Document:

Exhibit 10.3 - M.Parham Promotion Letter

Exhibit 10.3
August 24, 2012
Michael Parham
1917 10th Ave. W.
Seattle, WA 98119
Dear Michael:
I am extremely pleased to offer you a promotion to the position of Senior Vice President & General Counsel.  In this new role, you will continue to report directly to me.  The effective date of this promotion will be the pay period beginning August 16, 2012.
Your responsibilities will continue to be as directed by Real and myself.  This position continues as a full-time, exempt, regular position.  You will accrue vacation and sick leave at the same rate you did before.  Your benefits will continue uninterrupted, unless you change your work hours from full-time to something less.
You will be paid a salary, which is equivalent on an annualized basis to $260,000.00 (subject to normal withholdings), payable semi-monthly in accordance with our normal payroll procedures.
You remain eligible to participate in Real's Executive Management Bonus Plan; however your new annual target shall be 45% of your new base salary or $117,000.00 for an annualized total compensation target of $377,000.00.  For the 2012 plan year, your eligibility in the Executive MBO Incentive Plan will be pro-rated based on full months' eligibility.  Eligible employees promoted after the first of the month will not begin proration of the new bonus target until the first day of the next month.
For the 2012 plan year, your annual bonus will be prorated as follows:
		
	•
	For the period Jan 1- August 31, your annual target for the 2012 plan year was 20% of your then current base salary, so 8/12th of a full year's target is $29,533.00.

		
	•
	For the period Sept 1- Dec 31, your annual target for the 2012 plan year will be 45% of your new salary, so 4/12th of a full year's target is $39,000.00 for a 2012 blended target of $68,533.00.

You will also earn equity in RealNetworks under the terms of RealNetworks 2005 Stock Incentive Plan.  Subject to and effective upon the commencement of your promotion and the approval of the Compensation Committee of RealNetworks Board of Directors ("Compensation Committee"), you will receive a grant of stock options for the purchase of 70,000 shares of RealNetworks Common Stock, which will begin vesting on the first day of your new position, and 

will be subject to all other provisions contained in the Plan.  These stock options will fully vest after four years of continuous employment.
You will also receive a grant of 10,000 restricted stock units (RSUs), also subject to Compensation Committee approval, which will begin vesting on the first day of your new position, and will fully vest after four years of continuous employment.  These RSUs will also be subject to all other provisions contained in the Plan.  Both your stock options and your RSUs will be granted by the Compensation Committee of RealNetworks Board of Directors no later than ten business days after the effective date of your promotion (the "Grant Date").  The exercise price of the stock options granted to you shall be equal to the fair market value of RealNetworks Common Stock on the Grant Date.  Fair market value shall equal the last sales price for shares of RealNetworks Common Stock on the Grant Date as reported by the NASDAQ National Market.  Please be aware that unvested stock is forfeited upon termination of employment.
Additionally, you will also receive a Performance Restricted Share Unit (PRSU) target grant of 50,000 PRSUs, which if earned over the performance period ending December 31, 2013 will vest upon completion of the performance goal which will be evaluated in early first quarter 2014.  This PRSU award is subject to your performance and continued employment through the vesting date and subject to applicable tax withholdings.  The details of your PRSU grant will be provided within 45 days of your promotion start date under separate cover.
You will continue to be regarded as a key employee under certain federal regulations governing family and medical leave.  This status will require that you work closely with us in planning should you develop a need for family or medical leave.
In the event that RealNetworks terminates your employment without "cause" (as defined in Exhibit A), and in consideration for your signing (and not revoking) a customary separation and release agreement to be provided by RealNetworks at the time of termination, RealNetworks will provide you with a lump sum payment equal to twelve (12) months of your then current base salary on the payment terms set forth in this letter.
In addition to the severance benefit offered above, in the event of a "Change in Control", the Company agrees to provide you certain benefits as set forth in its Change of Control and Severance Agreement to be effective as of your start date, which agreement will be provided under separate cover shortly.
Our employment relationship will be terminable at will, which means that either you or RealNetworks may terminate your employment at any time and for any reason or no reason, subject only to the provision above to make certain payments if RealNetworks terminates your employment for reasons other than cause.
REAL PROVIDES EQUAL OPPORTUNITY IN EMPLOYMENT AND WILL ADMINISTER ITS POLICIES WITH REGARD TO RECRUITMENT, TRAINING, PROMOTION, TRANSFER, DEMOTION, LAYOFF, TERMINATION, COMPENSATION AND BENEFITS WITHOUT REGARD TO RACE, RELIGION, COLOR, NATIONAL ORIGIN, 

