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EXHIBIT 10.3
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THE SECURITIES OFFERED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND ANY SALE OF SUCH SECURITIES IS SUBJECT TO COMPLIANCE WITH, OR THE
AVAILABILITY OF EXEMPTIONS FROM COMPLIANCE WITH, THE REGISTRATION AND
QUALIFICATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THIS INSTRUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON IN
ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE MADE.
TRANSFER OF THIS INSTRUMENT AND THE SECURITIES OFFERED HEREBY IS RESTRICTED AS
PROVIDED IN SECTIONS 7, 8 AND 9 BELOW.
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into effective
as of _________________, 19__ (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 is attached as
Exhibit A (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 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 __________, 19__ (the "Vest Date"). The Option shall vest and become
exercisable in accordance with the following schedule:
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Cumulative Number
Date of Shares Vested (Percent)
---- ----------------- ---------
__ MONTHS AFTER VEST DATE _________________ (30%)
__ MONTHS AFTER VEST DATE _________________ (40%)
__ MONTHS AFTER VEST DATE _________________ (50%)
__ MONTHS AFTER VEST DATE _________________ (60%)
__ MONTHS AFTER VEST DATE _________________ (70%)
__ MONTHS AFTER VEST DATE _________________ (80%)
__ MONTHS AFTER VEST DATE _________________ (90%)
__ 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.
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) 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 B, 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;
(e) if requested by the Administrative Committee, deliver to the
Company, at the Holder's expense, a legal opinion, satisfactory in form and
substance to the Company, of legal counsel designated by the Holder and
satisfactory to the Company, to the effect that exercise of the Option by the
Holder, and the acquisition of shares of Common Stock pursuant thereto, may be
effected without registration or qualification of such shares under the
Securities Act of 1933, as amended (the "1933 Act"), or any applicable state
securities laws; and
OPTION No. NQ____
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(f) execute and deliver to the Company and any other documents
required from time to time by the Administrative Committee in order to promote
compliance with the Plan, the 1933 Act, applicable state securities laws, or any
other applicable law, rule or regulation.
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 and represents and warrants to the
Company and covenants and agrees with the Company as follows:
(a) The Holder agrees to comply with all of the provisions of this
Agreement and the Plan.
(b) The Holder recognizes, agrees and acknowledges that no
registration statement under the 1933 Act, or under any state securities laws,
has been or will be filed with respect to the Option or any shares of Common
Stock that may be acquired upon exercise of the Option.
(c) The Holder warrants and represents that the Option and any
shares of Common Stock acquired upon exercise of the Option will be acquired and
held by the Holder for the Holder's own account, for investment purposes only,
and not with a view towards the distribution or public offering thereof nor with
any present intention of reselling or distributing the same at any particular
future time.
(d) The Holder agrees not to sell, transfer or otherwise dispose of
any shares of Common Stock that may be acquired upon exercise of the Option
unless (i) there is an effective registration statement under the 1933 Act
covering the proposed disposition and compliance with governing state securities
laws, (ii) the Holder delivers to the Company, at the Holder's expense, a
"no-action" letter or similar interpretative opinion, satisfactory in form and
substance to the Company, from the staff of each appropriate securities agency,
to the effect that such shares may be disposed of by the Holder in the manner
proposed, or (iii) the Holder delivers to the Company, at the Holder's expense,
a legal opinion, satisfactory in form and substance to the Company, of legal
counsel designated by the Holder and satisfactory to the Company, to the effect
that the proposed disposition is exempt from registration under the 1933 Act and
governing state securities laws.
(e) The Holder acknowledges and consents to the appearance of the
restrictive legends, in the form required by Section 6.8 of the Plan, on each
certificate representing shares of Common Stock issued upon exercise of the
Option.
(f) The Holder agrees not to sell, transfer or otherwise dispose of
the Option or any shares of Common Stock acquired upon exercise of the Option,
except as specifically permitted by this Agreement, the Plan and any applicable
securities laws.
OPTION No. NQ____
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9. PROCEDURES UPON PERMITTED TRANSFER. Prior to any sale, transfer or
other disposition of any of the shares of Common Stock acquired upon exercise of
the Option, the Holder agrees to give written notice to the Company of the
Holder's intention to effect such disposition. The notice must describe the
circumstances of the proposed transfer in reasonable detail and must specify the
manner in which the requirements of Section 8(d) above will be satisfied in
connection with the proposed disposition. After (a) legal counsel to the Company
has determined that the requirements of Section 8(d) above will be satisfied,
(b) the Holder has executed such documentation as may be necessary to effect the
proposed disposition, and (c) the Holder has paid, or made arrangements
satisfactory to the Administrative Committee for the payment of, all federal,
state and local taxes, if any, required to be withheld by the Company in
connection with the proposed disposition, the Company will, as soon as
practicable, transfer such shares in accordance with the terms of the notice.
Any stock certificate issued upon such transfer will bear the restrictive
legends, in the form required by Section 6.8 of the Plan, unless in the opinion
of legal counsel to the Company such legends are not required. Compliance with
the foregoing procedures are in addition to compliance with any separate
requirements applicable to the Holder under the Company's Articles of
Incorporation or otherwise.
10. 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 delivered to the Holder).
11. 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.
12. 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.
13. BINDING EFFECT. This Agreement shall be binding upon the Holder and
the Holder's heirs, successors and assigns.
14. 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.
15. 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.
OPTION No. NQ____
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16. 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 ____________________________________
"HOLDER"
_________________________________________
_________________________________________
OPTION No. NQ-
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EXHIBIT A
(REALNETWORKS, INC. 1996 STOCK OPTION PLAN, AS AMENDED AND RESTATED)
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EXHIBIT B
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 ___________, 19__ (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.
The undersigned acknowledges that no registration statement under the
1933 Act, or under any state securities laws, has been or will be filed with
respect to the Shares. The undersigned warrants and represents that the
undersigned is acquiring and will hold the Shares for the undersigned's own
account, for investment purposes only, and not with a view towards the
distribution or public offering of the Shares nor with any present intention of
reselling or distributing the Shares at any particular future time. The
undersigned consents to the appearance of restrictive legends, in the form
required by Section 6.8 of the Plan, on the certificate for the Shares. The
undersigned agrees not to sell, transfer or otherwise dispose of the Shares
except as specifically permitted by the Agreement, the Plan and any applicable
securities laws.
Date: ____________________
Signature of Holder
________________________________________
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