Document:

Exhibit
10.8

 

REALD INC.

2010 STOCK INCENTIVE PLAN

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 Stock Unit Agreement and
in the RealD Inc. 2010 Stock Incentive Plan as it may be amended from time to
time.  This cover sheet is incorporated
into and a part of the attached Stock Unit Agreement (together, the
“Agreement”).

 

Date of Award: 
                                    ,
[YEAR]

 

Name of Participant:

 

Number of Stock Units Awarded:

 

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

 

Vesting Calculation Date: 
                          ,
[YEAR]

 

Vesting Schedule:

 

[Subject to all terms of the Agreement and your
continued Service, the Stock Units under this Award shall vest at the rate of
one-twelfth (1/12) of the total number of Stock Units covered by this Award, as
shown above, per calendar month on the first day of each of the twelve (12)
months following the month of the Vesting Calculation Date.  The resulting aggregate
number of vested Stock Units will be rounded down to the nearest whole number.]

 

OR

 

[Subject to all terms of the Agreement and your
continued Service, the Stock Units under this Award shall vest at the rate of
one-twenty-fourth (1/24) of the total number of Stock Units covered by this
Award, as shown above, per calendar month on the first day of each of the
twenty-four (24) months following the month of the Vesting Calculation Date.  The resulting aggregate
number of vested Stock Units will be rounded down to the nearest whole number.]

 

In addition, if you are still rendering Service
upon the consummation of a Change In Control, the total number of then unvested
Stock Units subject to this Award shall become fully vested upon such
consummation of the Change In Control. 
Further, if your Service terminates due to your death or Disability, the
total number of then unvested Stock Units subject to this Award shall become
fully vested upon your Termination Date.

 

No Stock Units will vest after your Service has
terminated for any reason and you will forfeit to the Company without
consideration on your Termination Date all of the unvested Stock Units subject
to this Award and you shall cease to have right or entitlement to receive any
Shares under such canceled Stock Units.

 

 

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:

  	
   

  	
   

  

 

 

Attachment

 

 

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. 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 number of Stock
  Units shown on the cover sheet of this Agreement. 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 Schedule described in the cover sheet of this
  Agreement. Only vested Stock Units shall be eligible for settlement.

  
	
   

  	
   

  	
   

  
	
  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 earliest to occur of: (i) the fifth
  anniversary of the Date of Award; (ii) within ten (10) days after
  your Termination Date; or (iii) the consummation of a Change In Control.

   

  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

  	
   

  	
  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, 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 the corresponding 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 a certificate for your Shares has been
  issued.

  
	
   

  	
   

  	
   

  
	
  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 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 Shares of Common Stock.

   

  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 Company 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.

   

  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. 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.

  
	
   

  	
   

  	
   

  
	
  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.”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “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

  	
   

  	
  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
  unexercised. 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.

  
	
   

  	
   

  	
   

  
	
  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 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/or the Board.

  
	
   

  	
   

  	
   

  
	
  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/or the Board.

  

 

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.Exhibit 10.9

 

May 25, 2010

 

Michael V. Lewis

c/o RealD Inc.

100 N. Crescent Dr., Suite 120

Beverly Hills, CA 90210

 

Dear Michael:

 

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
Chief Executive Officer and Chairman (subject to being re-elected to the
Company’s Board of Directors by Company stockholders) and shall report directly
to the Board of Directors of the Company (the “Board”).  There shall be no other officers of the
Company who are equal or senior to you. 
You shall have the authority to run the day-to-day operations of the
Company and such other duties and responsibilities as shall be consistent with
your position.  All employees of the
Company shall report (directly or indirectly) to you, except that the Chief
Financial Officer of the Company shall also have a “dotted line” report to the
Board.  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)           Start Date.  The effective date of this Agreement shall be
April 1, 2010 (the “Effective Date”).

 

(b)           Board Seat
Nomination.  During the
Term and while you are serving as the Company’s Chief Executive Officer, the
Company agrees to nominate you to be re-elected to serve as a director on the
Board whenever your term as director comes up for re-election.

 

 

(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 Board must provide its
advance written consent with respect to the items referenced in clause (i).