CITIZENSHIP, MARITAL STATUS, SEX, SEXUAL ORIENTATION, AGE, DISABILITY OR STATUS AS A DISABLED VETERAN OR VETERAN OF THE VIETNAM ERA OR ANY OTHER CHARACTERISTIC OR STATUS PROTECTED BY APPLICABLE LAW.
This letter and the newly executed Development, Confidentiality and Noncompetition Agreement attached herein, and the RealNetworks, Inc. 2005 Stock Incentive Plan, contain the entire agreement between you and Real relating to your new job.  This letter may not be modified except in writing signed by both you and Real.  Any disputes regarding this letter or your employment with Real shall be governed by and construed in accordance with the laws of the State of Washington.  If any provision of this letter is deemed to be invalid or unenforceable, at Real's option, the remaining terms shall continue in full force and effect.  You agree to keep the terms of this letter and your offer strictly confidential and not to disclose them to anyone other than your spouse or partner, tax advisors and attorneys, provided you first obtain their agreement to keep the terms confidential.
If you have questions about this letter, please let me know.
This offer reflects our appreciation for your past contributions and our commitment to your continued career growth and success at RealNetworks.
Sincerely
/s/ Rob Glaser
Rob Glaser
Interim Chief Executive Officer
RealNetworks, Inc.
I have read and agree to the terms my promotion contained in this letter and the attached Development, Confidentiality and Noncompetition Agreement, which represent a full, complete and fair statement of the promotion offer made to me by RealNetworks, Inc. on this date.
Michael Parham: /s/ Michael Parham      Date:    08/24/12

Exhibit A
Definition of "Cause"
For purposes of this letter, "cause" will mean the occurrence of any of the following: 1) your conviction of, or plea of nolo contendere to, a felony involving moral turpitude (including under Federal securities laws), resulting in material harm to RealNetworks; (2) your substantial and continuing failure after written notice thereof to render services to RealNetworks in accordance with the terms or requirements of your employment for reasons other than illness or incapacity; (3) your willful misconduct, gross negligence, fraud, embezzlement, theft, misrepresentation or dishonesty involving RealNetworks or any of its subsidiaries, resulting in any case in material harm to RealNetworks; or (4) your violation of any confidentiality or non-competition agreements with RealNetworks or its subsidiaries, resulting in material harm to RealNetworks.
Release and Section 409A
The receipt of any severance benefits pursuant to this letter will be subject to your signing and not revoking a release of any and all claims, in a form prescribed by RealNetworks I (the "Release") and provided that such Release becomes effective and irrevocable no later than sixty (60) days following the termination date (such deadline, the "Release Deadline").  If you do not execute the Release on or prior to the date set forth in the Release for you to consider it, you will forfeit any rights to severance benefits under this letter.  No severance benefits will be paid or provided until the Release becomes effective and irrevocable.  Upon the Release becoming effective, any payments delayed from the date you terminate employment through the effective date of the Release will be payable in a lump sum without interest on the first payroll date after the Release becomes effective and irrevocable.
It is the intent of this letter that all payment and benefits hereunder comply with or be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder and any applicable state law requirements ("Section 409A") so that none of the payments and benefits to be provided under this letter will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be exempt or so comply.  Each payment and benefit payable under this letter is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.  You and RealNetworks agree to work together in good faith to consider amendments to this letter and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to you under Section 409A.  Notwithstanding anything to the contrary in this letter, no severance pay or benefits to be paid or provided to you, if any, pursuant to this letter that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A (together, "Deferred Compensation") or otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be paid or otherwise provided until you have a "separation from service" within the meaning of Section 409A.  However, unless a later date is required by the next sentence, any severance 

