Exhibit 10.1
February 24, 2010
Robert Kimball
c/o RealNetworks, Inc.
2601 Elliott Avenue, Suite 1000
Seattle, WA 98121
Dear Bob:
     As you are aware, RealNetworks is going through a transition period. Your
continued dedication and commitment to RealNetworks will be instrumental in
successfully navigating this transition period.
     We understand that a change of this nature can create uncertainty. Thus, we
want to express our gratitude for your past service and our commitment to you as
a continuing member of RealNetworks by providing you with (1) additional
compensation, as detailed below; (2) the payment of a cash retention bonus (the
“Retention Payment”), as detailed below; (3) certain severance benefits as more
fully detailed in the Change in Control and Severance Agreement (the “CIC
Agreement”) if the Company terminates your employment without “Cause” or you
resign for “Good Reason” (for all purposes in this letter, as such terms are
defined in your CIC Agreement) not in connection with a “Change in Control” (for
all purposes in this letter, as defined in the CIC Agreement) of RealNetworks;
and (4) certain enhanced severance benefits as more fully detailed in your CIC
Agreement if the Company terminates your employment without Cause or you resign
for Good Reason during the period commencing three (3) months prior to, and
ending twenty-four (24) months following, a Change in Control (the “CIC
Period”).
     In recognition of your promotion to President of the Company, effective
February 1, 2010, your annual base salary will be four hundred and twenty-five
thousand dollars ($425,000) and your target bonus will be one hundred percent
(100%) of your annual base salary. Additionally, RealNetworks granted you an
option to purchase five hundred thousand (500,000) shares of RealNetworks common
stock on February 1, 2010 (the “Promotion Option”), which will be scheduled to
vest as to twelve and one-half percent (12.5%) of the shares subject to the
Option after each successive six-month period following the vesting commencement
date, subject to your continued employment through each vesting date. The
specific terms of your Promotion Option will be set forth in the standard form
of award agreement entered into between you and RealNetworks.
     In recognition of your service as the Acting Chief Executive Officer of the
Company, you will be entitled to a cash payment equal to $100,000 on July 12,
2010 (the “Bonus Payment”), subject to your continued employment through such
date. If the Company terminates your employment without Cause or you resign for
Good Reason prior to July 12, 2010, you will receive the entire Bonus Payment
within thirty (30) days of your termination of employment. Additionally,
effective February 17, 2010,

 

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RealNetworks has granted you an option to purchase sixty thousand (60,000)
shares of RealNetworks common stock with a vesting commencement date of
January 12, 2010 (the “Acting CEO Option”), which will be scheduled to vest as
to fifty percent (50%) of the shares subject to the Option on each of the six
(6) month and twelve (12) month anniversaries of the vesting commencement date,
subject to your continued employment through each vesting date. The specific
terms of your Acting CEO Option will be set forth in the standard form of award
agreement entered into between you and RealNetworks.
     Subject to your continued full-time employment through each scheduled
payment date, you are eligible to receive a Retention Payment of up to a maximum
of eight hundred and fifty thousand dollars ($850,000), of which fifty percent
(50%) is guaranteed and fifty percent (50%) is discretionary. The exact amount
of the discretionary portion of our Retention Payment will be determined at the
time of payment by the Compensation Committee of the Board of Directors of
RealNetworks (the “Compensation Committee”) in its sole discretion, subject to
applicable tax withholdings, payable as follows:

  •   On February 1, 2011, you will receive a Retention Payment of up to a
maximum of $566,666.67, of which fifty percent (50%) is a fixed amount and fifty
percent (50%) is a discretionary amount determined by the Compensation
Committee.     •   On August 1, 2011, you will receive a Retention Payment of up
to a maximum of $283,333.33, of which fifty percent (50%) is a fixed amount and
fifty percent (50%) is a discretionary amount determined by the Compensation
Committee.

