3. Severance Benefits. If the Company terminates Executive’s employment with theCompany for a reason other than Cause or Executive’s death or disability, or Executiveresigns for Good Reason and such termination occurs during the period commencing three (3)months before and ending twenty-four (24) months following a Change in Control (the “*Changein Control Period*”), then, in each case subject to Section 4, Executive will receive thefollowing severance from the Company:          (a) Base Salary Severance. Executive will receive a lump sum severance paymentequal to one hundred twenty-five percent (125%) of Executive’s base salary as ineffect immediately prior to Executive’s termination of employment (unless thetermination occurs as a result of clause (ii) of the definition of “Good Reason”under Section 6(c) below, in which case the amount will be equal to Executive’sannual base salary in effect prior to such reduction) or, if greater, at the levelin effect immediately prior to the Change in Control, payable within forty-five (45)days following the date of Executive’s termination of employment. In addition, asset forth in the retention letter agreement between the Company and Executive datedFebruary 24, 2010, (the “*Retention Letter*”), within thirty (30) days following thedate of Executive’s termination of employment, the Company shall pay Executive theremaining unpaid amount (as determined in accordance with the terms and conditionsof the Retention Letter), if any, of Executive’s Retention Payment (as defined underthe Retention Letter).          (b) Target Bonus Severance. Executive will receive a lump sum severancepayment equal to one hundred twenty-five percent (125%) of Executive’s target bonusas in effect for the fiscal year in which Executive’s termination occurs (unless thetermination occurs as a result of clause (iii) of the definition of “Good Reason”under Section 6(c) below, in which case the amount will be equal to Executive’starget bonus in effect prior to such reduction) or (if greater) at the level ineffect for the fiscal year in which the Change in Control occurs, payable withinforty-five (45) days following Executive’s termination date.          (c) Prorated Annual Incentive Bonus. Executive will receive a lump sumseverance payment equal to Executive’s prorated bonus for any partial annualincentive bonus period (based on the number of days Executive remained an employeeof the Company) through the date of Executive’s termination of employment (at anassumed 100% on-target achievement of applicable goals) to the extent not alreadypaid, payable within forty-five (45) days following the date of Executive’stermination of employment.          (d) Equity. All of Executive’s unvested and outstanding equity awards grantedon or after February 1, 2010, will vest immediately and become exercisable as of thedate of Executive’s termination of employment. In addition, Executive will havetwelve (12) months following the date of Executive’s termination of employment inwhich to exercise Executive’s equity awards that are or become vested, and areoutstanding, as of the date of Executive’s termination of employment; provided,however, (A) in no event will Executive’s equity awards be permitted to be exercisedbeyond their original maximum term to expiration and (B) notwithstanding theforegoing, the extension of post-termination exercisability described in thisSection 3(d) will not apply to any of Executive’s stock options to purchase sharesof the Company’s common stock granted prior to the Effective Date to the extent such options are intended to constitute and do qualify asincentive stock options within the meaning of Section 422 of the Code.
