1998 Employee Stock Purchase Plan - RealNetworks Inc.
REALNETWORKS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN,
AS AMENDED AND RESTATED EFFECTIVE APRIL 9, 2002
REALNETWORKS, INC., a Washington corporation (the "Company"), hereby
establishes this 1998 Employee Stock Purchase Plan (the "Plan").
1. PURPOSE OF PLAN. The purpose of the Plan is to enable Eligible
Employees (as defined in Section 3) who wish to become shareholders of the
Company a convenient and favorable method of doing so. The Plan is intended to
constitute an "employee stock purchase plan," as defined in Section 423(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and shall be
interpreted and administered to further that intent.
2. ADMINISTRATION OF THE PLAN. The Plan will be administered by the
Compensation Committee (the "Committee") of the Board of Directors of the
Company (the "Board"). Subject to the provisions of the Plan, the Committee will
have the complete authority to interpret the Plan, to adopt, amend and rescind
rules and procedures relating to the Plan, and to make all of the determinations
necessary or advisable for the administration of the Plan. All such
interpretations, rules, procedures and determinations will, in the absent of
fraud or patent mistake, be conclusive and binding on all persons with any
interest in the Plan.
3. ELIGIBLE EMPLOYEES. The term "Eligible Employees" means all common law
employees of the Company and its current majority-owned subsidiaries (and each
other corporation designated by the Committee that hereafter becomes a
majority-owned subsidiary of the Company), except the following: (a) employees
who have been employed for less than 30 days; (b) employees whose customary
employment is 20 hours or less per week; and (c) employees whose customary
employment is for not more than five months in any calendar year. Except as
otherwise expressly provided in the Plan and permitted by Section 423 of the
Code, all Eligible Employees shall have the same rights and obligations under
the Plan.
4. STOCK SUBJECT TO THE PLAN. The stock subject to the Plan shall be
shares of the Company's authorized but unissued voting Common Stock, $.001 par
value per share (the "Common Stock"). The aggregate number of shares of Common
Stock that may be purchased by Eligible Employees pursuant to the Plan is
1,000,000, subject to adjustment as provided in Section 13.
5. OFFERING PERIODS. The Common Stock shall be offered under the Plan
during ten consecutive six-month periods (the "Offering Periods"). The first
Offering Period shall begin on January 1, 1998 and end on June 30, 1998.
Thereafter, the Offering Periods will begin on the first day and end on the last
day of each subsequent six-month period.
6. PARTICIPANTS; PAYROLL DEDUCTIONS
6.1 A person who is an Eligible Employee at the beginning of an
Offering Period may elect to have the Company make deductions from the person's
Compensation (as defined in Section 6.4), at a specified percentage rate, to be
used to purchase of shares of Common Stock pursuant to the Plan. Such election
shall be made prior to the beginning of the
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Offering Period in accordance with such procedures as the Committee may adopt
(each Eligible Employee who so elects to have such deductions made will be
referred to as a "Participant").
6.2 The maximum rate of deduction that a Participant may elect for
any Offering Period is 10%, provided, however, that no Participant may apply
payroll deductions in excess of $10,000 toward the purchase of Common Stock
under the Plan during any calendar year. An amount equal to the elected
percentage shall be deducted from the Participant's pay each time during the
Offering Period that any Compensation is paid to the Participant. The Committee
may set such minimum level of payroll deductions as the Committee determines to
be appropriate. Any minimum level of deductions set by the Committee shall apply
equally to all Eligible Employees. A Participant's accumulated payroll
deductions shall remain the property of the Participant until applied toward the
purchase of shares of Common Stock under the Plan, but may be commingled with
the general funds of the Company. No interest will be paid on payroll deductions
accumulated under the Plan.
6.3 A Participant in the Plan on the last day of an Offering Period
shall automatically continue to participate in the Plan during the next Offering
Period unless he or she withdraws in the manner described in Section 11.
6.4 The term "Compensation" means all cash salary, wages, bonuses,
commissions and other amounts paid to or on behalf of a Participant for services
performed or on account of holidays, vacation, sick leave or other similar
events, including any amounts by which such amounts are reduced, at the election
of a Participant, pursuant to a cafeteria plan described in Section 125 of the
Code, a dependent care assistance program described in Section 129 of the Code,
a cash or deferred arrangement described in Section 401(k) of the Code, or any
similar plan, program or arrangement, but excluding the value of any noncash
benefits under any employee benefit plans and any special amounts paid to the
Participant that are specifically excluded by the Committee.