payments or benefits under this letter that would be considered Deferred Compensation will be paid on, or, in the case of installments, will not commence until, the sixtieth (60th) day following your separation from service and any installment payments that would have been made to you during the sixty (60) day period immediately following your separation from service but for this sentence will be paid to you on the sixtieth (60th) day following your separation from service and the remaining payments shall be made as provided in this letter. Further, if at the time of your termination of employment, you are a "specified employee" within the meaning of Section 409A, payment of such Deferred Compensation will be delayed to the extent necessary to avoid the imposition of the additional tax imposed under Section 409A, which generally means that you will receive payment on the first payroll date that occurs on or after the date that is six (6) months and one (1) day following your termination of employment, or your death, if earlier.Exhibit 10.1

 

NBTY- Management Incentive Plan (MIP)

US Based Associates

 

The NBTY Management Incentive Plan (the Plan) is directly linked to the company’s growth and profitability objectives, and supports a culture where performance drives compensation.

 

I. Plan Eligibility

 

NBTY employees (Associates) whose base salary is at $110,000 or greater may be eligible to participate in the Plan (each such Associate, a “participant”), with the exception of Associates who are on another NBTY incentive plan including, but not limited to, Sales Incentive Plans, Year End Bonus (YEB), etc.  Contractors and student interns also are excluded from the Plan.

 

II. Plan Structure

 

A participant’s incentive payout is influenced by the following components:

 

A.            NBTY’s Financial Performance

 

B.            Assessment of NBTY’s Performance by the CEO and NBTY’s Compensation Committee

 

C.            Assessment of Business Unit performance by the CEO

 

D.            Associate’s Base Salary & Incentive Target Percent

 

E.            Associate’s Individual Performance

 

For purposes of this plan, “Business Unit” will be used to describe the Global Wholesale, Puritan’s Pride, Vitamin World HDQ staff and Corporate Support/Staff Functions.

 

A.                  NBTY Financial Performance

 

The amount of funding that is available to distribute to the Business Units, and subsequently to Associates, is based on NBTY’s financial performance. It is expected that the plan will fund at 50% when NBTY meets threshold performance, at 100% when plan performance is met, and at 200% when maximum performance is achieved (after accruing for the bonus payout).

 

B.                  Assessment of NBTY Performance by the CEO and NBTY’s Compensation Committee

 

The actual amount of funding available may be adjusted up or down based on the joint discretion of the CEO and NBTY Compensation Committee’s assessment of the overall performance of NBTY.

 

C.                  Assessment of Business Unit Performance by the CEO

 

Each Business Unit is allocated a portion of the overall NBTY funding based on:

 

How the Business Unit performs against its own performance commitments and contribution to NBTY EBITDA and CEO discretion.

 

NBTY Confidential

 

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D.                  Associate’s Base Salary & Incentive Target Percent

 

Incentive opportunity (the amount of incentive an Associate is eligible to receive) is based on their base salary as of September 30th and his/her incentive target percent. Incentive opportunity is calculated as follows:

 

·                  Incentive Opportunity = base salary as of September 30th x target incentive %

·                  Funded Incentive Opportunity = Incentive opportunity x Business Unit assessment

 

E.                  Associate’s Individual Performance

 

·                  The amount of incentive that each Associate receives depends on their personal performance (i.e. high-performing employees are eligible for higher rewards.)

·                  Performance is assessed by the Associate’s manager based on achievement of assigned performance goals and objectives.

·                  Based on this performance assessment, the manager will determine an applicable payout % that, in conjunction with an Associate’s funded incentive opportunity, will be used to determine the incentive payout amount.

·                  Senior management reserves the right to adjust an individual Associate’s payout amount if the calculated payout does not appropriately reflect effort, or extraordinary/unusual events.

