REALNETWORKS INC
EXHIBIT 10.10
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<TYPE>EX-10.10
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<FILENAME>v96101exv10w10.txt
<DESCRIPTION>EXHIBIT 10.10
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                                                                   EXHIBIT 10.10


                               REALNETWORKS, INC.

                        DIRECTOR COMPENSATION STOCK PLAN

      1.    Purpose. The Director Compensation Stock Plan (the "Plan") is
established to allow the outside directors of RealNetworks, Inc. (the "Company")
to participate in the ownership of the Company through ownership of shares of
the Company's Common Stock, and to promote identification of such directors'
interests with those of the Company's shareholders.

      2.    Definitions. As used in the Plan:

            2.1 "Affiliate" of the Company means any corporation, partnership or
other business association that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is in common control with the
Company.

            2.2 "Annual Retainer Fee" means the annual fee payable to a
Nonemployee Director for his or her services on the Board.

            2.3 "Committee Chairperson Retainer Fee" means the annual fee, if
any, payable to a Nonemployee Director for serving as a chairperson of the Audit
Committee, the Compensation Committee, the Nominating and Corporate Governance
Committee, or such other committee of the Board for which a chairperson may be
appointed and designated by the Board from time to time as being eligible to
receive the Committee Chairperson Retainer Fee.

            2.4 "Director Service Fees" means, collectively, the Annual Retainer
Fee, the Committee Chairperson Retainer Fee and the Meeting Attendance Fees.

            2.5 "Board" means the Board of Directors of the Company.

            2.6 "Business Day" means a day on which the Company's executive
offices are open for business and on which trading is conducted on the Stock
Exchange.

            2.7 "Committee" means the Compensation Committee of the Board.

            2.8 "Common Stock" means the Common Stock, par value $.001 per
share, of the Company.

            2.9 "Compensation Dates" means the last Business Day of each
calendar quarter in a calendar year.

            2.10 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.

            2.11 "Fair Market Value" of a share of Common Stock, as of any date,
means the last sales price (or, if no last sales price is reported, the average
of the high bid and low asked


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prices) for a share of Common Stock on that day as reported by the Stock
Exchange, or if no such prices were quoted for the shares of Common Stock on the
Stock Exchange for that day for any reason, the closing price quoted on the last
Business Day on which prices were quoted. If such prices or quotations are not
reported by the Stock Exchange, the Committee shall select the source of prices
or quotations for the purpose of determining the Fair Market Value.

            2.12 "Meeting Attendance Fees" means fees payable to a Nonemployee
Director for attendance at meetings of the Board or committees of the Board.

            2.13 "Nonemployee Director" means a member of the Board of Directors
who is not an employee of the Company or any of its subsidiaries.

            2.14 "Plan Year" means the 12-month period commencing February 1 and
ending on the following January 31. The first Plan Year shall commence on
February 1, 2004.

            2.15 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act (or any successor rule to the same effect).

            2.16 "Shares" means shares of Common Stock of the Company.

            2.17 "Stock Exchange" means The Nasdaq Stock Market ("Nasdaq") or,
if the Common Stock is no longer included on Nasdaq, then such other market
price reporting system on which the Common Stock is traded or quoted.

      3.    Authorized Shares. The total number of shares of Common Stock
available for issuance under the Plan is Three Hundred Fifty Thousand (350,000),
subject to adjustment pursuant to Section 12 hereof. Shares available for
issuance under the Plan may be authorized and unissued shares, as the Company
may determine from time to time.

      4.    Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall, subject to the provisions of the Plan, adopt
such rules as it may deem appropriate in order to carry out the purpose of the
Plan. All questions of interpretation, administration, and application of the
Plan shall be determined by a majority of the members of the Committee, except
that the Committee may authorize any one or more of its members, or any officer
or employee of the Company, to execute and deliver documents on behalf of the
Committee. The determination of such majority shall be final and binding in all
matters relating to the Plan and shall be given the maximum deference permitted
by law. No member of the Committee shall be liable for any act done or omitted
to be done by such member or by any other member of the Committee in connection
with the Plan, except for such member's own willful misconduct or as expressly
provided by statute. All costs and expenses involved in administration of the
Plan shall be borne by the Company.