 

2.             Term.

 

(a)           Initial Term.  The initial term of this Agreement shall
commence on the Effective Date and end on March 31, 2013 (“Term”)
unless terminated earlier or extended further in accordance with the terms
herein.

 

(b)           Renewal Term.  On April 1, 2011, and on each subsequent
April 1st through and including April 1, 2014 (each, a “Renewal
Date”), 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 prior to the Renewal Date to not so extend the Term (a “Renewal
Termination Notice”).  Once a Renewal
Termination Notice has been so provided, then the Term shall no longer be
extended on any Renewal Date following the date of the Renewal Termination
Notice and your employment hereunder shall continue through the expiration of
the Term (unless terminated earlier in accordance with the terms herein).  Notwithstanding anything to the contrary
herein, this Agreement shall in all cases expire no later than (and cannot be
extended beyond) March 31, 2017. 
The terms of Sections 6 through 14 shall survive any termination or
expiration of this Agreement or of your employment.

 

(c)           Resignation.  Upon termination of your employment for any
reason, you shall be deemed to have immediately resigned from all positions as
an employee and officer with the Company, and any of its affiliates, as of your
last day of employment.  In addition,
unless you and the Company otherwise agree in writing, effective as of the
Termination Date you shall be deemed to have immediately resigned from all
positions as a director of the Company and any of its affiliates upon (a) the
termination of your employment for “Cause” (defined below); (b) your
resignation other than for “Good Reason” (defined below); (c) your death
or termination due to Disability (defined below); or (d) a “Qualifying
Termination” (defined below) but only if, for purposes of this clause (d) only,
you hold shares of the Company as of the “Qualifying Termination Date” (defined
below) representing less than fifty percent (50%) of the number of shares of
the Company held by you as of the Effective Date.

 

(d)           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 

 

2

 

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.

 

(e)           No Eligibility for Severance.  For the avoidance of doubt, the act of either
party providing a Renewal Termination Notice, or the expiration of the Term
either on March 31, 2017 or sooner if either party has provided a Renewal
Termination Notice, shall not trigger any rights to or eligibility for
severance, 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 January 1, 2010, your
base salary is $600,000 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 $600,000 base salary payable under this Agreement commencing as
of January 1, 2010, over the base salary actually paid to you during such
period.

 

(ii)           Effective upon the effective date of an
initial public offering (“IPO”), if any, of the Company’s common shares
pursuant to an effective registration statement filed with the United States
Securities and Exchange Commission, your annual base salary shall be increased
to $700,000.

 

(iii)          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.

 

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 one
hundred percent (100%) of your Base Salary. 
Your actual bonus for fiscal year 2011, if any, shall be based on your
successful completion of the performance objectives (“MBO Goals”) that
are mutually approved in writing by you and the Company, such approval not to
be unreasonably withheld or delayed. 
Thereafter, the MBO Goals will be prescribed and established by the Company,
after full and meaningful consultation with you (provided that MBO Goals may
be replaced with a 

 

3

 

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, 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, during
the Term, you are no longer serving as the Chief Executive Officer of the
Company because either (1) the Company has terminated your employment as Chief
Executive Officer without “Cause” (defined below), or (2) you resign as
Chief Executive Officer 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 two hundred percent (200%)
of your annual Base Salary as in effect on your “Qualifying Termination Date”
(as defined below) (“Cash Severance”) with the first installment of Cash
Severance (in an amount equal to three months of Base Salary) being paid on the
90th day after the Termination Date and with the
remaining amount of Cash Severance being paid in equal monthly pro-rata
installments commencing four months after the Termination Date such that the
last installment is paid on the second 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, assuming that the Qualifying Termination had not occurred
and that you remained as Chief Executive Officer of the Company through the end
of 

 

4

 