 

Guidelines for Determining Incentive Awards: Applied to All Plan Components

 

	
Results
    	
 
    	
Incentive Payout
   Range
    	
 
    
	
Exceeded all or most   goals and objectives  
    	
 
    	
 
    	
 
    
	
·    Results exceeded target   performance levels 
    	
 
    	
 
    	
 
    
	
·  Notable/exceptional   contribution to department/organization
    	
 
    	
Up to 150%
    	
 
    
	
·    Continually demonstrated a superior level   of knowledge, skills and behaviors
    	
 
    	
 
    	
 
    
	
Met goals and objectives    
    	
 
    	
 
    	
 
    
	
·  Accomplishments met target   performance levels 
    	
 
    	
 
    	
 
    
	
·  Fully   satisfactory 
    	
 
    	
Up to 100%
    	
 
    
	
·    Solid, reliable and meaningful contribution   to the organization and
    	
 
    	
 
    
	
·    Consistently demonstrated   expected levels of knowledge skills and behaviors
    	
 
    	
 
    	
 
    
	
Met some goals and   objectives   
    	
 
    	
Up to 75%
    	
 
    
	
·    Accomplishments met some,   but not all target performance levels and
    	
 
    	
 
    
	
·    Sometimes demonstrated the   expected level of knowledge,
    	
 
    	
 
    	
 
    
	
·    Improvement needed
    	
 
    	
 
    	
 
    
	
Did not achieve most or   all goals and objectives 
    	
 
    	
 
    	
 
    
	
·    Performance fell below   expectations
    	
 
    	
 
    	
 
    
	
·    Did not demonstrate   expected level of knowledge 
    	
 
    	
0%
    	
 
    
	
·    Improvement needed
    	
 
    	
 
    	
 
    

 

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III. Changes to Eligibility Status

 

Form and Timing of Payment - Incentive awards will be paid in a single lump sum typically no later than mid- December immediately following the preceding Plan Year. Incentive awards may be pro-rated (or not paid at all) dependent upon the Associate’s active participation in the Plan Year, as follows:

 

A.            New Hire - Associates who begin their employment with NBTY on or before June 30 of the Plan Year are eligible to receive a pro-rated incentive award based on month of hire. (E.g. Associate hired May 21 of the Plan Year is eligible for 5 months of pro-ration).  Associates who begin work with NBTY on or after July 1 of the Plan Year are not eligible to participate in the Plan for that Plan Year.  (See attached pro-ration schedule.)

 

B.            Promotions, Demotions and Base Salary/Incentive Target Changes - The award for the Plan Year will be calculated based on the salary and target % as of September 30th, regardless of whether an eligible Associate has a base salary and/or incentive target percent change during the Plan Year.

 

C.            Other Leave of Absence - Subject to applicable local policy and applicable law, eligible Associates who are absent from work due to an approved absence or leave will have their awards pro-rated to reflect the number of full weeks the Associate was on a leave of absence.  Associates who were absent from work due to an approved FMLA will not have their awards pro-rated for the time spent on an approved FMLA leave. Those on any leave of absence on the payment date will have their payment deferred until they return to work.

 

D.            Voluntary Termination — No payment will be made to an Associate if they voluntarily terminate at any time during the Plan Year (October 1-September 30th), or prior to the payment date.

 

E.            Involuntary Termination — No payment will be made if an Associate is terminated, with or without cause, at any time during the Plan Year.  However, if the Associate is terminated by NBTY without cause after the completion of the Plan Year (September 30th) but before the award is paid (usually mid-December), then they will be eligible for their MIP award.  No payment, under any circumstances, will be made if the Associate is involuntary terminated for cause, as determined by NBTY.

 

F.             Death & Permanent Disability - In the event that employment ends due to death or permanent disability, awards will be pro-rated on the number of active months preceding death or permanent disability. Awards will be paid to the Associate’s beneficiaries on the same date as all other award payments.

