Document:

exv10w1

Exhibit 10.1

July 1, 2008

Mr. John J. Giamatteo

c/o RealNetworks, Inc.

2601 Elliott Avenue

Seattle, WA 98121

Dear John,

This letter amends and restates the terms of the letter dated June 24, 2008 related to
your promotion to Chief Operating Officer (“COO”) for RealNetworks, Inc. and acts as an
addendum to the original offer letter you received on May 24, 2005; all other terms of
employment that you previously agreed to will apply.

This promotion has been approved by the Board of Directors, and comes in recognition of
the outstanding work you have done at RealNetworks, Inc. since you joined RealNetworks
in 2005. Your new annual salary will be increased to $435,000 per annum (subject to
normal withholdings). It will take effect upon the receipt of the written formal
acceptance of this offer.

As part of this promotion, you will also continue to be eligible for the company’s
executive incentive MBO program, allowing you to earn an annual bonus of up to 100% of
your base salary, based on the achievement of specific business goals. As such, you are
eligible to earn $435,000 upon meeting these MBO business goals, for an annual targeted
total compensation of $870,000. The Comp Committee of the Board of Directors has
approved, in principle, a modification to your 2009 Executive MBO plan that will allow
for a potential maximum payout opportunity of 200%, depending on the achievement of
specified performance goals . Please note that your participation will remain in effect
only in those quarters during which you are employed as an executive on the first and
last day of the quarter.

You will receive two equity awards in connection with your appointment as COO of
RealNetworks. Upon your acceptance of the terms of this letter, stock options for the
purchase of 375,000 shares of RealNetworks Common Stock will be granted to you having an
exercise price equal to the closing price of RealNetworks Common Stock as reported on
NASDAQ on the date the options are granted (the “Grant Date”). These options will vest
as follows, and as set forth on Exhibit A (assuming continued employment with Real):
75,000 options will vest thirty months after the Grant Date, 75,000 options will vest
thirty-six months after the Grant Date, 112,500 options will vest forty-two months after
the Grant Date and the remaining 112,500 options will vest forty-eight months after the
Grant Date. In addition, 208,333 restricted stock units (“RSUs”) will be granted to you
on the Grant Date. The RSUs will vest as follows (assuming continued employment with
Real): 33,333 RSUs will vest twelve months after the Grant Date, 50,000 RSUs will vest
twenty-four months after the Grant Date, 25,000 RSUs will vest thirty months after the
Grant Date, 25,000 RSUs will vest thirty-six months after the Grant Date, 37,500 RSUs
will vest forty-two months after the Grant Date and the

 

remaining 37,500 RSUs will vest forty-eight months after the Grant Date. The stock
options and RSUs will be granted pursuant to the RealNetworks, Inc. 2005 Stock Incentive
Plan, as amended and restated (the “2005 Plan”), and will be subject to all of the terms
and conditions of the 2005 Plan and the agreement evidencing each equity award.

Additionally, in the event that Real decides to terminate your employment without cause
during the first two years of vesting for these RSU and stock option awards, there will
be accelerated vesting applicable to the RSUs and stock options as further described
herein. If your employment is terminated without cause during the first twelve months
following your promotion to COO (“Year 1”), 4,861 RSUs will become vested for each
completed month of employment during Year 1 in lieu of the 33,333 RSUs that would vest
on the first anniversary of your promotion. If your employment is terminated without
cause during the second twelve month period following your promotion to COO (“Year 2”),
25,000 RSUs will become vested, plus an additional 5,556 RSUs for each completed month
of employment during Year 2, in lieu of the 50,000 RSUs that would vest on the second
anniversary of your promotion. In addition, if your employment is terminated without
cause during Year 1, 6,250 options will become vested for each completed month of
employment during Year 1, and if such termination occurs during Year 2, 4,167 options
will become vested for each completed month of employment during Year 2 in addition to
75,000 options that would have become vested on the first anniversary of your promotion
to COO had such termination of employment occurred on such date. This accelerated
vesting will become effective on the date of termination of your employment without
cause.