7. PURCHASE OF SHARES
7.1 At the end of an Offering Period, a Participant's accumulated
payroll deductions for the Offering Period will, subject to the limitations in
Section 9 and the termination provisions of Section 16, be applied toward the
purchase of shares of Common Stock at a purchase price (the "Purchase Price")
equal to the lesser of ---
(a) 85% of the Market Price (as defined in Section 8.1) of the Common
Stock on the first Business Day (as defined in Section 8.2) of the
Offering Period; or
(b) 85% of the Market Price for the Common Stock on the last Business
Day of the Offering Period;
in either event rounded to the nearest whole cent.
7.2 Shares of Common Stock may be purchased under the Plan only with
a Participant's accumulated payroll deductions. Fractional shares cannot be
purchased. Any portion of a Participant's accumulated payroll deductions for an
Offering Period not used for the purchase of Common Stock shall be applied to
the purchase of Common Stock in the next Offering Period, if the Participant is
participating in the Plan during that Offering Period, or returned to the
Participant.
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7.3 Each Participant who purchases shares of Common Stock under the
Plan shall thereby be deemed to have agreed that the Company or the subsidiary
of the Company that employs the Participant shall be entitled to withhold, from
any other amounts that may be payable to the Participant at or around the time
of the purchase, such federal, state, local and foreign income, employment and
other taxes may be required to be withheld under applicable laws. In lieu of
such withholding, the Company or such subsidiary may require the Participant to
remit such taxes to the Company or such subsidiary as a condition of the
purchase.
8. MARKET PRICE
8.1 For purposes of the Plan, the term "Market Price" on any day
means, if the Common Stock is publicly traded, the last sales price (or, if no
last sales price is reported, the average of the high bid and low asked prices)
for a share of Common Stock on that day as reported by the principal exchange on
which the Common Stock is listed, or, if the Common Stock is publicly traded but
not listed on an exchange, as reported by The Nasdaq Stock Market, or, if such
prices or quotations are not reported by The Nasdaq Stock Market, as reported by
any other available source of prices or quotations selected by the Committee.
8.2 For purposes of the Plan, the term "Business Day" means a day on
which prices or quotations for the Common Stock are reported by a national
securities exchange, the Nasdaq Stock Market, or any other available source of
prices or quotations selected by the Committee, whichever is applicable pursuant
to the preceding paragraph.
8.3 If the Market Price of the Common Stock must be determined for
purposes of the Plan at a time when the Common Stock is not publicly traded,
then the term "Market Price" shall mean the fair market value of the Common
Stock as determined by the Committee, after taking into consideration all the
factors it deems appropriate, including, without limitation, recent sale and
offer prices of the Common Stock in private transactions negotiated at arm's
length.
9. LIMITATIONS ON SHARE PURCHASES
9.1 Notwithstanding Section 3, an employee will not be an Eligible
Employee for purposes of the Plan if the employee owns stock possessing 5% or
more of the total combined voting power or value of all classes of stock of the
Company. For purposes of this 5% limitation, an employee shall be treated as
owning any stock the ownership of which is attributed to him or her under the
rules of Section 424(d) of the Code, as well as any stock that, in the absence
of this paragraph, the employee could purchase under the Plan with his or her
payroll deductions held pursuant to Section 6 but not yet applied to the
purchase of shares of Common Stock under the Plan.
9.2 During any calendar year, the maximum value of the Common Stock
that may be purchased by a Participant under the Plan is $25,000, said value to
be determined on the basis of the Market Price of the Common Stock on the first
Business Day of each Offering Period that ends in the calendar year.
9.3 The limitations in Section 9.1 and Section 9.2 are intended to
and shall be interpreted in such a manner as will comply with Section 423(b)(3)
and Section 423(b)(8) of the Code, respectively.
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10. CHANGES IN PAYROLL DEDUCTIONS. The rate of payroll deductions for an
Offering Period may not be increased or decreased by a Participant during the
Offering Period. However, the Participant may change the rate of payroll
deduction for a subsequent Offering Period. In addition, a Participant may
withdraw in full from the Plan in the manner described in Section 11.