 

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IV. General Conditions

 

Participation in the Plan is at the discretion of the Company.  The Company reserves the right to revise or terminate any of the provisions of this Plan or to terminate the Plan itself at any time without prior notice.  The Director of Compensation will publish all such revisions to the Plan.

 

A.            The issuance of these guidelines for any year does not, in any way, commit the Company to pay a similar kind of compensation in any subsequent year.  Furthermore, the payment of an incentive award in any year shall not be considered a precedent for any subsequent year, and the payment shall not limit the Company’s absolute discretion in future years to pay, or not pay, any incentive award.

 

B.            Eligibility for participation and receipt of compensation under this Plan requires strict compliance with NBTY standards for ethical conduct and company policies.  Non-compliance, as determined by NBTY in its sole discretion, will constitute grounds for cancellation of incentive compensation eligibility.

 

C.            Participation in this Plan by any Associate of the Company is conditioned on the express agreement by the participant that he/she will not, directly (or indirectly) during (or after) his/her employment with the Company, transfer, or allow to be transferred, any Company confidential information to any person, firm, or organization not authorized by NBTY to receive such information.

 

D.            Participation in this Plan is conditioned on the express agreement by the participant that he/she executes any documents deemed necessary by the Company to administer the Plan.

 

E.            Any participant’s complaint regarding this Plan, or with respect to any incentives received pursuant to this Plan, must be received in writing by the Company from the participant within six (6) months after the end of the Plan Year.  Failure to formally register a complaint or claim for compensation will constitute a waiver of complaint on the participant’s behalf.

 

F.             Anything in this Plan to the contrary notwithstanding, the terms of this Plan shall be interpreted and applied in a manner consistent with the requirements of Section 409A of the United States Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations thereunder so as not to subject an Associate to the payment of any tax penalty or interest which may be imposed by Section 409A of the Code and the Company shall have no right to accelerate or make any payment under this Plan except to the extent such action would not subject an Associate to the payment of any tax penalty or interest under Section 409A of the Code. It is intended that payments made under this Plan shall be exempt from compliance with Section 409A of the Code pursuant to the exemption for short-term deferrals set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. If all or a portion of the payments provided under this Plan constitute taxable income to an Associate for any taxable year that is prior to the taxable year in which such payments are to be paid to such Associate as a result of the Plan’s failure to comply with the requirements of Section 409A of the Code and the Treasury Regulations, the applicable payment shall be paid immediately

 

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to the associate to the extent such payment is required to be included in the Associates income.

 

V. Plan Review & Approvals

 

This Plan document supersedes any and all prior incentive plans, policies and arrangements of NBTY.

 

All components of this Plan, including accompanying forms, and any updates, revisions, clarifications, and/or other modifications made by NBTY are proprietary and may not be altered or modified in any way unless authorized in writing by the Director of Compensation and the Senior Vice President of Human Resources .  The Senior Vice President of Human Resources has the authority to interpret the Plan and to make all discretionary decisions relating to, exceptions to, and interpretations of the Plan and the administration and implementation thereof.

 

The Company maintains sole discretion to make any and all financial calculations necessary for the administration of this Plan, or the calculation of any incentive compensation hereunder, based on applicable NBTY policies and procedures.

 

5

 

MIP PRO-RATION SCHEDULE

 

	
MONTH OF HIRE
    	
 
    	
PRO-RATION %
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
October
    	
 
    	
100.0
    	
%
    
	
November
    	
 
    	
91.7
    	
%
    
	
December
    	
 
    	
83.3
    	
%
    
	
January 
    	
 
    	
75.0
    	
%
    
	
February
    	
 
    	
66.7
    	
%
    
	
March
    	
 
    	
58.3
    	
%
    
	
April
    	
 
    	
50.0
    	
%
    
	
May
    	
 
    	
41.7
    	
%
    
	
June 
    	
 
    	
33.3
    	
%
    
	
July 
    	
 
    	
0.0
    	
%
    
	
August
    	
 
    	
0.0
    	
%
    
	
September
    	
 
    	
0.0
    	
%
    

 

6

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