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 Qualifying
Termination Date and the denominator of which is 365 days.  You shall also be eligible for a
discretionary bonus (as determined by the Board or a compensation committee of
the Board) for the portion of the year served through the Qualifying
Termination Date.  The pro-rated
Performance Bonus and any such discretionary bonus described in this clause
(d)(i)(B) (collectively, 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
Qualifying 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
Qualifying Termination Date for eighteen (18) months after the Qualifying
Termination Date provided that you are not an employee of the Company after the
Qualifying 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”).  In addition, to the extent that you are no
longer an employee of the Company after the Qualifying Termination Date, the
Company will continue to pay the cost (to the same extent that the Company was
doing so immediately before the Qualifying Termination Date) of all other
benefits being provided to you immediately prior to the Qualifying Termination
Date (the “Other Benefits”), for eighteen (18) months after the
Qualifying Termination Date.  If you remain
as an employee of the Company after a Qualifying Termination Date, the benefits
provided by the Company to you under this Section 3(d)(i)(C) shall
begin to be payable to you from the Termination Date (as determined with
reference to your employment with the Company which continued after the
Qualifying Termination) and shall be paid until the earlier of (x) eighteen
(18) months after such Termination Date; or (y) you become eligible to
receive group health coverage from another employer.  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 

 

5

 

considered
part of your COBRA coverage entitlement period, and may, for tax purposes, be
considered income to you;

 

(D)          the portion 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”),
that would have vested (assuming that your employment had continued and where
vesting is based solely on continued employment) through the twenty-four (24)
month period following the Qualifying Termination Date, shall automatically
vest and become exercisable on the Qualifying Termination Date.  In addition, in the event that any portion of
the Equity Incentives vest based on continued employment on an annual or “cliff”
basis and the date of any such annual or cliff vesting is outside of the
twenty-four (24) month forward vesting period mentioned in the preceding
sentence (each, a “Cliff Vesting Award”), then the portion of the Cliff Vesting Award
that, but for such Qualifying Termination, would have vested from the date of
grant of the Cliff Vesting Award through the twenty-four (24) month period
following such Qualifying Termination if the Cliff Vesting Award vested on a
monthly basis over its vesting period rather than 100% at the end of the
vesting period, shall automatically vest and become exercisable as of the
Qualifying Termination Date.  If and to the extent any portion of the
Equity Incentives are performance-based and/or are subject to any vesting
conditions other than the passage of time (including without limitation the “Performance
Options”, defined below) (collectively, the “Performance Awards”), then
such Equity Incentives shall vest and become exercisable based on the terms set
forth in the applicable Performance Award Agreement, it being understood that
the Company shall structure the Performance Awards to include the concept of
twenty-four (24) month forward vesting with respect to time-based vesting
requirements after the Qualifying Termination Date and a measurement of the
performance standard as of the Qualifying Termination Date, on a pro-rated
basis with reference to the Qualifying Termination Date or in any other manner
determined by the Company.  The vested
Equity Incentives as of the Qualifying Termination Date (including any Options
that were subject to accelerated vesting pursuant to this clause (D)) shall be
exercisable by you until the earliest to occur of (x) twelve (12) months
following the date on which the Equity Incentives vest pursuant to the terms of
this clause (D); (y) the scheduled expiration date of the Options or other
equity incentives; or (z) the date on which the Options are canceled (and
not substituted or assumed) pursuant to a Change in Control (defined below) or
merger or acquisition or similar transaction involving the Company; and

 

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

 

6

 

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 Qualifying 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 four hundred percent (400%) of the then annual Base Salary; (b) the
duration of your COBRA Benefits and Other Benefits under Section 3(d)(i)(C) shall
be eighteen (18) months; and (c) one hundred percent (100%) of the Equity
Incentives (including without limitation the Options but excluding any portion
of any Performance Awards which are/were forfeited due to failure to achieve
the requisite performance objectives) which are outstanding and unvested as of
the Qualifying Termination Date shall become fully vested and exercisable as of
the later of your Qualifying Termination Date or immediately prior to the date
of the Change in Control.  Subject to Section 14
below, your Cash Severance shall instead be fully paid to you in a single lump
sum payment on the 90th day after your Qualifying Termination
Date.  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.