-2-

 
          (e) Continued Employee Benefits. If Executive elects continuation coveragepursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended(“COBRA”) for Executive and Executive’s eligible dependents (as applicable), withinthe time period prescribed pursuant to COBRA, the Company will reimburse Executivefor, or pay directly on Executive’s behalf, the COBRA premiums for such coverage (atthe coverage levels in effect immediately prior to Executive’s termination ofemployment) until the earlier of (A) a period of eighteen (18) months from the lastdate of employment of the Executive with the Company, or (B) the date upon whichExecutive and/or Executive’s eligible dependents becomes covered under similarplans.          (f) Voluntary Resignation Without Good Reason; Termination for Cause; Death orDisability. If Executive’s employment with the Company terminates voluntarily byExecutive (except upon resignation for Good Reason during the Change in ControlPeriod), for Cause by the Company, without Cause by the Company (except during theChange in Control Period) or due to Executive’s death or disability, then (i) allvesting will terminate immediately with respect to Executive’s outstanding equityawards, (ii) all payments of compensation by the Company to Executive hereunder willterminate immediately (except as to amounts already earned), and (iii) Executivewill only be eligible for severance benefits in accordance with the Company’sestablished policies, if any, as then in effect.          (g) Exclusive Remedy. In the event of a termination of Executive’s employment,the provisions of this Agreement (including, for the avoidance of doubt, theRetention Letter) are intended to be and are exclusive and in lieu of and supersedeany other rights or remedies to which Executive or the Company otherwise may beentitled, whether at law, tort or contract or in equity. Executive will be entitledto no benefits, compensation or other payments or rights upon termination ofemployment other than those benefits expressly set forth in this Agreement.     4. Conditions to Receipt of Severance          (a) Release of Claims Agreement. The receipt of any severance payments orbenefits pursuant to this Agreement is subject to Executive signing and not revokinga separation agreement and release of claims in a form acceptable to the Company(the “Release”), which must become effective and irrevocable no later than thesixtieth (60th) day following Executive’s termination of employment (the“Release *Deadline”)*. If the Release does not become effective and irrevocable by theRelease Deadline, Executive will forfeit any right to severance payments or benefitsunder this Agreement. In no event will severance payments or benefits be paid orprovided until the Release actually becomes effective and irrevocable.               (i) In the event the termination occurs at a time during the calendaryear when the Release could become effective in the calendar year followingthe calendar year in which Executive’s termination of employment occurs(whether or not it actually becomes effective in the following year), thenany severance payments and benefits under Section 3 of this Agreement thatwould be considered Deferred Payments (as defined in Section 4(c) below) will be paid on the firstpayroll date to occur during the calendar year following the calendar yearin which such termination occurs, or, if later, (A) the date the Releaseactually becomes effective, (B) such time as required by the paymentschedule applicable to each payment or benefit as set forth in Section4(a)(ii), or (C) such time as required by Section 4(c).
-3-

 
               (ii) No severance payments and benefits under Section 3 of thisAgreement will be paid or provided until the Release becomes effective andirrevocable, and any such severance payments and benefits otherwise payablebetween the date of Executive’s termination of employment and the date theRelease becomes effective and irrevocable will be paid on the date theRelease becomes effective and irrevocable. In the event of Executive’sdeath before all of the severance payments and benefits under Section 3 havebeen paid, such unpaid amounts will be paid in a lump sum payment promptlyfollowing such event to Executive’s designated beneficiary, if living, orotherwise to the personal representative of Executive’s estate.          (b) Non-disparagement, No-hire, and Non-solicitation. Executive agrees, to theextent permitted by applicable law, that in the event Executive receives severancepay or other benefits pursuant to Section 3 above,               (i) that Executive will refrain from any disparaging statements aboutthe Company and its officers, directors and affiliates, including, withoutlimitation, the business, products, intellectual property, financialstanding, future, or employment/compensation/benefit practices of theCompany; and               (ii) that for a period of one (1) year immediately following the dateof Executive’s termination of employment, Executive will not, eitherdirectly or indirectly, solicit, induce, recruit or encourage any of theCompany’s employees to leave their employment, or hire or take away suchemployees, or attempt to solicit, induce, recruit, encourage, hire or takeaway employees of the Company, either for Executive’s own purposes, or forany other person or entity. Executive acknowledges and agrees that theCompany is relying on Executive’s compliance with this Section 4(b) **as anessential term of this Agreement****.