or during the period of time you are receiving benefits under this subsection
(C), to inform the Company promptly in writing if you become eligible to
receive group health coverage from another employer; and (ii) that you may
not increase the number of your designated dependents, if any, during this time
unless you do so at your own expense. 
The period of such COBRA Benefits shall be considered part of your COBRA
coverage entitlement period; and

 

(D)          the “Accrued Obligations” (defined
below) as of the Termination Date.

 

For avoidance of doubt,
the payments and benefits that may be provided under Sections 3(d)(i) above
or 3(d)(ii) below shall not be provided more than once and if payments and
benefits are provided under either one of these subsections, then no payments
or benefits will otherwise be provided again under either one of these
subsections.

 

(ii)           Change in Control.  If, during the Term,
there is a Qualifying Termination and your Termination Date occurs (because of
such Qualifying Termination) during the time period that commences on the date
that is ninety (90) days before a “Change in Control” (defined below) and
extends through the date that is twenty-four (24) months after a Change in
Control, then: (a) the amount of the total Cash Severance in Section 3(d)(i)(A) shall
be equal to one 

 

5

 

hundred eighty percent (180%) of the then annual
Base Salary; (b) the duration of your COBRA Benefits under Section 3(d)(i)(C) shall
be increased from twelve (12) months to eighteen (18) months; and (c) one
hundred percent (100%) of the Options (defined below), including any additional
stock options and other equity compensation incentives granted to you during
the Term (collectively, the “Equity Incentives”)(but excluding any
portion of the Performance Option or any other performance awards which
are/were forfeited due to failure to achieve the requisite performance
objectives) which are outstanding and unvested as of the Termination Date shall
become fully vested and exercisable as of the later of your Termination Date or
immediately prior to the date of the Change in Control.  Subject to Section 13 below, $75,000 of
your Cash Severance shall instead be fully paid to you in a single lump sum
payment on the 90th day after your Termination Date.  Subject to Section 13 below and to the
extent Code Section 409A is not violated, the remaining portion of your
Cash Severance shall instead be fully paid to you in a single lump sum payment
on the 90th day
after your Termination Date, provided however that if Code Section 409A
would be violated by such lump sum payment then such remaining portion of the
Cash Severance shall be paid out in the same time and manner specified in Section 3(d)(i)(A).  For avoidance of doubt, the payments and
benefits that may be provided under Sections 3(d)(i) or 3(d)(ii) shall
not be duplicated and if payments and benefits are provided under one such
subsection then no payments or benefits will be provided under the other
subsection and vice-versa.

 

(iii)          Release of Claims.  Notwithstanding anything to the contrary, in
order to receive any payments or benefits under Section 3(d)(i) or Section 3(d)(ii) as
applicable, you must timely execute and deliver (and not revoke) a separation
agreement and general release of claims in favor of the Company, any affiliates
or related entities, and their employees and affiliates, in the form and
content attached as Exhibit A hereto, within the time period
specified in the release, but in no event after the 60th day following the Termination
Date.  However, you shall receive payment
or benefits from the Company of the Accrued Obligations, as applicable,
regardless of whether a separation agreement and general release of claims in
the form and content attached as Exhibit A hereto is executed and
timely provided to the Company.

 

(iv)          Golden Parachute Excise Tax.  If any payment or benefit received or to be
received by you (including any payment or benefit received pursuant to this
Agreement or otherwise) would be (in whole or part) subject to the excise tax
imposed by Code Section 4999, or any successor provision thereto, or any
similar tax imposed by state or local law, or any interest or penalties with
respect to such excise tax (such tax or taxes, together with any such interest
and penalties, are hereafter collectively referred to as the “Excise Tax”),
then, the payments or benefits provided under this Agreement or any other
agreement pursuant to which you receive payments that give rise to the Excise
Tax will either be (a) paid in full or (b) reduced to the extent
necessary to make such payments and benefits not 

 

