EXHIBIT 10.20
April 2, 2004
Sid Ferrales
3108 Alexander Circle NE
Atlanta, GA 30326
Dear Sid:
I am extremely pleased to offer you employment at RealNetworks, Inc. as Senior
Vice President, Human Resources. Your start date will be finalized at a later
time but we hope that it will be on or before April 12, 2004.
This offer is for a full-time, exempt, regular position with Real. Your
responsibilities will be as directed by Real. You will be paid a monthly salary,
which is equivalent on an annualized basis to $240,000 (subject to normal
withholdings), payable semi-monthly in accordance with our normal payroll
procedures. You are eligible to earn an annual bonus under the Company's
Executive MBO Incentive Program. We expect that in 2004 executives will be
eligible to earn an annual bonus of up to 30% of their base salary, per the
terms of the Company's Executive MBO Incentive Program. As such, you will be
eligible to earn an MBO bonus of up to $72,000, based on meeting MBO target
goals, for a total target annual cash compensation of $312,000. Performance
targets for the Program will be set in April this year and must be approved by
the Board of Directors
You will also earn equity in Real under the terms of Real's 1996 Stock Option
Plan. Upon the start of your employment, you will be eligible for options on
200,000 shares, which will begin vesting on your hire date according to the
vesting rules, and all other provisions contained in the Plan. Under the Plan,
the first 30% of this grant will vest on the 18-month anniversary of the grant,
and 10% will vest each six months thereafter. Your stock options will be granted
on the date the Compensation Committee of the Company's Board of Directors
approves the grant of the option (the "Grant Date"). The exercise price of the
stock options granted to you shall be equal to the fair market value of Real's
Common Stock on the Grant Date. Fair market value shall equal the last sales
price for shares of Real'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.
Real will make the following payments to you in connection with your relocation
from Austin, Texas to Seattle, WA:
1. A signing bonus of $30,000 will be paid within 30 days of the commencement
of your employment with Real.
2. An additional bonus of $60,000 will be paid to you in two separate
increments to assist with relocation and housing costs. The first $10,000
will be paid within 30 days of the commencement of your employment. The
additional $50,000 will be paid on January 15, 2005, provided that you
have purchased or leaseda permanent residence in the immediate Seattle
area by that date, or within 15 days of the date you do secure a permanent
resident, if later than January 15, 2005.
3. Up to two 4 day house-hunting trips for you and your immediate family,
including coach airfare, accommodations, and reimbursement for your
reasonable rental car, food and incidental expenses. Real will arrange for
a realtor or apartment finder to show you different neighborhoods in and
around Seattle.
4. Real will cover the costs of those additional items set forth on the
attached Compensation Summary attached as Attachment A upon the
presentation of receipts.
Some or all of these bonus and relocation payments or costs may be taxable
income. If you voluntarily resign your employment with Real within 12 months of
the date of completion of your relocation, or if Real terminates your
employement for "Cause" (as defined in Real's 1996 Stock Option Plan) during
such period, you agree to reimburse Real for a pro rata amount of all of the
payments described above and you authorize Real to deduct from your final
paycheck any amounts remaining due to Real as of your terminate date.
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 Real Employee Handbook, Benefit Plan descriptions, and Real policies, as
they may be amended from time to time. All of these Benefits are subject to
change upon notice from Real.
You will be regarded as a key employee under certain federal regulations
governing family and medical leave. This status will require that you work
closely with us in planning if you develop a need for family or medical leave.
Also, as a corporate executive, you will be subject to the Pre-Clearance
Procedures of the Policy on Avoidance of Insider Trading. A copy of the policy
is attached.
It is our policy that employees may not use or disclose confidential information
or trade secrets obtained from any source or during any prior employment. Real
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. Prior to signing this letter, you must inform us if you are
subject to any such obligations that would prevent you from working at Real in
your intended capacity or that would otherwise restrict you in the performance
of your services to Real. Violation of this requirement may result in
termination of your employment with Real. By signing this letter, you further
agree that you will not bring to Real any confidential documents of another, nor
disclose any confidential information of another, and that you will comply fully
with these requirements.