11. WITHDRAWAL FROM THE PLAN
11.1 A Participant may elect to withdraw from the Plan, effective for
the Offering Period in progress, by delivering to the Committee written notice
thereof prior to the end of the Offering Period. If a Participant so withdraws,
all of the Participant's payroll deductions for that Offering Period will be
promptly returned to the Participant. If a Participant's payroll deductions are
interrupted by any legal process, the Participant will be deemed to have elected
to withdraw from the Plan for the Offering Period in which the interruption
occurs.
11.2 A Participant may elect to withdraw from the Plan, effective for
an Offering Period that has not yet commenced, by delivering to the Committee
written notice thereof prior to the first day of the Offering Period.
11.3 Following withdrawal from the Plan, in order to participate in
the Plan for any subsequent Offering Period, the Participant must again elect to
participate in the manner described in Section 6.1.
12. ISSUANCE OF COMMON STOCK.
12.1 Certificates for the shares of Common Stock purchased by
Participants will be delivered by the Company's transfer agent as soon as
practicable after each Offering Period. In lieu of issuing certificates for such
shares directly to Participants, the Company shall be entitled to issue such
shares to a bank, broker-dealer or similar custodian (the "Custodian") that has
agreed to hold such shares for the accounts of the respective Participants. Fees
and expenses of the Custodian shall be paid by the Company or allocated among
the respective Participants in such manner as the Committee determines.
12.2 A Participant may direct, in accordance with such procedures as
the Committee may adopt, that shares purchased by the Participant shall be
issued (or, if such shares are issued to the Custodian, that the account for
such shares be held) in the names of the Participant and one other person
designated by the Participant, as joint tenants with right of survivorship,
tenants in common, or community property, to the extent and in the manner
permitted by applicable law.
12.3 A Participant may at any time, in the manner described in
Section 18, undertake a disposition (as that term is defined in Section 424(c)
of the Code), whether by sale, exchange, gift or other transfer of legal title,
of any or all of the shares held for the Participant by the Custodian. In the
absence of such a disposition of the shares, the shares shall continue to be
held by the Custodian until the holding period set forth in Section 423(a) of
the Code has been satisfied. If a Participant so requests, shares for which such
holding period has been satisfied will be transferred to another brokerage
account specified by the Participant, or a stock certificate for such shares
will be issued and delivered to the Participant or his or her designee.
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13. CHANGES IN CAPITALIZATION
13.1 Upon the happening of any of the following described events, a
Participant's right to purchase shares of Common Stock under the Plan shall be
adjusted as hereinafter provided:
(a) If the shares of Common Stock are subdivided or combined into a
greater or smaller number of shares of Common Stock or if, upon a
recapitalization, split-up or other reorganization of the Company, the
shares of Common Stock are exchanged for other securities of the Company,
the rights of each Participant shall be modified so that the Participant
is entitled to purchase, in lieu of the shares of Common Stock that the
Participant would otherwise have been entitled to purchase for the
Offering Period in progress at the time of such subdivision, combination
or exchange (the "Offering Period Shares"), such number of shares of
Common Stock or such number and type of other securities as the
Participant would have received if such Offering, Period Shares had been
issued and outstanding at the time of such subdivision, combination or
exchange (unless in the case of an exchange the Committee determines that
the nature of the exchange is such that it is not feasible or advisable
that the rights of Participants be so modified, in which event the
exchange shall be deemed a Terminating Event under Section 14); and
(b) If the Company issues any of its shares as a stock dividend upon
or with respect to the Common Stock, each Participant who purchases shares
of Common Stock under the Plan at the end of the Offering Period in
progress on the record date for the stock dividend shall be entitled to
receive the shares so purchased (the "Purchased Shares") and shall also be
entitled to receive at no additional cost, but only if the Purchase Price
for the Purchased Shares was determined with reference to the Market Price
of the Common Stock on the first Business Day of the Offering Period, the
number of shares of the class of stock issued as a stock dividend, and the
amount of cash in lieu of fractional shares, that the Participant would
have received if he or she had been the holder of the Purchased Shares on
the record date for the stock dividend.
13.2 Upon the happening of an event specified in clause (a) or (b)
above, the class and aggregate number of shares available under the Plan, as set
forth in Section 4, shall be appropriately adjusted to reflect the event.