As you are aware, Real currently expects to execute an initial public offering, spin-off
or other corporate transaction relating to its games business. You understand and
agree that any adjustments — if any adjustments are approved by the RealNetworks Board
of Directors — to the stock options described above to reflect any games business
transaction will affect only the exercise price of the options. Consequently, the
number of Real shares covered by the options will not be increased and the options will
not allow you to purchase any shares in the games business. Additionally, you will
receive RSU conversion treatment based on the regular approved formula at the time of
the games business transaction. However, the maximum conversion formula that will be
applied to this RSU grant is fifty percent of the original RSU grant. The foregoing
clause is applicable only to the stock option and RSU awards described herein and will
not apply to any stock option or RSU awards previously granted to you. The Compensation
Committee of Real’s Board of Directors has full discretion to determine any adjustments
that may or will made to your equity awards in order to reflect any games business
transaction or any other event. Any adjustments to your equity awards to reflect any
games business transaction may differ from those made to equity awards granted by Real
to other individuals.

In the event that Real terminates your employment without cause, Real will provide you
with twelve months notice or pay you your then-current base salary in lieu of notice
through any remaining portion of the notice period.

If you are a “specified employee” within the meaning of Section 409A of the Internal
Revenue Code (“Section 409A”) at the time you terminate employment (other than due to
your death), then any severance benefits payable to you under this offer, if any, and
any other severance payments or separation benefits that may be considered deferred
compensation under Section 409A (together, the “Deferred Compensation Separation
Benefits”) otherwise due to you on or within the six (6) month period following your

 

termination will accrue during such six (6) month period and instead will be payable in
a lump sum payment (less applicable withholding taxes) on the date six (6) months and
one (1) day following the date of your termination of employment. All subsequent
payments, if any, will be payable in accordance with the payment schedule applicable to
each payment or benefit. However, if you die following your termination but prior to
the six-month anniversary of your date of termination, then any payments delayed in
accordance with this paragraph will be payable in a lump sum (less applicable
withholding taxes) to your estate as soon as administratively practicable after the date
of your death and all other Deferred Compensation Separation Benefits will be payable in
accordance with the payment schedule applicable to each payment or benefit. It is the
intent of this offer to comply with the requirements of Section 409A so that none of the
severance payments and benefits to be provided hereunder will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be
interpreted to so comply. Real and you agree to work together in good faith to consider
amendments to this offer and related documents to take such reasonable actions which are
necessary, appropriate or desirable to avoid imposition of any additional tax or income
recognition under Section 409A prior to actual payment to you.

John, please accept our congratulations on your new promotion. We look forward to your
continued contributions and future success in your new role.

Sincerely,

/s/ Robert Glaser

Robert Glaser

Chief Executive Officer

RealNetworks, Inc.

I have read and agree to the terms outlined in this promotional letter.

John Giamatteo: /s/ John J. Giamatteo

Date: 7/21/2008

 

Exhibit A

RSU and Stock Option Vesting:

	 	 	 	 	 	 	 	 	 	 	 
	Months	 	RSU Vesting	 	Stock Option Vesting	 	 
	12

	 	 	33,333	 	 	 	 	 	 	 
	24

	 	 	50,000	 	 	 	 	 	 	 
	30

	 	 	25,000	 	 	 	75,000	 	 	 
	36

	 	 	25,000	 	 	 	75,000	 	 	 
	42

	 	 	37,500	 	 	 	112,500	 	 	 
	48

	 	 	37,500	 	 	 	112,500	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total

	 	 	208,333	 	 	 	375,000exv10w2

Exhibit 10.2

RealNetworks, Inc. Executive Compensation Program –MBO Plan Document

Objective of the Plan

The objective of the RealNetworks’ FY 2008 Executive MBO Incentive Plan is to reward business
leaders for their contribution to the Company’s success and ensure market competitiveness as we
work to attract and retain executive-level talent. RealNetworks has adopted this plan to reward
high performance consistent with our core business objectives.

Effective Date

The effective date of this Plan is January 1, 2008 – December 31, 2008.

Target Goals

Target goals for the plan will be based upon Revenue and EBITDA plan goals for the fiscal year.