6

 

subject to such Excise Tax.  The Company shall reduce or eliminate the
payments first by reducing those payments that are not payable in cash and then
by reducing or eliminating cash payments, in each case in reverse order
beginning with payments that are to be paid the farthest in time from the
determination.  You shall receive the
greater, on an after-tax basis, of (a) or (b).  However, if the imposition of such Excise Tax
could be avoided by approval of stockholders as described in Code Section 280G(b)(5)(B),
then you may request the Company to solicit a vote of such stockholders
(described in Code Section 280G(b)(5)(B) and in which case you will
cooperate and execute any such waivers of compensation as may be necessary to
enable the stockholder vote to comply with the requirements specified under
Code Section 280G and the regulations promulgated thereunder.  In no event will the Company be required to
gross up any payment or benefit to you to avoid the effects of the Excise Tax
or to pay any regular or excise taxes arising from the application of the
Excise Tax.  Unless the Company and you
otherwise agree in writing, any parachute payment calculation will be made in
writing by independent public accountants selected by the Company, whose calculations
will be conclusive and binding upon the Company and you for all purposes.  The Company and you will furnish to the
accountants such information and documents as the accountants may reasonably
request in order to make a parachute payment determination.  The accountants also will provide its
calculations, together with detailed supporting documentation, both to the
Company and to you, before making any payments that may be subject to the
Excise Tax.  As expressly permitted by
Q/A #32 of the Code Section 280G regulations, with respect to performing
any present value calculations that are required in connection with this
Section, the parties affirmatively elect to utilize the Applicable Federal
Rates that are in effect in October, 2010 (the “October 2010 AFRs”)
and the accountants shall therefore use such October 2010 AFRs in their
determinations and calculations.

 

(e)           Expense
Reimbursement.  You shall be
reimbursed for all documented reasonable business expenses that are incurred in
the ordinary course of business in accordance with the Company’s expense
reimbursement policy as in effect from time to time.  Additionally, during your employment with the
Company, the Company will reimburse you for all reasonable expenses related to:
(i) the maintenance of your State Bar membership in the States of
California and New York; and (ii) all required continuing legal education
classes and requirements.  The Company
shall also provide you with a new Company-owned laptop computer reasonably
acceptable to you for your use provided you agree to comply with any applicable
Company policies regarding its use.  You
are required to return this laptop, and all other Company property, to the
Company upon your Termination Date.  Any
reimbursements or in-kind benefits provided under this Agreement that are
subject to Section 409A shall be made or provided in compliance with the
requirements of Section 409A, including, where applicable, the requirement
that (i) any reimbursement is for expenses incurred during the period of time
specified in this Agreement, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a fiscal year may not
affect the 

 

7

 

expenses eligible for reimbursement or in-kind
benefits to be provided, in any other fiscal year, (iii) the reimbursement
of an eligible expense will be made no later than the last day of the fiscal
year following the year in which the expense is incurred, and (iv) the
right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit.

 

4.                                       Other Termination Rules.

 

Notwithstanding
anything to the contrary in this Agreement whether express or implied, the
Company may at any time terminate your employment with the Company and the Term,  for any
reason or no reason, and with or without Cause, and you may resign from your
employment with or without Good Reason and terminate the Term, all as set forth
in greater detail in this Section 4. 
If your employment terminates due to your
resignation without Good Reason, or due to your death or Disability or by the
Company for Cause, or the Agreement is terminated at the end of the Term due to
non-renewal in accordance with Section 2, then you will not be eligible
for any severance benefits, except as provided in Sections 4(d) and 4(e).

 

(a)           The
following definitions shall apply for purposes of this Agreement:

 

(i)            “Accrued
Obligations” shall mean the sum of (i) any
portion of your accrued but unpaid Base Salary through the Termination Date; (ii) subject
to Section 13, any compensation previously earned but deferred by you
(together with any interest or earnings thereon) that has not yet been paid and
that is not otherwise to be paid at a later date pursuant to any deferred
compensation arrangement of the Company to which you are a party, if any; (iii) your
accrued but unpaid vacation pay through the Termination Date; (iv) any
reimbursements that you are entitled to receive under Section 3(e) of
the Agreement or otherwise; and (v) any vested benefits or amounts that
you are otherwise entitled to receive under any plan, policy, practice or
program of or any other contract or agreement with the Company in accordance
with the terms thereof (other than any such plan, policy, practice or program
of the Company that provides benefits in the nature of severance or
continuation pay).