Our employment relationship will be terminable at will, which means that either
you or Real may terminate your employment at any time and for any reason or no
reason, subject only to the provisions below describing your obligation to
provide Real with notice, and Real's obligation to make certain payments if Real
terminates your employment for reasons other than cause. Your right to receive
these payments described below are subject to and conditioned upon your signing
a valid general and complete release of all claims (except those relating to
Real's payment obligations under this letter agreement) against Real (and its
related entities and persons) in a form provided by Real.
You agree that you will provide Real four months notice prior to you terminating
your employment in the first two years of your employment. In the event that
Real terminates your employment without Cause in the first two years of your
employment, we will provide you with four months notice or pay of your
then-current base salary in lieu of notice through any remaining portion of the
notice period.
This offer is contingent on: (i) you providing evidence of employability as
required by federal law (which includes providing Real within 3 days after your
employment commences with acceptable evidence of your identity and US employment
eligibility), (ii) Real receiving acceptable results from any background check
or reference check, and (iii) you signing Real's Development, Confidentiality
and Noncompetition Agreement, attached hereto.
REAL PROVIDES EQUAL OPPORTUNITY IN EMPLOYMENT AND WILL ADMINISTER ITS POLICIES
WITH REGARD TO RECRUITMENT, TRAINING, PROMOTION,
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TRANSFER, DEMOTION, LAYOFF, TERMINATION, COMPENSATION AND BENEFITS WITHOUT
REGARD 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.
This letter and the Development, Confidentiality and Noncompetition Agreement,
the 1996 Stock Option Plan, and your Stock Option Agreement, contain the entire
agreement between you and Real, and supersede all prior oral and written
discussion, agreements and understandings. This letter may not be modified
except in writing signed by both you and Real. Any disputes regarding this
letter or your employment with Real shall be governed by and construed in
accordance with the laws of the State of Washington. If any provision of this
letter is deemed to be invalid or unenforceable, at Real's option, the remaining
terms shall continue in full force and effect.
This offer is valid until April 9, 2004.
Sid, we are excited about the prospect of you joining RealNetworks, Inc. and
know that you will make significant contributions to our continued growth and
success. We look forward to working with you. Please call me or Sandy Gould if
you have questions about this offer letter.
Sincerely,
/s/ Kelly Jo MacArthur
Kelly Jo MacArthur
Senior Vice President and Chief of Staff
RealNetworks, Inc.
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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.
Sid Ferrales: /s/ Sid Ferrales
Date: April 12, 2004
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ATTACHMENT A
COMPENSATION SUMMARY
SALARY: $240,000
TARGET BONUS: Up to 30% of base comp. based on meeting MBO objectives, pending
approval by Comp. Cmte. of Company's 2004 MBO Program and payout targets
SIGNING BONUS: $30,000
STOCK OPTIONS: 200,000 vesting over 5 years per Option Plan
RELOCATION EXPENSE ASSISTANCE: $60,000
SHIPMENT OF HOUSEHOLD GOODS: 21,000 lb. Maximum (incl. Up to 2 autos)
STORAGE OF HOUSEHOLD GOODS: Maximum 30 days
TEMPORARY HOUSING: Up to 6 months/2 return trips home per month
FINAL MOVE EXPENSES: Not to exceed $2,500
HOME FINDING TRIP: 2 roundtrips for employee & guest, 4-days, $2000 max
INCIDENTAL EXPENSES: Up to $3000 Homeowner / up to $1500 Renter
TIME OFF FOR HOME FINDING / MOVING: 5 days
REPAYMENT OF ABOVE: Prorated if voluntarily resign or are terminated for cause
within one year from completion of move
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REALNETWORKS, INC.
DEVELOPMENT, CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
THIS AGREEMENT is made and entered into as of the 12th day of April, 2004, by
and between RealNetworks, Inc. ("Real") and Sid Ferrales ("You"). "Real" means
RealNetworks, Inc. and all of its present and future subsidiaries and related
entities including partnerships in which Real is a member.