     If RealNetworks terminates your employment without Cause or you resign for
Good Reason at any time, you will receive the remaining unpaid amount of the
maximum amount of your future Retention Payments, if any, within thirty
(30) days of your termination of employment, less applicable tax withholding.
     Within thirty (30) days following your death or permanent disability, you
or your heirs will be entitled to receive (1) a prorated Retention Payment; and
(2) a prorated Bonus Payment. The maximum amount of such prorated Retention
Payment will be based on the number of days between February 1, 2010, and the
date of your death or permanent disability relative to five hundred and
forty-seven (547) days, less any amount already paid to you, payment of fifty
percent (50%) of which remains subject to the discretion of the Compensation
Committee. The amount of such prorated Bonus Payment will be based on the number
of days between January 12, 2010, and the date of your death or permanent
disability relative to one hundred and eighty-two (182) days. In the event of
any mutually agreed (1) change in your employment status to part-time for a
continuous period lasting greater than three (3) months; or (2) your leave of
absence for a continuous period lasting greater than three (3) months, the
amount of the Retention Payment and/or Bonus Payment may be adjusted, in the
Compensation Committee’s sole discretion, to reflect appropriately the change in
status (for example, by altering the payment schedule, prorating the payments,
tolling the payment schedule or such other method determined by the Company).
     Under your CIC Agreement, if the Company terminates your employment without
Cause or you resign for Good Reason at any time other than during the CIC

 

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Period, you generally will be entitled to the following severance benefits:
(1) a lump sum payment equal to one hundred percent (100%) of your then-current
base salary; (2) vesting acceleration up to a maximum of fifty percent (50%) of
the shares subject to your Promotion Option (i.e., up to 250,000 shares) and one
hundred percent (100%) of the shares subject to your Acting CEO Option; and
(3) extension of the post-termination exercise period on all of your vested
equity awards to twelve (12) months following the date of your termination of
employment or the last day of your service as a member of the Board of Directors
of the Company (the “Board”), whichever is later (except with respect to your
incentive stock options), but in no event beyond the original term of the award.
Alternatively, if the Company terminates your employment without Cause or you
resign for Good Reason during the CIC Period, you generally will be entitled to
the following enhanced severance benefits: (1) a lump sum payment equal to one
hundred and twenty-five percent (125%) of your (a) annual base salary and
(b) target bonus opportunity, in each case as in effect at termination of
employment or, if greater, immediately prior to the Change in Control; (2) a
lump sum payment equal to the prorated bonus amount, if any, for any partially
completed bonus period, to the extent not already paid; (3) accelerated vesting
as to one hundred percent (100%) of your unvested equity awards granted on or
after February 1, 2010; (4) extension of the post-termination exercise period on
all of your vested equity awards to twelve (12) months following the date of
your termination of employment (except with respect to your incentive stock
options), but in no event beyond the original term of the award; and
(5) company-paid COBRA for up to eighteen (18) months following your termination
of employment or the last day of your service as a member of the Board,
whichever is later. The foregoing is only a summary of the benefits under your
CIC Agreement. Your right to the above severance benefits is subject to your
execution of a release of claims in favor of the Company and your compliance
with the restrictive covenants in your CIC Agreement. You should review your CIC
Agreement for the specific details, a copy of which is attached hereto as
Attachment A. If there is a conflict between this letter and the CIC Agreement,
the terms of the CIC Agreement will control.
     The Company intends that the Retention Payments and the Bonus Payment
comply with, or be exempt from, the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations and other
guidance thereunder and any state law of similar effect (collectively
“Section 409A”) so that none of the payments or benefits will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be
interpreted to so comply or be exempt. Specifically, the Retention Payment and
the Bonus Payment will be exempt from the requirements of Section 409A because
all such payments will be made within the applicable short-term deferral period,
in accordance with the requirements of Section 1.409A-1(b)(4) of the Treasury
Regulations. Each Retention Payment is intended to constitute a separate payment
for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. In no event
will the Company reimburse you for any taxes that may be imposed on you as a
result of Section 409A.
     Although we intend the Retention Payment, the Bonus Payment and the other
benefits described in this letter as an incentive for your continued employment
with RealNetworks, your employment remains at-will. RealNetworks or you may
terminate your employment at any time, with or without cause, for any reason or
no reason, except as may be restricted by law or contract.

 

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     We are excited that we are able to provide you with the benefits described
in this letter. We appreciate your dedication and your past efforts and we look
forward to your ongoing contributions to the future success of RealNetworks.

          Sincerely,
    By:   /s/ Tracy D. Daw       Tracy D. Daw      Vice President, Corporate
Development, Deputy General Counsel and Corporate Secretary     

     
ACCEPTED and AGREED:
   
 
   
/s/ Robert Kimball
  Date: February 24, 2010
 
   
Robert Kimball