 

(ii)           “Cause” shall
mean (i) your commission of fraud, (ii) your willful misconduct, (iii) your
material violation of Company policies or practices, (iv) your use or
disclosure of Confidential Information (as defined below) that is unauthorized
by this Agreement, or (v) your performance of any act or omission which,
if you were prosecuted, would constitute a felony, in each case as determined
by the Board of Directors of the Company (the “Board”) (or a committee
of members of the Board), whose determination shall be conclusive and binding.

 

(iii)          “Change in
Control” shall mean:

 

8

 

(1)           any person or group
of persons (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended ( the “Exchange Act”)
together with its affiliates, but excluding (i) the Company or any of its
subsidiaries, (ii) any employee benefit plans of the Company, or (iii) a
corporation or other entity owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
stock of the Company (individually, a “Person” and collectively, “Persons”),
is or becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act) of securities of the Company representing 50% or more
of the combined voting power of the Company’s then-outstanding securities (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates);

 

(2)           the consummation of a
merger or consolidation of the Company or any direct or indirect subsidiary of
the Company with any other corporation or other entity regardless of which
entity is the survivor, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company, such surviving entity or
any parent thereof outstanding immediately after such merger or consolidation;
or

 

(3)           there is consummated
an agreement for the sale or disposition of all or substantially all of the
Company’s assets.

 

(iv)          “Confidential
Information” shall mean:  The Company’s
confidential and proprietary business information, including but not limited to
the Company’s products, services, customers, contracts, fees, prices, costs,
business affairs, marketing, accounting, financial statements, employees,
research, inventions, data, software, and any other confidential and
proprietary business information of any kind, nature or description, tangible
or intangible, in whatever form.

 

(v)           “Disability”
shall mean your medically-determined
incapacity due to physical or mental illness which makes you unable to perform
substantially the duties pertaining to your employment with or without
reasonable accommodation for a period of six (6) consecutive months.

 

(vi)          “Good Reason”
shall mean any one or more of the following: (1) a material diminution in
your Base Salary, (2) a material diminution in your authority, duties,
reporting or responsibilities as the Company’s General Counsel, (3) a
material change in the geographic location at which you must perform your 

 

9

 

services to the
Company, which shall be defined to be a relocation of your principal workplace
to a new location that is more than thirty miles away from the workplace
location specified in Section 1 above, or (4) a material breach by
the Company of this Agreement.  Notwithstanding the foregoing, a diminution in your authority, duties, reporting
or responsibilities as the Company’s Executive Vice President and/or Secretary,
including any reduction, sharing or relinquishment of your title and/or role as
Executive Vice President and/or Secretary,
shall not constitute Good Reason.

 

(vii)         “Separation from
Service” has the meaning set forth in Treasury Regulations Section 1.409A-1(h)(1).

 

(viii)        “termination or
resignation for Good Reason” shall mean any termination or resignation by
you of your employment for Good Reason.

 

(ix)           “termination
without Cause” shall mean any termination of your employment by the Company
for any reason other than Cause or your death or Disability.

 

(b)           Termination for Cause.  The Company may terminate your employment and the
Term at any time for Cause, provided, however, that in the event the Board
determines to terminate your employment for Cause, such termination shall only
become effective if the Board shall first provide you with written notice
detailing the alleged grounds for such Cause, and if such act or omission is
susceptible to cure, provide you a 30 day period to cure such act or omission.
Upon a termination of your employment by the Company for Cause, you only will
be entitled to any salary and other benefits earned, but unpaid (including accrued
but unpaid vacation), and any reimbursement for expenses owed to you by the
Company, as of the Termination Date.

 

(c)           Termination without Cause.   The Company
shall have the unilateral right to terminate your employment and the Term
at any time without Cause, and without notice, in the Company’s sole and
absolute discretion.  Any such
termination without Cause shall not constitute a breach of any term of this
Agreement, express or implied, or a wrongful deprivation of your office or
position.   If the Company terminates
your employment and the Term without Cause, it shall be treated as a
Qualifying Termination and the Company shall have no obligation to you, except
to continue to pay you (or cause to occur, if applicable) the amounts (and
actions) set forth in Section 3(d)(i) above in accordance with the
terms thereof and any related provisions of this Agreement.

