Employment Agreement - RealNetworks Inc. and Richard Cohen
Richard Cohen October 13th, 2000
Dear Richard:
As you know, I am extremely pleased to offer you employment at RealNetworks,
Inc. (RN) as a corporate Senior Vice President with responsibility for our media
delivery service businesses. As a Senior Vice President, you will also
participate as a member of the company's Operating Committee. Your start date is
November 1, 2000.
This offer is for a full-time, exempt, regular position with RN. Your
responsibilities will be as directed by RN. You will be paid a monthly salary,
which is equivalent on an annualized basis to $350,000 (subject to normal
withholdings). Your salary will be payable in 2 installments on the 15th and the
last day of each month. You are eligible to earn an annual bonus of up to
$300,000, based on MBO target goals, of which $150,000 is guaranteed for each of
the first two full years you are employed by RN, and earned and payable as of
the end of each full year.
This offer also includes a one-time lump sum payment of $100,000, less standard
withholdings, payable on your first regularly scheduled paycheck. You will also
receive a one-year anniversary bonus of $100,000 at the completion of your first
12 months. In addition, you will receive a two-year anniversary bonus totaling
$200,000 minus the value of your vested equity at the end of your first 24
months, in the event that your vested equity is worth less than $200,000. These
amounts are taxable income. If you elect to leave voluntarily within 12 months
of receiving any of these payments, you agree to reimburse RN for the entire
amount of that lump sum payment. By signature below, you consent to RN deducting
from your final paycheck any amount remaining due to RN on or before your
termination date. Any amount still remaining due shall be paid by you to RN no
later than your termination date.
You will also earn equity in RN under the terms of RN's 1996 Stock Option Plan.
Upon the start of your employment, you will be eligible for options on 300,000
shares, which will begin vesting on your hire date according to the vesting
rules, and all other provisions contained in the Plan. Your stock options will
be granted on the last NASDAQ stock trading day ("Grant Date") of the calendar
week in which the first day of your employment occurs. The exercise price of the
stock options granted to you shall be equal to the fair market value of RN's
Common Stock on the Grant Date. Fair market value shall equal the last sales
price for shares of RN's 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 be eligible for options on 75,000 shares, the vesting
cycle for which will commence on your one-year anniversary, and will vest
according to our standard vesting rules. Your strike price will be identical to
the price of your initial grant.
It is our understanding that the initial position will be based in Los Angeles,
with visits to Seattle approximately one week per month. We will provide
mutually agreeable housing.
You will receive paid vacation, paid holidays, paid sick leave and, upon
satisfaction of any eligibility or waiting requirements, medical/dental
coverage, 401K participation, disability and life insurance coverage, employee
stock purchase plan participation and other benefits ("Benefits") as described
in the RN Employee Handbook and Benefit Plan descriptions. All of these Benefits
are subject to change upon notice from RN.
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It is our policy that employees are not to use or disclose confidential
information or trade secrets obtained from any source or during any prior
employment. RN requires employees to abide by all contractual and legal
obligations they may have to prior employers or others, such as limits on
disclosure of information, or competition. You must inform us if you are subject
to any such obligations. Violation of this requirement may result in termination
of your employment with RN. By signing this letter you further agree that you
will not bring any confidential documents of another, nor disclose any
confidential information of another, and will in all ways abide by these
requirements.
Our employment relationship will be terminable at will, which means that either
you or RN may terminate your employment at any time and for any reason or no
reason with the exception of the following special allowances below.
If RN terminates you without cause (as "cause" is defined in RN's 1996 Stock
Option Plan) prior to the end of your first 6 months of employment, you will be
paid an amount equal to your first year's annual base salary, as well as any
guaranteed cash bonuses you would have received over the next 12 months. If RN
terminates you without cause after your first 6 months of employment but prior
to your first 18 months of employment, you will receive the greater of (a) the
remaining salary plus any guaranteed bonuses due to you but not yet received for
your first 18 months, or (b) 50% of your then annual base salary plus any
guaranteed bonuses due to you over the next 6 months. If you are terminated
without cause after your first 18 months of employment, RN will pay you an
amount equal to 50% of your annual base salary plus any guaranteed cash bonuses
due to you over the next 6 months. In each of the foregoing scenarios, the
amount paid to you will be subject to normal withholdings and taxes.
In addition, in the event that RN terminates you without cause during your first
18 months, you will receive, at RN's election, either (a) an acceleration of the
stock option you would have vested at 18 months; (b) a cash payment equivalent
to the difference between the fair market value of the number of shares that
would have vested at 18 months calculated as of the date of termination, and the
fair market value of those shares at the Grant Date; or (c) a termination date
of your 18 month anniversary, thereby allowing you to exercise the options that
vest at 18 months. RN agrees that the value of whichever option it elects will,
at the time of election, have a value to you of at least $750,000; in the event
that it is worth less than $750,000, RN will make up the difference to you in
cash. In each of the foregoing scenarios, the amount paid to you will be subject
to normal withholdings and taxes.
In the event that RN terminates you without cause at any time after 18 months
but during your first 3 years and your cumulative vested equity, including any
exercised options or earned shares you hold, or the earned shares you have sold,
is worth less than $750,000 at the time of termination, you will receive a
one-time payment totaling $750,000 minus the value of your cumulative vested
equity at the time of termination, subject to normal withholdings and taxes.
You agree that you will provide RN nine months notice prior to you terminating
your employment during the first nine months of your employment. Thereafter, you
will provide RN at least six months notice prior to you terminating your
employment.
This offer is contingent on (i) your providing evidence of employability as
required by federal law (which includes providing RN within 3 days after your
employment commences with acceptable evidence of your identity and US employment
eligibility), (ii) us receiving acceptable results from any background check or
reference check, and (iii) you signing RN's Development, Confidentiality and
Noncompetition Agreement, attached hereto. Please call us if you have questions
about this offer letter. This letter may not be modified except in writing
signed by both you and RN.
RN 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
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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.
We are excited about the prospect of you joining RealNetworks, Inc. and look
forward to working with you.
This offer is valid until October 25, 2000.
Sincerely,
/s/ Rob Glaser
Rob Glaser
CEO
RealNetworks, Inc.
I have read and agree to the terms of employment contained in this offer letter
and the attached Development, Confidentiality and Noncompetition Agreement,
which represent a full, complete and fair statement of the offer of employment
made to me by RealNetworks, Inc.
Richard Cohen:
/s/ Richard Cohen Date: October 20, 2000