      5.    Participation. Each Nonemployee Director shall be eligible to
participate in the Plan.

      6.    Election to Receive Common Stock in Lieu of Director Service Fees.
Prior to the first day of each Plan Year, each Nonemployee Director may make an
election to receive all or a portion of his or her Director Service Fees for
such Plan Year in Common Stock (a "Stock Election") in lieu of cash. Such shares
of Common Stock shall be transferred in accordance with Section 7 hereof. Any
Stock Election shall be made in such form and manner as the Company may specify
from time to time, shall specify the percentage of the Director Service Fees to
be


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paid in Common Stock, and shall be irrevocable for the Plan Year for which the
Stock Election is made. Notwithstanding the foregoing, any Nonemployee Director
who is newly elected or appointed to the Board after the first day of a Plan
Year must make the election under this Section 6 within 30 days after becoming a
Director with respect to the percentage of the Director Service Fees that are
payable for the remainder of that Plan Year. Each election must be made by the
Director by filing an election form with the Secretary of the Company. If a
Director does not file an election form for each Plan year by the specified
date, the Director will be deemed to have elected to receive the Director
Service Fees in the manner elected by the Director in his or her last valid
election. Any person who becomes a Director during a Plan Year and does not file
the required election within 30 days will be deemed to have elected to receive
all of the Director Service Fees in cash. When an election is made for a Plan
Year, the Director may not revoke or change that election.

      7.    Transfer of Shares. Shares of Common Stock issuable to a Nonemployee
Director pursuant to Section 6 hereof shall be determined and transferred to
such Nonemployee Director on the Compensation Dates as follows:

            (a)   The number of Shares to be issued to a Nonemployee Director on
any Compensation Date in respect of the Annual Retainer Fee shall equal
one-fourth of the amount of the Annual Retainer Fee to be paid in Shares (as
elected by the Nonemployee Director) for the Plan Year divided by the Fair
Market Value of a Share on the Compensation Date.

            (b)   The number of Shares to be issued to a Nonemployee Director on
any Compensation Date in respect of the Committee Chairperson Retainer Fee shall
equal one-fourth of the amount of the Committee Chairperson Retainer Fee to be
paid in Shares (as elected by the Nonemployee Director) for the Plan Year
divided by the Fair Market Value of a Share on the Compensation Date, provided
that the Nonemployee Director has served as Chairperson of the Committee during
the quarter to which the Committee Chairperson Retainer Fee relates; and

            (c)   The number of Shares to be issued to a Nonemployee Director on
any Compensation Date in respect of the Meeting Attendance Fees shall equal the
amount of the Meeting Attendance Fees to be paid in Shares (as elected by the
Nonemployee Director) for the quarter during which the meetings being
compensated were held and attended by the Nonemployee Director divided by the
Fair Market Value of a Share on the Compensation Date.

      The Company will instruct its registrar to make an entry on the Company's
shareholder records evidencing that the shares of Common Stock have been issued
as of the Compensation Dates.

      Notwithstanding anything to the contrary herein, if on any Compensation
Date the number of shares of Common Stock otherwise issuable to the Nonemployee
Directors shall exceed the number of authorized shares of Common Stock remaining
available under the Plan, the available shares shall be allocated among the
Nonemployee Directors in proportion to the number of shares they would otherwise
be entitled to receive and the remainder of the Nonemployee Directors' Director
Service Fees shall be payable in cash.

      8.    Fractional Shares. No fraction of a share of Common Stock will be
issued by virtue of a Stock Election made by a Nonemployee Director, but in lieu
thereof, a Nonemployee Director who would otherwise be entitled to a fraction of
a share of Common Stock shall receive an amount of cash (rounded to the nearest
whole cent) equal to the product of such fraction multiplied by the Fair Market
Value of the Common Stock on the applicable Compensation Date.


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      9.    Holding Period. Unless the Committee otherwise determines, shares of
Common Stock issued to a Nonemployee Director pursuant to Section 6 hereof may
not be sold, pledged, assigned, encumbered or otherwise transferred or disposed
of by the Nonemployee Director for a period of one year from the date of
issuance of such shares.