 

(d)           Termination due to Death.  Your employment and the Term  will be
automatically terminated on the date of your death.  In the event of your death, the Company shall pay your estate or assignees (or allow your estate or
assignees to retain, as applicable) within thirty (30) days of the Termination
Date the Accrued Obligations, subject to Section 13 below.  In addition, you shall be eligible to receive
a Pro-Rated Bonus for the year in which your employment is terminated,
calculated with reference to 

 

10

 

the Termination Date and calculated and paid as
provided in Section 3(d)(i)(B) above. 
The vested
Equity Incentives as of the date of your death shall be exercisable by your
estate or assignees until the earliest of (x) twelve (12) months following
the Termination Date; (y) the scheduled expiration date of the Equity
Incentives; or (z) the date on which the Equity Incentives are canceled
(and not substituted or assumed) pursuant to a Change in Control or merger or
acquisition or similar transaction involving the Company.

 

(e)           Termination due to Disability.  If
you are subject to a Disability, and if within thirty (30) days after written
notice is provided to you by the Company you shall not have returned to perform
substantially your duties, your employment and the Term may
be terminated by the Company for Disability. 
During any period prior to such termination during which you are unable
to perform substantially such duties due to Disability, the Company shall
continue to pay all amounts required to be paid under this Agreement (including
without limitation your Base Salary), offset by any amounts payable to your
under any disability insurance plan or policy provided by the Company, and the
Company shall continue to provide all benefits to you hereunder.  Upon termination of your employment due to
Disability, the Company shall pay you (or allow you to retain, as applicable)
within thirty (30) days of such termination the Accrued Obligations, subject to
Section 13 below.  In addition, you
shall be eligible to receive a Pro-Rated Bonus for the year in which your
employment is terminated, calculated with reference to the Termination Date and
calculated and paid as provided in Section 3(d)(i)(B) above.  The vested Equity Incentives as of the Termination
Date shall be exercisable by you until the earliest of (x) twelve (12)
months following the Termination Date; (y) the scheduled expiration date
of the Equity Incentives; or (z) the date on which the Equity Incentives
are canceled (and not substituted or assumed) pursuant to a Change in Control
or merger or acquisition or similar transaction involving the Company.

 

(f)            Resignation for Good Reason.  You may terminate your employment and the
Term at any time for Good Reason, provided that you provide written notice to
the Company describing the existence of any Good Reason condition(s) within
ninety (90) days of the date of the initial existence of the condition(s) or
else you will be deemed to have waived any Good Reason with respect to such
condition(s).  Upon the Company’s receipt
of such written notice, the Company shall then have thirty (30) days during
which it may cure or remedy the condition(s). 
If the Company does cure or remedy the condition(s) during such
thirty (30) day period then Good Reason will be deemed to have not occurred
with respect to such condition(s).  If
the Company does not cure or remedy the condition(s) during such thirty
(30) day period then your employment with the Company and the Term shall be
terminated for Good Reason as of the day following the expiration of the thirty
(30) day cure/remedy period.  If you terminate
your employment for Good Reason in accordance with the provisions of this Section 4(f),
it shall be treated as a Qualifying Termination and the Company shall pay you
(or cause to occur, if applicable) the amounts (and actions) set forth in Section 3(d)(i) above
in accordance with the terms thereof and any related provisions of this
Agreement.

 

11

 

(g)           Resignation without Good Reason.  You may terminate your employment and the
Term at any time for no reason, or for any reason that does not otherwise
constitute Good Reason, in your sole and absolute discretion, but only if you
provide written notice to the Company at least six (6) months prior to the
effective date of your resignation (and such notice must specify the effective date
of your resignation of employment).  In
the event you so terminate your employment without Good Reason, you shall only
be entitled to receive (subject to Section 13 below) the Accrued
Obligations through the effective date of your resignation, as well as all
other compensation and benefits required under this Agreement through the
effective date of your resignation, and neither you nor the Company shall have
any further obligations to the other except as set forth in Section 6
(Confidential Information), Section 7 (Covenants) and Sections 8 through
and including 13.  However, in the event
you terminate your employment without Good Reason and your Termination Date
occurs prior to the end of the required minimum six-month notice period
provided in this Section 4(g), then all of your Equity Incentives shall
immediately expire and be forfeited as of such Termination Date.  The Company is not obligated to actually
utilize your services at any time during the six-month period preceding the
effective date of your resignation, and may prevent you from accessing any of
the Company premises or resources during such six-month period.  Additionally, as long as the Company provides
you with any compensation and benefits that would have been earned by you
pursuant to Sections 3(a), 3(b) and 3(c) during the six-month period
preceding the effective date of your resignation had you remained employed
during such period, the Company may terminate your employment prior to the
expiration of such six-month period without
triggering any rights to or eligibility for severance, including without
limitation those payments and benefits described under Sections 3(d)(i) or
3(d)(ii).