 

Notwithstanding
anything to the contrary herein, in the event that during the Term (a) the
Equity Incentives are not assumed by 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 Equity Incentives are
converted or substituted) are not publicly-traded on an “Established Securities
Market” (defined below), then in either case the unvested Equity Incentives
(but excluding any portion of any Performance Awards which are/were forfeited
due to failure to achieve the requisite performance objectives) which are then
outstanding shall become fully vested and exercisable as of immediately before
such Change in Control.  In addition, if,
during the Term, you are still employed by the Company as of the consummation
of a Change in Control and the acquirer’s shares (into which the Equity
Incentives have been converted or substituted) are not publicly traded on an
Established Securities Market at any time after such Change in Control, then the
unvested Equity Incentives which are then outstanding shall become fully vested
and exercisable as of immediately before the date on which the acquirer’s
shares are no longer so publicly traded. 
If 

 

7

 

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, 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 any of your then vested Equity Incentives.  For purposes of this Agreement, an “Established
Securities Market” shall 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.

 

(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 Qualifying 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 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 

 

8

 

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, at the Company’s sole cost and expense.  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 May, 2010 (the “May 2010 AFRs”) and the
accountants shall therefore use such May 2010 AFRs in their determinations
and calculations.

 

(v)           No Duty to
Mitigate; No Right of Offset.  In the event of a Qualifying Termination, you
shall not be obligated to seek other employment or take any actions to mitigate
the payments or continuation of benefits required under Section 3(d).  In addition, the Company will not retain or
have a right of offset against the amounts payable to you under this Agreement
and the Company will not be entitled to reduce the amount of any compensation
or benefits payable to you under this Agreement by the amount of salary, bonus
or other compensation of any kind, and/or corresponding benefits, earned or
received by you from any employment, self-employment or other activities at any
time after the Qualifying Termination Date.

 

(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.  Any reimbursements or in-kind benefits
provided under this Agreement that are subject to Code Section 409A (“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 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.

 

9

 

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.

 

(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 (or Qualifying Termination Date, if applicable); (ii) subject
to Section 14, 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 (or Qualifying
Termination Date, if applicable); (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, and shall consist
only of: (i) your commission of fraud relating to the Company’s assets or
business; (ii) your willful misconduct relating to the Company’s assets or
business; (iii) your willful and material violation of any
Company policy pertaining to ethics or conflicts of interest; (iv) your willful and material breach of the
Employee Invention Assignment and Confidentiality Agreement; (v) your plea of guilty
or nolo contendere to, or conviction for,
the commission of a felony offense; or (vi) your material breach of this
Agreement.

 

(iii)          “Change in Control” shall mean:

 

(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 

 

10

 

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;

 

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

 

(4)           any liquidation or dissolution of the
Company.

 

(iv)          “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.

 

(v)           “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, (3) a
material change in the geographic location at which you must perform your
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, (4) you are not
nominated by the Company for election as a member of the Board, or (5) a material breach by the Company
of this Agreement.  Notwithstanding the
foregoing, in the event that the SEC, stock exchange or other regulatory body
requires you to relinquish your title and/or role as Chairman, any such
relinquishment shall not constitute Good Reason.

 

(vi)         “Qualifying Termination Date” means
the date that a Qualifying Termination event first occurred.  In the case of a Qualifying Termination that
arises from your resignation for Good Reason, the Qualifying Termination Date
shall be the effective date of the resignation for Good Reason, taking into account
any applicable cure periods set forth in Section 4(f) below.

 

11

 

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

 

(viii)        “Termination Date” means the date on
which your employment with the Company is terminated in accordance with the
terms of this Agreement, other than a Qualifying Termination Date.