In consideration of your employment, compensation, benefits, access to Real
training, Trade Secrets and Confidential Information, and the mutual promises
made herein, you and Real agree as follows:
1. COMPANY PROPERTY. "Company Property" means all records, files, notebooks,
manuals, objects, devices, supplies, materials, recordings, drawings,
models, computer programs, prototypes, equipment, inventory and other
materials, or copies thereof, in electronic or paper form, that have been
created, used or obtained by Real, as well as Trade Secrets, Confidential
Information and Employee Developments and all business revenues and fees
produced or transacted through your efforts. You agree that all Company
Property is and shall remain the property of Real. You will preserve and
use the Company Property only for the benefit of Real and the Real
business, and you will return all Company Property to Real upon Real
request or upon termination of your employment (whether voluntary or
involuntary).
2. CONFIDENTIAL INFORMATION AND EMPLOYEE DEVELOPMENTS.
As used in this Agreement, the following terms shall have the meanings
shown.
"EMPLOYEE DEVELOPMENT" means all technological, financial and
operating ideas, processes, and materials, including all inventions,
discoveries, concepts, ideas, enhancements to existing technology or
business processes, computer program ideas and expressions, computer
circuit designs, computer hardware concepts and implementations, formulae,
algorithms, techniques, written materials, graphics, photographs, literary
works, and any other ideas or original works of authorship relating to
software or hardware development that you may develop or conceive of while
employed by Real, alone or with others and which (i) relate directly to
Real's actual or demonstrably anticipated business or (ii) incorporate or
are developed using Trade Secrets or Confidential Information or (iii) are
conceived or developed with use of any Real equipment, supplies or
facilities including Real personnel or (iv) result from work performed by
you for Real, regardless of whether it is technically eligible for
protection under patent, copyright, or trade secret law.
"TRADE SECRET" means the whole or any portion of any scientific or
technical information that is valuable and not generally known to
competitors of Real. Trade Secrets include without limitation the
specialized information and technology that Real may develop or acquire
with respect to program materials (including without limitation program
and project ideas, source and object code, Codecs, program listings,
programming notes and documentation, flow-charts, and system and user
documentation), system designs, operating processes, know-how, equipment
designs, blue prints and product specifications.
"CONFIDENTIAL INFORMATION" means any data or information, other than
Trade Secrets, which has been discovered, developed (including information
conceived or developed by you) or has otherwise become known to Real,
including any parent, subsidiary, predecessor, successor or otherwise
affiliated company ("Real Company"), that is material to Real Company and
not generally known to the public. Confidential Information includes
without limitation:
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i. Sales records, profits and performance reports, pricing manuals
and lists, sales manuals and lists, training materials, selling and
pricing procedures, and financing methods of Real Company.
ii. Customer lists or accounts, special requirements of particular
customers, and current and anticipated requirements of customers
generally for the products of Real Company;
iii. Research and development and specifications of any new products
or lines of business under development or consideration;
iv. Sources of supply of integrated components and materials used
for production, assembly, and packaging by Real Company, and the
quality, price, and usage of such components and materials;
v. Marketing plans, strategies, sales and product development data,
and inventions;
vi. Business plans and internal financial statements and projections
of Real Company; and
vii. Personnel related information such as employees' compensation,
performance reviews, or other individually identifiable information.
You recognize and acknowledge that Real Company is engaged in a continuous
program of research, development and production respecting its software
products, its other business opportunities and for its customers.
Important assets of Real Company are its Confidential Information, Trade
Secrets and Employee Developments. You recognize that Real Company has a
vital and substantial interest in maintaining confidentiality of Trade
Secrets and Confidential Information to maintain a stable work force,
continuing positive business relationships and minimizing damage to or
interference with business. You also recognize and acknowledge that your
employment exposes you to programming, concepts, designs and other
information proprietary to Real Company and third parties with whom Real
does business, and creates a relationship of trust and confidence between
you and Real with respect to any such information.
