Item 1.01. Entry into a Material Definitive Agreement.
On February 10, 2020, RealNetworks, Inc. (the "Company") entered into a Series B
Preferred Stock Purchase Agreement (the "Stock Purchase Agreement") with Rob
Glaser, Founder, Chairman of the Board, Chief Executive Officer, and significant
shareholder of the Company. Pursuant to the Stock Purchase Agreement, Mr. Glaser
invested approximately $10 million in the Company in exchange for the issuance
to him of 8,064,516 shares of Series B Preferred Stock, par value $0.001 per
share (the "Series B Preferred Stock").
The relative rights, preferences, limitations and powers of the Series B
Preferred Stock are set forth in and governed by the Designation of Rights and
Preferences of Series B Preferred Stock (the "Certificate of Designation") in
accordance with the terms and provisions of the Stock Purchase Agreement. Such
rights, preferences, limitations and powers of the Series B Preferred Stock
include, among other provisions, the right to proportional adjustment and the
right to any dividends or distributions declared with regard to the Company's
common stock, par value $0.001 per share (the "Common Stock"), no voting rights
nor consent requirement for the taking of corporate action, and limitations on
transferability of the Series B Preferred Stock. Further, each share of Series B
Preferred Stock is convertible into one share of Common Stock, provided,
however, that no conversion is permitted in the event that such conversion would
cause Mr. Glaser's beneficial ownership of Common Stock to exceed the 38.5%
threshold set forth in the Company's Second Amended and Restated Shareholder
Rights Plan dated November 30, 2018 (the "Rights Plan").
The foregoing summary of certain rights, preferences, limitations and powers of
the Series B Preferred Stock is a general description only. It does not purport
to be complete and is qualified in its entirety by reference to (a) the Stock
Purchase Agreement, a copy of which is attached as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated by reference, and (b) the Certificate of
Designation, a copy of which is attached as Exhibit 4.1 to this Current Report
on Form 8-K and is incorporated by reference.
Item 3.02. Unregistered Sales of Equity Securities.
Pursuant to the Stock Purchase Agreement described in Item 1.01 of this Current
Report on Form 8-K (which description is hereby incorporated by reference into
this Item 3.02), 8,064,516 shares of Series B Preferred Stock (the "Series B
Shares") were issued to Rob Glaser, Founder, Chairman of the Board, Chief
Executive Officer, and significant shareholder of the Company in exchange for
cash consideration of approximately $10 million.
The Series B Shares were sold by the Company to Mr. Glaser in a private
placement without registration in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act of 1933, as
amended (the "1933 Act"), and Rule 506 of Regulation D promulgated by the United
States Securities and Exchange Commission pursuant to the 1933 Act.
Each of the Series B Shares is subject to the rights, preferences, limitations
and powers as set forth in the Certificate of Designation, and is convertible
into one share of Common Stock, provided, however, that no conversion is
permitted in the event that such conversion would cause Mr. Glaser's beneficial
ownership of Common Stock to exceed the 38.5% threshold set forth in the Rights
Plan.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
The board of directors of the Company (the "Board") adopted the Certificate
of Designation, effective February 10, 2020, effectuating an amendment (the
"Amendment") to the Company's Amended and Restated Articles of Incorporation
(the "Articles"). The Amendment functions to amend the Articles to set forth the
rights, preferences, limitations and powers of the Series B Preferred Stock,
which include, among other provisions, the right to proportional adjustment and
the right to any dividends or distributions declared with regard to the Common
Stock, no voting rights nor consent requirement for the taking of
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corporate action, and limitations on transferability of the Series B Preferred
Stock. Further, the Certificate of Designation provides that each share of
Series B Preferred Stock is convertible into one share of Common Stock,
provided, however, that no conversion is permitted in the event that such
conversion would cause Mr. Glaser's beneficial ownership of Common Stock to
exceed the 38.5% threshold set forth in the Rights Plan.
The foregoing description of the Certificate of Designation is a summary, is not
complete, and is qualified in its entirety by the text of the actual Certificate
of Designation, a copy of which is filed with this Current Report on Form 8-K as
Exhibit 4.1 and is incorporated herein by reference.
Item 7.01. Regulation FD.
The Company's press release dated February 10, 2020 announcing the sale and
issuance of shares of its Series B Preferred Stock to Rob Glaser is included as
Exhibit 99.1 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
4.1 RealNetworks, Inc. Designation of Rights and Preferences
of Series B Preferred Stock
10.1 Series B Preferred Stock Purchase Agreement dated February
10, 2020 by and between RealNetworks, Inc. and Rob Glaser
99.1 Press release of RealNetworks, Inc. dated February 10,
2020
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