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EXHIBIT 10.4
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into effective
as of __________ (the "Grant Date"), by REALNETWORKS, INC., a Washington
corporation (the "Company") and __________________ (the "Holder").
R E C I T A L S
A. The Company has adopted the RealNetworks, Inc. 1996 Stock Option Plan,
as amended and restated (the "Plan"), a copy of which has been provided to the
Holder (capitalized terms that are used but not defined in this Agreement will
have the meanings given those terms in the Plan).
B. The Holder is an employee of the Company, and has been designated by
the Administrative Committee to receive a stock option under the Plan.
NOW, THEREFORE, the Company and the Holder covenant and agree as follows:
1. GRANT OF THE OPTION. The Company hereby grants to the Holder a stock
option (the "Option") to acquire from the Company _________ (_______) shares of
the Common Stock, par value $.001, of the Company (the "Common Stock"), at the
price of $_____ per share (the "Option Price"). The Option is not intended to
qualify as an "incentive stock option," as that term is defined in Section 422
of the Internal Revenue Code of 1986, as amended.
2. TERM OF THE OPTION. Unless earlier terminated in accordance with the
provisions of the Plan, the Option will terminate on the earliest to occur of
(a) the expiration of Twenty (20) years from the Grant Date; (b) the expiration
of ninety (90) days following termination of the Holder's employment with the
Company for any reason other than death, Disability or cause (as defined in
Section 7.2(b) of the Plan); (c) the expiration of One (1) year following
termination of the Holder's employment with the Company on account of death or
Disability; and (d) the date of termination of the Holder's employment with the
Company for cause (as defined in Section 7.2(b) of the Plan).
3. VESTING. The vesting schedule applicable to the Option shall commence
on _________, 199_ (the "Vest Date"). The Option shall vest and become
exercisable in accordance with the following schedule:
Cumulative Number
Date of Shares Vested (Percent)
---- ----------------- ---------
18 MONTHS AFTER VEST DATE (30%)
24 MONTHS AFTER VEST DATE (40%)
30 MONTHS AFTER VEST DATE (50%)
36 MONTHS AFTER VEST DATE (60%)
42 MONTHS AFTER VEST DATE (70%)
48 MONTHS AFTER VEST DATE (80%)
54 MONTHS AFTER VEST DATE (90%)
60 MONTHS AFTER VEST DATE (100%)
PROVIDED, HOWEVER, that, if the Holder's employment with the Company terminates
for any reason, the Option will not vest further following such termination. To
the extent the Option is vested, it shall be exercisable at any time and from
time to time prior to its termination as provided in Section 2.
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4. OTHER LIMITATIONS ON THE OPTION. The Option is subject to all of the
provisions of the Plan, including but not limited to Section 4.2 (which permits
adjustments to the Option upon the occurrence of certain corporate events such
as stock dividends, extraordinary cash dividends, reclassifications,
recapitalizations, reorganizations, split-ups, spin-offs, combinations,
exchanges of shares, and warrants or rights offerings), Section 6.10 (which
provides that the Company may repurchase any and all shares of Common Stock
issued upon exercise of the Option in the event the Holder's employment is
terminated for "cause"), and Section 7.1 (which applies in the event of an
Approved Transaction or Control Purchase).
5. EXERCISE OF THE OPTION. To exercise the Option, the Holder must do the
following:
(a) deliver to the Company a written notice, in the form attached to
this Agreement as Exhibit A, specifying the number of shares of Common Stock for
which the Option is being exercised;
(b) surrender this Agreement to the Company;
(c) tender payment of the aggregate Option Price for the shares for
which the Option is being exercised, which payment may be made (i) in cash or by
check; or (ii) by such other means as the Administrative Committee, in its sole
discretion, shall permit at the time of exercise;
(d) pay, or make arrangements satisfactory to the Administrative
Committee for payment to the Company of all federal, state and local taxes, if
any, required to be withheld by the Company in connection with the exercise of
the Option; and
(e) execute and deliver to the Company the documents required by the
Plan and any other documents required from time to time by the Administrative
Committee in order to promote compliance with applicable laws, rules and
regulations.