Notwithstanding the foregoing, such adjustments shall be made only to the extent
that the Committee, based on advice of counsel for the Company, determines that
such adjustments will not constitute a change requiring shareholder approval
under Section 423(b)(2) of the Code.
14. TERMINATING EVENTS
14.1 Upon (a) the dissolution or liquidation of the Company, (b) a
merger or other reorganization of the Company with one or more corporations as a
result of which the Company will not be a surviving corporation, (c) the sale of
all or substantially all of the assets of the Company or a material division of
the Company, (d) a sale or other transfer, pursuant to a tender offer or
otherwise, of more than fifty percent (50%) of the then outstanding shares of
Common Stock of the Company, (e) an acquisition by the Company resulting in an
extraordinary expansion of the Company's business or the addition of a material
new line of business, or (f) any exchange that is subject to this Section 14 in
accordance with the provisions of Section 13 (any of such events is herein
referred to as a "Terminating Event"), the Committee may but shall not be
required to --
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(a) make provision for the continuation of the Participants' rights
under the Plan on such terms and conditions as the Committee determines to
be appropriate and equitable, including where applicable, but not limited
to, an arrangement for the substitution on an equitable basis, for each
share of Common Stock that could otherwise be purchased at the end of the
Offering Period in progress at the time of the Terminating Event, of any
consideration payable with respect to each then outstanding share of
Common Stock in connection with the Terminating Event; or
(b) terminate all rights of Participants under the Plan for such
Offering Period and --
(i) return to the Participants all of their payroll deductions
for such Offering Period; and
(ii) for each share of Common Stock, if any, that otherwise
could have been purchased under the Plan by a Participant at the end
of such Offering Period (determined by assuming that payroll
deductions at the rate elected by the Participant were continued to
the end of the Payroll Period and used to purchase shares based on
the Market Price of the Common Stock on the first Business Day of the
Offering Period) and with respect to which (A) the Purchase Price at
which such share could be purchased (determined with reference only
to the Market Price of the Common Stock on the first Business Day of
the Offering Period) is exceeded by (B) the Market Price on the date
of the Terminating Event of a share of Common Stock, as determined by
the Committee, pay to the Participant an amount equal to such excess.
14.2 The Committee shall make all determinations necessary or
advisable in connection with Terminating Events, and its determinations shall,
in the absent of fraud or patent mistake, be conclusive and binding on all
persons with any interest in the Plan.
15. NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS. An Eligible Employee's
rights under the Plan are the Eligible Employee's alone and may not be
voluntarily or involuntarily transferred or assigned to, or availed of by, any
other person other than by will or the laws of descent and distribution. An
Eligible Employee's rights under the Plan are exercisable during his or her
lifetime by the Eligible Employee alone.
16. TERMINATION OF EMPLOYEE'S RIGHTS
16.1 Subject to Section 16.2, a Participant's rights under the Plan
will terminate if he or she for any reason (including death, disability or
voluntary or involuntary termination of employment) ceases to be an employee of
the Company or one of its subsidiaries.
16.2 Notwithstanding the foregoing, effective for Offering Periods
beginning on or before July 15, 1999, if a Participant ceases to be an employee
of the Company or one of its subsidiaries, the termination of the Participant's
rights under the preceding paragraph shall not apply to any right the
Participant may have to purchase shares of Common Stock at the end of the
Offering Period in progress when the Participant ceases to be an employee. Such
purchases of shares of Common Stock shall, to the extent of payroll deductions
accumulated for the purchases
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of shares of Common Stock shall, to the extent payroll deductions accumulated
for the Offering Period, occur automatically at the end of the Offering Period,
unless the Participant or his or her personal representative withdraws from the
Plan for the Offering Period in the manner described in Section 11. To the
extent that the rights of a Participant terminate in accordance with this
Section 16, any of the Participant's payroll deductions not used to purchase
shares of Common Stock will be promptly returned (without interest thereon) to
the Participant or his or her personal representative.
16.3 Effective for Offering Periods commencing after July 15, 1999,
if a Participant ceases to be an employee of the Company or one of its
subsidiaries, then as soon as practicable after such cessation, the
Participant's payroll deductions shall cease and any of the Participant's
accumulated payroll deductions shall be promptly returned (without interest
thereon) to the Participant or his or her personal representative.