 

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

 

(x)            “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 that the Company provides you with
written notice of the Cause event and the Company’s intention to terminate your
employment as a result thereof within ninety (90) days of the date on which the
general counsel of the Company or a member of the Board (other than you) first
becomes aware of the initial existence of the condition(s).  If the Company does not timely provide such
notice during the applicable 90 days, then the Company will be deemed to have
waived any Cause with respect to such condition(s) provided that at least
one of such persons with knowledge of the initial existence of the condition(s) remains
in service with the Company through the conclusion of the ninety day notice
period.  Notwithstanding the foregoing, in the event of any breach of the provisions of
clause (iv) or (vi) in the Cause definition (see Section 4(a)(ii) above),
the Company shall provide you with written notice of the Cause event and the
Company’s intention to terminate you for Cause as a result thereof at least
twenty (20) days prior to the effective Termination Date, and in the event that
you cure the circumstances giving rise to the Cause event within such twenty
(20) day period as determined by the Board (but without prejudicing your
ability to later challenge such Board decision), the Company shall not have the
right to terminate you for Cause.  Upon a
termination of your employment by the Company for Cause, you will be entitled
to receive (or be allowed to retain, as applicable) only the Accrued
Obligations as of the Termination Date, subject to Section 14 below.

 

(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.

 

12

 

(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 14 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 (as opposed to the Qualifying
Termination Date), 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 14 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 (as
opposed to the Qualifying Termination Date), 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 

 

13

 

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.

 

(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 14
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 14.  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 a
Qualifying Termination or any rights to or eligibility for severance, including
without limitation those payments and benefits described under Sections 3(d)(i) or
3(d)(ii).  However, in the event you terminate your employment
without Good Reason and the effective date of your resignation occurs prior to
the end of the required minimum six-month notice period provided in this Section 4(g),
then, without limiting any of the Company’s rights or remedies in law and/or
equity, all of the Options and any additional stock options or stock
appreciation rights granted to you during the Term shall immediately expire and
be forfeited as of such effective date of your resignation.

 

5.          Equity
Compensation.

 

(a)         On or before the effective date of the IPO, you will
be granted a non-qualified stock option to purchase 200,000 shares of common
stock (the “Annual Grant  Option”) of the Company and a second
non-qualified stock option to purchase 550,000 shares of common stock (the “Performance
Option” and together with the Annual Grant Option, the “Options”) of
the Company.  The Annual Grant Option
will vest over four years subject to your continued employment with the
Company, except as otherwise provided herein. 
Fifty percent of the Performance Option will vest over four years 

 

14

 

subject to your continued
employment with the Company and the other fifty percent will be based both on a
three year time-based cliff vesting schedule and on relative total shareholder
return objectives over a three (3) year period as measured against a peer
group of companies as described in the Performance Option agreement attached as
Exhibit B.  If the Options
are granted on the IPO date, then their per share exercise prices will be
determined by the Board based upon the IPO price, but in any event will be
equal to not less than the fair market value of a Company common share on the
date of grant as determined in accordance with the Company’s 2004 Amended and
Restated Stock Plan or 2010 Stock Incentive Plan, or any successor plan thereto
(“Stock Plan”).  In the event of a
Change in Control that occurs prior to the IPO date, then the Options will be
granted as of the date immediately prior to the consummation date of the Change
in Control and will have per share exercise prices determined by the Board
based on the Change in Control transaction price, but in any event will be
equal to not less than the fair market value of a Company common share on the
date of grant as determined in accordance with the terms of the Stock
Plan.  The Options will be on other terms
and conditions set forth in the stock option agreements evidencing the grants,
which stock option agreements will include the terms and conditions of the
Options as set forth in this Agreement, and which you must execute as a
condition of grant, with vesting to commence on the date of the grant and in
accordance with the vesting schedule set forth in the Stock Plan and Option
agreements consistent with the terms of this Agreement.   The following sections of the 2010 Stock
Incentive Plan, however, shall not apply to the Options:  (a) Section 15(b)(ii) of the 2010
Stock Incentive Plan; and (b) the provisions in the first sentence of Section 4(d) of
the 2010 Stock Incentive Plan relating to rights of first refusal and rights of
repurchase.  In addition, during the
Term, the following provisions shall apply for purposes of making any “Cause”
determination under the Stock Plan and any of the Equity Incentives:  (i) “Cause” shall have the
meaning set forth in this Agreement; and (ii) the procedure for the determination
of “Cause” shall apply in the precise manner set forth in this Agreement, and
not based on the default rules set forth in the Stock Plan.  Further details on the Stock Plan and the specific
terms and conditions applicable to any Options granted to you will be provided
upon final approval of such grant by the Board. 
Copies of the Stock Plan and the option grant notices and stock option
agreements evidencing any Options granted to you will be delivered to you at
the time of the grant.  The number of
shares subject to the Options will be proportionately adjusted upon any stock
split of the Company’s common shares which occurs before the Options are
granted.