OBLIGATIONS WITH RESPECT TO EMPLOYEE DEVELOPMENTS. All Employee
Developments shall be considered works made for hire by you for Real and
prepared within the scope of your employment. Under U.S. Copyright Law,
all such materials shall, upon creation, be owned exclusively by Real. To
the extent that any such material, under applicable law, shall be deemed
not to be works made for hire, you hereby assign to Real all right, title
and interest in and to such materials, in the United States and foreign
countries, without further consideration, and Real shall be entitled to
register and hold in its own name all copyrights, patents and trademarks
in respect to such materials. You agree to promptly and completely
disclose in writing to Real details of all original works of your
authorship, discoveries, concepts, or ideas. You agree to apply, at Real's
request and expense, for any patent or other legal protection of Employee
Developments and to sign and deliver any applications, assignments or
other documents as Real may reasonably require. Real shall have the
exclusive right to all Employee Developments without additional
consideration to you, including but not limited to the right to own, make,
use, sell, have made, rent, lease, lend, copy, prepare derivative works
of, perform or display publicly.
YOU OWN PERSONAL INVENTIONS. You shall not be required to assign to Real
any of your rights in any personal invention you developed entirely on
your own time without using Real's equipment, supplies, facilities, Trade
Secrets or Confidential Information, except for those inventions that
either: (1) relate at the time of conception or reduction to practice of
the invention directly to Real's actual or demonstrably anticipated
business or (2) result from any work performed by you for Real. You
acknowledge notice by Real that the prior paragraph does not apply to any
personal invention as described in this paragraph. You agree that this
satisfies the requirements of Washington state law.
RESTRICTIONS ON USE AND DISCLOSURE OF TRADE SECRETS AND CONFIDENTIAL
INFORMATION. During your employment with Real and for so long thereafter
as the information remains a
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Trade Secret or Confidential Information, you shall not use, reproduce,
disclose, or permit any person to obtain or use any Trade Secret or
Confidential Information of Real (whether or not it is in written or
tangible form), except as specifically authorized in writing by Real. You
shall use the highest degree of care in safeguarding Trade Secrets and
Confidential Information against loss, theft, or other inadvertent
disclosure. You further agree that any Trade Secrets, Confidential
Information, copyrightable works or materials or copies of them that enter
into your possession, by reason of employment, are the sole property of
Real and shall not be used in any manner adverse to Real's best interests.
You agree not to remove any Confidential Information or Trade Secret from
Real's premises except in pursuit of Real's business.
Upon Real's request at any time, or upon your termination of employment
(whether voluntary or involuntary), you shall deliver to Real, and shall
not retain for your own or another's use, any and all originals or copies
of Employee Developments, Trade Secrets, Confidential Information and
Company Property. Your obligations under this Agreement supplement and do
not supersede or limit other obligations you have to Real or rights or
remedies of Real including without limitation those under the Washington
Uniform Trade Secrets Act.
3. YOUR WARRANTIES. You agree to perform at all times faithfully,
industriously and to the best of your ability all duties and functions
consistent with your position and to abide by any general employment
guidelines or policies adopted by Real. You acknowledge that your
employment is in no way conditioned upon your disclosure to Real of
confidential information or trade secrets of others, and you agree not to
improperly obtain, disclose to Real, or induce Real to use, any
confidential information or trade secrets belonging to any third party.
You represent that the execution of this Agreement, your employment with
Real, and the performance of your proposed duties to Real will not violate
any agreements or obligations you may have to any former employer or third
party and you are not subject to any restrictions which would prevent or
limit you from carrying out your duties for Real.
4. NON-COMPETITION. You acknowledge that Real is engaged in a highly
competitive business and that by virtue of the position in which you are
employed, you will perform services that are of competitive value to Real
and which if used in competition with Real could cause it serious harm.