17. TERMINATION AND AMENDMENT OF PLAN
17.1 The Plan shall terminate on December 31, 2007. The Plan may be
terminated at any earlier time by the Board, but, except as provided in Section
14, such termination shall not affect the rights of Participants under the Plan
for the Offering Period in progress at the time of termination. The Plan will
also terminate in any case when all or substantially all of the unissued shares
of Common Stock reserved for the purposes of the Plan have been purchased. If at
any time shares of Common Stock reserved for the purpose of the Plan remain
available for purchase but not in sufficient number to satisfy all then unfilled
purchase requirements, the available shares shall be apportioned among
Participants in proportion to the respective amounts of their accumulated
payroll deductions, and the Plan shall terminate. Upon such termination or any
other termination of the Plan, all payroll deductions not used to purchase
shares of Common Stock will be refunded to the Participants entitled thereto.
17.2 The Committee or the Board may from time to time adopt
amendments to the Plan; PROVIDED, HOWEVER, that, without the approval of the
shareholders of the Company, no amendment may increase the number of shares that
may be issued under the Plan or make any other change for which shareholder
approval is required by Section 423 of the Code or the regulations thereunder.
18. DISPOSITION OF SHARES. Subject to compliance with any applicable
federal and state securities and other laws and any policy of the Company in
effect from time to time with respect to trading in its shares, a Participant
may effect a disposition (as that term is defined in Section 424(c) of the Code)
of Common Stock purchased under the Plan at any time the Participant chooses;
PROVIDED, HOWEVER, each Participant agrees, by purchasing shares of Common Stock
under the Plan, that (a) the Company shall be entitled to withhold, from any
other amounts that may be payable to the Participant by the Company at or around
the time of such disposition, such federal, state, local and foreign income,
employment and other taxes as the Company may be required to withhold under
applicable law; and (b) in lieu of such withholding, the Participant will, upon
request of the Company, promptly remit such taxes to the Company. EACH EMPLOYEE
PURCHASING SHARES OF COMMON STOCK UNDER THE PLAN ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE THEREOF.
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19. NO SHAREHOLDER RIGHTS; INFORMATION TO PARTICIPANTS. A Participant
shall not have any rights as a shareholder of the Company (other than the right
potentially to receive stock dividends under Section 13) on account of shares of
Common Stock that may be purchased under the Plan prior to the time such shares
are actually purchased by and issued to the Participant. Notwithstanding the
foregoing, the Company shall deliver to each Participant under the Plan who does
not otherwise receive such materials (a) a copy of the Company's annual
financial statements (which shall be delivered annually as promptly as practical
following each fiscal year of the Company and review or audit of such statements
by the Company's auditors), together with management's discussion and analysis
of financial condition and results of operations for the fiscal year, and (b) a
copy of all reports, proxy statements and other communications distributed to
the Company's security holders generally.
20. USE OF PROCEEDS. The proceeds received by the Company from the sale of
shares of Common Stock under the Plan will be used for general corporate
purposes.
21. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and deliver
shares of the Common Stock under the Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares, including the Securities and Exchange Commission, the
securities administrators of the states in which Participants reside, and the
Internal Revenue Service.
22. MISCELLANEOUS PROVISIONS
22.1 Nothing contained in the Plan shall obligate the Company or any
of its subsidiaries to employ a Participant for any period, nor shall the Plan
interfere in any way with the right of the Company or any of its subsidiaries to
reduce a Participant's compensation.
22.2 The provisions of the Plan shall be binding upon each
Participant and, subject to the provisions of Section 15, the heirs, successors
and assigns of each Participant.
22.3 Where the context so requires, references in the Plan to the
singular shall include the plural, and vice versa, and references to a
particular gender shall include either or both additional genders.
22.4 The Plan shall be construed, administered and enforced in
accordance with the laws of the United States, to the extent applicable thereto,
as well as the laws of the State of Washington.
23. APPROVAL OF SHAREHOLDERS. The Plan shall be effective January 1,
1998, subject to approval by the shareholders of the Company in a manner that
complies with Section 423(b)(2) of the Code. If such approval does not occur
prior to January 1, 1998, the Plan shall be void and of no effect.
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