 

(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).

 

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 

 

15

 

expressly
subject to your executing (and complying with) the RealD Inc. Employee
Invention Assignment and Confidentiality Agreement (the “Confidentiality
Agreement”) in the form enclosed hereto as Exhibit C.

 

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; provided, however, the Company agrees
that you shall be permitted to retain a copy of your outlook rolodex and any
personal files.

 

(b)           Cooperation.  You agree that, upon the Company’s request
and without any payment therefore (other than reimbursement of your out of
pocket costs), you shall reasonably cooperate with the Company (and be
available as necessary subject to reasonably accommodating your professional
availability) after the Termination Date in connection with any matters involving
events that occurred during your period of employment with the Company.

 

(c)           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.

 

(d)           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.

 

(e)           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 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.

 

16

 

(f)            Clawback.  You understand and agree that all payments
and benefits provided to you will be subject to the terms and conditions of any
Clawback Policy which shall survive any termination or expiration of this
Agreement or termination of your employment.

 

(g)           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.

 

8.             Entire Agreement.  This Agreement and its attachments, the
Employee Invention Assignment and Confidentiality Agreement, and the Company’s
Stock Plan, 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.  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 

 

17

 

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.  In addition, the Company shall send a
courtesy copy of any notice sent to you (in the same manner described above) to
the following person:

 

Jackoway Tyerman Wertheimer Austen Mandelbaum Morris &
Klein, P.C.

1925 Century Park East, 22nd Floor

Los Angeles, California 90067

Attn:  Alan J. Epstein, Esq.

Fax. 310 203-2518

 

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.

 

13.           Indemnification.  Without limiting any of your rights to
indemnification under that certain Indemnification Agreement dated as of April 8,
2010 between you and the Company (attached hereto as Exhibit D),
the Company’s by-laws, articles of incorporation, California Labor Code Section 2802
and other applicable law or otherwise, the Company shall indemnify, defend and
hold you harmless for any claims, costs, liabilities, expenses and judgments
(including without limitation reasonable attorney’s fees and costs) arising
from, in connection with or as a result of any acts and omissions in your
capacity as an officer, director and/or employee of the Company and/or any of
its subsidiaries to the maximum extent permitted under applicable law,
including the advancement of fees and expenses. 
This Section 13 shall survive the termination or expiration of your
employment and this Agreement.

 

14.           Section 409A.  It is the intention of the parties that the
compensation arrangements under this Agreement be in full compliance with Section 409A.  Without limiting the foregoing, all payments
under this Agreement (as amended) are intended to be excluded from the
requirements of Section 409A or payable on a fixed date or schedule under Section 409A,
and this Agreement shall be construed in a manner to give effect to such
intention.  Your rights to any payment
that constitutes “deferred compensation” (within the meaning of Section 409A)
shall not be subject to borrowing, assignment, sale, transfer, pledge,
encumbrance, attachment or any similar claim by creditors, to the extent
necessary to avoid any additional taxes under Section 409A.  Each payment made pursuant to any provision
of this Agreement (as amended) shall be considered a 

 

18

 