Therefore, you agree not to work for any Competitor during your employment
with Real (including after work hours, weekends and vacation time), even
if only organizational assistance or limited consultation is involved.
During your employment with Real, you agree not to publish, design or
develop computer software that competes with Real software products
(either existing or under development). Further, you agree that for a
period of one (1) year after the termination of your employment with Real,
whether voluntary or not, you will not directly or indirectly be employed
by, own, manage, consult with or join any business or entity that is in
competition with Real or with products or services produced, sold or in
development by Real during the term of your employment. Ownership of 1% or
less of the stock (publicly or privately held) of a competitor of Real
shall not be a breach of this paragraph. You acknowledge that Real
competes in a global marketplace and that the duration and scope of this
noncompetition provision is reasonable and necessary to protect Real
interests. You authorize a court to restrict you to the maximum extent
allowed.
5. NONSOLICITATION. You recognize that Real's workforce is a vital part of
its business. You agree that for a period of one (1) year after your
employment ends, whether voluntarily or not, you will not induce or
attempt to influence, directly or indirectly, any employee of Real to
terminate his/her employment with Real or to work for you or any other
entity. You agree that this means you will not identify to a third party
Real employees as potential candidates for employment. You further agree
not to, directly or indirectly, solicit or assist in soliciting orders
from any current or known prospective customers or to encourage them to
terminate their business relationship or negotiations with Real.
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6. RETURN OF PROPERTY. You represent that you will return to Real all
company-owned property in your possession or control, including but not
limited to credit cards, keys, access cards, company-owned equipment,
computers and related equipment, customer lists, files, memoranda,
documents, price lists, and all other trade secrets and/or confidential
Real information, and all copies thereof, whether in electronic or other
form.
7. DEDUCTIONS FROM PAY. You authorize Real to deduct from your compensation
the value of any Company Property not returned or the amount of any sums
owed to Real by you, and you release Real from any claims based upon such
withholding.
8. MISCELLANEOUS. This Agreement together with the terms of your offer letter
constitute the complete and entire agreement between us, and supersedes
and cancels all prior understandings, correspondence and agreements, oral
and written, express or implied, between us relating to the subject matter
hereof. This Agreement can only be amended or waived by a written document
signed by Real and you. The waiver of any breach of this Agreement or the
failure to enforce any provision shall not waive any later breach. Real
and you both consent to the other giving third parties notification of the
existence and terms of this Agreement. This Agreement shall become
effective only when executed by Real and then shall be binding upon and
inure to the benefit of Real and you, and each of our successors, assigns,
heirs or legal representatives, except that you may not assign or delegate
any rights or duties under this Agreement. This Agreement will be
interpreted and enforced in accordance with the laws of the State of
Washington as applied to agreements made and performed in Washington,
without regard to the State's conflict of laws provisions. Jurisdiction
and venue in any proceeding either at law or in equity, of or relating to
this Agreement shall be in King County, Washington. You agree that Real
may be irreparably harmed by a breach by you of this Agreement, that
adequate remedies may not exist in law, and that Real shall be entitled to
bring an action for a preliminary or permanent injunction or restraining
order to enforce this Agreement. You acknowledge that your experience and
capabilities are such that an injunction to enforce this Agreement will
not prevent you from earning a reasonable livelihood. Your claims against
Real shall not be a defense to Real's enforcement of this Agreement. In
case any term in this Agreement shall be held invalid, illegal or
unenforceable in whole or in part, the validity of the remaining terms of
the Agreement shall not be affected.
You acknowledge that you have read this Agreement, have had an opportunity
to have it explained to you, understand its provisions and have received
an exact copy of it for your records. You further understand that your
employment relationship with Real is at will and nothing in this Agreement
suggests or signifies otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first written above.
REALNETWORKS, INC. EMPLOYEE
By: /s/ Kelly Jo MacArthur Signature: /s/ Savino R. Ferrales
Name: Kelly Jo MacArthur Printed Name: Savino R. (Sid) Ferrales
Title: SVP and Chief of Staff
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