6. DELIVERY OF SHARE CERTIFICATE. As soon as practicable after the Option
has been duly exercised, the Company will deliver to the Holder a certificate
for the shares of Common Stock for which the Option was exercised. Unless the
Option has expired or been exercised in full, the Company and the Holder agree
to execute a new Stock Option Agreement, covering the remaining shares of Common
Stock that may be acquired upon exercise of the Option, which will be identical
to this Agreement except as to the number of shares of Common Stock subject
thereto. In lieu of replacing this Agreement in such manner, the Company may
affix to this Agreement an appropriate notation indicating the number of shares
for which the Option was exercised and return this Agreement to the Holder.
7. NONTRANSFERABILITY. The Option is not transferable other than by will
or the laws of descent and distribution, and the Option may be exercised during
the lifetime of the Holder only by the Holder or the Holder's court appointed
legal representative.
8. WARRANTIES AND REPRESENTATIONS OF THE HOLDER. By executing this
Agreement, the Holder accepts the Option, acknowledges receipt of a copy of the
Plan and the Prospectus, and agrees to comply with all of the provisions of this
Agreement and the Plan.
9. RIGHTS AS SHAREHOLDER. The Holder will have no rights as a shareholder
of the Company on account of the Option or on account of shares of Common Stock
which will be acquired upon exercise of the Option (but with respect to which no
certificates have been issued).
10. TAX WITHHOLDING. The Holder agrees to pay, or to make arrangements
satisfactory to the Administrative Committee for payment to the Company of, all
federal, state and local income and employment taxes, if any, required to be
withheld by the Company in connection with the exercise of the Option or any
sale, transfer or other disposition of any shares of Common Stock acquired upon
exercise of the Option. If the Holder fails to do so, then the Holder hereby
authorizes the Company to deduct all or any portion of such taxes from any
payment of any kind otherwise due to the Holder.
11. FURTHER ASSURANCES. The Holder agrees from time to time to execute
such additional documents as the Company may reasonably require to effectuate
the purposes of the Plan and this Agreement.
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12. BINDING EFFECT. This Agreement shall be binding upon the Holder and
the Holder's heirs, successors and assigns.
13. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement, together with the
Plan and agreements referenced in this Agreement and/or the Plan, constitutes
the entire agreement and understanding between the Company and the Holder
regarding the subject matter hereof. Except as otherwise provided in the Plan,
no modification of the Option or this Agreement, or waiver of any provision of
this Agreement or the Plan, shall be valid unless in writing and duly executed
by the Company and the Holder. The failure of any party to enforce any of that
party's rights against the other party for breach of any of the terms of this
Agreement shall not be construed as a waiver of such rights as to any continued
or subsequent breach.
14. COST OF LITIGATION. In any action at law or in equity to enforce any
of the provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in a final judgment or decree, shall pay
the successful party or parties all costs, expenses and reasonable attorneys'
fees incurred by the successful party or parties (including without limitation
costs, expenses and fees in any appellate proceedings), and if the successful
party recovers judgment in any such action or proceeding, such costs, expenses
and attorneys' fees shall be included as part of the judgment.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Washington.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
"COMPANY" REALNETWORKS, INC.
By_______________________________________
Its Vice President, General Counsel
and Secretary
"HOLDER" _________________________________________
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FORM OF EXERCISE OF OPTION
To: RealNETWORKS, INC.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
The undersigned holds Option Number NQ-___ (the "Option"), represented by
a Stock Option Agreement dated effective as of _____________ (the "Agreement"),
granted to the undersigned pursuant to the RealNetworks, Inc. 1996 Stock Option
Plan, as Amended and Restated (the "Plan"). The undersigned hereby exercises the
Option and elects to purchase _______________ shares (the "Shares") of Common
Stock of RealNetworks, Inc. (the "Company") pursuant to the Option. This notice
is accompanied by full payment of the Option Price of $______ per share for the
Shares in cash or by check or in another manner permitted by Section 5(c) of the
Agreement. The undersigned has also paid, or made arrangements satisfactory to
the Administrative Committee administering the Plan for payment of, all federal,
state and local taxes, if any, required to be withheld by the Company in
connection with the exercise of the Option.
Date:______________________
Signature of Holder
_________________________________________
EXHIBIT A