      10.   Legends. Each certificate representing shares of Common Stock issued
under the Plan shall, unless the Committee otherwise determines, contain on its
reverse a legend in form substantially as follows, together with any other
legends that are required by law, the terms and conditions of the Plan or that
the Committee in its discretion deems necessary or appropriate:

      THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A MINIMUM
      HOLDING PERIOD AS DESCRIBED IN THE COMPANY'S NONEMPLOYEE DIRECTOR STOCK
      PLAN AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY
      STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
      TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
      REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE ACT AND APPLICABLE STATE
      SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
      REGISTRATION IS NOT REQUIRED UNDER THE ACT AND APPLICABLE STATE SECURITIES
      LAWS.

      The Company may cause the transfer agent for the Common Stock to place a
stop transfer order with respect to such shares.

      11.   Rights as a Shareholder. A Nonemployee Director shall have no rights
as a shareholder of the Company with respect to any Common Stock to be issued
under the Plan until he or she becomes the holder of record of such shares.

      12.   Effect of Certain Changes in Capitalization. In the event of any
recapitalization, stock split, reverse stock split, stock dividend,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event affecting the
Common Stock, the maximum number or class of shares available under the Plan,
and the number or class of shares of Common Stock to be delivered hereunder
shall be adjusted by the Committee to reflect any such change in the number or
class of issued shares of Common Stock. In the event that as a result of any
such change a Nonemployee Director will, in his or her capacity as the owner of
Shares subject to the holding period described in Section 9 (the "Prior
Shares"), be entitled to new or additional or different shares of stock, cash or
securities, such new or additional or different shares, cash or securities will
be subject to the same holding period and other terms and conditions of the Plan
that are applicable to the Prior Shares. The Committee (in its absolute
discretion) at any time may accelerate the release of the holding period of all
or any portion of such new or additional shares of stock, cash or securities.

      13.   Effectiveness. The Plan shall become effective on February 1, 2004,
provided that the Plan shall have been approved by the Company's shareholders at
the 2004 annual meeting of shareholders.

      14.   Amendment; Termination. The Board or the Committee may at any time
and from time to time alter, amend, or terminate the Plan in whole or in part;
provided, however, that


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no such action shall, without the consent of a Nonemployee Director, affect the
rights of such Nonemployee Director in any Common Stock previously issued to
such Nonemployee Director under the Plan, and provided further that no amendment
shall be effective prior to approval by the Company's shareholders to the extent
such approval is deemed necessary or advisable by the Committee.

      15.   Rights of Directors. Nothing contained in the Plan shall confer upon
any Nonemployee Director any right to continue in the service of the Company as
a director.

      16.   Government and Other Regulations. The obligations of the Company to
deliver shares under the Plan shall be subject to all applicable laws, rules and
regulations and such approvals by any government agency as may be required,
including, without limitation, compliance with the Securities Act of 1933, as
amended.

      17.   Nontransferability. The rights and benefits under the Plan shall not
be transferable by a Nonemployee Director other than by the laws of descent and
distribution.

      18.   Withholding. To the extent required by applicable federal, state and
local law, a Nonemployee Director shall make arrangements satisfactory to the
Company for the payment of any withholding tax obligations that arise in
connection with the Plan. The Company shall not be required to issue any Common
Stock under the Plan until such obligations are satisfied. The method or methods
of payment of any withholding tax obligations that arise in connection with the
Plan may consist of (i) cash, (ii) check, (iii) the delivery to the Company of
whole shares of Common Stock already owned by the Nonemployee Director having an
aggregate Fair Market Value equal to the amount required to be withheld, (iv)
the retention by the Company of whole shares of Common Stock that are issuable
to the Nonemployee Director as compensation under this Plan, which shares have
an aggregate Fair Market Value equal to the minimum amount required to be
withheld, or (v) any combination of the foregoing methods of payment.

      19.   Governing Law. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Washington.

      20.   Headings. The headings of sections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.


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