 

5.             Equity
Compensation.

 

(a)           On
July 15, 2010, the Company granted you a non-qualified stock option to purchase
67,500 shares of common stock (the “Annual Grant  Option”) of the
Company and a second non-qualified stock option to purchase 60,000 shares of
common stock of the Company (the “Performance Option”) and a third
non-qualified stock option to purchase 300,000 shares of common stock (the “Commencement
Option” and together with the Annual Grant Option and Performance Option,
the “Options”) of the Company under the Company’s 2010 Stock Incentive
Plan (“Stock Plan”).  The terms
and conditions of the Options are set forth in the stock option agreements
evidencing the grants and the Stock Plan. 
Copies of the Stock Plan, Stock Plan prospectus and the option grant
notices and stock option agreements evidencing the Options granted to you were
delivered to you at the time of the grant. 
The Options satisfy any prior Company commitments to grant you equity
compensation.

 

(b)           You
shall be eligible to be considered for additional equity awards during each
year of the Term at the discretion of the Board (or an appropriate committee
thereof).

 

12

 

6.             Confidential
Information.  As an employee of the
Company, you will have access to certain confidential information of the
Company and you may, during the course of your employment or thereafter,
develop certain information or inventions which will be the property of the
Company.  In consideration of, and as a
condition to, your employment with the Company, and as an essential inducement to
the Company to enter into this Agreement, this Agreement is expressly subject
to your compliance with the RealD Inc. Employee Invention Assignment and
Confidentiality Agreement (the “Confidentiality Agreement”) that you
previously executed, a copy of which is enclosed hereto as Exhibit B.

 

7.             Covenants.  You agree to timely and fully comply with all
of the covenants set forth in this Section 7 and further understand and
agree that such covenants shall survive any termination of your employment and
termination or expiration of this Agreement.

 

(a)           Return
of Company Property.  On your
Termination Date, or at any other time as required by the Company, you will
immediately surrender to the Company all Company property, including but not
limited to Confidential Information (as such term is defined in the
Confidentiality Agreement), keys, key cards, computers, telephones, pagers,
credit cards, automobiles, equipment, and/or other similar property of the
Company.

 

(b)           Nondisparagement.  You will not at any time during the period of
your employment with the Company and during any period in which you are
receiving severance payments under Section 3(d), make (or direct anyone
else to make) any disparaging statements (oral or written) about the Company,
or any of its affiliated entities, officers, directors, employees,
stockholders, representatives or agents, or any of the Company’s products or
services or work-in-progress, that are harmful to their businesses, business
reputations or personal reputations.

 

(c)           Cooperation.  You agree that, upon the Company’s request
and without any payment therefore, you shall reasonably cooperate with the
Company (and be available as necessary) after the Termination Date in
connection with any matters involving events that occurred during your period
of employment with the Company.

 

(d)           Amounts
Due.  You will fully pay off any
outstanding amounts owed to the Company no later than their applicable due date
or within thirty days of the Termination Date (if no other due date has
previously been established).  Within
thirty (30) days of the Termination Date, you will submit any outstanding
business expense reports to the Company for business expenses incurred prior to
the Termination Date.

 

(e)           Company
Resources.  As of the Termination
Date, you will no longer represent that you are an officer, director or
employee of the Company or any Company affiliate and you will immediately
discontinue using the Company mailing address, telephone, facsimile machines,
voice mail and e-mail.

 

13

 

(f)            Notice
of New Employment.  You will provide
written notice to the Company within three (3) business days after the
date that you agree to accept new full or part time employment or agree to
provide consulting or other services to another entity or venture.