separate payment and not one
of a series of payments for purposes of Section 409A.  The payments under this Agreement are
intended to be qualify as “short-term deferrals” exception described in Section 409A
and the Regulations under Section 409A to the fullest extent
possible.  If as of the Qualifying
Termination Date you have not had a Separation from Service from the Company,
then the amounts payable to you pursuant to Sections 3(d)(i)(A)-(B) above
and any cash amounts payable to you under Section 3(d)(ii) above
(collectively, the “Deferred Payments”) shall not become payable to you
until such time as you have had a Separation from Service, and the date on
which there has been a Separation from Service shall be deemed to be a
Termination Date for purposes of this Section 14.  In addition, the Deferred Payments shall
accrue “Interest” (defined below), commencing on the date on which the Deferred
Payments would have been otherwise payable to you under the terms of this
Agreement (based on the assumption that a Separation from Service occurred on
the Qualifying Termination Date) and continuing through the date of your
Separation from Service.  “Interest”
shall mean the prime interest rate published by Bank of America as of the
Qualifying Termination Date.  The
Interest shall be payable to you concurrently with the Deferred Payments with
respect to which the Interest accrued. 
Notwithstanding anything to the contrary, in the event that you are a “specified
employee” (within the meaning of Section 409A) on a Qualifying Termination
Date or on a Termination Date, then (i) the payments of Base Salary and
pro-rated Performance Bonus pursuant to Sections 3(d)(i)(A)-(B) above and
any cash amounts payable to you under Section 3(d)(ii) above
(collectively, the “Cash Severance Payments”) to be paid within the
first six months following the Qualifying Termination Date (or the Termination
Date, if applicable) (the “Initial Payment Period”) shall be paid,
without interest, on the first business day of the seventh calendar month after
the Qualifying Termination Date (or the Termination Date, if applicable); and (ii) any
portion of the Cash Severance Payments that is payable after the Initial
Payment Period shall be paid at the times set forth in Section 3(d)(i)(A)-(B) and
Section 3(d)(ii) above. 
Similarly, if you have any other nonqualified deferred compensation
amounts that are subject to the delay in payment required for specified
employees, then such delayed nonqualified deferred compensation amounts will
also be paid, without interest, on the first business day of the seventh
calendar month after your Separation from Service.  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, provided that the Company is otherwise in strict
compliance with its obligations as to the timing of payments under this
Agreement.

 

15.           Reimbursement of Legal Fees.  The Company shall pay directly to your legal
counsel your reasonable legal fees and costs incurred in connection with the
negotiation of this Agreement and its related agreements referenced
herein.  Payment will be made within 45
days of the Company’s receipt of applicable invoices and such invoices must be
submitted to the Company within 45 days of the execution of this Agreement.

 

16.           Mutual Termination Right.  Notwithstanding anything to the contrary
herein, in the event that the Company does not consummate an IPO on or before September 30,
2010, then either party shall have the right to terminate this Agreement by
giving written notice to the other party 

 

19

 

on or before December 31,
2010.  Any such termination under this Section 16
shall not trigger any rights to or eligibility for severance.

 

17.           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/ Craig Gatarz

  
	
   

  	
   

  	
  Craig
  Gatarz

  
	
   

  	
   

  	
  Executive Vice
  President & General Counsel

  

 

20

 

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/ Michael V. Lewis

  	
   

  
	
  Employee Signature

  	
   

  
	
   

   

  	
   

  
	
  Michael V. Lewis

  	
   

  
	
  Printed Name

  	
   

  

 

 

Date:  May 25, 2010

 

 

	
  Enclosures:

  	
  Duplicate
  Original Letter

  
	
   

  	
  EXHIBIT
  A:

  	
  FORM OF
  SEPARATION AGREEMENT AND RELEASE OF CLAIMS

  
	
   

  	
  EXHIBIT
  B:

  	
  PERFORMANCE
  OPTION AGREEMENT

  
	
   

  	
  EXHIBIT
  C:

  	
  EMPLOYEE
  INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT

  
	
   

  	
  EXHIBIT D:

  	
  INDEMNIFICATION AGREEMENT

  

 

21

 

EXHIBIT
A

FORM OF
SEPARATION AGREEMENT AND RELEASE OF CLAIMS

 

[SEE
EXHIBIT NUMBER 10.12]

 

 

EXHIBIT
B

PERFORMANCE OPTION

AGREEMENT

 

[SEE EXHIBIT NUMBER 10.6]

 

 

EXHIBIT C

EMPLOYEE INVENTION ASSIGNMENT

AND CONFIDENTIALITY AGREEMENT

 

[SEE EXHIBIT NUMBER 10.10]

 

24

 

EXHIBIT
D

INDEMNIFICATION AGREEMENT

 

[SEE EXHIBIT NUMBER 10.11]

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