REALNETWORKS INC
EXHIBIT 10.20
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<TYPE>EX-10.20
<SEQUENCE>5
<FILENAME>v17789exv10w20.txt
<DESCRIPTION>EXHIBIT 10.20
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                                                                   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.
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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,

                                       2
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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.

--------------------------------------------------------------------------------

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:

                                       5
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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

                                       6

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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.



                                       7
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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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