 

(g)           Representations.  You represent that you have not entered into
any agreements, understandings, or arrangements with any person or entity that
you would breach as a result of, or that would in any way preclude or prohibit
you from entering into, this Agreement with the Company or performing any of
the duties and responsibilities provided for in this Agreement.  You represent that you do not possess any
confidential, proprietary business information belonging to any other entity,
and will not use any confidential, proprietary business information belonging
to any other entity in connection with your employment with the Company.  You represent that you are not resigning
employment or relocating any residence in reliance on any promise or
representation by the Company regarding the kind, character, or existence of
such work, or the length of time such work will last, or the compensation
therefor.

 

(h)           Clawback
Policy.  Without limiting the
requirement in Section 1 that you will strictly adhere to and obey Company
policies, you understand and agree that the Company has implemented a policy on
the recoupment of compensation (“Clawback Policy”).  As a result, you may be required to repay to the Company certain
previously paid compensation (that was earned or accrued on or after the
Effective Date) in accordance with any such Clawback Policy and/or in
accordance with applicable law.

 

(i)            Violations.  You acknowledge that (i) upon a
violation of any of the covenants contained in this Section 7; or (ii) if
the Company is terminating your employment for Cause as provided under this
Agreement, the Company would sustain irreparable harm as a result and that the
Company would not have entered into this Agreement without such restrictions,
and, therefore, you agree that in addition to any other remedies which the
Company may have, the Company shall be entitled, without bond of any kind, to
seek equitable relief including specific performance and injunctions
restraining you from committing or continuing any such violation.

 

(j)            Satisfaction
of Prior Company Obligations.  You
acknowledge and agree that as of the Effective Date, the Company’s obligations
to provide specified payments in connection with the rent obligations under
your prior Northern California home lease and travel and relocation expenses
from Northern California to Los Angeles, as specified in Sections 2(g) and
5 of that employment agreement by and between RealD and Craig Gatarz dated January 21,
2010, have been fully satisfied.

 

8.             Entire
Agreement.  This Agreement and its
attachments, the Employee Invention Assignment and Confidentiality Agreement,
and the Company’s 2010 Stock Incentive Plan, or any successor plan thereto, and
any other agreements referenced herein, as amended or superseded from time to time,
contain the entire agreement between you and the Company regarding their terms
and supersede any and all prior written or oral understandings including 

 

14

 

without limitation that employment agreement by and
between RealD and Craig Gatarz dated January 21, 2010.  Except as otherwise provided herein, this
Agreement may not be amended or modified except in a writing, executed by you
and a duly authorized officer of the Company other than yourself.  This Agreement may be executed by facsimile
signatures and in counterparts, each of which shall constitute an original, and
all of which shall constitute one and the same instrument.

 

9.             Choice
of Law; Severability; Waiver.  This
Agreement will be governed by the laws of the State of California, United
States, without reference to the conflict of law provisions thereof.  If any provision of this Agreement, or
portion thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision, or portion thereof, of this
Agreement.  No breach of any provision
hereof can be waived unless in writing. 
Waiver of any one breach of any provision hereof will not be deemed to
be a waiver of any other breach of the same or any other provision of this
Agreement.

 

10.           Successors
and Assigns.  The Company may assign
this Agreement to any successor (whether by amalgamation, merger,
consolidation, sale of assets, purchase or otherwise) to all or substantially
all of the equity, assets or business of the Company, and this Agreement will
be binding upon and inure to the benefit of such successors and assigns,
including any successor entity.  You may
not assign this Agreement or your obligations hereunder.

 

11.           Notice.  Any and all notices required or permitted to
be given to you or the Company pursuant to the provisions of this Agreement
will be in writing, and will be effective and deemed to provide such party
sufficient notice hereunder on the earliest of the following: (i) at the
time of personal delivery, if delivery is in person; (ii) one (1) business
day after deposit with an express overnight courier for United States
deliveries, or two (2) business days after such deposit for deliveries
outside of the United States; (iii) three (3) business days after
deposit in the United States mail by certified mail (return receipt requested)
for United States deliveries.  All
notices that the Company is required to or may desire to give you that are not
delivered personally will be sent with postage and/or other charges prepaid and
properly addressed to you at your home address of record with the Company, or
at such other address as you may from time to time designate by one of the
indicated means of notice herein.  All
notices that you are required to or may desire to give to the Company that are
not delivered personally will be sent with postage and/or other charges prepaid
and properly addressed to the Company’s General Counsel at its principal
office, or at such other office as the Company may from time to time designate
by one of the indicated means of notice herein.