**If Executive becomes entitled to receiveany benefits or payments pursuant to Section 3, and is determined to haveviolated this Section 4(b), whether before or after Executive’s separationfrom employment, the Company will be entitled to cease providing and/orrecover any payments made or benefits provided pursuant to Section 3. TheCompany’s rights pursuant to this Section 4(b) are in addition to anyremedies it may have for breach of contract or otherwise; further, theremaining terms of this Agreement, as well as the Release contemplated bySection 4(a), as applicable, will remain in full force and effect.          (c) Section 409A.               (i) Notwithstanding anything to the contrary in this Agreement, noseverance payments or benefits payable to Executive, if any, pursuant tothis Agreement that, when considered together with any other severancepayments or separation benefits, is considered deferred compensation underInternal Revenue Code Section 409A (together, the “Deferred *Payments”)*willbe payable until Executive has a “separation from service” within themeaning of Section 409A (“Section *409A”)*of the Internal Revenue Code of 1986, as amended (the “Code”).Similarly, no severance payable to Executive, if any, pursuant to thisAgreement that otherwise would be exempt from Section 409A pursuant toTreasury Regulation Section 1.409A-1(b)(9) will be payable until Executivehas a “separation from service” within the meaning of Section 409A.               (ii) Further, if Executive is a “specified employee” within the meaningof Section 409A at the time of Executive’s separation from service (otherthan due to death), any
-4-

 
Deferred Payments that otherwise are payable within the first six (6) months following Executive’sseparation from service will become payable on the first payroll date that occurs on or after thedate six (6) months and one (1) day following the date of Executive’s separation from service. Allsubsequent Deferred Payments, if any, will be payable in accordance with the payment scheduleapplicable to each payment or benefit. Notwithstanding anything herein to the contrary, in theevent of Executive’s death following Executive’s separation from service but prior to the six (6)month anniversary of Executive’s separation from service (or any later delay date), then anypayments delayed in accordance with this paragraph will be payable in a lump sum as soon asadministratively practicable after the date of Executive’s death and all other Deferred Paymentswill be payable in accordance with the payment schedule applicable to each payment or benefit.Each payment and benefit payable under the Agreement is intended to constitute a separate paymentfor purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.               (iii) The foregoing provisions are intended to comply with, or beexempt from, the requirements of Section 409A so that none of the severancepayments and benefits to be provided under the Agreement will be subject tothe additional tax imposed under Section 409A, and any ambiguities hereinwill be interpreted to so comply or be exempt. Specifically, the paymentshereunder are intended to be exempt from the requirements of Section 409Aunder the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) ofthe Treasury Regulations. Executive and the Company agree to work togetherin good faith to consider amendments to the Agreement and to take suchreasonable actions which are necessary, appropriate or desirable to avoidimposition of any additional tax or income recognition prior to actualpayment to Executive under Section 409A. In no event will the Companyreimburse Executive for any taxes that may be imposed on Executive as resultof Section 409A.     5. Limitation on Payments. In the event that the severance and other benefits providedfor in this Agreement or otherwise payable to Executive (i) constitute “parachute payments”within the meaning of Section 280G of the Code and (ii) but for this Section 5, would besubject to the excise tax imposed by Section 4999 of the Code, then Executive’s severancebenefits under Section 3 will be either: (a) delivered in full, or  (b) delivered as to such lesser extent which would result in no portion of suchseverance benefits being subject to excise tax under Section 4999 of the Code,whichever of the foregoing amounts, taking into account the applicable federal, state and localincome taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on anafter-tax basis, of the greatest amount of severance benefits, notwithstanding that all or someportion of such severance benefits may be taxable under Section 4999 of the Code. Unless theCompany and Executive otherwise agree in writing, any determination required under this Section 4will be made in writing by the Company’s independent public accountants immediately prior to theChange in Control (the “Accountants”), whose determination will be conclusive and binding uponExecutive and the Company for all purposes. For purposes of making the calculations required bythis Section 5, the Accountants may make reasonable assumptions and approximations concerningapplicable taxes and may rely on reasonable, good faith interpretations concerning the applicationof