Semi-annual assessment of goal attainment will be completed after the close of the six month
period. Corresponding payout based on goal attainment will typically occur 30 to 45 days after the
close of the six month period.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Corporate	 	Divisional	 	BU	 	Sales	 	 
	Exec Level	 	Revenue	 	EBITDA	 	Revenue	 	EBITDA	 	Revenue	 	Revenue	 	Discretionary
	Corp Leader
	 	 	50.0	%	 	 	50.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sr Divisional Leader
	 	 	25.0	%	 	 	25.0	%	 	 	25.0	%	 	 	25.0	%	 	 	 	 	 	 	 	 	 	 	 	 
	BU Leader
	 	 	12.5	%	 	 	12.5	%	 	 	 	 	 	 	37.5	%	 	 	37.5	%	 	 	 	 	 	 	 	 
	Divisional Leader
	 	 	12.5	%	 	 	12.5	%	 	 	37.5	%	 	 	37.5	%	 	 	 	 	 	 	 	 	 	 	 	 
	Sales Leader
	 	 	10.0	%	 	 	10.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	80.0	%	 	 	 	 
	Finance Leader
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	100.0	%

MBO Payout Mechanics

Revenue:

	 	•	 	Revenue – in order to maintain consistent revenue growth year over year, performance
under 90% of the revenue target goal will not be rewarded.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Example
	Attainment	 	Incentive Payout	 	Actual Attainment	 	Actual Payout
	< 90%
	 	No Payout	 	 	75%	 	 	No Payout
	90% - 100%
	 	 	40% - 100	%	 	 	98%	 	 	 	88%	 
	>100% - 110%
	 	Up to 160%	 	 	110%	 	 	 	160%	 

EBITDA:

	 	•	 	EBITDA attainment will be paid out linearly to a maximum of 160% for profitable units.
There is no threshold for payout except in rare instances where the EBITDA target is a
negative number. In order for the payout to exceed 100% corresponding revenue attainment
must be greater than 100%.

	 	o	 	EBITDA targets set at a negative number require setting a reverse
attainment percentage to ensure that performance against goal is appropriately
measured.
	 
	 	o	 	Performance that results in progress towards shrinking the loss will be
rewarded. A maximum loss will also be established during the target phase beyond
which there will be no payout.

Positive EBITDA Target Example

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Example
	Attainment	 	Incentive Payout	 	Actual Attainment	 	Actual Payout
	0 - 100%
	 	 	0-100%	 	 	 	89.50%	 	 	 	89.50%	 
	>100% -160%
	 	Up to 160%*	 	 	130%	 	 	 	130%*	 

 

			
	*	 	EBITDA payout is capped at 100% unless revenue attainment is at or above 100% of target.

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Negative EBITDA Target Example

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Example
	Attainment	 	Incentive Payout	 	Actual Attainment	 	Actual Payout
	<50%

	 	No Payout
	 	 	49.5%	 	 	No Payout

	50% - 100%

	 	0-100%
	 	 	98%	 	 	 	98%	 

Terms and Conditions

	 	•	 	MBO calculations are completed and payments are made every six months with payout timing
approximately 30 – 45 days after the close of the six month period. In all circumstances,
any payouts that are earned in the plan year will be paid by March 15, 2009, at the latest.
	 
	 	•	 	You must be in an eligible position on the first and last day of the quarter to
participate in the MBO program for that quarter.
	 
	 	•	 	Salary, eligible position changes and/or transfers from one eligible group to another
within a quarter will be based on salary and change at the beginning of the quarter.
Changes after the first day of the quarter will be reflected in the next quarter.
	 
	 	•	 	In order to receive a payout from the plan you must be on the company’s payroll as of
the last day of each six month period and on the company’s payroll as of the date the award
is paid, subject to the following. If your employment terminates due to your total and
permanent disability or death, you or your estate, still may be eligible to receive any
payout that otherwise was earned. If the Company terminates your employment other than for
cause, you may also be eligible to receive any payout that was otherwise earned.
	 
	 	•	 	Notwithstanding any other provision of the plan the Compensation Committee, in its sole
discretion, may increase, reduce or eliminate a participant’s award at any time before it
is paid, whether or not calculated on the basis of pre-established performance goals or
formulas.
	 
	 	•	 	The Compensation Committee has all power and discretion to interpret and administer the
Plan, including (but not limited to) the power to determine who is eligible for the Plan
and the size of any payouts.
	 
	 	•	 	The compensation Committee may delegate all or any part of its powers under the Plan to
the company’s CEO and SVP HR, except that the CEO and SVP HR may not administer the Plan
with respect to participants who are executive officers of the company. (For this purpose,
an individual will be considered an executive officer of the company if his or her role at
the company falls within the definition of “officer” under Rule 16a-1(f) promulgated under
the Securities Exchange Act of 1934, as amended.)
	 
	 	•	 	The Compensation Committee reserves the right to adjust targets/measurements based on
acquisition or disposition of businesses/assets.

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