 

12.           Withholding
and Taxes.  The Company shall have
the right to withhold and deduct from any payment hereunder any federal, state
or local taxes of any kind required by law to be withheld with respect to any
such payment.  The Company (including without
limitation members of the Board) shall not be liable to you or other persons as
to any unexpected or adverse tax consequence realized by you and you shall be
solely responsible for the timely payment of all taxes arising from this
Agreement that are imposed on you.

 

15

 

13.           Section 409A.  The payments under this Agreement are
intended to be exempt from the application of Section 409A pursuant to the
“short-term deferral” exception and “separation pay plan” exception under Section 409A
to the fullest extent possible.  Each
individual payment provided under Sections 3(d), 4(d) or 4(e) is
intended to be a separate payment and not a series of payments for purposes of Section 409A.  Anything in this Agreement to the contrary
notwithstanding, if the severance payment above constitutes an item of
nonqualified deferred compensation subject to Section 409A, the Company
and you shall take all steps necessary (including with regard to any
post-termination services you may perform) to ensure that any such termination
constitutes a “separation from service” within the meaning of Section 409A.  In addition, if you are deemed at the time of
your “separation from service” to be a “specified employee” within the meaning
of that term under Section 409A and to the extent delaying commencement of
payment of nonqualified deferred compensation (that is payable on account of
your separation from service) is required in order to avoid the imposition of
taxes under Section 409A, then all such payments and benefits will instead
be paid to you in a lump sum without interest on the earlier of (a) the
first business day of the seventh month following your “separation from service”
or (b) five business days after the date the Company receives written
confirmation of your death.  It is
intended that payments under this Agreement will be exempt from or comply with Section 409A,
but the Company makes no representation or covenant to ensure that the payments
under this Agreement are exempt from, or compliant with, 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, Section 409A
is not so exempt or compliant.

 

14.           Exhibits.  All Exhibits attached to this Agreement shall
be incorporated herein by this reference as though fully set forth herein.

 

A duplicate original of this Agreement is enclosed
for your records.  If you decide to
accept the terms of this Agreement, please sign the enclosed copy of this
Agreement and the Employee Invention Assignment and Confidentiality Agreement
in the spaces indicated and return it to me. 
Your signature will acknowledge that you have read and understood and
agreed to the terms and conditions of this Agreement and Employee Invention
Assignment and Confidentiality Agreement. 
Should you have anything else that you wish to discuss, please do not
hesitate to contact me.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  RealD Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael V. Lewis

  
	
   

  	
   

  	
  Michael V. Lewis

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

16

 

I have read, understand, and accept this
offer.  Furthermore, in choosing to
accept this offer, I agree that I am not relying on any representations,
whether verbal or written, except as specifically set out within this
Agreement.

 

 

	
  /s/ Craig Gatarz

  	
   

  
	
  Employee Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Craig Gatarz

  	
   

  
	
  Printed Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 
  October 26, 2010

  	
   

  

 

	
  Enclosures:

  	
  Duplicate Original Letter

  
	
   

  	
  EXHIBIT A:

  	
  FORM OF SEPARATION AGREEMENT AND RELEASE OF
  CLAIMS

  
	
   

  	
  EXHIBIT B:

  	
  EMPLOYEE INVENTION ASSIGNMENT AND CONFIDENTIALITY
  AGREEMENT

  

 

17

 

EXHIBIT A

FORM OF SEPARATION AGREEMENT AND
RELEASE OF CLAIMS

 

[Incorporated
by reference to Exhibit 10.31 filed with the Registrant’s 

Registration Statement on Form S-1/A (No. 333-165988) on May 26,
2010.]

 

 

EXHIBIT B

EMPLOYEE INVENTION ASSIGNMENT AND
CONFIDENTIALITY AGREEMENT

 

[Incorporated by reference to Exhibit 10.32
filed with the Registrant’s 

Registration Statement on Form S-1/A (No. 333-165988) on May 26,
2010.]

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