-5-

 
Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Accountants suchinformation and documents as the Accountants may reasonably request in order to make adetermination under this Section. The Company will bear all costs the Accountants may reasonablyincur in connection with any calculations contemplated by this Section 5. If a reduction inseverance and other benefits constituting “parachute payments” is necessary so that benefits aredelivered to a lesser extent, reduction will occur in the following order: (1) reduction of thecash severance payments; (2) cancellation of accelerated vesting of equity awards; and (3)reduction of continued employee benefits. In the event that the accelerated vesting of equityawards is to be cancelled, such vesting acceleration will be cancelled in the reverse chronologicalorder of the Executive’s equity awards’ grant dates.     6. Definition of Terms. The following terms referred to in this Agreement will havethe following meanings:          (a) Cause. For purposes of this Agreement, “Cause” means conduct involving oneor more of the following: (i) the conviction of Executive of, or plea of *nolocontendere*by Executive to, a felony involving moral turpitude (including underfederal securities laws), resulting in material harm to the Company; (ii) thesubstantial and continuing failure of Executive after written notice thereof torender services to the Company in accordance with the terms or requirements ofExecutive’s employment for reasons other than illness or incapacity; (iii) willfulmisconduct, gross negligence, fraud, embezzlement, theft, misrepresentation ordishonesty by Executive involving the Company or any of its subsidiaries, resultingin any case in material harm to the Company; or (iv) Executive’s violation of anyconfidentiality or non-competition agreements with the Company or its subsidiaries,resulting in material harm to the Company.          (b) Change in Control. “Change *in Control”*means the occurrence of any of thefollowing:               (i) during any period of twenty-four (24) consecutive months,individuals who, at the beginning of the period constitute the Board (the“Incumbent *Directors”)*cease for any reason to constitute at least amajority of the Board, provided that any person becoming a directorsubsequent to the Company’s initial public offering whose election ornomination for election was approved by a vote of at least a majority of theIncumbent Directors then on the Board (either by a specific vote or byapproval of the proxy statement of the Company in which such person is namedas a nominee for director, without written objection to such nomination)will be an Incumbent Director; provided, however, that no individualinitially elected or nominated as a director of the Company as a result ofan actual or threatened election contest with respect to directors or as aresult of any other actual or threatened solicitation of proxies by or onbehalf of any person other than the Board will be deemed to be an IncumbentDirector; or               (ii) any “person” (as such term is defined in the Securities ExchangeAct of 1934, as amended (the “Exchange *Act”)*and as used in Sections 13(d)(3)and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (asdefined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fiftypercent (50%) or more of the combined voting power of the Company’s thenoutstanding securities eligible to vote for the election of the Board (the“Company *Voting Securities”);*provided, however, that the event
-6-

 
described in this paragraph (ii) will not be deemed to be a Change in Control by virtue of any ofthe following acquisitions: (A) by the Company or any subsidiary, (B) by any employee benefit plan(or related trust) sponsored or maintained by the Company or any subsidiary, (C) by any underwritertemporarily holding securities pursuant to an offering of such securities, or (D) pursuant to aNon-Qualifying Transaction (as defined in clause (iii) below); or               (iii) the consummation of a merger, consolidation, statutory shareexchange, reorganization or similar form of corporate transaction involvingthe Company or any of its subsidiaries that requires the approval of theCompany’s shareholders, whether for such transaction or the issuance ofsecurities in the transaction (a “Business *Combination”),*unless immediatelyfollowing such Business Combination: (A) more than fifty percent (50%) of thetotal voting power of (x) the corporation resulting from such BusinessCombination (the “Surviving *Corporation”),*or (y) if applicable, the ultimateparent corporation that directly or indirectly has beneficial ownership ofone hundred percent (100%) of the voting securities eligible to electdirectors of the Surviving Corporation (the “Parent *Corporation”),*isrepresented by Company Voting Securities that were outstanding immediatelyprior to such Business Combination (or, if applicable, is represented byshares into which such Company Voting Securities were converted pursuant tosuch Business Combination), and such voting power among the holders thereofis in substantially the same proportion as the voting power of such CompanyVoting Securities among the holders thereof immediately prior to the BusinessCombination, (B) no person (other than any employee benefit plan (or relatedtrust) sponsored or maintained by the Surviving Corporation or the ParentCorporation), is or becomes the beneficial owner, directly or indirectly, offifty percent (50%) or more of the total voting power of the outstandingvoting securities eligible to elect directors of the Parent Corporation (or,if there is no Parent Corporation, the Surviving Corporation) and (C) atleast half of the members of the board of directors of the Parent Corporation(or, if there is no Parent Corporation, the Surviving Corporation) followingthe consummation of the Business Combination were Incumbent Directors at thetime of the Board’s approval of the execution of the initial agreementproviding for such Business Combination (any Business Combination whichsatisfies all of the criteria specified in (A), (B) and (C) above shall bedeemed to be a “Non-Qualifying *Transaction”);*or               (iv) a change in the ownership of a substantial portion of the Company’sassets which occurs on the date that any one person, or more than one personacting as a group (“Person”) acquires (or has acquired during the twelve (12)month period ending on the date of the most recent acquisition by such personor persons) assets from the Company that have a total gross fair market valueequal to or more than fifty percent (50%) of the total gross fair marketvalue of all of the assets of the Company immediately prior to suchacquisition or acquisitions. For these purposes, persons will be consideredto be acting as a group if they are owners of a corporation that enters intoa merger, consolidation, purchase or acquisition of stock, or similarbusiness transaction with the Company. For purposes of this subsection (iv), gross fair market value means the value of the assetsof the Company, or the value of the assets being disposed of, determinedwithout regard to any liabilities associated with such assets.          Notwithstanding the foregoing, a Change in Control will not be deemed to occuras a result of the sale, spin-off, or other divestiture of the Company’s Gamesand/or Rhapsody businesses.
-7-

 
          (c) Good Reason. “Good *Reason”*means Executive’s resignation within thirty(30) days following the expiration of any Company cure period following theoccurrence of one or more of the following, without Executive’s written consent:               (i) a material reduction in Executive’s duties, authorities orresponsibilities relative to Executive’s duties, authorities orresponsibilities as in effect immediately prior to such reduction(including, for example, but not by way of limitation, a material reductiondue to (A) the Company ceasing to be a publicly held company; or (B) theCompany becoming part of a larger entity (unless Executive receivessubstantially the same level of duties, authorities and responsibilitieswith respect to the total combined entity and not only with respect to theCompany as a division, subsidiary or business unit of the total combinedentity));               (ii) a material reduction in Executive’s annual base compensation as ineffect immediately prior to such reduction (provided that a reduction of tenpercent (10%) or less will not constitute a material reduction under thisclause (ii));               (iii) a material reduction in Executive’s annual target bonusopportunity as in effect immediately prior to such reduction (provided thata reduction of ten percent (10%) or less will not constitute a materialreduction under this clause (iii)); and               (iv) a material change in the geographic location at which Executivemust perform services; provided, however, that any requirement of theCompany that Executive be based anywhere within fifty (50) miles fromExecutive’s primary office location or within fifty (50) miles fromExecutive’s principal residence will not constitute a material change underthis clause (iv).               Executive will not resign for Good Reason without first providing theCompany with written notice within ninety (90) days of the event thatExecutive believes constitutes “Good Reason” specifically identifying theacts or omissions constituting the grounds for Good Reason and a reasonablecure period of not less than thirty (30) days following the date of suchnotice.     7. Successors.          (a) The Company’s Successors. Any successor to the Company (whether direct orindirect and whether by purchase, merger, consolidation, liquidation or otherwise)to all or substantially all of the Company’s business and/or assets will assume theobligations under this Agreement and agree expressly to perform the obligationsunder this Agreement in the same manner and to the same extent as the Company wouldbe required to perform such obligations in the absence of a succession. For allpurposes under this Agreement, the term “Company” will include any successor to theCompany’s business and/or assets which executes and delivers the assumptionagreement described in this Section 7(a) or which becomes bound by the terms of thisAgreement by operation of law.          (b) Executive’s Successors. The terms of this Agreement and all rights ofExecutive hereunder will inure to the benefit of, and be enforceable by, Executive’spersonal or legal representatives, executors, administrators, successors, heirs,distributees, devisees and legatees.
-8-

 
     8. Notice.          (a) General. Notices and all other communications contemplated by thisAgreement will be in writing and will be deemed to have been duly given whenpersonally delivered or when mailed by U.S. registered or certified mail, returnreceipt requested and postage prepaid. In the case of Executive, mailed noticeswill be addressed to him or her at the home address which he or she most recentlycommunicated to the Company in writing. In the case of the Company, mailed noticeswill be addressed to its corporate headquarters, and all notices will be directed tothe attention of the Company’s Chief Executive Officer (or in the absence of a ChiefExecutive Officer, the President of the Company) and its General Counsel (or in theabsence of a General Counsel, the Deputy General Counsel of the Company).          (b) Notice of Termination. Any termination by the Company for Cause or byExecutive for Good Reason will be communicated by a notice of termination to theother party hereto given in accordance with Section 8(a) of this Agreement. Suchnotice will indicate the specific termination provision in this Agreement reliedupon, will set forth in reasonable detail the facts and circumstances claimed toprovide a basis for termination under the provision so indicated, and will specifythe termination date (which will be not more than thirty (30) days after the givingof such notice). The failure by Executive to include in the notice any fact orcircumstance which contributes to a showing of Good Reason will not waive any rightof Executive hereunder or preclude Executive from asserting such fact orcircumstance in enforcing Executive’s rights hereunder.     9. Miscellaneous Provisions.          (a) Waiver. No provision of this Agreement will be modified, waived ordischarged unless the modification, waiver or discharge is agreed to in writing andsigned by Executive and by an authorized officer of the Company (other thanExecutive). No waiver by either party of any breach of, or of compliance with, anycondition or provision of this Agreement by the other party will be considered awaiver of any other condition or provision or of the same condition or provision atanother time.          (b) Headings. All captions and section headings used in this Agreement are forconvenient reference only and do not form a part of this Agreement.          (c) Entire Agreement. This Agreement, together with the Retention Letter andthe Development, Confidentiality and Noncompetition Agreement entered into betweenyou and the Company, constitutes the entire agreement of the parties hereto andsupersedes in their entirety all prior representations, understandings, undertakingsor agreements (whether oral or written and whether expressed or implied) of theparties with respect to the subject matter hereof. No waiver, alteration, ormodification of any of the provisions of this Agreement will be binding unless inwriting and signed by duly authorized representatives of the parties hereto andwhich specifically mention this Agreement.          (d) Choice of Law. The validity, interpretation, construction, and performanceof this Agreement will be governed by the laws of the State of Washington (with theexception of its
-9-

 
conflict of laws provisions). Any claims or legal actions by one party against the other arisingout of the relationship between the parties contemplated herein (whether or not arising under thisAgreement) will be commenced or maintained in any state or federal court located in thejurisdiction where Executive resides, and Executive and the Company hereby submit to thejurisdiction and venue of any such court.          (e) Severability. The invalidity or unenforceability of any provision orprovisions of this Agreement will not affect the validity or enforceability of anyother provision hereof, which will remain in full force and effect.          (f) Withholding. All payments made pursuant to this Agreement will be subjectto withholding of applicable income and employment taxes.          (g) Counterparts. This Agreement may be executed in counterparts, each ofwhich will be deemed an original, but all of which together will constitute one andthe same instrument.
-10-

 
     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of theCompany by its duly authorized officer, as of the day and year set forth above.          COMPANY REALNETWORKS, INC.   By:   /s/ Robert Kimball    Title:  President and Acting Chief Executive Officer      EXECUTIVE    By:                                /s/ Henry Skorny    Title:   Senior Vice President       
-11-